Document:

Exhibit 10.9

EXECUTION COPY

CREDIT AGREEMENT

dated as of

May 31, 2005,

among

JAMES RIVER COAL COMPANY,
 as Borrower,

The Lenders Party Hereto,

PNC BANK, NATIONAL ASSOCIATION,
 as Administrative Agent, and

MORGAN STANLEY SENIOR FUNDING, INC.,
 as Syndication Agent

MORGAN STANLEY SENIOR FUNDING, INC.,
 as Sole Bookrunner

MORGAN STANLEY SENIOR FUNDING, INC. and PNC CAPITAL MARKETS, INC.,
 as Joint Lead Arrangers

	

	

[CS&M Ref. 8669-106]

TABLE OF CONTENTS

	
  
 
  	
  
 
  	
  
Page
  
	
  
 
  	
  
 
  	
  

  
	
  ARTICLE I
  	
   
 
	
  
 
  	
  
 
  	
   
 
	
  
Definitions
  	
   
 
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   1.01.
  	
  
Defined   Terms
  	
  
2
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   1.02.
  	
  
Classification   of Loans and Borrowings
  	
  
29
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   1.03.
  	
  
Terms   Generally
  	
  
29
  
	
   
  	
  
 
  	
   
 
	
  
SECTION   1.04.
  	
  
Accounting   Terms; GAAP
  	
  
30
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   1.05.
  	
  
Pro Forma   Calculations
  	
  
30
  
	
  
 
  	
  
 
  	
   
 
	
  
ARTICLE II
  	
   
 
	
  
 
  	
  
 
  	
   
 
	
  
The Credits
  	
   
 
	
  
 
  	
  
 
  	
   
 
	
  SECTION   2.01.
  	
  
Commitments
  	
  
30
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   2.02.
  	
  
Loans and   Borrowings
  	
  
30
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   2.03.
  	
  
Requests for   Borrowings
  	
  
31
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   2.04.
  	
  
[Reserved.]
  	
  
32
  
	
  
 
  	
  
 
  	
   
 
	
  SECTION   2.05.
  	
  
Letters of   Credit
  	
  
32
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   2.06.
  	
  
Funding of   Borrowings
  	
  
39
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   2.07.
  	
  
Interest   Elections
  	
  
40
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   2.08.
  	
  
Termination   and Reduction of Commitments; Return of Credit-Linked Deposits
  	
  
41
  

	
  
SECTION   2.09.
  	
  
Repayment of   Loans; Evidence of Debt
  	
  
42
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   2.10.
  	
  
[Reserved.]
  	
  
43
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   2.11.
  	
  
Prepayment   of Loans; Early Return of Credit-Linked Deposits
  	
  
43
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   2.12.
  	
  
Fees
  	
  
44
  
	
   
  	
  
 
  	
   
 
	
  
SECTION   2.13.
  	
  
Interest
  	
  
46
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   2.14.
  	
  
Alternate   Rate of Interest
  	
  
47
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   2.15.
  	
  
Increased   Costs
  	
  
47
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   2.16.
  	
  
Break   Funding Payments
  	
  
49
  
	
   
  	
  
 
  	
   
 
	
  
SECTION 2.17.
  	
  
Taxes
  	
  
50
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   2.18.
  	
  
Payments   Generally; Pro Rata Treatment; Sharing of Setoffs
  	
  
52
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   2.19.
  	
  
Mitigation   Obligations; Replacement of Lenders
  	
  
56
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   2.20.
  	
  
Incremental   Revolving Commitment
  	
  
56
  
	
   
  	
  
 
  	
   
 
	
  
SECTION   2.21.
  	
  
Certificate   of Deposit Account
  	
  
58
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   2.22.
  	
  
Evidence of   Credit-Linked Deposits
  	
  
59
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   2.23.
  	
  
Interests in   Credit-Linked Deposits
  	
  
59
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   2.24.
  	
  
Tax Shelter   Regulations
  	
  
59
  

	
  
ARTICLE III
  	
   
 
	
  
 
  	
  
 
  	
   
 
	
  
Representations and Warranties
  	
   
 
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   3.01.
  	
  
Organization;   Powers
  	
  
60
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   3.02.
  	
  
Authorization;   Enforceability
  	
  
60
  
	
   
  	
  
 
  	
   
 
	
  
SECTION   3.03.
  	
  
Governmental   Approvals; No Conflicts
  	
  
60
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   3.04.
  	
  
Financial   Condition; No Material Adverse Change
  	
  
61
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   3.05.
  	
  
Properties
  	
  
62
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   3.06.
  	
  
Litigation   and Environmental Matters
  	
  
63
  
	
   
  	
  
 
  	
   
 
	
  
SECTION   3.07.
  	
  
Compliance   with Laws and Agreements
  	
  
63
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   3.08.
  	
  
Investment   and Holding Company Status
  	
  
63
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   3.09.
  	
  
Taxes
  	
  
63
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   3.10.
  	
  
ERISA
  	
  
64
  
	
   
  	
  
 
  	
   
 
	
  
SECTION   3.11.
  	
  
Disclosure
  	
  
64
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   3.12.
  	
  
Subsidiaries
  	
  
64
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   3.13.
  	
  
Insurance
  	
  
64
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   3.14.
  	
  
Labor   Matters
  	
  
65
  
	
   
  	
  
 
  	
   
 
	
  
SECTION   3.15.
  	
  
Solvency
  	
  
65
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   3.16.
  	
  
Senior   Indebtedness
  	
  
65
  

	
  
SECTION   3.17.
  	
  
Coal Act;   Black Lung Act
  	
  
65
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   3.18.
  	
  
Coal Supply   Agreements
  	
  
66
  
	
   
  	
  
 
  	
   
 
	
  
SECTION   3.19.
  	
  
Surety Bonds
  	
  
66
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   3.20.
  	
  
Anti-Terrorism   Laws
  	
  
66
  
	
  
 
  	
  
 
  	
   
 
	
  
ARTICLE IV
  	
   
 
	
  
 
  	
  
 
  	
   
 
	
  
Conditions
  	
   
 
	
  
 
  	
  
 
  	
   
 
	
  SECTION   4.01.
  	
  
Effective   Date
  	
  
67
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   4.02.
  	
  
Each Credit   Event
  	
  
71
  
	
  
 
  	
  
 
  	
   
 
	
  
ARTICLE V
  	
   
 
	
  
 
  	
  
 
  	
   
 
	
  
Affirmative Covenants
  	
   
 
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   5.01.
  	
  
Financial   Statements and Other Information
  	
  
72
  
	
   
  	
  
 
  	
   
 
	
  
SECTION   5.02.
  	
  
Notices of   Material Events
  	
  
74
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   5.03.
  	
  
Information   Regarding Collateral
  	
  
75
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   5.04.
  	
  
Existence;   Conduct of Business
  	
  
75
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   5.05.
  	
  
Payment of   Obligations
  	
  
76
  
	
   
  	
  
 
  	
   
 
	
  
SECTION   5.06.
  	
  
Maintenance   of Properties
  	
  
76
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   5.07.
  	
  
Insurance
  	
  
76
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   5.08.
  	
  
Casualty and   Condemnation
  	
  
76
  

	
  
SECTION   5.09.
  	
  
Books and   Records; Inspection and Audit Rights
  	
  
77
  
	
   
  	
  
 
  	
   
 
	
  
SECTION   5.10.
  	
  
Compliance with   Laws
  	
  
77
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   5.11.
  	
  
Use of   Proceeds and Letters of Credit
  	
  
77
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   5.12.
  	
  
Additional   Subsidiaries
  	
  
77
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   5.13.
  	
  
Further   Assurances
  	
  
77
  
	
   
  	
  
 
  	
   
 
	
  
SECTION   5.14.
  	
  
Interest   Rate Protection
  	
  
78
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   5.15.
  	
  
Mining
  	
  
78
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   5.16.
  	
  
Bailee’s   Letters
  	
  
78
  
	
  
 
  	
  
 
  	
   
 
	
  
ARTICLE VI
  	
   
 
	
   
  	
  
 
  	
   
 
	
  
Negative Covenants
  	
   
 
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   6.01.
  	
  
Indebtedness;   Certain Equity Securities
  	
  
79
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   6.02.
  	
  
Liens
  	
  
81
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   6.03.
  	
  
Fundamental   Changes
  	
  
82
  
	
   
  	
  
 
  	
   
 
	
  
SECTION   6.04.
  	
  
Investments,   Loans, Advances, Guarantees and Acquisitions
  	
  
83
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   6.05.
  	
  
Asset Sales
  	
  
85
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   6.06.
  	
  
Sale and   Leaseback Transactions
  	
  
86
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   6.07.
  	
  
Swap   Agreements
  	
  
86
  
	
   
  	
  
 
  	
   
 
	
  
SECTION   6.08.
  	
  
Restricted   Payments; Certain Payments of Indebtedness
  	
  
86
  

	
  
SECTION   6.09.
  	
  
Transactions   with Affiliates
  	
  
87
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   6.10.
  	
  
Restrictive   Agreements
  	
  
87
  
	
  
 
  	
  
 
  	
   
 
	
  SECTION   6.11.
  	
  
Amendment of   Material Documents
  	
  
88
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   6.12.
  	
  
Fixed Charge   Coverage Ratio
  	
  
88
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   6.13.
  	
  
Leverage   Ratio
  	
  
88
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   6.14.
  	
  
Senior   Secured Leverage Ratio
  	
  
89
  
	
  
 
  	
  
 
  	
   
 
	
  SECTION   6.15.
  	
  
Maximum   Capital Expenditures
  	
  
89
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   6.16.
  	
  
Changes in   Fiscal Periods
  	
  
89
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   6.17.
  	
  
Anti-Terrorism   Laws
  	
  
89
  
	
  
 
  	
  
 
  	
   
 
	
  
ARTICLE VII
  	
   
 
	
  
 
  	
  
 
  	
   
 
	
  Events of Default
  	
   
 
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   7.01.
  	
  
Events of   Default
  	
  
90
  
	
  
 
  	
  
 
  	
   
 
	
  
ARTICLE VIII
  	
   
 
	
  
 
  	
  
 
  	
   
 
	
  
The Administrative Agent
  	
   
 
	
  
 
  	
  
 
  	
   
 
	
  
ARTICLE IX
  	
   
 
	
  
 
  	
  
 
  	
   
 
	
  Miscellaneous
  	
   
 
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   9.01.
  	
  
Notices
  	
  
95
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   9.02.
  	
  
Waivers;   Amendments
  	
  
96
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   9.03.
  	
  
Expenses;   Indemnity; Damage Waiver
  	
  
98
  

	
  SECTION   9.04.
  	
  
Successors   and Assigns
  	
  
99
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   9.05.
  	
  
Survival
  	
  
103
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   9.06.
  	
  
Counterparts;   Integration; Effectiveness
  	
  
104
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   9.07.
  	
  
Severability
  	
  
104
  
	
  
 
  	
  
 
  	
   
 
	
  SECTION   9.08.
  	
  
Right of   Setoff
  	
  
104
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   9.09.
  	
  
Governing   Law; Jurisdiction; Consent to Service of Process
  	
  
105
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   9.10.
  	
  
WAIVER OF   JURY TRIAL
  	
  
105
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   9.11.
  	
  
Headings
  	
  
106
  
	
  
 
  	
  
 
  	
   
 
	
  SECTION   9.12.
  	
  
Confidentiality
  	
  
106
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   9.13.
  	
  
Interest   Rate Limitation
  	
  
107
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   9.14.
  	
  
USA Patriot   Act
  	
  
107
  
	
  
 
  	
  
 
  	
   
 
	
  
SECTION   9.15.
  	
  
No Reliance   on Administrative Agent’s Customer Identification Program
  	
  
107
  

SCHEDULES:

	
  
Schedule   1.01
  	
  
—
  	
  
Existing   Letters of Credit
  
	
  
 
  	
  
 
  	
  
 
  
	
  
Schedule   1.02
  	
  
—
  	
  
Mortgaged   Property
  
	
  
 
  	
  
 
  	
  
 
  
	
  
Schedule   2.01
  	
  
—
  	
  
Commitments
  
	
  
 
  	
  
 
  	
  
 
  
	
  
Schedule   2.21(b)
  	
  
—
  	
  
Certificate   of Deposit Terms and Conditions
  
	
   
  	
  
 
  	
  
 
  
	
  
Schedule   3.05(c)
  	
  
—
  	
  
Real   Property
  

	
  
Schedule   3.05(d)
  	
  
—
  	
  
Mines
  
	
  
 
  	
  
 
  	
  
 
  
	
  
Schedule   3.05(e)
  	
  
—
  	
  
Mining   Leases
  
	
  
 
  	
  
 
  	
  
 
  
	
  Schedule   3.06
  	
  
—
  	
  
Disclosed   Matters
  
	
  
 
  	
  
 
  	
  
 
  
	
  
Schedule   3.12
  	
  
—
  	
  
Subsidiaries
  
	
  
 
  	
  
 
  	
  
 
  
	
  
Schedule   3.13
  	
  
—
  	
  
Insurance
  
	
  
 
  	
  
 
  	
  
 
  
	
  
Schedule   3.18
  	
  
—
  	
  
Coal Supply   Agreements
  
	
  
 
  	
  
 
  	
  
 
  
	
  Schedule   6.01
  	
  
—
  	
  
Existing   Indebtedness
  
	
  
 
  	
  
 
  	
  
 
  
	
  
Schedule   6.02
  	
  
—
  	
  
Existing   Liens
  
	
  
 
  	
  
 
  	
  
 
  
	
  
Schedule   6.04
  	
  
—
  	
  
Existing   Investments
  
	
  
 
  	
  
 
  	
  
 
  
	
  
Schedule   6.10
  	
  
—
  	
  
Existing   Restrictions
  
	
  
 
  	
  
 
  	
  
 
  
	
  Schedule   9.01
  	
  
—
  	
  
Notice   Information
  

EXHIBITS:

	
  
Exhibit A
  	
  
—
  	
  
Form of   Assignment and Assumption
  
	
  
 
  	
  
 
  	
  
 
  
	
  
Exhibit B-1
  	
  
—
  	
  
Form of   Opinion of Kilpatrick Stockton LLP
  
	
  
 
  	
  
 
  	
  
 
  
	
  
Exhibit B-2
  	
  
—
  	
  
Form of   Opinion of Local Counsel
  
	
   
  	
  
 
  	
  
 
  
	
  
Exhibit C
  	
  
—
  	
  
Form of   Collateral Agreement
  
	
  
 
  	
  
 
  	
  
 
  
	
  
Exhibit D
  	
  
—
  	
  
Form of   Perfection Certificate
  

EXECUTION

	
  
 
  	
  
          CREDIT   AGREEMENT dated as of May 31, 2005 (this “Agreement”), among   JAMES RIVER COAL COMPANY, the LENDERS party hereto, PNC BANK, NATIONAL   ASSOCIATION, as Administrative Agent and as Collateral Agent, and MORGAN   STANLEY SENIOR FUNDING, INC., as Syndication Agent.
  

                    Pursuant to the Stock Purchase Agreement (the “Acquisition Agreement”) dated as of March 30, 2005, by and among James River Coal Company, a Virginia corporation (the “Borrower”), Triad Mining, Inc., an Indiana corporation (the “Company”), and the stockholders of the Company, the Borrower will purchase all the outstanding capital stock of the Company (the “Acquisition”) for aggregate consideration of $75,000,000 (subject to a net working capital adjustment as described in the Acquisition Agreement), which will be paid in cash and shares of common stock of the Borrower (“Common Stock”).

                    In connection with the Acquisition, the Borrower will (a) issue not less than $150,000,000 aggregate principal amount of Senior Notes (such term, and each other capitalized term, having the meaning set forth in Article I) in a public offering, (b) issue shares of Common Stock (the “Equity Offering”) in an underwritten public offering for gross cash proceeds of not less than $38,000,000, (c) repay or otherwise extinguish all obligations in respect of the Existing Indebtedness and terminate all existing commitments and the release of all Liens in respect thereof and (d) pay all fees, costs and expenses incurred or payable by the Borrower or any Subsidiary in connection with the Transactions (the “Transaction Costs”).

                    The Borrower has requested (a) the Revolving Lenders to extend credit in the form of Loans, the Issuing Bank to issue Revolving Letters of Credit and the Revolving Lenders to acquire participations in such Letters of Credit at any time and from time to time during the Revolving Availability Period such that the aggregate Revolving Exposure will not exceed $25,000,000 at any time, and (b) the Synthetic LC Lenders to deposit an aggregate amount equal to $75,000,000 in cash into the Certificate of Deposit Account, which deposits shall support the issuance of Synthetic Letters of Credit at any time and from time to time during the Synthetic LC Availability Period.  The proceeds of the Loans will be used solely to finance the working capital needs and other general corporate purposes of the Borrower and the Subsidiaries, provided
that such proceeds may not be used to finance any portion of the Acquisition.  Letters of Credit will be used solely to satisfy performance and payment obligations of the Borrower and the Subsidiaries incurred in the ordinary course of business.

                    The Revolving Lenders are willing to extend such credit to the Borrower and acquire such participations, the Synthetic LC Lenders are willing to make such deposits and acquire such participations and the Issuing Bank is willing to issue such Letters of Credit for the account of the Borrower, in each case on the terms and subject to the conditions set forth herein.  Accordingly, the parties hereto agree as follows:

ARTICLE I

Definitions

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

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

                    “Acquisition” has the meaning assigned to such term in the preamble of this Agreement.

                    “Acquisition Agreement” has the meaning assigned to such term in the preamble of this Agreement.

                    “Acquisition Documents” means the Acquisition Agreement, all other agreements to be entered into in connection with the Acquisition and all schedules, exhibits and annexes to each of the foregoing and all side letters, instruments and agreements affecting the terms of the foregoing or entered into in connection therewith.

                    “Additional Revolving Lender” has the meaning assigned to such term in Section 2.20.

                    “Administrative Agent” means PNC Bank, National Association, in its capacity as (a) administrative agent for the Lenders hereunder, and its successors in such capacity as provided in Article VIII, (b) as collateral agent for the Lenders hereunder, and its successors in such capacity as provided in Section 7.04 of the Collateral Agreement and (c) as agent under any of the other Loan Documents, in each case as the context may require. 

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

                    “Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified, provided, however, that for purposes of Section 6.09, the term “Affiliate” shall also include any person that directly, or indirectly through one or more intermediaries, owns 5% or more of any class of Equity Interests of the Person specified or that is an officer or director of the Person specified.

                    “Agreement” has the meaning assigned to such term in the preamble of this Agreement.

2

                    “Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day and (b) the Federal Funds Open Rate in effect on such day plus 0.50%.  Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Open Rate shall be effective from and including the effective date of such change in the Prime Rate or the Federal Funds Open Rate, respectively.

                    “Anti-Terrorism Laws” means any Requirement of Law relating to terrorism or money laundering, including Executive Order No. 13224, the USA Patriot Act, the Requirement of Laws comprising or implementing the Bank Secrecy Act, and the laws administered by the United States Treasury Department’s Office of Foreign Asset Control.

                    “Applicable Percentage” means, at any time, (a) with respect to any Revolving Lender, the percentage of the aggregate Revolving Commitments represented by such Lender’s Revolving Commitment at such time and (b) with respect to any Synthetic LC Lender, the percentage of the Total Credit-Linked Deposit represented by such Lender’s Credit-Linked Deposit at such time.  If the Revolving Commitments have terminated or expired, the Applicable Percentage with respect to any Revolving Lender shall be determined based upon the Revolving Commitments most recently in effect, giving effect to any assignments of Loans and obligations that occur after such termination or expiration.  If the Credit-Linked Deposits shall have been applied in full to reimburse Synthetic LC Disbursements, the Applicable Percentage
with respect to any Synthetic LC Lender shall be determined based upon the Total Credit-Linked Deposit most recently in effect, giving effect to any assignments of deposits and obligations that occur after such reimbursement.

                    “Applicable Rate” means, for any day with respect to any Loan or the commitment fees payable hereunder, as the case may be, the applicable rate per annum set forth below under the caption “Loan ABR Spread” or “Loan Eurodollar Spread”, as the case may be, based upon the Leverage Ratio as of the most recent determination date, provided that until the delivery to the Administrative Agent pursuant to Sections 5.01(b) and (d) of the Borrower’s consolidated financial statements and related certificate of a Financial Officer, respectively, for the first two fiscal quarters of the Borrower beginning after the Effective Date, the “Applicable Rate” shall be the applicable rate per annum set forth below in Category 1:

3

	
  Leverage   Ratio:
  	
   
 	
  
Loan ABR   Spread
  	
   
 	
  
Loan   Eurodollar Spread
  
	
  

  	
  
 
  	
  

  	
  
 
  	
  

  
	
  
Category   1
  	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
Greater   than or equal to 2.00 to 1.00
  	
  
 
  	
  
1.75%
  	
  
 
  	
  
2.75%
  
	
   
 	
  
 
  	
   
 	
  
 
  	
   
 
	
  Category   2
  	
  
 
  	
   
 	
  
 
  	
   
 
	
  
Greater   than or equal to 1.50 to 1.00
  	
  
 
  	
   
 	
  
 
  	
   
 
	
  
but   less than 2.00 to 1.00
  	
  
 
  	
  
1.50%
  	
  
 
  	
  
2.50%
  
	
   
 	
  
 
  	
   
 	
  
 
  	
   
 
	
  
Category   3
  	
  
 
  	
   
 	
  
 
  	
   
 
	
  Greater   than or equal to 1.00 to 1.00
  	
  
 
  	
   
 	
  
 
  	
   
 
	
  
but   less than 1.50 to 1.00
  	
  
 
  	
  
1.25%
  	
  
 
  	
  
2.25%
  
	
   
 	
  
 
  	
   
 	
  
 
  	
   
 
	
  
Category   4
  	
  
 
  	
   
 	
  
 
  	
   
 
	
  
Less   than 1.00 to 1.00
  	
  
 
  	
  
1.00%
  	
  
 
  	
  
2.00%
  

                    For purposes of the foregoing, (a) the Leverage Ratio shall be determined as of the end of each fiscal quarter of the Borrower’s fiscal year based upon the Borrower’s consolidated financial statements delivered pursuant to Section 5.01(a) or (b) and (b) each change in the Applicable Rate resulting from a change in the Leverage Ratio shall be effective during the period commencing on and including the date of delivery to the Administrative Agent of such consolidated financial statements and related certificate of a Financial Officer indicating such change and ending on the date immediately preceding the effective date of the next such change, provided that the Leverage Ratio shall be deemed to be in Category 1 (i) at any time that an Event of Default has occurred and is continuing or (ii) at the
option of the Administrative Agent or at the request of the Required Lenders if the Borrower fails to deliver the consolidated financial statements or related certificate of a Financial Officer required to be delivered by it pursuant to Section 5.01(a) or (b) and Section 5.01(c), as the case may be, during the period from the expiration of the time for delivery thereof until such consolidated financial statements and related certificate of a Financial Officer are delivered.

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

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

                    “Bailee’s Letter” means a letter in form and substance reasonably satisfactory to the Administrative Agent and executed by any Person (other than a Loan Party) that is in possession of Inventory (as defined in the Collateral Agreement) on behalf of a Loan Party pursuant to which such Person acknowledges, among other things, the Administrative Agent’s Lien, for the benefit of the Secured Parties, with respect to such Inventory.

4

                    “Benchmark LIBOR Rate” means the rate per annum, as determined by the Certificate of Deposit Issuer, initially on the Effective Date and reset thereafter on the first Business Day of each Benchmark LIBOR Interest Period equal to the rate then in effect for one month Euro-Rate deposits.

                    “Benchmark LIBOR Interest Period” means, initially, the period commencing on the Effective Date and ending on the first day of the calendar month immediately following such Effective Date.  Each subsequent Benchmark LIBOR Interest Period shall begin on the first day of the calendar month and end on the first day of the next succeeding calendar month, provided that, if such first day is not a Business Day, then such Benchmark LIBOR Interest Period shall end on the next preceding Business Day, provided further that, in the event that the Benchmark LIBOR Interest Period would otherwise extend beyond the Synthetic LC Maturity Date, the Benchmark LIBOR Interest Period shall end on the Synthetic LC Maturity Date.

                    “Black Lung Act” means together, the Black Lung Benefits Revenue Act of 1977, as amended, and the Black Lung Benefits Reform Act of 1977, as amended.

                    “Blocked Person” has the meaning assigned to such term in Section 9.15.

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

                    “Borrower” has the meaning assigned to such term in the preamble of this Agreement.

                    “Borrowing” means Loans of the same Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect.

                    “Borrowing Request” means a request by the Borrower for a Borrowing in accordance with Section 2.03.

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

5

                    “Capital Expenditures” means, for any period, (a) the additions to property, plant and equipment and other capital expenditures of the Borrower and the Subsidiaries that are (or should be) set forth in a consolidated statement of cash flows of the Borrower for such period prepared in accordance with GAAP and (b) Capital Lease Obligations incurred by the Borrower and the Subsidiaries during such period, but excluding in each case any such expenditure (i) made to restore, replace or rebuild property to the condition of such property immediately prior to any damage, loss, destruction or condemnation of such property, to the extent such expenditure is made with, or subsequently reimbursed out of, insurance proceeds, indemnity payments, condemnation awards (or payments in lieu thereof) or damage recovery proceeds
relating to any such damage, loss, destruction or condemnation, (ii) constituting reinvestment of the Net Proceeds of any event described in clause (a) or (b) of the definition of the term “Prepayment Event”, to the extent permitted by Section 2.11(c), or (iii) made by the Borrower or any Subsidiary as payment of the consideration for a Permitted Acquisition.

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

                    “Cash Management Agreement” means the Deposit Account Control Agreement dated as of May 31, 2005, by and among Wachovia Bank, National Association, James River Coal Company and the Administrative Agent.

                    “Certificate of Deposit” has the meaning assigned to such term in Section 2.21(b) herein.

                    “Certificate of Deposit Account” means the credit-linked certificate of deposit account established by the Administrative Agent under its sole and exclusive control maintained at the office of PNC Bank, National Association, 249 Fifth Avenue, Pittsburgh, Pennsylvania 15222, designated as the “James River Synthetic LC Certificate of Deposit Account” that shall be used solely to hold the Credit-Linked Deposits.

                    “Certificate of Deposit Issuer” means PNC Bank, National Association, and its successors and assigns.

                    “Change in Control” means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934, as amended, and the rules of the SEC promulgated thereunder as in effect on the date hereof) of Equity Interests representing more than 25% of either the aggregate ordinary voting power or the aggregate equity value represented by the issued and outstanding Equity Interests in the Borrower, (b) the occupation of a majority of the seats (other than vacant seats) on the board of directors of the Borrower by Persons who were neither (i) nominated by the board of directors of the Borrower nor (ii) appointed by directors so nominated, (c) the acquisition of Control of the Borrower by any Person or group or (d) the
occurrence of a “Change of Control” (or similar event, however denominated), as defined in the Senior Notes Documents, the Existing Company Secured Notes, any indenture or agreement in respect of Material Indebtedness of the Borrower or any Subsidiary or any certificate of designations relating to any Qualified Equity Interests.

6

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

                    “CLO” has the meaning assigned to such term in Section 9.04(b).

                    “Coal Act” means the Coal Industry Retiree Health Benefits Act of 1992, as amended.

                    “Coal Handling Facility” means any coal handling facility, including all necessary electrical, water and plumbing lines and systems necessary to operate such coal handling facility, all coal storage and transportation facilities, administrative facilities and vehicle parking facilities related thereto and all leases in respect of the foregoing.

                    “Coal Supply Agreements” means those contracts entered into by the Borrower or any Subsidiary for the sale, purchase, exchange, processing or handling of coal with an initial term of more than one year and that are in effect.

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

                    “Collateral” means any and all “Collateral”, as defined in any applicable Security Document, and shall also include the Mortgaged Properties.

                    “Collateral Agreement” means the Guarantee and Collateral Agreement among the Borrower, the Subsidiary Loan Parties and the Administrative Agent, substantially in the form of Exhibit C.

                    “Collateral and Guarantee Requirement” means, at any time, the requirement that:

	
  
 
  	
  
          (a)   the Administrative Agent shall have received from each Loan Party either   (i) a counterpart of the Collateral Agreement duly executed and   delivered on behalf of such Loan Party or (ii) in the case of any Person   that becomes a Loan Party after the Effective Date, a supplement to the   Collateral Agreement, in the form specified therein, duly executed and   delivered on behalf of such Loan Party;
  
	
  
 
  	
  
 
  
	
   
  	
  
          (b)   all outstanding Equity Interests of each Subsidiary and all other Equity   Interests owned by or on behalf of any Loan Party shall have been pledged   pursuant to the Collateral Agreement (except that the Loan Parties shall not   be required to pledge more than 65% of the outstanding voting Equity   Interests of any Foreign Subsidiary that is not a Loan Party) and the   Administrative Agent shall have received certificates or other instruments   representing all such Equity Interests, together with undated stock powers or   other instruments of transfer with respect thereto endorsed in blank;
  

7

	
  
 
  	
  
          (d)   all documents and instruments, including Uniform Commercial Code financing statements,   required by law or reasonably requested by the Administrative Agent to be   filed, registered or recorded to create the Liens intended to be created by   the Collateral Agreement and to perfect such Liens to the extent required by,   and with the priority required by, the Collateral Agreement, shall have been   filed, registered or recorded or delivered to the Administrative Agent for   filing, registration or recording;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (e)   the Administrative Agent shall have received (i) counterparts of a Mortgage   with respect to each Mortgaged Property duly executed and delivered by the   record owner of such Mortgaged Property, (ii) evidence that all enclosed   structures on the Mortgaged Property that are located in a special flood   hazard area are covered by flood insurance of a type and in an amount as   required by FEMA or certifications reflecting that all enclosed structures on   the Mortgaged Property are not located in a federal flood plain where flood   insurance is required in accordance with the standards imposed by FEMA on   financial institutions extending credit secured by such Mortgaged Property   and (iii) such legal opinions and other documents as the Administrative   Agent or the Required Lenders may reasonably request with respect to any such   Mortgage or Mortgaged Property; and

	
   
  	
  
 
  
	
  
 
  	
  
          (f)   each Loan Party shall have obtained all consents and approvals required to be   obtained by it in connection with the execution and delivery of all Security   Documents to which it is a party, the performance of its obligations   thereunder and the granting by it of the Liens thereunder.
  

                    “Commitment” means the Revolving Commitments and the Credit-Linked Deposits, or any combination thereof (as the context requires).

                    “Common Stock” has the meaning assigned to such term in the preamble of this Agreement.

                    “Company” has the meaning assigned to such term in the preamble of this Agreement.

8

                    “Consolidated Cash Interest Expense” means, for any period, the excess of (a) the sum of (i) the interest expense (including imputed interest expense in respect of Capital Lease Obligations) of the Borrower and the Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP, (ii) any interest accrued during such period in respect of Indebtedness of the Borrower or any Subsidiary that is required to be capitalized rather than included in consolidated interest expense for such period in accordance with GAAP, (iii) any cash payments made during such period in respect of obligations referred to in clause (b)(ii) below that were amortized or accrued in a previous period and (iv) all cash dividends paid or payable during such period in respect of preferred Equity Interests of
the Borrower, provided that such dividends shall be multiplied by a fraction the numerator of which is one and the denominator of which is one minus the effective combined tax rate of the Borrower (expressed as a decimal) for such period (as estimated by a Financial Officer in good faith), minus (b) the sum of (i) to the extent included in such consolidated interest expense for such period, non-cash amounts attributable to amortization of financing costs paid in a previous period and (ii) to the extent included in such consolidated interest expense for such period, non-cash amounts attributable to amortization of debt discounts or accrued interest payable in kind for such period.  Consolidated Cash Interest Expense for the period of four consecutive fiscal quarters of the Borrower ended on September 30, 2005, shall be an amount equal to the product of (1) Consolidated Cash Interest Expense for the three fiscal quarters ended September 30, 2005,
determined on a Pro Forma Basis after giving effect to the Acquisition as if it had occurred on January 1, 2005, and (2) 4/3.  Consolidated Cash Interest Expense for any fiscal period beginning on or prior to July 1, 2005, shall be calculated on a Pro Forma Basis after giving effect to the Acquisition as if it had occurred on the first day of such fiscal period.

                    “Consolidated EBITDA” means, for any period, Consolidated Net Income for such period plus (a) without duplication and to the extent deducted in determining such Consolidated Net Income, the sum of (i) consolidated interest expense for such period, (ii) consolidated income tax expense for such period, (iii) all amounts attributable to depreciation and amortization for such period (excluding amortization expense attributable to a prepaid cash item that was paid in a prior period), (iv) any extraordinary non-cash charges for such period (but excluding any such non-cash charge in respect of an item that was included in Consolidated Net Income in a prior period and any such charge that results from the write-down or write-off of inventory), (v) non-recurring fees and expenses incurred during
such period in connection with the Transactions in an aggregate amount not to exceed $5,000,000, (vi) non-cash expenses resulting from the grant of stock options or other equity-related incentives to any director, officer or employee of the Borrower or any Subsidiary pursuant to a written plan or agreement approved by the board of directors of the Borrower and (vii) any expense relating to defined benefits pension or post-retirement benefit plans, and minus (b) without duplication and to the extent included in determining such Consolidated Net Income, the sum of (i) any cash disbursements during such period that relate to non-cash charges or losses added to Consolidated Net Income pursuant to clause (a)(iv) of this paragraph in any prior period, (ii) any extraordinary gains for such period, (iii) any non-cash gains for such period that represent the reversal of any accrual for, or cash reserves for, anticipated cash charges in any prior period, (iv) any
income relating to defined benefits pension or post-retirement benefit plans, (v) all gains during such period resulting from the sale or disposition of any asset of the Borrower or any Subsidiary outside the ordinary course of business and (vi) any amounts contributed by the Borrower or any Subsidiary in cash to any defined benefits pension or post-retirement benefit plans during such period, all determined on a consolidated basis in accordance with GAAP.  Consolidated EBITDA for the period of four consecutive fiscal quarters of the Borrower ended on September 30, 2005, shall be an amount equal to the product of (1) Consolidated EBITDA for the three fiscal quarters ended September 30, 2005, determined on a Pro Forma Basis after giving effect to the Acquisition as if it had occurred on January 1, 2005, and (2) 4/3.  Consolidated EBITDA for any fiscal period beginning on or prior to July 1, 2005, shall be calculated on a Pro Forma Basis after giving effect
to the Acquisition as if it had occurred on the first day of such fiscal period.

9

                    “Consolidated Fixed Charges” means, for any period, the sum of (a) Consolidated Cash Interest Expense for such period, (b) the aggregate amount of scheduled principal payments made during such period in respect of Long-Term Indebtedness of the Borrower and the Subsidiaries (other than payments made by the Borrower or any Subsidiary to the Borrower or a Subsidiary), (c) the aggregate amount of principal payments (other than scheduled principal payments) made during such period in respect of Long-Term Indebtedness of the Borrower and the Subsidiaries, to the extent that such payments reduce any scheduled principal payments that would have become due within one year after the date of the applicable payment, (d) Maintenance Capital Expenditures for such period and (e) the aggregate amount of Taxes paid in
cash by the Borrower and the Subsidiaries during such period.

                    “Consolidated Net Income” means, for any period, the net income or loss of the Borrower and the Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, provided that there shall be excluded (a) the income of any Subsidiary to the extent that the declaration or payment of dividends or other distributions by such Subsidiary of that income is not at the time permitted by a Requirement of Law or any agreement or instrument applicable to such Subsidiary, except to the extent of the amount of cash dividends or other cash distributions actually paid to the Borrower or any Subsidiary (unless the income of such Subsidiary would be excluded from Consolidated Net Income pursuant to this proviso) during such period, and (b) the income of any Person (other than the Borrower or any Subsidiary)
in which the Borrower or any Subsidiary owns an Equity Interest, except to the extent of the amount of cash dividends or other cash distributions actually paid to the Borrower or any Subsidiary (unless the income of such Subsidiary would be excluded from Consolidated Net Income pursuant to this proviso) during such period.

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

                    “Credit-Linked Deposit” means, as to each Synthetic LC Lender, the cash deposit made by such Lender pursuant to Section 2.05(b)(ii)(B), as such deposit may be (a) reduced from time to time pursuant to Section 2.05(b)(iii)(B), Section 2.08 or Section 2.11, (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04 and (c) increased from time to time pursuant to Section 2.05(b)(iii).  On the Effective Date, the amount of each Synthetic LC Lender’s Credit-Linked Deposit is set forth in Schedule 2.01 or in the Assignment and Assumption pursuant to which such Synthetic LC Lender shall have acquired its Credit-Linked Deposit, as applicable.  The aggregate amount of the Credit-Linked Deposits on the Effective Date is
$75,000,000.

10

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

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

                    “Disqualified Equity Interests” means Equity Interests that (a) require the payment of any dividends (other than dividends payable solely in shares of Qualified Equity Interests), (b) mature or are mandatorily redeemable or subject to mandatory repurchase or redemption or repurchase at the option of the holders thereof, in whole or in part and whether upon the occurrence of any event, on a fixed date or otherwise, pursuant to a sinking fund obligation or otherwise prior to the date that is 180 days after the Synthetic LC Maturity Date (other than (i) upon payment in full of the Loan Document Obligations, reduction of the LC Exposure to zero, termination of the Commitments and the return in full of all Credit-Linked Deposits to the Synthetic LC Lenders or (ii) upon a “change in control”,
provided that any payment required pursuant to this clause (ii) is contractually subordinated in right of payment to the Loan Document Obligations on terms reasonably satisfactory to the Administrative Agent and such requirement is not applicable in more circumstances than pursuant to the change of control provisions in the Senior Notes Documents), (c) require the maintenance or covenant of any financial performance standards other than as a condition to the taking of specific actions or provide remedies to holders thereof (other than voting rights and increases in pay-in-kind dividends) or (d) are convertible or exchangeable, automatically or at the option of any holder thereof, into any Indebtedness, Equity Interests or other assets other than Qualified Equity Interests.

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

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

                    “Environmental Law” means all Federal, state, local and foreign treaties, laws (including common law), rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices, directives or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, the preservation or reclamation of natural resources, the management, presence, Release or threatened Release of, or exposure to, any Hazardous Material or to health and safety matters (including all Mining Laws).

                    “Environmental Liability” means any liability, obligation, damage, loss, claim, action, suit, judgment, order, penalty, fine, fee, expense or cost, contingent or otherwise (including any liability for costs of medical monitoring, costs of environmental remediation, restoration, preservation or reclamation, administrative oversight costs, consultants’ fees or indemnities), directly or indirectly arising out of, relating to, resulting from, or based upon (a) compliance or non-compliance with Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which
liability is assumed or imposed with respect to any of the foregoing.

11

                    “Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person.

                    “Equity Offering” has the meaning assigned to such term in the preamble of this Agreement.

                    “Equity Offering Documents” means the Form S-1 Registration Statement under the Securities Act of 1933, as amended, filed with the SEC on April 19, 2005 (File Number 333-124147) pursuant to which the Equity Offering is registered, all side letters, instruments, agreements and other documents evidencing or governing such Equity Offering, affecting the terms of the foregoing or entered into in connection therewith and all schedules, exhibits and annexes to each of the foregoing.

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

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

                    “ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan, (b) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived, (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan, (d) the existence of a reasonable expectation that the Borrower or any of its ERISA Affiliates will incur any liability under Title IV of ERISA with respect to the termination of any Plan, (e) the existence of a reasonable expectation that the Borrower or any of its ERISA Affiliates
will incur any significantly increased employee-related liability under any Mining Law or any material increase in future post-employment welfare and insurance expenses, (f) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan, (g) the existence of a reasonable expectation that the Borrower or any of its ERISA Affiliates will incur any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan or (h) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

12

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

                    “Euro-Rate” means, with respect to the Loans comprising any Eurodollar Borrowing to which the Euro-Rate Option applies for any Interest Period, the interest rate per annum determined by the Administrative Agent by dividing (the resulting quotient rounded upwards, if necessary, to the nearest 1/100th of 1% per annum) (a) the rate of interest determined by the Administrative Agent in accordance with its usual procedures (which determination shall be conclusive absent manifest error) to be the average of the London interbank offered rates for dollars quoted by the British Bankers’ Association as set forth on Moneyline Telerate (or appropriate successor or, if the British Bankers’ Association or its successor ceases to provide such quotes, a comparable replacement determined by the Agent) display page 3750 (or
such other display page on the Moneyline Telerate service as may replace display page 3750) two Business Days prior to the first day of such Interest Period for an amount comparable to such Borrowing and having a borrowing date and a maturity comparable to such Interest Period by (b) a number equal to 1.00 minus the Euro-Rate Reserve Percentage.  The Euro-Rate may also be expressed by the following formula:

	
   
  	
  
 
  	
  
Average   of London interbank offered rates quoted
  	
   
 
	
  
 
  	
  
 
  	
  
by   BBA or appropriate successor as shown on
  	
   
 
	
  
 
  	
  
 
  	
  
Moneyline   Telerate Service display page 3750
  	
   
 
	
  
 
  	
  
Euro-Rate =
  	
  

  	
  
 
  
	
  
 
  	
  
 
  	
  
1.00   – Euro-Rate Reserve Percentage
  	
   
 
	
  
 
  	
  
 
  	
  
 
  	
  
 
  

                    The Euro-Rate shall be adjusted with respect to any Loan to which the Euro-Rate Option applies that is outstanding on the effective date of any change in the Euro-Rate Reserve Percentage as of such effective date.  The Administrative Agent shall give prompt notice to the Borrower of the Euro-Rate as determined or adjusted in accordance herewith, which determination shall be conclusive absent manifest error.

                    “Euro-Rate Option” means the option of the Borrower to have Loans bear interest at the rate on the terms and subject to the conditions set forth in Section 2.07.

                    “Euro-Rate Reserve Percentage” means, on any date, the maximum percentage in effect to which any of the Lenders is subject on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including supplemental, marginal and emergency reserve requirements) with respect to eurocurrency funding (currently referred to as “Eurocurrency Liabilities”).  The Euro-Rate Reserve Percentage shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

                    “Event of Default” has the meaning assigned to such term in Section 7.01.

                    “Excess Credit-Linked Deposits” means, at any time, the amount by which the Total Credit-Linked Deposits exceed the Synthetic LC Exposure at such time.

13

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

                    “Executive Order No. 13224” means the Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.

                    “Existing Company Secured Debt” means Indebtedness in respect of the Existing Company Secured Notes.

                    “Existing Company Secured Notes” means (a) the Term Note, dated as of September 26, 2001, by and between Triad Mining, Inc. and Fifth Third Bank, Kentucky, Inc. and (b) the Term Note, dated September 26, 2001, by and between Triad Underground Mining, LLC and Fifth Third Bank, Kentucky, Inc.

                    “Existing Credit Agreements” means (a) the Term Loan Agreement dated as of May 6, 2004, by and among the Borrower, certain subsidiaries of the Borrower, the lenders from time to time party thereto and BNY Asset Solutions LLC (as amended, supplemented, restated or otherwise modified as of the Effective Date) and (b) the Existing Loan and Security Agreement.

                    “Existing Indebtedness” means all obligations of the Borrower and the Subsidiaries under the Existing Credit Agreements (except the Existing Letters of Credit) and all Indebtedness of the Company and its subsidiaries as of the Effective Date (except the Existing Company Secured Debt).

                    “Existing Letters of Credit” means each letter of credit previously issued for the account of, or guaranteed by, the Borrower pursuant to the Existing Loan and Security Agreement that (a) is outstanding on the Effective Date and (b) is listed on Schedule 1.01.

                    “Existing Loan and Security Agreement” means the Loan and Security Agreement dated as of May 6, 2004, by and among the Borrower and the other borrower parties thereto, Leeco Processing Company and the other credit parties thereto, the lenders thereto, Wells Fargo Foothill, Inc. and Morgan Stanley Senior Funding, Inc.

14

                    “Fair Labor Standards Act” means the Fair Labor Standards Act, 29 U.S.C. ss.201 et seq.

                    “Federal Funds Open Rate” means, for any day, the rate per annum determined by the Administrative Agent in accordance with its usual procedures (which determination shall be conclusive absent manifest error) to be the Open Rate for federal funds transactions as of the opening of business for federal funds transactions among members of the Federal Reserve System arranged by federal funds brokers on such day, as quoted by Garvin Guybutler, any successor entity thereto, or any other broker selected by the Administrative Agent, as set forth on the applicable Telerate display page; provided, however, that if such day is not a Business Day, the Federal Funds Open Rate for such day shall be the Open Rate on the immediately preceding Business Day, or if no such rate shall be quote by a federal funds broker at such time,
such other rate as determined by the Administrative Agent in accordance with its usual procedures.

                    “FEMA” means the Federal Emergency Management Agency of the United States of America.

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

                    “Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than the United States of America, any State thereof or the District of Columbia.

                    “Foreign Subsidiary” means any Subsidiary that is organized under the laws of a jurisdiction other than the United States of America, any State thereof or the District of Columbia.

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

                    “Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

                    “Granting Lender” has the meaning assigned to such term in Section 9.04(e).

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

                    “Hazardous Materials” means (A) petroleum products and byproducts, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, radon gas, explosives, radioactive substances, chlorofluorocarbons and all other ozone-depleting substances; or (B) any chemical, material, substance, waste, pollutant or contaminant, including any mine tailings and mine drainage, that is prohibited, limited or regulated by or pursuant to any Environmental Law or Mining Law.

                    “Indemnitee” has the meaning assigned to such term in Section 9.03(b).

                    “Incremental Revolving Commitment” has the meaning assigned to such term in Section 2.20.

                    “Incremental Revolving Commitment Lender” has the meaning assigned to such term in Section 2.20.

                    “Incremental Revolving Facility Amendment” has the meaning assigned to such term in Section 2.20.

                    “Incremental Revolving Facility Closing Date” has the meaning assigned to such term in Section 2.20.

                    “Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding trade accounts payable incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty and (j) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances.  The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.  Notwithstanding the foregoing, in connection with any Permitted Acquisition, the term
“Indebtedness” shall not include contingent post-closing purchase price adjustments or earn-outs to which the seller in such Permitted Acquisition may become entitled.

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                    “Indemnified Taxes” means Taxes other than Excluded Taxes.

                    “Information Memorandum” means the Confidential Information Memorandum dated May, 2005, relating to the Borrower and the Transactions.

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

                    “Interest Payment Date” means (a) with respect to any ABR Loan, the last day of each March, June, September and December and (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period.

                    “Interest Period” means, with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is 1, 2, 3, 6, 9 or 12 months thereafter, as the Borrower may elect, provided that (a) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (b) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last
Business Day of the last calendar month of such Interest Period.  For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

                    “Issuing Bank” means PNC Bank, National Association, in its capacity as the issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section 2.05(b)(vii).  The Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of the Issuing Bank, in which case the term “Issuing Bank” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate.

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

                    “LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time and (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time.

                    “Lenders” means the Persons listed on Schedule 2.01 and any other Person that shall have become a party hereto pursuant to Section 2.20 or 9.04, other than any such Person that ceases to be a party hereto pursuant to Section 9.04.  Unless the context otherwise requires, the term “Lenders” includes the Synthetic LC Lenders.

                    “Letter of Credit” means any Revolving Letter of Credit, any Synthetic Letter of Credit or any Existing Letter of Credit.

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

                    “Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

                    “Loan Document Obligations” has the meaning assigned to such term in the Collateral Agreement.

                    “Loan Documents” means this Agreement, any Incremental Revolving Facility Amendment, the Collateral Agreement and the other Security Documents.

                    “Loan Parties” means the Borrower and the Subsidiary Loan Parties.

                    “Loans” means the loans made by the Lenders to the Borrower pursuant to this Agreement.

                    “Long-Term Indebtedness” means any Indebtedness (excluding Indebtedness permitted by Section 6.01(iv)) that, in accordance with GAAP, constitutes (or, when incurred, constituted) a long-term liability.

                    “Maintenance Capital Expenditures” means, for any period, all Capital Expenditures required to maintain the Borrower’s or any Subsidiary’s property, plant, equipment and Mining Leases, which shall be deemed to be $50,000,000 for each period of four consecutive fiscal quarters.

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                    “Material Adverse Effect” means a material adverse effect on (a) the business, assets, operations or condition, financial or otherwise, of the Borrower and the Subsidiaries, taken as a whole, (b) the ability of any Loan Party to perform any of its obligations under any Loan Document or (c) the rights of or benefits available to the Lenders under any Loan Document.

                    “Material Indebtedness” means Indebtedness (other than the Loans and Letters of Credit), or obligations in respect of one or more Swap Agreements, of any one or more of the Borrower and the Subsidiaries in an aggregate principal amount exceeding $5,000,000.  For purposes of determining Material Indebtedness, the “principal amount” of the obligations of the Borrower or any Subsidiary in respect of any Swap Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Borrower or such Subsidiary would be required to pay if such Swap Agreement were terminated at such time.

                    “Mine” means any excavation or opening into the earth now and hereafter made from which coal is or can be extracted on or from any of the properties owned or leased by the Borrower or any Subsidiary, together with all appurtenances, fixtures, structures, improvements and assets in connection therewith.

                    “Mining Law” means all treaties, laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to mining operations and activities, including the Federal Coal Leasing Amendments Act, the Surface Mining Control and Reclamation Act, the Federal Coal Mine Health and Safety Act, the Black Lung Act and the Coal Act, in each case as amended.

                    “Mining Lease” means a lease pursuant to which the Borrower or any Subsidiary has rights with respect to coal reserves.

                    “Mining Permits” means any and all permits, licenses, registrations, notifications, exemptions and any other authorization required under any applicable Mining Law or otherwise necessary to recover coal from any Mine being operated by the Borrower or any of the Subsidiaries.

                    “MM&A” means Marshall Miller & Associates, Inc.

                    “MM&A 2004 Report” means the report of MM&A completed in June 2004 regarding the estimated coal reserves of the Borrower and the Subsidiaries as of March 31, 2004, which is described in the Borrower’s Report on Form 10-K filed with the SEC for the fiscal year ended December 31, 2004.

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

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                    “Mortgage” means a mortgage, deed of trust, assignment of leases and rents, leasehold mortgage or other security document granting a Lien on any Mortgaged Property to secure the Obligations.  Each Mortgage shall be satisfactory in form and substance to the Administrative Agent.

                    “Mortgaged Property” means, initially, each parcel of real property and the improvements thereto owned or leased by a Loan Party and identified on Schedule 1.02, and includes each other parcel of real property and improvements thereto owned by a Loan Party with respect to which a Mortgage is granted pursuant to Section 5.12 or 5.13.

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

                    “Net Proceeds” means, with respect to any event, (a) the cash proceeds received in respect of such event, including (i) any cash received in respect of any non-cash proceeds (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment or earn-out, but excluding any reasonable interest payments), but only as and when received, (ii) in the case of a casualty, insurance proceeds, and (iii) in the case of a condemnation or similar event, condemnation awards and similar payments, minus (b) the sum of (i) all reasonable fees and out-of-pocket expenses paid by the Borrower and the Subsidiaries to third parties (other than Affiliates) in connection with such event, (ii) in the case of a sale, transfer or
other disposition of an asset (including pursuant to a sale and leaseback transaction or a casualty or a condemnation or similar proceeding), the amount of all payments that are permitted hereunder and are made by the Borrower and the Subsidiaries as a result of such event to repay Indebtedness (other than Loans) secured by such asset or otherwise subject to mandatory prepayment as a result of such event, and (iii) the amount of all taxes paid (or reasonably estimated to be payable) by the Borrower and the Subsidiaries, and the amount of any reserves established by the Borrower and the Subsidiaries to fund contingent liabilities reasonably estimated to be payable, in each case during the year that such event occurred or the next succeeding year and that are directly attributable to such event (as determined reasonably and in good faith by a Financial Officer), provided that any reduction at any time in the amount of any such reserves (other than as a result of payments made in respect
thereof) shall be deemed to constitute the receipt by the Borrower at such time of Net Proceeds in the amount of such reduction.

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

                    “Other Taxes” means any and all present or future recording, stamp, documentary, excise, transfer, sales, property or similar taxes, charges or levies arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document.

                    “Participant” has the meaning assigned to such term in Section 9.04(c).

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

                    “Perfection Certificate” means a certificate in the form of Exhibit D or any other form approved by the Administrative Agent.

                    “Permitted Acquisition” means any acquisition by the Borrower or a wholly owned Subsidiary Loan Party of all the outstanding Equity Interests (other than directors’ qualifying shares) in, all or substantially all the assets of, or all or substantially all the assets constituting a division or line of business of, a Person if (a) such acquisition was not preceded by, or consummated pursuant to, a hostile offer (including a proxy contest), (b) such Person (in the case of an acquisition of Equity Interests) is organized under the laws of, and substantially all its assets (or the assets of such division or line of business, as the case may be) are located in, the United States of America, any State thereof or the District of Columbia, (c) no Default has occurred and is continuing or would result therefrom,
(d) such acquisition and all transactions related thereto are consummated in accordance with applicable laws, (e) all actions required to be taken with respect to such acquired or newly formed Subsidiary or such acquired assets under Sections 5.12 and 5.13 shall have been taken, (f) the Borrower is in compliance on a Pro Forma Basis after giving effect to such acquisition with the covenants contained in Sections 6.12, 6.13, 6.14 and 6.15 recomputed as of the last day of the most recently ended fiscal quarter of the Borrower, (g) after giving effect to such acquisition, there shall be no less than $10,000,000 of aggregate unused and available Revolving Commitments, (h) the business of such Person or such assets, as the case may be, constitutes a business permitted by Section 6.03(b), (i) the Leverage Ratio, calculated immediately prior to such acquisition and on a Pro Forma Basis after giving effect to such acquisition recomputed as of the last day of the
most recently ended fiscal quarter of the Borrower, is at least 0.25 less than the Leverage Ratio set forth in Section 6.13 opposite the period during which such acquisition is contemplated, and (j) the Borrower has delivered to the Administrative Agent a certificate of a Financial Officer to the effect set forth in clauses (a), (b), (c), (d), (e), (f), (g), (h) and (i) above, together with all relevant financial information for the Person or assets to be acquired and setting forth reasonably detailed calculations demonstrating compliance with clauses (f) and (i) above (which calculations shall, if made as of the last day of any fiscal quarter of the Borrower for which the Borrower has not delivered to the Administrative Agent the financial statements and certificate of a Financial Officer required to be delivered by Section 5.01(a) or (b) and Section 5.01(d), respectively, be accompanied by a reasonably detailed calculation of Consolidated EBITDA and Consolidated Cash
Interest Expense for the relevant period).

                    “Permitted Encumbrances” means:

	
  
 
  	
  
          (a) Liens   imposed by law for taxes, assessments or other governmental charges that are   not yet due or are being contested in compliance with Section 5.05;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (b) carriers’,   warehousemen’s, mechanics’, materialmen’s, repairmen’s, landlords’ and other   like Liens imposed by law, arising in the ordinary course of business and   securing obligations that are not overdue by more than 45 days or are   being contested in compliance with Section 5.05;
  

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          (c) pledges   and deposits made in the ordinary course of business in compliance with   workers’ compensation, unemployment insurance and other social security laws   or regulations;
  
	
   
  	
  
 
  
	
  
 
  	
  
          (d) deposits   to secure the performance of bids, trade contracts, leases, statutory   obligations, surety and appeal bonds, performance bonds and other obligations   of a like nature, in each case in the ordinary course of business;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (e)   judgment liens in respect of judgments that do not constitute an Event of   Default under clause (k) of Section 7.01;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (f) easements,   zoning restrictions, rights-of-way and similar encumbrances on real property   imposed by law or arising in the ordinary course of business that do not   secure any monetary obligations and do not materially detract from the value   of the affected property or interfere with the ordinary conduct of business   of the Borrower or any Subsidiary; and
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (g) Liens   arising from Permitted Investments described in clause (d) of the   definition of the term “Permitted Investments”,
  

provided that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness.

                    “Permitted Investments” means:

	
  
 
  	
  
          (a) direct   obligations of, or obligations the principal of and interest on which are   unconditionally guaranteed by, the United States of America (or by any agency   thereof to the extent such obligations are backed by the full faith and   credit of the United States of America), in each case maturing within one   year from the date of acquisition thereof;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (b) investments   in commercial paper maturing within 270 days from the date of   acquisition thereof and having, at such date of acquisition, the highest   credit rating obtainable from S&P or from Moody’s;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (c) investments   in certificates of deposit, banker’s acceptances and time or demand deposits   maturing within 180 days from the date of acquisition thereof issued or   guaranteed by or placed with, and money market deposit accounts issued or   offered by, any domestic office of any commercial bank organized under the   laws of the United States of America or any State thereof that has a combined   capital and surplus and undivided profits of not less than $500,000,000;
  
	
   
  	
  
 
  
	
  
 
  	
  
          (d) fully   collateralized repurchase agreements with a term of not more than   30 days for securities described in clause (a) above and entered   into with a financial institution satisfying the criteria described in   clause (c) above; and
  

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          (e) investments   in “money market funds” within the meaning of Rule 2a-7 of the   Investment Company Act of 1940, as amended, substantially all of whose assets   are invested in investments of the type described in clauses (a) through   (d) above.
  

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

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

                    “Prepayment Event” means:

	
  
 
  	
  
          (a) any   sale, transfer or other disposition (including by way of merger or   consolidation) of any property of the Borrower or any Subsidiary, other than   (i) dispositions permitted by clauses (a), (b), (c), (f), (g) and   (h) of Section 6.05 and (ii) other dispositions resulting in   aggregate Net Proceeds not exceeding $5,000,000 for all such transactions during   any fiscal year of the Borrower; or
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (b) any   casualty or other insured damage to, or any taking under power of eminent   domain or by condemnation or similar proceeding of, any property of the   Borrower or any Subsidiary with a fair market value immediately prior to such   event equal to or greater than $2,500,000;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (c) the   issuance by the Borrower or any Subsidiary of any Equity Interests, or the   receipt by the Borrower or any Subsidiary of any capital contribution, other   than (i) any such issuance of Equity Interests to, or receipt of any   such capital contribution from, the Borrower or any Subsidiary or   (ii) any such issuance of Qualified Equity Interests of the Borrower to   management or employees of the Borrower or any Subsidiary under any employee   stock option or stock purchase plan or other employee benefit plan in   existence from time to time; or
  
	
   
  	
  
 
  
	
  
 
  	
  
          (d) the   incurrence by the Borrower or any Subsidiary of any Indebtedness, other than   Indebtedness permitted under Section 6.01 or permitted by the Required   Lenders pursuant to Section 9.02.
  

                    “Prep Plant Lease” means any lease entered into by the Borrower or any of the Subsidiaries in respect of a preparation plant and/or a related property on which the preparation plant is situated.

                    “Prime Rate” means the rate of interest per annum publicly announced from time to time by PNC Bank, National Association, as its prime rate in effect at its principal office in Pittsburgh, Pennsylvania; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective.

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                    “Pro Forma Basis” means, with respect to the calculation of the financial covenants contained in Sections 6.12, 6.13, 6.14 and 6.15 as of any date, that such calculation shall give pro forma effect to all Permitted Acquisitions, all issuances, incurrences or assumptions of Indebtedness (with any such Indebtedness being deemed to be amortized over the applicable testing period in accordance with its terms) and all sales, transfers or other dispositions of any material assets, Equity Interests in a Subsidiary or all or substantially all the assets of a Subsidiary or division or line of business of a Subsidiary outside the ordinary course of business that have occurred during (or, if such calculation is being made for the purpose of determining whether any proposed acquisition will constitute a Permitted Acquisition, or any
Incremental Revolving Commitment may be made since the beginning of) the four consecutive fiscal quarter period of the Borrower most recently ended on or prior to such date for which the financial statements and the certificate of a Financial Officer required by Sections 5.01(b) and (d), respectively, have been delivered in accordance with such Sections as if they occurred on the first day of such four consecutive fiscal quarter period (including cost savings to the extent such cost savings would be permitted to be reflected in pro forma financial information complying with the requirements of GAAP and Article XI of Regulation S-X under the Securities Act of 1933, as amended, as interpreted by the Staff of the SEC, and as certified by a Financial Officer).  For purposes of calculating (a) the Leverage Ratio for the 12-month period ended December 31, 2004, or (b) the Leverage Ratio, Senior Secured Leverage Ratio and Fixed Charge Coverage Ratio for any fiscal period
commencing prior to July 1, 2005, Total Indebtedness, Senior Secured Indebtedness, Consolidated Fixed Charges and Consolidated EBITDA shall be calculated on a Pro Forma Basis to give effect to the Acquisition as if it were a Permitted Acquisition.

                    “Proposed Change” has the meaning assigned to such term in Section 9.02(c).

                    “Qualified Equity Interests” means Equity Interests of the Borrower other than Disqualified Equity Interests.

                    “Register” has the meaning assigned to such term in Section 9.04(b).

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

                    “Release” means any release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching or migration into or through the environment or within or upon any building, structure, facility or fixture.

                    “Required Lenders” means, at any time, Lenders having Revolving Exposures, Synthetic LC Exposures, unused Revolving Commitments and Excess Credit-Linked Deposits representing more than 50% of the aggregate Revolving Exposures, Synthetic LC Exposure, unused Revolving Commitments and Excess Credit-Linked Deposits at such time.

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                    “Requirement of Law” means, with respect to any Person, (a) the charter, articles or certificate of organization or incorporation and bylaws or other organizational or governing documents of such Person and (b) any statute, law, treaty, rule, regulation, order, decree, writ, injunction or determination of any arbitrator or court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

                    “Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests in the Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancelation or termination of any Equity Interests in the Borrower or any Subsidiary or any option, warrant or other right to acquire any such Equity Interests in the Borrower or any Subsidiary, or any other payment (including any payment under any Swap Agreement) that has a substantially similar effect to any of the foregoing.

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

                    “Revolving Commitment” means, with respect to each Lender, the commitment, if any, of such Lender to make Loans and to acquire participations in Revolving Letters of Credit hereunder, expressed as an amount representing the maximum possible aggregate amount of such Lender’s Revolving Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant to (i) assignments by or to such Lender pursuant to Section 9.04 or (ii) Section 2.20.  The initial amount of each Lender’s Revolving Commitment is set forth on Schedule 2.01, or in the Assignment and Assumption or Incremental Revolving Facility Amendment pursuant to which such Lender shall have assumed its Revolving Commitment, as the case
may be.  The initial aggregate amount of the Lenders’ Revolving Commitments is $25,000,000.

                    “Revolving Exposure” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Loans and its Revolving LC Exposure at such time.

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

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

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                    “Revolving Lender” means a Lender with a Revolving Commitment or, if the Revolving Commitments have terminated or expired, a Lender with Revolving Exposure.

                    “Revolving Letters of Credit” means, at any time, any Letter of Credit other than any Synthetic Letter of Credit.

                    “Revolving Maturity Date” means May 31, 2010.

                    “S&P” means Standard & Poor’s Ratings Group, Inc.

                    “SEC” means the Securities and Exchange Commission or any Governmental Authority succeeding to any of its principal functions.

                    “Second-Priority Lien” means Liens that are subordinated to the Liens securing the Obligations.

                    “Security Documents” means the Collateral Agreement, the Mortgages and each other security agreement or other instrument or document executed and delivered pursuant to Section 5.12 or 5.13 to secure any of the Obligations.

                    “Senior Notes” means the senior unsecured notes due 2015 to be issued by the Borrower pursuant to the Senior Notes Indenture on or prior to the Effective Date and the Indebtedness represented thereby.

                    “Senior Notes Documents” means the Senior Notes Indenture, all side letters, instruments, agreements and other documents evidencing or governing the Senior Notes, providing for any Guarantee or other right in respect thereof, affecting the terms of the foregoing or entered into in connection therewith and all schedules, exhibits and annexes to each of the foregoing.

                    “Senior Notes Indenture” means the Indenture dated as of May 31, 2005, among the Borrower, the Subsidiaries listed therein and U.S. Bank, National Association, as trustee, in respect of the Senior Notes.

                    “Senior Secured Indebtedness” means, as of any date, the aggregate principal amount of Indebtedness of the Borrower and the Subsidiaries outstanding as of such date that consists of, without duplication, (a) Loans, Revolving Exposure and Synthetic LC Exposure and (b) Indebtedness secured by a Lien (other than any Second-Priority Lien), provided that the terms “Revolving Exposure”, “Synthetic LC Exposure” and “Indebtedness” shall not include contingent obligations of the Borrower or any Subsidiary as an account party or applicant in respect of any letter of credit or letter of guaranty that supports obligations of the Borrower or any Subsidiary in respect of performance bonds, bid bonds, appeal bonds, surety bonds, performance and completion guarantees, workers’ compensation
expenses and similar items, in each case provided in the ordinary course of business.

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

                    “SPV” has the meaning assigned to such term in Section 9.04(c).

                    “subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled, by the parent
or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.

                    “Subsidiary” means any subsidiary of the Borrower.  For purposes of the representations and warranties made herein on the Effective Date, the term “Subsidiary” includes the Company and its subsidiaries.

                    “Subsidiary Loan Party” means any Subsidiary that is not a Foreign Subsidiary.

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

                    “Synthetic LC Availability Period” means the period from and including the Effective Date to but excluding the earlier of (a) five Business Days prior to the Synthetic LC Maturity Date, (b) the date on which all of the Credit-Linked Deposits are required returned to the Synthetic LC Lenders and (c) the date of the termination of the Commitments pursuant to Article VII.

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

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

                    “Synthetic LC Lender” means a Lender having a Credit-Linked Deposit.

                    “Synthetic LC Maturity Date” means the November 30, 2011.

                    “Synthetic Letters of Credit” means, at any time, Letters of Credit in an amount equal to the lesser of (a) the Total Credit-Linked Deposit and (b) the aggregate amount of outstanding Letters of Credit at such time.  Letters of Credit will from time to time be deemed to be Synthetic Letters of Credit or Revolving Letters of Credit in accordance with the provisions of Section 2.05(a).

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

                    “Total Credit-Linked Deposits” means, at any time, the sum of all Credit-Linked Deposits at such time, as the same may be (a) reduced from time to time pursuant to Section 2.05(b)(iii)(B) or Section 2.08 and (b) increased from time to time pursuant to Section 2.05(b)(iii).

                    “Total Indebtedness” means, as of any date, the aggregate principal amount of Indebtedness of the Borrower and the Subsidiaries outstanding as of such date, provided that the term “Indebtedness” shall not include contingent obligations of the Borrower or any Subsidiary as an account party or applicant in respect of any letter of credit or letter of guaranty that supports obligations of the Borrower or any Subsidiary in respect of performance bonds, bid bonds, appeal bonds, surety bonds, performance and completion guarantees, workers’ compensation expenses and similar items, in each case provided in the ordinary course of business.

                    “Transactions” means (a) the execution, delivery and performance by each Loan Party of the Loan Documents to which it is to be a party, the borrowing of Loans, the use of the proceeds thereof and the issuance of Letters of Credit hereunder, (b) the Equity Offering, (c) the Acquisition and the other transactions contemplated by the Acquisition Documents, (d) the repayment in full and discharge of all obligations in respect of the Existing Indebtedness and the termination of all commitments and the release of all Liens in respect thereof, (e) the payment of the Transaction Costs, (f) the execution, delivery and performance by each Loan Party of the Senior Notes Documents to which it is to be a party, the issuance of the Senior Notes and the use of the proceeds thereof.

                    “Transaction Costs” has the meaning assigned to such term in the preamble of this Agreement.

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                    “Triggering Event” means the earlier of (i) acceleration of the maturity under Section 7.01, (ii) the demand for cash collateral under Section 2.05(b)(viii), provided, however, that a Triggering Event shall no longer be continuing under this clause (ii) if the obligation to provide cash collateral under Section 2.05(b)(viii) has been eliminated in accordance with such Section, (iii) the Revolving Maturity Date or (iv) the Synthetic LC Maturity Date.

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

                    “USA Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.

                    “wholly owned Subsidiary” means, with respect to any Person at any date, a subsidiary of such Person of which securities or other ownership interests representing 100% of the Equity Interests (other than directors’ qualifying shares) are, as of such date, owned, controlled or held by such Person or one or more wholly owned Subsidiaries of such Person or by such Person and one or more wholly owned Subsidiaries of such Person.

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

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

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

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

                    SECTION 1.05.  Pro Forma Calculations.  With respect to any period during which any Permitted Acquisition or any sale, transfer or other disposition of any material assets outside the ordinary course of business occurs, for purposes of determining compliance with the covenants contained in Sections 6.12, 6.13, 6.14 and 6.15, or for purposes of determining the Leverage Ratio, Senior Secured Leverage Ratio, Consolidated EBITDA and Consolidated Fixed Charge, calculations with respect to such period shall be made on a Pro Forma Basis.

ARTICLE II

The Credits

                    SECTION 2.01.  Commitments.  Subject to the terms and conditions set forth herein, each Revolving Lender agrees to make Loans to the Borrower at any time and from time to time during the Revolving Availability Period in an aggregate principal amount that will not result in such Lender’s Revolving Exposure exceeding such Lender’s Revolving Commitment at any time.  Within the foregoing limits and on the terms and subject to the conditions set forth herein, the Borrower may borrow, prepay and reborrow Loans.

                    SECTION 2.02.  Loans and Borrowings.  (a)  Each Loan shall be made as part of a Borrowing consisting of Loans of the same Type made by the Revolving Lenders ratably in accordance with their respective Revolving Commitments.  The failure of any Revolving Lender to make any Loan required to be made by it shall not relieve any other Revolving Lender of its obligations hereunder, provided that the Revolving Commitments of the Revolving Lenders are several and no Revolving Lender shall be responsible for any other Revolving Lender’s failure to make Loans as required herein.

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

                    (c)  At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $1,000,000.  At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $1,000,000.  Borrowings of more than one Type may be outstanding at the same time, provided that there shall not at any time be more than a total of five Eurodollar Borrowings outstanding.  Notwithstanding anything to the contrary herein, an ABR Borrowing may be in an aggregate amount that is equal to the entire unused balance of the aggregate Revolving Commitments or that is required to finance the reimbursement of an LC Disbursement as contemplated by
Section 2.05(b)(iii).

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

                    SECTION 2.03.  Requests for Borrowings.  To request a Borrowing, the Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 11:00 a.m., New York City time, one Business Day before the date of the proposed Borrowing, provided that any such notice of an ABR Borrowing to finance the reimbursement of an LC Disbursement as contemplated by Section 2.05(b)(iii) may be given not later than 10:00 a.m., New York City time, on the date of the proposed Borrowing.  Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Borrowing Request in a form approved by the Administrative Agent and signed by the Borrower.  Each such telephonic and written Borrowing Request shall specify the following information:

	
  
 
  	
  
                    (i)    the   aggregate amount of such Borrowing;
  
	
  
 
  	
  
 
  
	
   
  	
  
                    (ii)   the   date of such Borrowing, which shall be a Business Day;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
                    (iii)  whether   such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;
  

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                    (iv)  in   the case of a Eurodollar Borrowing, the initial Interest Period to be   applicable thereto, which shall be a period contemplated by the definition of   the term “Interest Period”;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
                    (v)   the   location and number of the Borrower’s account to which funds are to be   disbursed, which shall comply with the requirements of Section 2.06; and
  
	
   
  	
  
 
  
	
  
 
  	
  
                    (vi)   that   as of such date Sections 4.02(a) and (b) are satisfied.
  

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

                    SECTION 2.04.  [Reserved.]

                    SECTION 2.05.  Letters of Credit.  (a)  General.  On the terms and subject to the conditions set forth herein (including, with respect to issuances of Synthetic Letters of Credit, Section 2.21), the Borrower may request the issuance of (i) Synthetic Letters of Credit, at any time and from time to time during the Synthetic LC Availability Period, and (ii) Revolving Letters of Credit, at any time and from time to time during the Revolving Availability Period, in each case for the Borrower’s own account (or for the account of any Subsidiary so long as the Borrower and such Subsidiary are co-applicants and co-obligors), in a form reasonably acceptable to the Administrative Agent and the Issuing Bank.  For purposes hereof, (i) Letters of Credit shall at all times and from time to time be
deemed to be Synthetic Letters of Credit in the amount specified in clause (a) of the definition of Synthetic Letters of Credit and be deemed to be Revolving Letters of Credit only to the extent, and in an amount by which, the aggregate amount of outstanding Letters of Credit exceeds such amount specified in clause (a) of the definition of Synthetic Letters of Credit, (ii) drawings under any Letter of Credit shall be deemed to have been made under Revolving Letters of Credit for so long as, and to the extent that, there are any undrawn Revolving Letters of Credit outstanding (and thereafter shall be deemed to have been made under Synthetic Letters of Credit) and (iii) any Letter of Credit that expires or terminates will be deemed to be a Revolving Letter of Credit, for so long as, and to the extent that, there are outstanding Revolving Letters of Credit immediately prior to such expiration or termination; provided that at any time during which an Event of Default shall have
occurred and be continuing, (A) Letters of Credit shall be deemed to be Revolving Letters of Credit and Synthetic Letters of Credit, (B) drawings under Letters of Credit shall be deemed to have been made under Revolving Letters of Credit and Synthetic Letters of Credit and (C) any Letter of Credit that expires or terminates shall be deemed to be a Revolving Letter of Credit and a Synthetic Letter of Credit, in each case pro rata based upon (1) the Revolving LC Exposure immediately prior to such Event of Default determined in accordance with the foregoing provisions of this Section 2.05(a) and (2) the Synthetic LC Exposure immediately prior to such Event of Default determined in accordance with the foregoing provisions of this Section 2.05(a).  To the extent necessary to implement the foregoing, the identification of a Letter of Credit as a Revolving Letter of Credit or a Synthetic Letter of Credit may change from time to time and a portion of a
Letter of Credit may be deemed to be a Synthetic Letter of Credit and the remainder may be deemed to be a Revolving Letter of Credit.  Notwithstanding the foregoing, the entire face amount of any Letter of Credit with an expiration date after the Revolving Maturity Date shall at all times be deemed to be a Synthetic Letter of Credit, subject to the limitations set forth in clause (i) of the second sentence of this paragraph (a).  In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, the Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control.

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                    (b)  Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions.  To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Bank) to the Issuing Bank (except that the Issuing Bank in respect of Existing Letters of Credit shall not issue additional Letters of Credit and, unless agreed by it, shall not be required to amend, renew or extend an Existing Letter of Credit) and the Administrative Agent (by 10:00 a.m., New York City time, on the fifth Business Day prior to the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, or identifying the
Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with subparagraph (i) of this Section), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit.  If requested by the Issuing Bank, the Borrower (and any other Subsidiary for whose account such Letter of Credit is issued) also shall submit a letter of credit application on the Issuing Bank’s standard form in connection with any request for a Letter of Credit.  A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit, the Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal
or extension (x) the LC Exposure shall not exceed the sum of the aggregate Revolving Commitments and the Total Credit-Linked Deposit, (y) the total Revolving Exposures shall not exceed the aggregate Revolving Commitments and (z) the Synthetic LC Exposure shall not exceed the Total Credit-Linked Deposit.

	
  
 
  	
  
                    (i)  Expiration   Date.  Each Letter of Credit shall expire at or prior to the   close of business on the earlier of (A) with respect to any Revolving   Letter of Credit, (x) the date that is one year after the date of the   issuance of such Letter of Credit (or, in the case of any renewal or extension   thereof, one year after such renewal or extension) and (y) the date that   is five Business Days prior to the Revolving Maturity Date and (B) with   respect to any Synthetic Letter of Credit, (x) the date that is one year   after the date of issuance of such Letter of Credit (or, in the case of any   renewal or extension thereof, one year after such renewal or extension) and   (y) the date that is five Business Days prior to the Synthetic LC   Maturity Date; provided, however,
that a Revolving Letter of   Credit or Synthetic Letter of Credit, as the case may be, may, upon the   written request of the Borrower, include a provision whereby such Letter of   Credit shall be renewed automatically for additional consecutive periods of   one year or less (but not beyond the date that is five Business Days prior to   (x) in the case of the Revolving Letter of Credit, the Revolving   Maturity Date and (y) in the case of the Synthetic Letter of Credit, the   Synthetic LC Maturity Date) unless the Issuing Bank notifies the beneficiary   thereof at least 30 days prior to the then-applicable expiration date   that such Letter of Credit will not be renewed.
  

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                    (ii)  Participations.  (A)  By   the issuance of a Revolving Letter of Credit (or an amendment to a Revolving   Letter of Credit increasing the amount thereof) and without any further   action on the part of the Issuing Bank or the Revolving Lenders, the Issuing   Bank hereby grants to each Revolving Lender, and each Revolving Lender hereby   acquires from the Issuing Bank, a participation in such Letter of Credit   equal to such Lender’s Applicable Percentage of the aggregate amount   available to be drawn under such Letter of Credit.  In consideration and in furtherance of the foregoing, each   Revolving Lender hereby absolutely and unconditionally agrees to pay to the   Administrative Agent, for the account of the Issuing Bank, such Lender’s   Applicable Percentage of each Revolving LC
Disbursement made by the Issuing   Bank and not reimbursed by the Borrower or any other account party on the   date due as provided in paragraph (b)(iii) of this Section, or of any   reimbursement payment required to be refunded to the Borrower or any other   account party for any reason.  Each   Revolving Lender acknowledges and agrees that its obligation to acquire   participations pursuant to this subparagraph (A) in respect of Revolving   Letters of Credit is absolute and unconditional and shall not be affected by   any circumstance whatsoever, including any amendment, renewal or extension of   any Revolving Letter of Credit or the occurrence and continuance of a Default   or reduction or termination of any Commitment, and that each such payment   shall be made without any offset, abatement, withholding or reduction   whatsoever.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (B)  Each   Synthetic LC Lender shall deliver to the Administrative Agent its   Credit-Linked Deposit in full on the Effective Date (and the Administrative   Agent shall deposit such Credit-Linked Deposit in the Certificate of Deposit   Account).  By the issuance or deemed issuance of a Synthetic Letter   of Credit (or an amendment to a Synthetic Letter of Credit increasing the   amount thereof) and without any further action on the part of the Issuing   Bank or the Synthetic LC Lenders, the Issuing Bank hereby grants to each   Synthetic LC Lender, and each Synthetic LC Lender hereby acquires from the   Issuing Bank, a participation in such Letter of Credit (including each   Existing Letter of Credit) equal to such Synthetic LC Lender’s Applicable   Percentage of the aggregate amount available to be drawn under such Letter of   Credit.  In consideration and in   furtherance
of the foregoing, each Synthetic LC Lender hereby absolutely and   unconditionally agrees that if the Issuing Bank makes a Synthetic LC Disbursement   that is not reimbursed by the Borrower on the date due as provided in   paragraph (b)(iii) of this Section, or is required to refund any   reimbursement payment in respect of a Synthetic LC Disbursement to the   Borrower for any reason, the Administrative Agent shall reimburse the Issuing   Bank for the amount of such LC Disbursement from such Synthetic LC Lender’s   Credit-Linked Deposit on deposit in the Certificate of Deposit Account.  In the event the Certificate of Deposit   Account is charged by the Administrative Agent to reimburse the Issuing Bank   for an unreimbursed Synthetic LC Disbursement and so long as no Triggering   Event shall have occurred and be continuing, the Borrower may pay over to the   Administrative Agent in reimbursement thereof an amount equal to the amount   so charged, and such payment shall be deposited by
the Administrative Agent   in the Certificate of Deposit Account.    Each Synthetic LC Lender acknowledges and agrees that its obligation   to acquire and fund participations in Synthetic Letters of Credit pursuant to   this subparagraph (B) is unconditional and irrevocable and shall not be   affected by any circumstance whatsoever, including any amendment, renewal or   extension of any Synthetic Letter of Credit or the occurrence and continuance   of a Default or the return of the Credit-Linked Deposits, and that each such   payment shall be made without any offset, abatement, withholding or reduction   whatsoever.  Without limiting the   foregoing, each Synthetic LC Lender irrevocably authorizes the Administrative   Agent to apply amounts of its Credit-Linked Deposit as provided in this   subparagraph (B) and Section 2.18(f).
  

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                    (iii)  Reimbursement.  If   the Issuing Bank shall make any LC Disbursement in respect of a Letter of   Credit, the Borrower shall reimburse such LC Disbursement by paying (or   causing any other account party in respect of such Letter of Credit to pay)   to the Administrative Agent an amount equal to such LC Disbursement not later   than 3:00 p.m., New York City time, on the date that such LC Disbursement   is made, if the Borrower shall have received notice of such LC Disbursement   prior to 10:00 a.m., New York City time, on such date, or, if such   notice has not been received by the Borrower prior to such time on such date,   then not later than (i) 3:00 p.m., New York City time, on the   Business Day that the Borrower receives such notice, if such notice is   received prior to
10:00 a.m., New York City time, on the day of   receipt, or (ii) 12:00 noon, New York City time, on the   Business Day immediately following the day that the Borrower receives such   notice, if such notice is not received prior to 10:00 a.m.,   New York City time, on the day of receipt, provided that, if such   LC Disbursement is not less than $1,000,000, the Borrower may, subject to the   conditions to borrowing set forth herein, request in accordance with   Section 2.03 that such payment be financed with an ABR Borrowing in an   equivalent amount and, to the extent so financed, the Borrower’s obligation   to make such payment shall be discharged and replaced by the resulting ABR   Borrowing.
  
	
  
 
  	
  
 
  
	
   
  	
  
          (A)  If   the Borrower fails to make (or cause another account party to make) any   payment due under paragraph (b)(iii) above with respect to a Revolving   Letter of Credit when due, the Administrative Agent shall notify each   Revolving Lender of the applicable Revolving LC Disbursement, the payment   then due from the Borrower in respect thereof and such Lender’s Applicable   Percentage thereof.  Promptly   following receipt of such notice, each Revolving Lender shall pay to the   Administrative Agent its Applicable Percentage of the payment then due from   the Borrower, in the same manner as provided in Section 2.06 with   respect to Loans made by such Lender and the Administrative Agent shall   promptly pay to the Issuing Bank the amounts so received by it from the   Revolving Lenders.  Promptly following   receipt by the Administrative Agent of any payment from the
Borrower pursuant   to this paragraph, the Administrative Agent shall distribute such payment to   the Issuing Bank or, to the extent that Revolving Lenders have made payments   pursuant to this paragraph to reimburse the Issuing Bank, then to such   Lenders and the Issuing Bank as their interests may appear.  Any payment made by a Revolving Lender   pursuant to this paragraph to reimburse the Issuing Bank for any Revolving LC   Disbursement (other than the funding of ABR Loans as contemplated above)   shall not constitute a Loan and shall not relieve the Borrower (or any other   account party in respect of the relevant Revolving Letter of Credit) of its   obligation to reimburse such LC Disbursement.
  

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          (B)  If   the Borrower fails to make (or cause another account party to make) any   payment due under paragraph (b)(iii) above with respect to a Synthetic   Letter of Credit, the Administrative Agent shall notify each Synthetic LC   Lender of the applicable Synthetic LC Disbursement, the payment then due from   the Borrower in respect thereof and such Lender’s Applicable Percentage   thereof, and the Administrative Agent shall promptly pay to the Issuing Bank   each Synthetic LC Lender’s Applicable Percentage of such LC Disbursement from   such Synthetic LC Lender’s Credit-Linked Deposit.  Promptly following receipt by the Administrative Agent of any   payment by the Borrower in respect of any Synthetic LC Disbursement, the   Administrative Agent shall distribute such payment to the Issuing Bank or, to   the extent payments have been made from the Credit-Linked Deposits,
to the   Certificate of Deposit Account to be added to the Credit-Linked Deposits of   the Synthetic LC Lenders in accordance with their Applicable   Percentages.  The Borrower   acknowledges that each payment made pursuant to this subparagraph (B) in   respect of any Synthetic LC Disbursement is required to be made for the benefit   of the distributees indicated in the immediately preceding sentence.  Any payment made from the Certificate of   Deposit Account, or from funds of the Administrative Agent, pursuant to this   paragraph to reimburse the Issuing Bank for any Synthetic LC Disbursement   shall not constitute a loan and shall not relieve the Borrower (or any other   account party in respect of the relevant Synthetic Letter of Credit) of its   obligation to reimburse such LC Disbursement.
  
	
   
  	
  
 
  
	
  
 
  	
  
                    (iv)    Obligations Absolute.  The Borrower’s   obligation to reimburse LC Disbursements as provided in   paragraph (b)(iii) of this Section shall be absolute, unconditional   and irrevocable, and shall be performed strictly in accordance with the terms   of this Agreement under any and all circumstances whatsoever and irrespective   of (1) any lack of validity or enforceability of any Letter of Credit or   this Agreement, or any term or provision therein, (2) any draft or other   document presented under a Letter of Credit proving to be forged, fraudulent   or invalid in any respect or any statement therein being untrue or inaccurate   in any respect, (3) payment by the Issuing Bank under a Letter of Credit   against presentation of a draft or other document that does not comply with   the
terms of such Letter of Credit (except as otherwise provided below) or   (4) any other event or circumstance whatsoever, whether or not similar   to any of the foregoing, that might, but for the provisions of this Section,   constitute a legal or equitable discharge of, or provide a right of setoff   against, the Borrower’s obligations hereunder.  
  

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None of the   Administrative Agent, the Lenders, the Issuing Bank, and any of their   respective Related Parties, shall have any liability or responsibility by   reason of or in connection with the issuance or transfer of any Letter of   Credit or any payment or failure to make any payment thereunder (irrespective   of any of the circumstances referred to in the preceding sentence), or any   error, omission, interruption, loss or delay in transmission or delivery of   any draft, notice or other communication under or relating to any Letter of   Credit (including any document required to make a drawing thereunder), any   error in interpretation of technical terms or any consequence arising from   causes beyond the control of the Issuing Bank, provided that the   foregoing shall not be construed to excuse the Issuing Bank from liability to   the Borrower to the extent of any direct or actual damages (as opposed to   special, indirect, consequential or
punitive damages, claims in respect of   which are hereby waived by the Borrower to the extent permitted by applicable   law) suffered by the Borrower that are the result of the Issuing Bank’s   failure to exercise due care when determining whether drafts and other   documents presented under a Letter of Credit comply with the terms thereof.   The parties hereto expressly agree that, in the absence of gross negligence   or wilful misconduct on the part of the Issuing Bank that resulted in such   damages to the Borrower (as determined in a final non appealable judgment by   a court of competent jurisdiction), the Issuing Bank shall be deemed to have   exercised due care in each such determination.  In furtherance of the foregoing and without limiting the   generality thereof, the parties agree that, with respect to documents   presented that appear on their face to be in substantial compliance with the   terms of a Letter of Credit, the Issuing Bank may, in its sole discretion,   either
accept and make payment upon such documents without responsibility for   further investigation, regardless of any notice or information to the   contrary, or refuse to accept and make payment upon such documents if such   documents are not in strict compliance with the terms of such Letter of Credit,   and any such acceptance or refusal shall be deemed not to constitute gross   negligence or wilful misconduct.
  
	
   
  	
  
 
  
	
  
 
  	
  
                    (v)   Disbursement   Procedures.  The Issuing Bank shall, promptly following its   receipt thereof, examine all documents purporting to represent a demand for   payment under a Letter of Credit.  The   Issuing Bank shall promptly notify the Administrative Agent and the Borrower   by telephone (confirmed by telecopy) of such demand for payment and whether   the Issuing Bank has made or will make an LC Disbursement thereunder, provided   that any failure to give or delay in giving such notice shall not relieve the   Borrower of its obligation to reimburse the Issuing Bank and the Revolving   Lenders or the Administrative Agent, for the account of the Synthetic LC   Lenders, as the case may be, with respect to any such LC Disbursement in   accordance with paragraph (b)(iii) of this Section.

 

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                    (vi)  Interim   Interest.  If the Issuing Bank shall make any LC Disbursement,   then, unless the Borrower shall reimburse such LC Disbursement in full on the   date such LC Disbursement is made, the unpaid amount thereof shall bear   interest, for each day from and including the date such LC Disbursement is   made to but excluding the date that the Borrower (or any other account party)   reimburses such LC Disbursement, at (1) in the case of a Revolving LC   Disbursement, the rate per annum then applicable to ABR Loans and (2) in   the case of a Synthetic LC Disbursement, a rate per annum equal to the   Alternate Base Rate plus 1.75%; provided that, if the Borrower fails   to reimburse (or cause another account party to reimburse) such LC   Disbursement when due pursuant to paragraph (b)(iii) of
this Section,   then Section 2.13(c) shall apply.    Interest accrued pursuant to this paragraph shall be for the   account of the Issuing Bank, except that interest accrued on and after the   date of payment by any Revolving Lender pursuant to paragraph (b)(iii)(A)   of this Section or from the Credit-Linked Deposit of any Synthetic LC Lender   pursuant to paragraph (b)(iii)(B) of this Section to reimburse the   Issuing Bank shall be for the account of such Revolving Lender or Synthetic   LC Lender, as applicable, to the extent of such payment.
  
	
   
  	
  
 
  
	
  
 
  	
  
                    (vii)  Replacement   of the Issuing Bank.  The Issuing Bank may be replaced at any   time by written agreement among the Borrower, the Administrative Agent, the   replaced Issuing Bank and the successor Issuing Bank.  The Administrative Agent shall notify the Lenders   of any such replacement of the Issuing Bank.    At the time any such replacement shall become effective, the Borrower   shall pay all unpaid fees accrued for the account of the replaced Issuing   Bank pursuant to Section 2.12(b).    From and after the effective date of any such replacement,   (1) the successor Issuing Bank shall have all the rights and obligations   of the Issuing Bank under this Agreement with respect to Letters of Credit to   be issued thereafter and (2) references herein to the term “Issuing
Bank”   shall be deemed to refer to such successor or to any previous Issuing Bank,   or to such successor and all previous Issuing Banks, as the context shall   require.  After the replacement of the   Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto   and shall continue to have all the rights and obligations of the Issuing Bank   under this Agreement with respect to Letters of Credit issued by it prior to   such replacement, but shall not be required to issue additional Letters of   Credit.
  

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                    (viii)  Cash   Collateralization.  If any Event of Default shall occur and be   continuing, on the next Business Day after that date (A) on which the   Borrower receives notice from the Administrative Agent or the Required   Lenders demanding the deposit of cash collateral pursuant to this paragraph   or (B) the maturity of the Loans has been accelerated, the Borrower   shall deposit in an account with the Administrative Agent, in the name of the   Administrative Agent and for the benefit of the Lenders, an amount in cash   equal to the LC Exposure as of such date plus any accrued and unpaid   interest thereon, provided that the obligation to deposit such cash   collateral shall become effective immediately, and such deposit shall become   immediately due and payable, without demand or other
notice of any kind, upon   the occurrence of any Event of Default with respect to the Borrower described   in clause (h) or (i) of Section 7.01.  Each such deposit shall be held by the Administrative Agent as   collateral for the payment and performance of the obligations of the Borrower   under this Agreement.  The   Administrative Agent shall have exclusive dominion and control, including the   exclusive right of withdrawal, over such account.  Other than any interest earned on the investment of such   deposits, which investments shall be made at the option and sole discretion   of the Administrative Agent and at the Borrower’s risk and expense, such   deposits shall not bear interest.    Interest or profits, if any, on such investments shall accumulate in   such account.  Moneys in such account   shall be applied by the Administrative Agent to reimburse the Issuing Bank   for LC Disbursements for which it has not been reimbursed and, to the extent   not so
applied, shall be held for the satisfaction of the reimbursement   obligations of the Borrower for the LC Exposure at such time or, if the   maturity of the Loans has been accelerated (but subject to the consent of   Synthetic LC Lenders and Revolving Lenders with LC Exposure representing   greater than 50% of the aggregate LC Exposure), be applied to satisfy other   obligations of the Borrower under this Agreement.  If the Borrower is required to provide an amount of cash   collateral hereunder as a result of the occurrence of an Event of Default and   so long as no Triggering Event shall have occurred and be continuing, such   amount (to the extent not applied as aforesaid) shall be returned to the   Borrower within three Business Days after all Events of Default have been   cured or waived.  If the Borrower is   required to provide an amount of cash collateral hereunder pursuant to   Section 2.11(b), such amount (to the extent not applied as aforesaid)   shall be returned to the
Borrower as and to the extent that, after giving   effect to such return, the Borrower would remain in compliance with   Section 2.11(b) and no Triggering Event or Default shall have occurred   and be continuing.
  

                    SECTION 2.06.  Funding of Borrowings.  (a)  Each Revolving Lender shall make each Loan to be made by it hereunder on the proposed date thereof (in accordance with section 2.03) by wire transfer of immediately available funds by 12:00 noon, New York City time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders.  The Administrative Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower maintained with the Administrative Agent in Pittsburgh, Pennsylvania and designated by the Borrower in the applicable Borrowing Request, provided that ABR Loans made to finance the reimbursement of an LC Disbursement as provided in Section 2.05(b)(iii) shall
be remitted by the Administrative Agent to the Issuing Bank or, to the extent that Revolving Lenders have made payments pursuant to Section 2.05(b)(iii) to reimburse the Issuing Bank, then to such Lenders and the Issuing Bank as their interests may appear.

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

                    SECTION 2.07.  Interest Elections.  (a)  Each Borrowing initially shall be of the Type specified in the applicable Borrowing Request or designated by Section 2.03 and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request or designated by Section 2.03.  Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section.  The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Revolving Lenders holding the Loans comprising such Borrowing, and the Loans
comprising each such portion shall be considered a separate Borrowing.

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

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

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

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

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

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

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

                    SECTION 2.08.  Termination and Reduction of Commitments; Return of Credit-Linked Deposits.  (a)  Unless previously terminated, the Revolving Commitments shall terminate at 5:00 p.m., New York City time, on the Revolving Maturity Date.  So long as no Triggering Event shall occurred and be continuing, any amount of the Credit-Linked Deposits held in the Certificate of Deposit Account will be returned to the Synthetic LC Lenders on the Synthetic LC Maturity Date.

                    (b)  The Borrower may at any time terminate, or from time to time reduce, the Revolving Commitments, provided that (i) each reduction of the Revolving Commitments shall be in an amount that is an integral multiple of $1,000,000 and not less than $1,000,000 and (ii) the Borrower shall not terminate or reduce the Revolving Commitments if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 2.11, the aggregate Revolving Exposure (excluding the portion of the Revolving Exposure attributable to the outstanding Revolving Letters of Credit if the Borrower has made arrangements satisfactory to the Administrative Agent and the Issuing Bank with respect to such Letters of Credit and the Issuing Bank has released the Revolving Lenders from their participation obligations with respect to
such Letters of Credit) would exceed the aggregate Revolving Commitments.  The Borrower may at any time or from time to time direct the Administrative Agent to reduce the Total Credit-Linked Deposits; provided that (i) each reduction occurs at the end of a Benchmark LIBOR Interest Period, (ii) each reduction of the Credit-Linked Deposits shall be in an amount that is an integral multiple of $1,000,000 and not less than $1,000,000 and (iii) the Borrower shall not direct the Administrative Agent to reduce the Total Credit-Linked Deposits if, after giving effect to such reduction (and to the provisions of Section 2.05(a)), the aggregate Synthetic LC Exposure would exceed the Total Credit-Linked Deposit or the Revolving Exposure would exceed the total Revolving Commitments.  In the event the Total Credit-Linked Deposits shall be reduced as provided in the preceding sentence and so long as no Triggering Event shall have occurred and be continuing, the
Administrative Agent shall return all amounts in the Certificate of Deposit Account in excess of the reduced Total Credit-Linked Deposit to the Synthetic LC Lenders, ratably in accordance with their Applicable Percentages of the Total Credit-Linked Deposit (as determined immediately prior to such reduction).

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                    (c)  The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Revolving Commitments or the Total Credit-Linked Deposit under paragraph (b) of this Section at least three Business Days for Revolving Commitments and thirty days for the Total Credit-Linked Deposit prior to the effective date of such termination or reduction, specifying such election and the effective date thereof.  Promptly following receipt of any such notice, the Administrative Agent shall advise the Lenders of the contents thereof.  Each notice delivered by the Borrower pursuant to this Section shall be irrevocable, provided that a notice of termination of the Revolving Commitments and return of the Total Credit-Linked Deposits delivered by the Borrower may state that such notice is conditioned upon
the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied.  Any termination or reduction of the Revolving Commitments or reduction of the Total Credit-Linked Deposit shall be permanent.  Each termination or reduction of the Revolving Commitments or reduction of the Total Credit-Linked Deposit shall be made ratably among the Lenders in accordance with their Applicable Percentage of Revolving Commitments or Applicable Percentage of Total Credit-Linked Deposits, as the case may be.

                    SECTION 2.09.  Repayment of Loans; Evidence of Debt.  (a)  The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Revolving Lender the then unpaid principal amount of each Loan of such Lender on the Revolving Maturity Date.

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

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

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

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

                    SECTION 2.10.  [Reserved.]

                    SECTION 2.11.  Prepayment of Loans; Early Return of Credit-Linked Deposits.  (a)  The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to the requirements of this Section.

                    (b)  In the event and on such occasion that the Revolving Exposures exceed the aggregate Revolving Commitments, the Borrower shall prepay Borrowings (or, if no such Borrowings are outstanding, deposit cash collateral in an account with the Administrative Agent pursuant to Section 2.05(b)(viii)) in an aggregate amount equal to such excess.

                    (c)  In the event and on each occasion that any Net Proceeds are received by or on behalf the Borrower or any Subsidiary in respect of any Prepayment Event, the Borrower shall, within three Business Days after such Net Proceeds are received apply an amount, equal to (i) in the case of a Prepayment Event described in clause (c) of the definition of the term “Prepayment Event”, 50% of the amount of such Net Proceeds and (ii) in the case of all other Prepayment Events, 100% of the amount of such Net Proceeds (such amount to be applied the “Prepayment Amount”) as follows:  (A) first, to prepay Borrowings (without a corresponding reduction in the Revolving Commitments) and (B) second, to the extent the Prepayment Amount exceeds the amount applied as required in
clause (A) above, deposit cash collateral in an account with the Administrative Agent for the benefit of the Lenders who have LC Exposure pursuant to Section 2.05(b)(viii), provided that in the case of any event described in clause (a) or (b) of the definition of the term “Prepayment Event”, if the Borrower shall deliver to the Administrative Agent a certificate of a Financial Officer to the effect that the Borrower and the Subsidiaries intend to apply the Net Proceeds from such event (or a portion thereof specified in such certificate), within 360 days after receipt of such Net Proceeds, to acquire real property, equipment or other tangible assets to be used in the business of the Borrower and the Subsidiaries, and certifying that no Default has occurred and is continuing, then no prepayment shall be required pursuant to this paragraph in respect of the Net Proceeds in respect of such event (or the portion of such Net Proceeds specified in such certificate, if
applicable) except to the extent of any such Net Proceeds therefrom that have not been so applied by the end of such 360-day period, at which time a prepayment shall be required in an amount equal to such Net Proceeds that have not been so applied.

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                    (d)  Prior to any optional or mandatory prepayment of Borrowings hereunder, the Borrower shall select the Borrowing or Borrowings to be prepaid and shall specify such selection in the notice of such prepayment pursuant to paragraph (e) of this Section.

                    (e)  The Borrower shall notify the Administrative Agent by telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of prepayment or (ii) in the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time, one Business Day before the date of prepayment.  Each such notice shall be irrevocable and shall specify the prepayment date, the principal amount of each Borrowing or portion thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably detailed calculation of the amount of such prepayment, provided that, if a notice of optional prepayment is given in connection with a conditional notice of termination of
the Revolving Commitments as contemplated by Section 2.08, then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.08.  Promptly following receipt of any such notice, the Administrative Agent shall advise the applicable Lenders of the contents thereof.  Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.02, except as necessary to apply fully the required amount of a mandatory prepayment.  Except as otherwise set forth herein, each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing.  Each optional prepayment of Borrowings made pursuant to Section 2.11(a) shall be in an amount that is an integral multiple of $1,000,000 and not less than $1,000,000 (or the entire outstanding principal amount of any Borrowings, if such amount is less than
$1,000,000).  Prepayments shall be accompanied by accrued interest to the extent required by Section 2.13.

                    SECTION 2.12.  Fees.  (a)  The Borrower agrees to pay to the Administrative Agent for the account of each Revolving Lender a commitment fee, which shall accrue at the rate of 0.50% per annum on the average daily unused amount of the Revolving Commitment of such Lender during the period from and including the Effective Date to but excluding the date on which such Revolving Commitment terminates.  Accrued commitment fees shall be payable in arrears on the first Business Day following the last day of March, June, September and December of each year and on the date on which the Revolving Commitments terminate, commencing on the first such date to occur after the date hereof.  All commitment fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).  For purposes of computing commitment fees, a Revolving Commitment of a Revolving Lender shall be deemed to be used to the extent of the outstanding Loans and Revolving LC Exposure of such Lender.

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                    (b)  The Borrower agrees to pay (i) to the Administrative Agent for the account of each Revolving Lender a participation fee with respect to such Lender’s participations in Revolving Letters of Credit, which shall accrue at the same Applicable Rate used to determine the interest rate applicable to Eurodollar Loans on the average daily amount of such Lender’s Revolving LC Exposure (excluding any portion thereof attributable to unreimbursed Revolving LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date on which such Lender’s Revolving Commitment terminates and the date on which such Lender ceases to have any Revolving LC Exposure and (ii) to the Issuing Bank a fronting fee, which shall accrue at a rate equal to 0.25% per annum on the average daily amount
of the Revolving LC Exposure (excluding any portion thereof attributable to unreimbursed Revolving LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date of termination of the Revolving Commitments and the date on which there ceases to be any Revolving LC Exposure, as well as the Issuing Bank’s standard fees with respect to the issuance, amendment, renewal or extension of any Revolving Letter of Credit or processing of drawings thereunder.  Participation fees and fronting fees accrued up to the last day of March, June, September and December of each year shall be payable on the first Business Day following such last day, commencing on the first such date to occur after the Effective Date, provided that all such fees shall be payable on the date on which the Revolving Commitments terminate and any such fees accruing after the date on which the Revolving Commitments terminate shall be payable on demand.  Any other fees
payable to the Issuing Bank pursuant to this paragraph shall be payable within 10 days after demand.  All participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

                    (c)  The Borrower agrees to pay (i) to the Administrative Agent for the account of each Synthetic LC Lender a participation fee with respect to such Lender’s participations in Synthetic Letters of Credit, which shall accrue at the rate of (a) 2.75% per annum plus (b) 0.25% per annum on the average daily amount of such Synthetic LC Lender’s Credit-Linked Deposit during the period from and including the Effective Date to but excluding the date on which the entire amount of such Lender’s Credit-Linked Deposit is returned to it and (ii) to the Issuing Bank a fronting fee, which shall accrue at the rate equal to 0.25% per annum on the average daily amount of the Synthetic LC Exposure (excluding any portion thereof attributable to unreimbursed Synthetic LC Disbursements) during the period from and including
the Effective Date to but excluding the date on which there ceases to be any Synthetic LC Exposure, as well as the Issuing Bank’s standard fees with respect to the issuance, amendment, renewal or extension of any Synthetic Letter of Credit or processing of drawings thereunder.  Participation fees and fronting fees in respect of Synthetic Letters of Credit accrued through and including the last day of March, June, September and December of each year shall be payable on the first Business Day following such last day, commencing on the first such date to occur after the Effective Date; provided that all such fees shall be payable on the date no later than which the Credit-Linked Deposits are returned in full to the Synthetic LC Lenders and any such fees accruing after the date on which the Credit-Linked Deposits are returned to the Synthetic LC Lenders shall be payable on demand.  Any other fees payable to the Issuing Bank pursuant to this paragraph shall be payable within
10 days after demand.  All participation fees and fronting fees in respect of Synthetic Letters of Credit shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

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

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

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

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

                    (c)  Notwithstanding the foregoing, if any principal of or interest on any Loan or any LC Disbursement or any fee or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2.00% plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section, (ii) in the case of overdue unreimbursed amounts with respect to any LC Disbursement, 2.00% plus the rate otherwise applicable to such LC Disbursement as provided in Section 2.05(b) or (iii) in the case of any other amount, 2.00% plus the rate applicable to ABR Loans as provided in
paragraph (a) of this Section.

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

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                    (e)  All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate and interest on Credit-Linked Deposits shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day).  The applicable Alternate Base Rate or Euro-Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

                    SECTION 2.14.  Alternate Rate of Interest.  If prior (i) to the commencement of any Interest Period for a Eurodollar Borrowing or (ii) the determination of the Benchmark LIBOR Rate on any day:

	
   
  	
  
          (a)  the   Administrative Agent determines (which determination shall be conclusive   absent manifest error) that adequate and reasonable means do not exist for   ascertaining the Euro-Rate for such Interest Period or the Benchmark LIBOR   Rate for such day; or
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (b)  the   Administrative Agent is advised by the Required Lenders that the Euro-Rate   for such Interest Period or the Benchmark LIBOR Rate for such day will not   adequately and fairly reflect the cost to such Lenders of making or   maintaining their Loans included in such Borrowing or such Credit-Linked   Deposit, as applicable, for such Interest Period or such day, as the case may   be;
  

then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective, (ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing and (iii) the Credit-Linked Deposits shall be invested so as to earn a return equal to the greater of the Federal Funds Open Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

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

	
  
 
  	
  
               (i)   impose,   modify or deem applicable any reserve, special deposit, compulsory loan,   insurance charge or similar requirement against assets of, deposits with or   for the account of, or credit extended by, any Lender, the Certificate of   Deposit Issuer or the Issuing Bank (except any such reserve requirement   reflected in the Euro-Rate); or
  
	
  
 
  	
  
 
  
	
  
 
  	
  
               (ii)  impose   on any Lender, the Certificate of Deposit Issuer, the Issuing Bank or the   London interbank market any other condition, cost or expense affecting this   Agreement, the Certificate of Deposit, Eurodollar Loans made by such Lender,   any Letter of Credit or participation therein or any Credit-Linked Deposit;
  

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

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

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

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

                    SECTION 2.16.  Break Funding Payments.  In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.11(d) and is revoked in accordance therewith), (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.19 or Section 9.02(b), or (e) monies are
withdrawn from the Certificate of Deposit Account to reimburse the Issuing Bank for an unreimbursed Synthetic LC Disbursement, then, in any such event, the Borrower shall compensate each Lender or the Certificate of Deposit Issuer, as the case may be, for the loss, cost and expense attributable to such event.  In the case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest (without giving effect to Applicable Margins) that would have accrued on the principal amount of such Loan had such event not occurred, at the Euro-Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest that would accrue on
such principal amount for such period at the interest rate that such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the eurodollar market.  A certificate of any Lender or the Certificate of Deposit Issuer setting forth any amount or amounts that such Lender or the Certificate of Deposit Issuer is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error.  The Borrower shall pay such Lender or the Certificate of Deposit Issuer the amount shown as due on any such certificate within 10 days after receipt thereof.

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

                    (b)  Without limiting the provisions of paragraph (a) above, the Borrower shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

                    (c)  Any and all payments by or on account of any obligation of the Administrative Agent pursuant to Section 2.21(b) hereunder shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that if the Administrative Agent shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the Administrative Agent shall so notify the Borrower and advise it of the additional amount required to be paid so that the sum payable by the Administrative Agent pursuant to Section 2.21(b) after making all required deductions (including deductions applicable to additional sums payable under this Section) to the Synthetic LC Lenders is an amount from the Administrative Agent equal to the sum they would have received from the Administrative Agent had no
deductions been made, (ii) the Borrower shall pay such additional amount to the Administrative Agent, (iii) the Administrative Agent shall make all required deductions, (iv) the Administrative Agent shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law and (v) the Borrower shall indemnify, within 10 days after written demand therefor, the Administrative Agent for the full amount of any deductions paid by the Administrative Agent with respect to any payments made on account of any obligation of the Administrative Agent pursuant to Section 2.21(b).

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

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

                    (f)  Each Lender or assignee or participant of a Lender that is not incorporated under the laws of the United States of America or a state thereof (and, upon the written request of the Administrative Agent, each other Lender or assignee or participant of a Lender) agrees that it will deliver to each of the Borrower and the Administrative Agent two duly completed appropriate valid Withholding Certificates (as defined under § 1.1441-1(c)(16) of the Income Tax Regulations (the “Regulations”)) certifying its status (i.e., U.S. or foreign person) and, if appropriate, making a claim of reduced, or exemption from, U.S. withholding tax on the basis of an income tax treaty or an exemption provided by the Code.  The term “Withholding Certificate” means a Form W-9; a Form W-8BEN; a
Form W-8ECI; a Form W-8IMY and the related statements and certifications as required under § 1.1441-1(e)(2) and/or (3) of the Regulations; a statement described in § 1.871-14(c)(2)(v) of the Regulations; or any other certificates under the Code or Regulations that certify or establish the status of a payee or beneficial owner as a U.S. or foreign person.  Each Lender, assignee or participant required to deliver to the Borrower and the Administrative Agent a Withholding Certificate pursuant to the preceding sentence shall deliver such valid Withholding Certificate as follows:  (i) each Lender which is a party hereto on the Effective Date shall deliver such valid Withholding Certificate at least five Business Days prior to the first date on which any interest or fees are payable by the Borrower hereunder for the account of such Lender; (ii) each assignee or participant shall deliver such valid Withholding Certificate at least five Business Days
before the effective date of such assignment or participation (unless the Administrative Agent in its sole discretion shall permit such assignee or participant to deliver such valid Withholding Certificate less than five Business Days before such date in which case it shall be due on the date specified by the Administrative Agent).  Each Lender, assignee or participant which so delivers a valid Withholding Certificate further undertakes to deliver to each of the Borrower and the Administrative Agent two additional copies of such Withholding Certificate (or a successor form) on or before the date that such Withholding Certificate expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent Withholding Certificate so delivered by it, and such amendments thereto or extensions or renewals thereof as may be reasonably requested by the Borrower or the Administrative Agent.  Notwithstanding the submission of a Withholding Certificate claiming a
reduced rate of or exemption from U.S. withholding tax, the Administrative Agent shall be entitled to withhold U.S. federal income taxes at the full 30% withholding rate if the Administrative Agent determines, in its sole discretion, it is required to do so under the due diligence requirements imposed upon a withholding agent under § 1.1441-7(b) of the Regulations.  Further, the Administrative Agent is indemnified under § 1.1461-1(e) of the Regulations against any claims and demands of any Lender or assignee or participant of a Lender for the amount of any tax it deducts and withholds in accordance with regulations under § 1441 of the Code.

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                    (g)  If the Administrative Agent, the Issuing Bank or a Lender determines, in its sole discretion, that it has received a refund of any Indemnified Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section, it shall pay over such refund to the Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section with respect to the Indemnified Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent, the Issuing Bank or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that the Borrower, upon the request of the Administrative
Agent, the Issuing Bank or such Lender, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent, the Issuing Bank or such Lender in the event the Administrative Agent, the Issuing Bank or such Lender is required to repay such refund to such Governmental Authority.  This Section shall not be construed to require the Administrative Agent, the Issuing Bank or any Lender to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the Borrower or any other Person.

                    SECTION 2.18.  Payments Generally; Pro Rata Treatment; Sharing of Setoffs.  (a)  The Borrower shall make each payment required to be made by it under any Loan Document (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section 2.15, 2.16 or 2.17, or otherwise) prior to the time expressly required hereunder or under such other Loan Document for such payment (or, if no such time is expressly required, prior to 12:00 noon, New York City time), on the date when due, in immediately available funds, without setoff or counterclaim.  Any amounts received after such time on any date may, in the sole discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest
thereon.  All such payments shall be made to the Administrative Agent at its offices at 249 Fifth Avenue, Pittsburgh, Pennsylvania 15222, except payments to be made directly to the Issuing Bank as expressly provided herein and except that payments pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons entitled thereto and payments pursuant to other Loan Documents shall be made to the Persons specified therein.  The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient as promptly as practicable following receipt thereof.  If any payment under any Loan Document shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension.  All payments under each Loan
Document shall be made in dollars.

                    (b)  If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, interest, fees and unreimbursed LC Disbursements then due hereunder such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due to such parties.

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                    (c)  If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or participations in LC Disbursements resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Loans and participations in LC Disbursements and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Loans and participations in LC Disbursements of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and participations in LC Disbursements,
provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, (ii) if a Triggering Event is in existence, the setoff, counterclaim or other payment shall be paid over by such Lender to the Administrative Agent and applied in accordance with the provisions of Section 2.18(f) below and (iii) the provisions of this paragraph shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or participant, other than to the Borrower or any Subsidiary or other Affiliate thereof (as to which the provisions of this paragraph shall apply).  The
Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

                    (d)  Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Bank hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption and in its sole discretion, distribute to the Lenders or the Issuing Bank, as the case may be, the amount due.  In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the Issuing Bank, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or Issuing Bank with interest thereon, for each day from
and including the date such amount is distributed to it but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Open Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

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                    (e)  If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.04(c), 2.05(d) or (e), 2.06(a) or (b), 2.18(d) or 9.03(c), then the Administrative Agent may, in its sole discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.

                    (f)  Notwithstanding anything to the contrary set forth above, from and after the date of a Triggering Event and until all obligations of the Loan Parties to the Lenders under the Loan Documents have been paid in full, any and all payments and proceeds received by the Administrative Agent or any Lender, whether voluntarily from the Borrower or from any sale or other disposition of all or a part of the Collateral or the exercise of any other remedy by the Administrative Agent, shall be paid by the Administrative Agent to the Lenders as follows:

	
  
 
  	
  
               (i)  first,   to reimburse the Administrative Agent and the Lenders for out-of-pocket   costs, expenses and disbursements, including reasonable attorneys’ fees and   expenses, incurred by the Administrative Agent or the Lenders in connection   with fees and expenses incurred in realizing on the Collateral or collection   of any obligations of any of the Loan Parties under any of the Loan   Documents, including advances made by the Lenders or any one of them or the   Administrative Agent or otherwise for the reasonable maintenance,   preservation, protection or enforcement of, or realization upon, the   Collateral, including advances for taxes, insurance, repairs and the like and   reasonable expenses incurred to sell or otherwise realize on, or prepare for   sale or other realization on, any of the Collateral;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
               (ii)  second,   to the ratable payment (based upon the obligations outstanding to the Lenders   at the time of the Triggering Event) of the obligations then due and unpaid   of the Loan Parties to the Lenders under the Loan Documents (including   obligations owing under the specified swap agreements, unreimbursed LC   Disbursements and cash collateral for the Letters of Credit) whether of   principal, interest, fees, expenses or otherwise; provided that in the event   that there are undrawn Letters of Credit at such time, the payments otherwise   payable under this clause (b) attributable to the obligations represented by   the undrawn Letters of Credit shall be retained by the Administrative Agent,   to be held as cash collateral, for the ratable portion of the obligations   consisting of undrawn Letters of Credit, it being understood that (x) if a   Letter of
Credit is drawn upon, the Administrative Agent shall pay to the   Issuing Bank, to the extent necessary to reimburse the Issuing Bank for such   draw, the amount of cash held as collateral for such Letter of Credit   pursuant to this clause and (y) if and to the extent that any Letter of Credit   shall expire or terminate, the amount of cash retained as collateral   therefore pursuant to the application of this clause shall be applied by the   Administrative Agent under this clause (b) to ensure that each of the Lenders   shall receive a ratable share of all payments made subsequent to the date of   the Trigger Event after taking into account the reduction in the obligations   associated with the  termination or   expiration of such Letter of Credit; and
  
	
   
  	
  
 
  
	
  
 
  	
  
               (iii)  the   balance, if any, as required by Law.
  

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For purposes of determining the proportionate amounts of all obligations sharing in any distribution under clause (f) of this Section 2.18 the amount of the outstanding obligations attributable to the undrawn amount of all outstanding Letters of Credit shall be reduced by the amount of cash (specifically excluding the Credit-Linked Deposits) held as collateral therefore by the Administrative Agent on the date of the Triggering Event.

In the event that the sum of all cash held by the Administrative Agent as collateral for the Letters of Credit plus the Credit-Linked Deposits exceed the undrawn amount of the Letters of Credit, the Administrative Agent may release a portion of the Credit-Linked Deposits equal to the excess amount to be shared among the Lenders in accordance with the following paragraph.  

To the extent that monies are payable to the Revolving Lenders or the Synthetic LC Lenders under clause (ii) above or released by the Administrative Agent pursuant to the preceding paragraph (a “Distribution”), the Lenders agree that such Distribution shall be shared ratably among the Lenders based upon the sum of the Revolving Exposures and the Credit-Linked Deposits (including any unreimbursed Credit-Linked Deposits used to fund a Synthetic LC Disbursement) in existence at the time of the Triggering Event.  In the event that a Letter of Credit expires or is terminated subsequent to the date of a Triggering Event, the Distributions payable under this paragraph shall, in addition to the adjustments occurring under clause (ii) above, be reallocated among the Lenders so that all Distributions occurring subsequent to the date of the Triggering Event are shared ratably among the Lenders based upon the revised Revolving Exposures and the Credit-Linked
Deposits.  If the Administrative Agent shall have insufficient cash collateral, when combined with Credit-Linked Deposits, to reimburse the Issuing Bank for any drawing on a Letter of Credit, then the Revolving Lenders shall immediately fund, in proportion to each Revolving Lender’s Applicable Share, the amount necessary to reimburse the Issuing Bank for such drawing (such funding by the Revolving Lenders, since previously included in Revolving Exposures, does not cause any reallocation under this Section 2.18 among the Revolving Lenders and the Synthetic LC Lenders).  To the extent necessary to effectuate the foregoing allocations among the Lenders, each Lender is deemed to have granted a ratable participation interest in its obligations to each of the other Lenders.

To the extent that cash is deposited by the Loan Parties for the Letters of Credit, whether deposited directly by the Loan Parties or as a result of the distributions set forth in this Section 2.18, the Lenders agree that such cash collateral shall be used by the Administrative Agent to reimburse the Issuing Bank for a draw under any Letter of Credit prior to applying any of the Credit-Linked Deposits in reimbursement thereof. 

This Section 2.18 is solely for allocating the payments and proceeds among the Lenders and nothing contained herein shall in any way reduce or alter the obligations payable by the Loan Parties to the Lenders.

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                    SECTION 2.19.  Mitigation Obligations; Replacement of Lenders.  (a)  If any Lender requests compensation under Section 2.15, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not be
inconsistent with its internal policies or otherwise be disadvantageous to such Lender.  The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

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

                    SECTION 2.20.  Incremental Revolving Commitment.  (a)  At any time and from time to time during the Revolving Availability Period, on the terms and subject to the conditions set forth herein, the Borrower may, by notice to the Administrative Agent (whereupon the Administrative Agent shall promptly deliver a copy to each of the Revolving Lenders), request to add one or more increases in the aggregate amount of the Revolving Commitments (each such increase, an “Incremental Revolving Commitment”), provided that at the time of any such request and upon the effectiveness of any Incremental Revolving Facility Amendment (as defined below), (A) no Default has occurred and is continuing or shall result therefrom, (B) the Borrower shall be in compliance on a Pro Forma Basis with the
covenants contained in Sections 6.12, 6.13, 6.14 and 6.15 recomputed as of the last day of the most recently ended fiscal quarter of the Borrower for which financial statements are available, (C) the Leverage Ratio on a Pro Forma Basis recomputed as of the last day of the most recently ended fiscal quarter of the Borrower for which financial statements are available shall not be greater than the ratio set forth in Section 6.13 for such period less 0.25 and (D) the Borrower shall have delivered a certificate of a Financial Officer to the effect set forth in clauses (A), (B) and (C) above, together with all calculations relevant thereto.  Notwithstanding anything to the contrary herein, the aggregate principal amount of the Incremental Revolving Commitment shall not exceed $25,000,000.  Each Incremental Revolving Commitment shall be in an integral multiple of $5,000,000 and be in an aggregate principal amount that is not less than $10,000,000, provided
that such amount may be less than $5,000,000 if such amount represents all the remaining availability under the aggregate principal amount of Incremental Revolving Commitment set forth above.

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                    (b)  Each notice from the Borrower pursuant to this Section shall set forth the requested amount and proposed terms of the relevant Incremental Revolving Commitment.  Any additional bank, financial institution, existing Revolving Lender or other Person that elects to commit to the Incremental Revolving Commitment shall be reasonably satisfactory to the Borrower, the Administrative Agent and the Issuing Bank (any such bank, financial institution, existing Revolving Lender or other Person being called an “Additional Revolving Lender”) and, if not already a Revolving Lender, shall become a Revolving Lender under this Agreement pursuant to an amendment (an “Incremental Revolving Facility Amendment”) to this Agreement and, as appropriate, the other Loan Documents, executed by the Borrower, each
Revolving Lender agreeing to provide such Commitment, if any, each Additional Revolving Lender, if any, and the Administrative Agent.  No Revolving Lender shall be obligated to provide any Incremental Revolving Commitment, unless it so agrees.  Commitments in respect of any Incremental Revolving Commitment shall become Revolving Commitments (or in the case of any Incremental Revolving Commitment to be provided by an existing Revolving Lender, an increase in such Revolving Lender’s Revolving Commitment) under this Agreement pursuant to an Incremental Revolving Facility Amendment executed by the Borrower, each Revolving Lender agreeing to provide such Commitment, if any, each Additional Revolving Lender, if any, and the Administrative Agent.  An Incremental Revolving Facility Amendment may, without the consent of any other Lenders, effect such amendments to any Loan Documents as may be necessary or appropriate, in the sole discretion of the Administrative Agent, to
effect the provisions of this Section (including to provide for voting provisions applicable to the Additional Revolving Lenders comparable to the provisions of clause (B) of the second proviso of Section 9.02(b)).  The effectiveness of any Incremental Revolving Facility Amendment shall, unless otherwise agreed to by the Administrative Agent and the Additional Revolving Lenders, be subject to the satisfaction on the date thereof (each, an “Incremental Revolving Facility Closing Date”) of each of the conditions set forth in Section 4.02 (it being understood that all references to “the date of such Borrowing” in Section 4.02 shall be deemed to refer to the Incremental Revolving Facility Closing Date).  The proceeds of any Borrowings in respect of the Incremental Revolving Commitment will be used solely to finance the working capital needs and other general corporate purposes of the Borrower and the Subsidiaries.

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                    (c)  Upon each increase in the Revolving Commitments pursuant to this section, (i) each Revolving Lender immediately prior to such increase will automatically and without further act be deemed to have assigned to each Additional Revolving Lender providing a portion of the Incremental Revolving Commitment (each an “Incremental Revolving Commitment Lender”) in respect to such increase, and each such Incremental Revolving Commitment Lender will automatically and without further action be deemed to have assumed, a portion of such Revolving Lender’s participations hereunder in outstanding Revolving Letters of Credit such that, after giving effect to each such deemed assignment and assumption of participations, the percentage of the aggregate outstanding participations hereunder in Revolving Letters of Credit will
be equal to the Incremental Revolving Commitment Lender’s Applicable Percentage of the Revolving LC Exposure (after giving effect to the Incremental Revolving Facility Amendment) and (ii) if, on the date of such increase, there are any Loans outstanding, such Loans shall on or prior to the effectiveness of such Incremental Revolving Commitment be prepaid from the proceeds of additional Loans made hereunder (reflecting such increase in Revolving Commitments), which prepayment shall be accompanied by accrued interest on the Loans being prepaid and any costs incurred by any Revolving Lender in accordance with Section 2.16.  The Administrative Agent and the Lenders hereby agree that the minimum borrowing, pro rata borrowing and pro rata payment requirements contained elsewhere in this Agreement shall not apply to the transactions effected pursuant to the immediately preceding sentence.

                    SECTION 2.21.  Certificate of Deposit Account.  (a)  The Credit-Linked Deposits shall be held by the Administrative Agent in the Certificate of Deposit Account, and no party other than the Administrative Agent shall have a right of withdrawal from the Certificate of Deposit Account or any other right or power with respect to the Credit-Linked Deposits, except as expressly set forth in Section 2.05, 2.08 or 2.11.  Notwithstanding any provision in this Agreement to the contrary, the sole funding obligation of each Synthetic LC Lender in respect of its participation in Synthetic Letters of Credit shall be satisfied in full upon the funding of its Credit-Linked Deposit on the Effective Date.

                    (b)  Each of the Borrower, the Administrative Agent, the Issuing Bank issuing any Synthetic Letter of Credit and each Synthetic LC Lender hereby acknowledges and agrees that each Synthetic LC Lender is funding its Credit-Linked Deposit to the Administrative Agent for application in the manner contemplated by Section 2.05(b) and that the Administrative Agent has agreed to invest the Credit-Linked Deposits into a single certificate of deposit issued by the Certificate of Deposit Issuer on the terms and subject to the conditions specified in Schedule 2.21(b) (the “Certificate of Deposit”).  All interest accruing on the Certificate of Deposit shall be paid by the Administrative Agent ratably to each Synthetic LC Lender in accordance with its Applicable Percentage quarterly in arrears when the fees in
respect of the Synthetic Letter of Credit are payable pursuant to Section 2.12.  It is understood and agreed that the obligations to pay interest on the Certificate of Deposit shall be the exclusive obligation of the Certificate of Deposit Issuer and the Borrower shall not be obligated to pay such interest.  During periods when, and to the extent to which, such Credit-Linked Deposits are used by the Administrative Agent to cover unreimbursed Synthetic LC Disbursements, (i) the Certificate of Deposit shall be reduced by such amount and (ii) the Synthetic LC Lenders shall be entitled to receive interest on such amounts from the Borrower at the interest rates set forth in Section 2.05(b) and 2.13(c).

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                    (c)  The Borrower shall have no right, title or interest in or to the Credit-Linked Deposits and no obligations with respect thereto (except for the reimbursement obligations provided in Section 2.05), it being acknowledged and agreed by the parties hereto that the making of the Credit-Linked Deposits by the Synthetic LC Lenders, the provisions of this Section 2.21 and the application of the Credit-Linked Deposits in the manner contemplated by Section 2.05(b) constitute agreements among the Administrative Agent, the Certificate of Deposit Issuer, the Issuing Bank issuing any Synthetic Letter of Credit and each Synthetic LC Lender with respect to its funding obligations in respect of its participation in Synthetic Letters of Credit and do not constitute any loan or extension of credit to the Borrower or the Subsidiaries by
any of them.

                    (d)  Subject to the Borrower’s compliance with the cash-collateralization requirements set forth in Section 2.05(b)(viii) and so long as no Triggering Event shall have occurred and be continuing, the Administrative Agent shall return any remaining Credit-Linked Deposits to the Synthetic LC Lenders following the occurrence of the Synthetic LC Maturity Date.

                    SECTION 2.22.  Evidence of Credit-Linked Deposits.  The Administrative Agent shall maintain in accordance with its usual practice a book-entry evidencing each Synthetic LC Lender’s Credit-Linked Deposit in which the Administrative Agent will record (a) the amount of each Synthetic LC Lender’s Credit-Linked Deposit, (b) the amount of all interest accruing on the Credit-Linked Deposit made pursuant to this Agreement.  The book entries maintained by the Administrative Agent pursuant to this Section 2.22 shall be prima facie evidence of the amounts of the Credit-Linked Deposits.

                    SECTION 2.23.  Interests in Credit-Linked Deposits.  To the extent that interests in the rights and obligations of Synthetic LC Lenders under this Agreement are deemed to be securities, such interests have not been and will not be registered under the Securities Act of 1933 or 12 C.F.R. part 16.  The Credit-Linked Deposits will not be registered as an investment company under the Investment Company Act of 1940.

                    SECTION 2.24.  Tax Shelter Regulations.  (a)  None of the Loan Parties intends to treat the Loans 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 any of the Loan Parties determines to take any action inconsistent with such intention, the Borrower will promptly (a) notify the Administrative Agent thereof, and (b) deliver to the Administrative Agent a duly completed copy of IRS Form 8886 or any successor form.  If the Borrower so notifies the Administrative Agent, the Borrower acknowledges that one or more of the Lenders may treat its Loans 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.

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                    (b)  Promptly after any of the Loan Parties determines that it intends to treat any of the Loans, Letters of Credit or related transactions as being a “reportable transaction” as provided in this Section 9.16 Tax Shelter Regulations:

	
  
 
  	
  
                (i)   a written notice of such intention to the   Administrative Agent; and
  
	
  
 
  	
  
 
  
	
  
 
  	
  
                (ii)  a   duly completed copy of IRS Form 8886 or any successor form.
  

ARTICLE III

Representations and Warranties

The Borrower represents and warrants to the Lenders that:

                    SECTION 3.01.  Organization; Powers.  Each of the Borrower and the Subsidiaries (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) has all requisite power and authority to own its property, to carry on its business as now conducted and as proposed to be conducted, to execute, deliver and perform its obligations under each Loan Document to which it is a party and to effect the Transactions and (c) except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required.

                    SECTION 3.02.  Authorization; Enforceability.  The Transactions to be entered into by each Loan Party have been duly authorized by all necessary corporate or other action and, if required, action by the holders of the Equity Interests of such Loan Party.  This Agreement has been duly executed and delivered by the Borrower and constitutes, and each other Loan Document to which any Loan Party is to be a party, when executed and delivered by such Loan Party, will constitute, a legal, valid and binding obligation of the Borrower or such Loan Party (as the case may be), enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law.

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

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                    SECTION 3.04.  Financial Condition; No Material Adverse Change.  (a)  The Borrower has heretofore furnished to the Lenders its consolidated balance sheet and consolidated statements of income, stockholders’ equity and cash flows (i) as of and for the fiscal years ended December 31, 2002, December 31, 2003 and December 31, 2004, reported on by KPMG LLP, independent public accountants and (ii) as of and for the fiscal quarter and the portion of the fiscal year ended March 31, 2005 (and the comparable periods for the prior fiscal years), certified by a Financial Officer.  Such financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of the Borrower and the Subsidiaries as of such dates and for such
periods in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes in the case of the statements referred to in clause (ii) above.

                    (b)  The Borrower has heretofore furnished to the Lenders its pro forma consolidated balance sheet as of March 31, 2005, prepared giving effect to the Transactions as if the Transactions had occurred on such date.  Such pro forma consolidated balance sheet (i) has been prepared in good faith based on the same assumptions used to prepare the pro forma financial statements included in the Information Memorandum (which assumptions are believed by the Borrower to be reasonable), (ii) is based on the best information available to the Borrower after due inquiry, (iii) accurately reflects all adjustments necessary to give effect to the Transactions and (iv) presents fairly, in all material respects, the pro forma financial position of the Borrower and the Subsidiaries as of March 31, 2005, as if the
Transactions had occurred on such date.

                    (c)  Except as disclosed in the financial statements referred to above or the notes thereto or in the Information Memoranda and except for the Disclosed Matters, after giving effect to the Transactions, neither the Borrower nor any of the Subsidiaries has, as of the Effective Date, any material direct or contingent liabilities, unusual long-term commitments or unrealized losses.

                    (d)  No change, circumstance, condition, effect, event or development has occurred that has had, or could reasonably be expected to have, a material adverse effect on the business, assets, operations, prospects or condition, financial or otherwise, results of operations, liabilities (including contingent liabilities), material agreements of the Borrower and the Subsidiaries, taken as a whole, whether or not covered by insurance, since December 31, 2004.

                    (e)  The Company has heretofore furnished to the Lenders its consolidated balance sheet and consolidated statements of income, stockholders’ equity and cash flows (i) as of and for the fiscal years ended December 31, 2002, December 31, 2003 and December 31, 2004, reported on by York, Neel and Co. – Madisonville, LLP, independent public accountants and (ii) as of and for the fiscal quarter and the portion of the fiscal year ended March 31, 2005 (and the comparable periods for the prior fiscal years), certified by a Financial Officer.  Such financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of the Company and its subsidiaries as of such dates and for such periods in accordance with GAAP consistently applied,
subject to normal year-end audit adjustments and the absence of footnotes in the case of the statements referred to in clause (ii) above.

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                    SECTION 3.05.  Properties.  (a)  Each of the Borrower and the Subsidiaries has good title to, or valid leasehold interests in, all its property material to its business (including surface rights, coal and other mineral rights, and the Mortgaged Properties), except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or as proposed to be conducted or to utilize such properties for their respective intended purposes.

                    (b)  Each of the Borrower and the Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual property material to its business, and the use thereof by the Borrower and the Subsidiaries does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

                    (c)  Schedule 3.05(c) sets forth the address of each real property (including the Mortgaged Properties) that is owned or leased by the Borrower or any Subsidiary as of the Effective Date after giving effect to the Transactions.

                    (d)  Schedule 3.05(d) sets forth a complete and accurate list of all Mines (including addresses (or, in respect of any properties that have no addresses, locations) and the owner and operator thereof) owned or operated by the Borrower or any Subsidiary as of the Effective Date after giving effect to the Transactions.

                    (e)  Schedule 3.05(e) sets forth a complete and accurate list of all (i) Mining Leases (including addresses (or, in respect of any properties that have no addresses, locations) of the subject coal reserves and the lessor thereof) and (ii) all Prep Plant Leases (including addresses (or, in respect of any properties that have no addresses, locations) of the subject properties and lessor thereof), in each case as of the Effective Date after giving effect to the Transactions.

                    (f)  With respect to each Mining Lease and each Prep Plant Lease, the Borrower or a Subsidiary possesses the leasehold interest mining rights and Mining Permits necessary for the operation of the applicable Mine or Coal Handling Facility, as the case may be, currently being operated on such parcel, and each of its rights under the applicable lease, contracts, rights-of-way and easements necessary for the operation of such Mine or such Coal Handling Facility, as the case may be, is in full force and effect and no default exists thereunder, except to the extent that such defaults or the failure to maintain such lease, mining rights, Mining Permits, contracts, rights of way and easements in full force and effect has not had and could not reasonably be expected to result in a Material Adverse Effect on the operation and intended use of
such parcel by the Borrower or such Subsidiary, as the case may be.

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                    (g)  As of the Effective Date, neither the Borrower nor any Subsidiary has received notice of, or has knowledge of, any pending or contemplated condemnation proceeding affecting any Mortgaged Property or any sale or disposition thereof in lieu of condemnation.  Neither any Mortgaged Property nor any interest therein is subject to any right of first refusal, option or other contractual right to purchase such real property or interest therein.

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

                    (b)  Except for the Disclosed Matters and except with respect to any other matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, neither the Borrower nor any Subsidiary (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law (including any Mining Permit), (ii) has become subject to any Environmental Liability, (iii) has received notice of any claim with respect to any Environmental Liability or (iv) knows of any basis for any Environmental Liability.

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

                    SECTION 3.07.  Compliance with Laws and Agreements.  Each of the Borrower and the Subsidiaries is in compliance with (a) all Requirements of Law applicable to it or its property and (b) all indentures, agreements and other instruments binding upon it or its property except, in the case of clause (b) of this Section, where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

                    SECTION 3.08.  Investment and Holding Company Status.  Neither the Borrower nor any of the Subsidiaries is (a) an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940 or (b) a “holding company” as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935.

                    SECTION 3.09.  Taxes.  Each of the Borrower and the Subsidiaries has timely filed or caused to be filed all Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (a) any Taxes that are being contested in good faith by appropriate proceedings and for which the Borrower or such Subsidiary, as the case may be, has set aside on its books adequate reserves and (b) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect.

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                    SECTION 3.10.  ERISA.  No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect.  The present value of all accumulated benefit obligations under each Plan (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than $25,000,000 the fair market value of the assets of such Plan, and the present value of all accumulated benefit obligations of all underfunded Plans (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of
the date of the most recent financial statements reflecting such amounts, exceed by more than $25,000,000 the fair market value of the assets of all such underfunded Plans.  The minimum funding standards of ERISA and the Code with respect to each Plan have been satisfied.

                    SECTION 3.11.  Disclosure.  The Borrower has disclosed to the Lenders all agreements, instruments and corporate or other restrictions to which the Borrower or any Subsidiary is subject, and all other matters known to any of them, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.  Neither the Information Memorandum nor any of the other reports, financial statements, certificates or other information furnished by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the negotiation of any Loan Document or delivered thereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, provided that, with respect to projected financial information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed by it to be reasonable at the time delivered and, if such projected financial information was delivered prior to the Effective Date, as of the Effective Date.

                    SECTION 3.12.  Subsidiaries.  Schedule 3.12 sets forth the name of, and the ownership interest of the Borrower and each Subsidiary in each Subsidiary and identifies each Subsidiary that is a Subsidiary Loan Party, in each case as of the Effective Date.

                    SECTION 3.13.  Insurance.  Schedule 3.13 sets forth a description of all insurance maintained by or on behalf of the Borrower or any Subsidiary as of the Effective Date.  As of the Effective Date, all premiums in respect of such insurance have been paid.  The Borrower believes that the insurance maintained by or on behalf of the Borrower and the Subsidiaries is in such amounts (with no greater risk retention) and against such risks as is (a) customarily maintained by companies of established repute engaged in the same or similar businesses operating in the same or similar locations and (b) adequate.

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                    SECTION 3.14.  Labor Matters.  As of the Effective Date, there are no strikes, lockouts or slowdowns or any other material labor disputes against the Borrower or any Subsidiary pending or, to the knowledge of the Borrower or any Subsidiary, threatened.  The hours worked by and payments made to employees of the Borrower and the Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable Federal, state, local or foreign law dealing with such matters.  All payments due from the Borrower or any Subsidiary, or for which any claim may be made against the Borrower or any Subsidiary, on account of wages and employee health and welfare insurance and other benefits, have been paid or accrued as a liability on the books of the Borrower or such Subsidiary.  There is
no organizing activity involving the Borrower or any Subsidiary pending or, to the knowledge of the Borrower or any Subsidiary, threatened by any labor union or group of employees, except those that, in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.  There are no representation proceedings pending or, to the knowledge of the Borrower or any Subsidiary, threatened with the National Mediation Board, and no labor organization or group of employees of the Borrower or any Subsidiary has made a pending demand for recognition, except those that, in the aggregate, would not reasonably be expected to have a Material Adverse Effect.  There are no material complaints or charges against the Borrower or any Subsidiary pending or, to the knowledge of the Borrower or any Subsidiary, threatened to be filed with any Governmental Authority or arbitrator based on, arising out of, in connection with, or otherwise relating to the employment or termination of
employment by the Borrower or any Subsidiary of any individual, except those that, in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.  The consummation of the Transactions will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which the Borrower or any Subsidiary is bound.

                    SECTION 3.15.  Solvency.  Immediately after the consummation of the Transactions to occur on the Effective Date, (a) the fair value of the assets of each Loan Party, at a fair valuation, will exceed its debts and liabilities, subordinated, contingent or otherwise, (b) the present fair saleable value of the property of each Loan Party will be greater than the amount that will be required to pay the probable liability of its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured, (c) each Loan Party will be able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured and (d) each Loan Party will not have unreasonably small capital with which to
conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted following the Effective Date.

                    SECTION 3.16.  Senior Indebtedness.  The Obligations constitute “Senior Indebtedness” under and as defined in the Senior Notes Documents.

                    SECTION 3.17.  Coal Act; Black Lung Act.  Each of the Borrower and the Subsidiaries and each of their respective “related persons” (as defined in the Coal Act) are in compliance with the Coal Act and none of the Borrower, the Subsidiaries and their respective related persons has any liability under the Coal Act except with respect to premiums or other payments required thereunder that have been paid when due and except to the extent that the liability thereunder could not reasonably be expected to result in a Material Adverse Effect.  Each of the Borrower and the Subsidiaries is in compliance with the Black Lung Act, and neither the Borrower nor any of the Subsidiaries has any liability under the Black Lung Act except with respect to premiums, contributions or other payments required thereunder that
have been paid when due and except to the extent that the liability thereunder could not reasonably be expected to result in a Material Adverse Effect.

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                    SECTION 3.18.  Coal Supply Agreements.  Schedule 3.18 sets forth a complete and accurate list of each Coal Supply Agreement to which the Borrower or any Subsidiary is a party as of the Effective Date, including the counterparty to each such agreement.  As of the Effective Date, each such Coal Supply Agreement is in full force and effect, except to the extent that the failure to be in full force and effect could not reasonably be expected to result in a Material Adverse Effect.

                    SECTION 3.19.  Surety Bonds.  All surety, reclamation and similar bonds required to be maintained by the Borrower or any Subsidiary under any Requirement of Law or pursuant to any contractual obligation binding on any of them are in full force and effect and were not and will not be terminated, suspended, revoked or otherwise adversely affected as a result of the Transactions; provided that (a) self-bonding permitted under any Requirement of Law prior to the Effective Date may be required to be replaced following the Effective Date with surety bonds, (b) the cost of such bonds may be increased and (c) certain of such bonds may be terminated, suspended or revoked, provided that, taken together, the events specified in clauses (a), (b) and (c) above could not reasonably be expected to
result in a Material Adverse Effect.  All required guarantees of, and letters of credit with respect to, such surety, reclamation and similar bonds are in full force and effect except where such failure to be in full force and effect could not reasonably be expected to result in a Material Adverse Effect.

                    SECTION 3.20.  Anti-Terrorism Laws.  (a)  None of the Loan Parties or any Affiliate of any Loan Party, is in violation of any Anti-Terrorism Law or engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.

                    (b)  None of the Loan Parties, or any Affiliate of any Loan Party, or their respective agents acting or benefiting  in any capacity in connection with the Loans, Letters of Credit or other transactions hereunder, is any of the following (each a “Blocked Person”):

	
  
 
  	
  
                (i)  a   Person that is listed in the annex to, or is otherwise subject to the   provisions of, the Executive Order No. 13224;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
                (ii)  a   Person owned or  controlled  by, or acting for or on   behalf  of,  any  Person  that is   listed in the annex to, or is otherwise subject to the provisions of, the   Executive Order No. 13224;
  

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                (iii)  a   Person or entity with which any bank is prohibited from dealing or otherwise   engaging in any transaction by any Anti-Terrorism Law;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
                (iv)  a   Person or entity that commits, threatens or conspires to commit or supports   “terrorism” as defined in the Executive Order No. 13224;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
                (v)  a   Person or entity that is named as a “specially designated national” on the   most current list published by the U.S. Treasury Department Office of Foreign   Asset Control at its official website or any replacement website or other   replacement official publication of such list, or
  
	
  
 
  	
  
 
  
	
  
 
  	
  
                (vi)  a   person or entity who is affiliated or associated with a person or entity   listed above.
  

                    (c)  No Loan Party or to the knowledge of any Loan Party, any of its agents acting in any capacity in connection with the Loans, Letters of Credit or other transactions hereunder (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, or (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order No. 13224.

ARTICLE IV

Conditions

                    SECTION 4.01.  Effective Date.  The obligations of the Lenders to make Loans and acquire participations in Letters of Credit, the obligations of Synthetic LC Lenders to fund their Credit-Linked Deposits and the obligations of the Issuing Bank to issue any Letters of Credit hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 9.02):

	
  
 
  	
  
          (a)  The   Administrative Agent (or its counsel) shall have received from each party   hereto either (i) a counterpart of this Agreement signed on behalf of   such party or (ii) written evidence satisfactory to the Administrative   Agent (which may include telecopy transmission of a signed signature page of   this Agreement) that such party has signed a counterpart of this Agreement.
  
	
   
  	
  
 
  
	
  
 
  	
  
          (b)  The   Administrative Agent shall have received a favorable written opinion   (addressed to the Administrative Agent and the Lenders and dated the   Effective Date) of each of (i) Kilpatrick Stockton LLP, counsel for the   Borrower and the Subsidiaries, substantially in the form of Exhibit B-1,   and (ii) local counsel in each jurisdiction where the Borrower or a   Subsidiary Loan Party is organized or a Mortgaged Property is located,   substantially in the form of Exhibit B-2, and, in the case of each such   opinion required by this paragraph, covering such other matters relating to   the Loan Parties, the Loan Documents or the Transactions as the   Administrative Agent shall reasonably request.  The Borrower hereby   requests such counsel to deliver such opinions.
  

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          (c)  The   Administrative Agent shall have notified the Borrower in writing that it has   received such documents and certificates as the Administrative Agent or its   counsel may reasonably request relating to the organization, existence and   good standing of each Loan Party, the authorization of the Transactions and   any other legal matters relating to the Loan Parties, the Loan Documents or   the Transactions, all in form and substance satisfactory to the   Administrative Agent and its counsel.
  
	
   
  	
  
 
  
	
  
 
  	
  
          (d)  The   Administrative Agent shall have received a certificate, dated the Effective   Date and signed by a Financial Officer or the President or a Vice President   of the Borrower, confirming compliance with the conditions set forth in   paragraphs (a) (other than with respect to the representation and   warranty set forth in Section 3.04(d)) and (b) of Section 4.02.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (e)  Each   of the Administrative Agent and the Syndication Agent shall have received all   fees and other amounts due and payable on or prior to the Effective Date,   including, to the extent invoiced, reimbursement or payment of all   out-of-pocket expenses (including fees, charges and disbursements of counsel   to the Administrative Agent and the Syndication Agent) required to be   reimbursed or paid by any Loan Party under any Loan Document.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (f)  The   Collateral and Guarantee Requirement shall have been satisfied and the   Administrative Agent shall have received (i) a completed Perfection   Certificate dated the Effective Date and signed by a Financial Officer or   legal officer of the Borrower, together with all attachments contemplated   thereby, including the results of a search of the Uniform Commercial Code (or   equivalent) filings made with respect to the Loan Parties in the   jurisdictions contemplated by the Perfection Certificate and copies of the   financing statements (or similar documents) disclosed by such search and   evidence reasonably satisfactory to the Administrative Agent that the Liens   indicated by such financing statements (or similar documents) are permitted   by Section 6.02 or have been or will contemporaneously with the initial   funding of Loans on the Effective Date be released and
(ii) evidence   that the Cash Management Agreements contemplated by the Collateral Agreement   shall have been established.
  
	
   
  	
  
 
  
	
  
 
  	
  
          (g)  The   Administrative Agent shall have received evidence that the insurance required   by Section 5.07 and the Security Documents is in effect.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (h)  The   Administrative Agent and the Syndication Agent shall be reasonably satisfied   as to the amount and nature of any contingent liabilities (including   Environmental Liabilities and employee health and safety exposures) to which   the Borrower and the Subsidiaries may be subject after giving effect to the   Transactions, and with the plans of the Borrower or such Subsidiaries with   respect thereto.
  

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          (i)  The   Administrative Agent and the Syndication Agent shall have received and shall   be reasonably satisfied with, the report of MM&A regarding the estimated   coal reserves of the Company and its subsidiaries as of February 1,   2005, which shall be (x) substantially identical in form to the MM&A   2004 Report and (y) prepared in accordance with the guidelines and   methodology, consistently applied, used by MM&A and the Borrower to   prepare the MM&A 2004 Report.
  
	
   
  	
  
 
  
	
  
 
  	
  
          (j)  No   change, circumstance, condition, effect, event or development (other than the   ordinary course extraction of coal through ongoing mining operations) has   occurred that has had, or could reasonably be expected to have, a material   adverse effect on the estimated coal reserves (as set forth in the MM&A   2004 Report) of the Borrower and the Subsidiaries, taken as a whole, since   March 31, 2004.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (k)  The   Borrower shall have received gross cash proceeds of not less than   (A) $150,000,000 from the issuance of the Senior Notes and   (B) $38,000,000 from the Equity Offering.  The Administrative   Agent shall have received copies of the Senior Notes Documents and the Equity   Offering Documents, in each ease certified by a Financial Officer as complete   and correct.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (l)  All   consents and approvals required to be obtained from any Governmental Authority   or other Person in connection with the Transactions shall have been obtained,   and all applicable waiting periods and appeal periods (including any   extensions thereof) shall have expired without any action being taken or   threatened by any competent authority that would restrain, prevent or   otherwise impose adverse conditions on the Transactions.
  
	
   
  	
  
 
  
	
  
 
  	
  
          (m)  The   Lenders shall have received a pro forma consolidated balance sheet and   related statements of operations and comprehensive income, stockholders’   equity and cash flows of the Borrower as of March 31, 2005, reflecting   all pro forma adjustments as if the Transactions had been consummated on such   date, and such pro forma consolidated balance sheet shall not be materially   inconsistent with the forecasts or projections previously furnished to the   Lenders.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (n)  The   Lenders shall have received (i) audited consolidated balance sheets and   consolidated statements of operations and comprehensive income, stockholders’   equity and cash flows of the Borrower as of and for the fiscal years ended   December 31, 2002, December 31, 2003 and December 31, 2004 and   the related notes thereto, accompanied by a true and correct copy of the   reports thereon by KPMG LLP, independent public accountants, and (ii) unaudited   consolidated balance sheets and consolidated statements of operations and   comprehensive income, stockholders’ equity and cash flows of the Borrower as   of and for the fiscal quarter and portion of the fiscal year ended   March 31, 2005 (and for the comparable period for the prior fiscal   year), prepared in accordance with GAAP consistently applied (subject to   normal year-end audit adjustments
and the absence of footnotes) and certified   by a Financial Officer, which financial statements described in   clauses (i) and (ii) shall not be materially inconsistent with the   financial statements or forecasts previously furnished to the Lenders.
  

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          (o)  The   Lenders shall have received (i) audited consolidated balance sheets and   consolidated statements of operations and comprehensive income, stockholders’   equity and cash flows of the Company as of and for the fiscal years ended   December 31, 2002, December 31, 2003 and December 31, 2004 and   the related notes thereto, accompanied by a true and correct copy of the   reports thereon by York, Neel and Co. – Madisonville, LLP, independent   public accountants, and (ii) unaudited consolidated balance sheets and   consolidated statements of operations and comprehensive income, stockholders’   equity and cash flows of the Company as of and for the fiscal quarter and   portion of the fiscal year ended March 31, 2005 (and for the comparable   period for the prior fiscal year), prepared in accordance with GAAP   consistently applied (subject
to normal year-end audit adjustments and the   absence of footnotes) and certified by a Financial Officer, which financial   statements described in clauses (i) and (ii) shall not be materially   inconsistent with the financial statements or forecasts previously furnished   to the Lenders.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (p)  The   Transactions shall have been consummated or shall be consummated   simultaneously with the initial funding of Loans, if any, on the Effective   Date in accordance with applicable law, the Acquisition Agreement and all   other related documentation (without giving effect to any amendments or   waivers to or of such documents that are adverse to the Lenders and not   previously approved by the Administrative Agent and the Syndication   Agent).  The Administrative Agent shall have received copies of the   Acquisition Agreement and all certificates, opinions and other documents   delivered thereunder, certified by a Financial Officer as being complete and   correct.  The Transactions shall have been consummated as described   in the term sheet included in the Information Memoranda and in a manner   consistent with the sources and uses shown on Annex II to the term
sheet   included in the Information Memoranda.
  
	
   
  	
  
 
  
	
  
 
  	
  
          (q)  All   commitments under each of the Existing Credit Agreements and other Existing   Indebtedness shall have been terminated, and all loans, interest and other   amounts accrued or owing thereunder shall have been repaid in full (except   that the Existing Letters of Credit shall remain outstanding) and all   guarantees and liens granted in respect thereof shall have been released and   the terms and conditions of any such release shall be satisfactory to the   Administrative Agent.  The Administrative Agent shall have received   a payoff and release letter with respect to each of the Existing Credit   Agreements and other Existing Indebtedness in form and substance reasonably   satisfactory to the Administrative Agent.  After giving effect to   the Transactions, neither the Borrower nor any Subsidiary shall have   outstanding any shares of preferred stock or Disqualified
Equity Interests or   any Indebtedness, other than (i) Indebtedness incurred under the Loan   Documents, (ii) the Senior Notes and (iii) Indebtedness set forth   on Schedule 6.01.  The terms and conditions of all   Indebtedness to remain outstanding after the Effective Date (including terms   and conditions relating to interest rates, fees, amortization, maturity,   redemption, subordination, covenants, events of default and remedies) shall   be reasonably satisfactory in all respects to the Lenders.
  

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          (r)  The   Lenders shall have received a certificate from the chief executive officer of   the Borrower, in form and substance satisfactory to the Lenders, certifying   as to the solvency of the Borrower and the Subsidiaries on a consolidated   basis after giving effect to the Transactions.
  
	
   
  	
  
 
  
	
  
 
  	
  
          (s)  The   Lenders shall have received a detailed business plan of the Borrower and the   Subsidiaries for the fiscal years 2005 through 2012 (including quarterly   projections for the first three fiscal quarters commencing after the   Effective Date).
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (t)  No   change, circumstance, condition, effect, event or development has occurred   that has had, or could reasonably be expected to have, a material adverse   effect on the business, assets, operations, prospects or condition, financial   or otherwise, results of operations, liabilities (including contingent   liabilities), material agreements of (i) the Borrower and the   Subsidiaries, taken as a whole, whether or not covered by insurance, since   December 31, 2004, or (ii) the Company and its subsidiaries, taken   as a whole, whether or not covered by insurance, since December 31,   2004.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (u)  The   Administrative Agent shall be satisfied that, on a Pro Forma Basis, the   Leverage Ratio for the 12-month period ended December 31, 2004, shall   not exceed 2.35 to 1.00 and the Lenders shall have received a certificate of   a Financial Officer certifying to that effect.
  
	
   
  	
  
 
  
	
  
 
  	
  
          (v)  The   senior secured credit facilities provided to the Borrower and the   Subsidiaries hereunder and the Senior Notes shall have been rated by each of   Moody’s and S&P not less than 15 days prior to the Effective Date.
  

The Administrative Agent shall notify the Borrower and the Lenders of the Effective Date, and such notice shall be conclusive and binding.  Notwithstanding the foregoing, the obligations of the Lenders to make Loans and acquire participations in Letters of Credit, the obligations of Synthetic LC Lenders to fund their Credit-Linked Deposits and the obligations of the Issuing Bank to issue Letters of Credit hereunder shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant to Section 9.02) at or prior to 5:00 p.m., New York City time, June 8, 2005 (and, in the event such conditions are not so satisfied or waived, the Commitments shall terminate at such time).

                    SECTION 4.02.  Each Credit Event.  The obligation of each Lender to make a Loan on the occasion of any Borrowing or acquire participations in Letters of Credit, the obligations of the Synthetic LC Lenders to fund their Credit-Linked Deposits and the obligations of the Issuing Bank to issue, amend, renew or extend any Letter of Credit, is subject to receipt of the request therefor in accordance herewith and to the satisfaction of the following conditions:

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          (a)  The   representations and warranties of each Loan Party set forth in the Loan   Documents shall be true and correct in all material respects on and as of the   date of such Borrowing, acquisition, funding or the date of issuance,   amendment, renewal or extension of such Letter of Credit, as the case may be,   except to the extent such representations and warranties expressly relate to   an earlier date, as applicable.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (b)  At   the time of and immediately after giving effect to such Borrowing,   acquisition, funding or the issuance, amendment, renewal or extension of such   Letter of Credit, as the case may be, no Default shall have occurred and be   continuing.
  

Each Borrowing (provided that a conversion or a continuation of a Borrowing shall not constitute a “Borrowing” for purposes of this Section) acquisition and funding and each issuance, amendment, renewal or extension of a Letter of Credit shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in paragraphs (a) and (b) of this Section.

ARTICLE V

Affirmative Covenants

                    Until the Revolving Commitments have expired or been terminated and the principal of and interest on each Loan and all fees, expenses and other amounts (other than contingent amounts not yet due) payable under any Loan Document have been paid in full and all Letters of Credit have expired or been terminated and all LC Disbursements have been reimbursed and the Credit-Linked Deposits have been returned in full to the Synthetic LC Lenders, the Borrower covenants and agrees with the Lenders that:

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

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

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          (b)  within   45 days (or such shorter period as may be required by the SEC) after the   end of each of the first three fiscal quarters of each fiscal year of the   Borrower, its unaudited consolidated balance sheet and unaudited consolidated   statements of operations and comprehensive income, stockholders’ equity and   cash flows as of the end of and for such fiscal quarter and the then elapsed   portion of the fiscal year, setting forth in each case in comparative form   the figures for the corresponding period or periods of (or, in the case of   the balance sheet, as of the end of) the previous fiscal year, all certified   by a Financial Officer as presenting fairly in all material respects the   financial condition and results of operations of the Borrower and the   Subsidiaries on a consolidated basis in accordance with GAAP consistently   applied, subject to normal year-end
audit adjustments and the absence of   footnotes;
  
	
   
  	
  
 
  
	
  
 
  	
  
          (c)  concurrently   with any delivery of financial statements under paragraph (a) or   (b) above, a certificate of a Financial Officer (i) certifying as to   whether a Default has occurred and, if a Default has occurred, specifying the   details thereof and any action taken or proposed to be taken with respect   thereto, (ii) setting forth reasonably detailed calculations   demonstrating compliance with the covenants contained in Sections 6.12,   6.13, 6.14 and 6.15 and (iii) stating whether any change in GAAP or in   the application thereof has occurred since the later of the date of the   Borrower’s audited financial statements referred to in Section 3.04 and   the date of the prior certificate delivered pursuant to this   paragraph (c) indicating such a change and, if any such change has   occurred, specifying the effect of such change on the
financial statements   accompanying such certificate;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (d)  at   least 15 days prior to the commencement of each fiscal year of the   Borrower, a detailed consolidated budget for such fiscal year (including a   projected consolidated balance sheet and consolidated statements of projected   operations, comprehensive income and cash flows as of the end of and for such   fiscal year and setting forth the assumptions used for purposes of preparing   such budget) and, promptly when available, any significant revisions of such   budget;
  
	
  
 
  	
  
 
  
	
   
  	
  
          (e)  promptly   after the same becomes publicly available, if not publicly available on EDGAR   or any similar services, copies of all periodic and other reports, proxy   statements and other materials filed by the Borrower or any Subsidiary with   the SEC or with any national securities exchange, or distributed by the   Borrower to the holders of its Equity Interests generally, as the case may   be; and
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (f)  promptly   following any request therefor, such other information regarding the   operations, business affairs and financial condition of the Borrower or any   Subsidiary, or compliance with the terms of any Loan Document, as the   Administrative Agent or any Lender may reasonably request.
  

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          (g)  concurrently   with any delivery of financial statements under paragraph (a) above, the   Borrower shall deliver to the Administrative Agent a certificate executed by   a Financial Officer of the Borrower setting forth the information required pursuant   to sections 1, 2, 5 and 8 of the Perfection Certificate or confirming that   there has been no change in such information since the date of such   certificate.
  
	
   
  	
  
 
  
	
  
 
  	
  
          (h)  concurrently   with any delivery of financial statements under paragraph (b) above, the   Borrower shall deliver to the Administrative Agent a certificate executed by   a Financial Officer of the Borrower setting forth a true and complete list of   Mining Leases and any other rights with respect to Mines that the Borrower or   any of its Subsidiaries shall have acquired since the date of such   certificate previously delivered to the Administrative Agent pursuant to this   paragraph (h).
  

                    SECTION 5.02.  Notices of Material Events.  The Borrower will furnish to the Administrative Agent (for distribution to each Lender through the Administrative Agent) prompt written notice of the following:

	
  
 
  	
  
          (a)  the   occurrence of any Default;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (b)  the   filing or commencement of any action, suit or proceeding by or before any   arbitrator or Governmental Authority against or, to the knowledge of a   Financial Officer or another executive officer of the Borrower or any   Subsidiary, affecting the Borrower or any Affiliate thereof that, if   adversely determined, could reasonably be expected to result in a Material   Adverse Effect;
  
	
   
  	
  
 
  
	
  
 
  	
  
          (c)  the   occurrence of any ERISA Event or any fact or circumstance that gives rise to   a reasonable expectation that any ERISA Event will occur that, in either   case, alone or together with any other ERISA Events that have occurred or are   reasonably expected to occur, could reasonably be expected to result in   liability of the Borrower and the Subsidiaries in an aggregate amount   exceeding $1,125,000;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (d)  simultaneously   with the date that the Borrower or any Subsidiary (i) commences or   terminates negotiations with any collective bargaining agent for the purpose   of materially changing any collective bargaining agreement, (ii) reaches   an agreement with any collective bargaining agent prior to ratification for   the purpose of materially changing any collective bargaining agreement,   (iii) ratifies any agreement reached with a collective bargaining agent   for the purpose of materially changing any collective bargaining agreement or   (iv) becomes subject to a “cooling off period” under the auspices of the   National Mediation Board, the commencement or termination of such   negotiations or the receipt of such agreement or notice of a “cooling off   period” (including a copy of such agreement or notice), as the case may be;
  

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          (e)  any   change in the ratings of the senior secured credit facilities made available   under this Agreement by S&P or Moody’s, or any notice from either such   agency indicating its intent to effect such a change or to place the Borrower   or such credit facilities on a “CreditWatch” or “WatchList” or any similar   list, in each case with negative implications, or its cessation of, or its   intent to cease, rating such credit facilities; and
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (f)  any   other development (including notice of any claim or condition arising under   or relating to any Environmental Law (including any Environmental Liability)   or Mining Law) that results in, or could reasonably be expected to result in,   a Material Adverse Effect.
  

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

                    SECTION 5.03.  Information Regarding Collateral.  (a)  The Borrower will furnish to the Administrative Agent prompt written notice of any change (i) in any Loan Party’s corporate name, (ii) in the jurisdiction of incorporation or organization of any Loan Party or (iii) in any Loan Party’s organizational identification number.  The Borrower agrees not to effect or permit any change referred to in the preceding sentence unless all filings have been made under the Uniform Commercial Code or otherwise that are required in order for the Administrative Agent to continue at all times following such change to have a valid, legal and perfected security interest in all the Collateral.  The Borrower also agrees promptly to notify the Administrative Agent if any material
portion of the Collateral is damaged or destroyed.

                    (b)  At the time of delivery of financial statements pursuant to Section 5.01(a) or (b), the Borrower shall deliver to the Administrative Agent a certificate executed by a Financial Officer or chief legal officer of the Borrower (i) setting forth the information required pursuant to the Perfection Certificate or confirming that there has been no change in such information since the date of the Perfection Certificate delivered on the Effective Date or the date of the most recent certificate delivered pursuant to this Section and (ii) certifying that all Uniform Commercial Code financing statements (including fixture filings, as applicable) or other appropriate filings, recordings or registrations, including all refilings, rerecordings and reregistrations, containing a description of the Collateral have been filed of
record in each governmental, municipal or other appropriate office in each jurisdiction identified pursuant to clause (i) above to the extent necessary to protect and perfect the security interests under the Collateral Agreement for a period of not less than 18 months after the date of such certificate (except as noted therein with respect to any continuation statements to be filed within such period).

                    SECTION 5.04.  Existence; Conduct of Business.  The Borrower will, and will cause each Subsidiary to, do or cause to be done all things necessary to obtain, preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges, franchises, patents, copyrights, trademarks and trade names material to the conduct of its business, provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.03.

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                    SECTION 5.05.  Payment of Obligations.  The Borrower will, and will cause each Subsidiary to, pay its material obligations (other than Indebtedness and any obligations in respect of any Swap Agreements), including Tax liabilities, before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP, (c) such contest effectively suspends collection of the contested obligation and the enforcement of any Lien securing such obligation and (d) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect.

                    SECTION 5.06.  Maintenance of Properties.  The Borrower will, and will cause each Subsidiary to, keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted.

                    SECTION 5.07.  Insurance.  The Borrower will, and will cause each Subsidiary to, (a) maintain, with financially sound and reputable insurance companies, (i) insurance in such amounts (with no greater risk retention) and against such risks as is (x) customarily maintained by companies of established repute engaged in the same or similar businesses operating in the same or similar locations and (y) considered adequate by the Borrower, (ii) in the event that the Mortgaged Property includes enclosed structures that are located in a special flood hazard area (as described by FEMA), flood insurance in an amount and of a type satisfactory under FEMA for financing by a bank and (iii) all other insurance as may be required by law (including any Mining Law) or any other Loan Document and
(b) cause each insurance policy that is so maintained and that covers all or any portion of a Mortgaged Property, Mine, Coal Handling Facility, Mining Lease or Prep Plant Lease to contain a “lender’s loss payable endorsement” or a “union Mortgagee Clause” (or a “New York Mortgagee Clause”), as applicable, in form and substance reasonably satisfactory to the Administrative Agent.  The Borrower will furnish to the Lenders, upon request of the Administrative Agent, information in reasonable detail as to the insurance so maintained and flood zone determination forms for all enclosed structures owned by any Loan Party that is contained in the Mortgaged Property.

                    SECTION 5.08.  Casualty and Condemnation.  The Borrower, with respect to any casualty or condemnation related Prepayment Event, (a) will furnish to the Administrative Agent (for distribution to each Lender through the Administrative Agent) prompt written notice of any casualty or other insured damage to any material portion of the Collateral or the commencement of any action or proceeding for the taking of any material portion of or any material interest in the Collateral under power of eminent domain or by condemnation or similar proceeding and (b) will ensure that the Net Proceeds of any such event (whether in the form of insurance proceeds, condemnation awards or otherwise) are collected and applied in accordance with the applicable provisions of this Agreement and the Security Documents; provided,
however, that the Borrower shall not be required to comply with this Section unless the proceeds received hereunder would result in a Prepayment Event.

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                    SECTION 5.09.  Books and Records; Inspection and Audit Rights.  (a)  The Borrower will, and will cause each Subsidiary to, keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities.  The Borrower will, and will cause each Subsidiary to, permit any representatives designated by the Administrative Agent and, upon an Event of Default, any representatives designated by any Lender, in each case upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested.

                    (b)  The Borrower will use commercially reasonable efforts to cause the senior secured credit facilities made available under this Agreement to be continuously rated by S&P and Moody’s.

                    SECTION 5.10.  Compliance with Laws.  The Borrower will, and will cause each Subsidiary to, comply with all Requirements of Law with respect to it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to adversely effect the Borrower or any Subsidiary.

                    SECTION 5.11.  Use of Proceeds and Letters of Credit.  The proceeds of Loans drawn on or after the Effective Date will be used solely to finance the working capital needs and other general corporate purposes of the Borrower and the Subsidiaries, provided that such proceeds may not be used to finance any portion of the Acquisition.  No part of the proceeds of any Loan will be used, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board, including Regulations G, U and X.  Letters of Credit will be used solely to satisfy performance and payment obligations incurred by the Borrower or any of the Subsidiaries in the ordinary course of business.

                    SECTION 5.12.  Additional Subsidiaries.  If any additional Subsidiary is formed or acquired after the Effective Date, the Borrower will, within three Business Days after such Subsidiary is formed or acquired, notify the Administrative Agent and the Lenders thereof and cause the Collateral and Guarantee Requirement to be satisfied with respect to such Subsidiary (if it is a Subsidiary Loan Party) and with respect to any Equity Interest in or Indebtedness of such Subsidiary owned by or on behalf of any Loan Party.

                    SECTION 5.13.  Further Assurances.  (a)  The Borrower will, and will cause each Subsidiary Loan Party to, execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements, fixture filings, mortgages, deeds of trust and other documents), that may be required under any applicable law, or that the Administrative Agent or the Required Lenders may reasonably request, to cause the Collateral and Guarantee Requirement to be and remain satisfied, all at the expense of the Loan Parties.  The Borrower also agrees to provide to the Administrative Agent, from time to time upon request, evidence reasonably satisfactory to the Administrative Agent as to the perfection and priority of the Liens
created or intended to be created by the Security Documents.

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                    (b)  If any material assets (including any real property or improvements thereto or any interest therein with a fair market value in excess of $2,000,000) are acquired by the Borrower or any Subsidiary Loan Party after the Effective Date (other than assets constituting Collateral under the Collateral Agreement that become subject to the Lien created by the Collateral Agreement upon acquisition thereof), the Borrower will notify the Administrative Agent and the Lenders thereof, and, if requested by the Administrative Agent or the Required Lenders, the Borrower will cause such assets to be subjected to a Lien securing the Obligations and will take, and cause the Subsidiary Loan Parties to take, such actions as shall be necessary or reasonably requested by the Administrative Agent to grant and perfect such Liens, including actions
described in paragraph (a) of this Section, all at the expense of the Loan Parties.

                    SECTION 5.14.  Interest Rate Protection.  As promptly as practicable, and in any event within 45 days after the Effective Date, the Borrower will enter into, and thereafter for a period of not less than three years will maintain in effect, one or more Swap Agreements with such parties as shall be reasonably acceptable to the Administrative Agent, the effect of which is that at least 50% of the aggregate principal amount of Indebtedness (including Revolving LC Exposure) outstanding on such date and will be subject to interest at a fixed rate or the interest cost in respect of which will be fixed, in each case on terms and conditions reasonably acceptable to the Administrative Agent.

                    SECTION 5.15.  Mining.  The Borrower will, and will cause each Subsidiary to, (a) take all commercially reasonable efforts to ensure that all of their respective tenants, subtenants, contractors, subcontractors, and invitees comply in with all applicable Mining Laws, and obtain, comply and maintain any and all Mining Permits, applicable to any of them and (b) conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions in each case required under applicable Mining Laws and promptly comply in all respects with all lawful orders and directives of any Governmental Authority in respect of applicable Mining Laws.

                    SECTION 5.16.  Bailee’s Letters.  At any time that any Loan Party has coal valued at in excess of $2,000,000 stored on the premises of any third party, the Borrower will, and will cause each applicable Subsidiary to, use commercially reasonable efforts to deliver a Bailee’s Letter with respect thereto.

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ARTICLE VI

Negative Covenants

                    Until the Revolving Commitments have expired or been terminated and the principal of and interest on each Loan and all fees, expenses and other amounts payable (other than contingent amounts not yet due) under any Loan Document have been paid in full and all Letters of Credit have expired or been terminated and all LC Disbursements have been reimbursed and the Credit-Linked Deposits have been returned in full to the Synthetic LC Lenders, the Borrower covenants and agrees with the Lenders that:

                    SECTION 6.01.  Indebtedness; Certain Equity Securities.  (a)  The Borrower will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Indebtedness, except:

	
  
 
  	
  
                    (i)    Indebtedness   created under the Loan Documents;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
                    (ii)   the   Senior Notes in an aggregate principal amount not to exceed $150,000,000;
  
	
   
  	
  
 
  
	
  
 
  	
  
                    (iii)  Indebtedness   existing on the date hereof and set forth in Schedule 6.01 and   extensions, renewals and replacements of any such Indebtedness (other than in   respect of the Existing Company Secured Debt), provided that such   extending, renewal or replacement Indebtedness (A) shall not be   Indebtedness of an obligor that was not an obligor with respect to the   Indebtedness being extended, renewed or replaced, (B) shall not be in a   principal amount that exceeds the principal amount of the Indebtedness being   extended, renewed or replaced (plus any accrued but unpaid interest   and redemption premium thereon), (C) shall not have an earlier maturity   date or shorter weighted average life than the Indebtedness being extended,   renewed or replaced, (D) shall be subordinated to the
Obligations on the   same terms as the Indebtedness being extended, renewed or replaced and   (E) shall not have terms (including covenants, events of default,   remedies, redemption provisions and sinking fund provisions, but excluding   financial terms such as interest rates and redemption provisions) less   favorable to the Lenders than the terms of the Indebtedness being extended,   renewed or replaced;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
                    (iv)  Indebtedness   of the Borrower to any Subsidiary and of any Subsidiary to the Borrower or   any other Subsidiary, provided (A) that Indebtedness of any   Subsidiary that is not a Loan Party to the Borrower or any Subsidiary Loan   Party shall be subject to Section 6.04 and (B) Indebtedness of the   Borrower to any Subsidiary and Indebtedness of any Subsidiary Loan Party to   any Subsidiary that is not a Subsidiary Loan Party shall be subordinated to   the Obligations on terms reasonably satisfactory to the Administrative Agent;
  

79

	
  
 
  	
  
                    (v)   Guarantees   by the Borrower of Indebtedness of any Subsidiary and by any Subsidiary of   Indebtedness of the Borrower or any other Subsidiary, provided that   (A) the Indebtedness so Guaranteed is permitted by this Section (other   than clause (a)(iii) or (a)(vii)), (B) Guarantees by the Borrower   or any Subsidiary Loan Party of Indebtedness of any Subsidiary that is not a   Loan Party shall be subject to Section 6.04, (C) Guarantees   permitted under this clause (v) shall be subordinated to the Obligations   of the applicable Subsidiary to the same extent and on the same terms as the   Indebtedness so Guaranteed is subordinated to the Obligations and   (D) none of the Senior Notes shall be Guaranteed by any Subsidiary,   unless such Subsidiary is a Loan Party that has Guaranteed
the Obligations   pursuant to the Collateral Agreement;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
                    (vi)  (A) Indebtedness   of the Borrower or any Subsidiary incurred to finance the acquisition,   construction or improvement of any fixed or capital assets, including Capital   Lease Obligations and any Indebtedness assumed by the Borrower or any   Subsidiary in connection with the acquisition of any such assets or secured   by a Lien on any such assets prior to the acquisition thereof, provided   that such Indebtedness is incurred prior to or within 90 days after such   acquisition or the completion of such construction or improvement, and   (B) extensions, renewals and replacements of any such Indebtedness that   do not increase the outstanding principal amount thereof (plus any   accrued but unpaid interest and premium thereon), provided that the   aggregate principal amount of Indebtedness
permitted by this clause (vi)   shall not exceed $5,000,000 at any time outstanding;
  
	
   
  	
  
 
  
	
  
 
  	
  
                    (vii)  (A) Indebtedness   of any Person that becomes a Subsidiary after the date hereof, provided   that such Indebtedness exists at the time such Person becomes a Subsidiary   and is not created in contemplation of or in connection with such Person   becoming a Subsidiary, and (B) extensions, renewals and replacements of   any such Indebtedness that do not increase the outstanding principal amount   thereof (plus any accrued but unpaid interest and premium thereon), provided   that the aggregate principal amount of Indebtedness permitted by this   clause (vii) shall not exceed $5,000,000 at any time outstanding;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
                    (viii)  other   unsecured Indebtedness in an aggregate principal amount not exceeding   $5,000,000 at any time outstanding;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
                    (ix)   Indebtedness   owed to any Person (including obligations in respect of letters of credit for   the benefit of such Person) providing workers’ compensation, health,   disability or other employee benefits or property, casualty or liability   insurance, pursuant to reimbursement or indemnification obligations to such   Person, in each case incurred in the ordinary course of business;
  
	
   
  	
  
 
  
	
  
 
  	
  
                    (x)    Indebtedness   of the Borrower or any Subsidiary in respect of performance bonds, bid bonds,   appeal bonds, surety bonds, performance and completion guarantees and similar   obligations (other than in respect of other Indebtedness), in each case   provided in the ordinary course of business; and
  

80

	
  
 
  	
  
                    (xi)   Indebtedness   in respect of Swap Agreements permitted by Section 6.07.
  

                    (b)  The Borrower will not, and will not permit any Subsidiary to, issue any Disqualified Equity Interests.

                    SECTION 6.02.  Liens.  (a)  The Borrower will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Lien on any property now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, except:

	
  
 
  	
  
                    (i)  Liens   created under the Loan Documents;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
                    (ii)  Permitted   Encumbrances;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
                    (iii)  any   Lien on any property of the Borrower or any Subsidiary existing on the date   hereof and set forth in Schedule 6.02, provided that   (A) such Lien shall not apply to any other property of the Borrower or   any Subsidiary and (B) such Lien shall secure only those obligations   that it secures on the date hereof and extensions, renewals and replacements   thereof that do not increase the outstanding principal amount thereof (plus   any accrued but unpaid interest and premium thereon);
  
	
  
 
  	
  
 
  
	
   
  	
  
                    (iv)  any   Lien existing on any property prior to the acquisition thereof by the   Borrower or any Subsidiary or existing on any property of any Person that   becomes a Subsidiary after the date hereof prior to the time such Person   becomes a Subsidiary, provided that (A) such Lien is not created   in contemplation of or in connection with such acquisition or such Person   becoming a Subsidiary, as the case may be, (B) such Lien shall not apply   to any other property of the Borrower or any Subsidiary and (C) such   Lien shall secure only those obligations that it secures on the date of such   acquisition or the date such Person becomes a Subsidiary, as the case may be,   and extensions, renewals and replacements thereof that do not increase the   outstanding principal amount thereof (plus any accrued but
unpaid   interest and premium thereon);
  
	
  
 
  	
  
 
  
	
  
 
  	
  
                    (v)  Liens   on fixed or capital assets acquired, constructed or improved (including any   such assets made the subject of a Capital Lease Obligation incurred) by the   Borrower or any Subsidiary, provided that (A) such Liens secure   Indebtedness incurred to finance such acquisition, construction or   improvement and permitted by clause (vi)(A) of Section 6.01(a) or   to extend, renew or replace such Indebtedness and permitted by   clause (vi)(B) of Section 6.01(a), (B) such Liens and the   Indebtedness secured thereby are incurred prior to or within 90 days   after such acquisition or the completion of such construction or improvement,   provided that this clause (B) shall not apply to any Indebtedness   permitted by clause (vi)(B) of Section 6.01(a) or any Lien securing
 such Indebtedness, (C) the Indebtedness secured thereby does not exceed   the lesser of (x) the cost of acquiring, constructing or improving such   fixed or capital asset or (y) in the case of Indebtedness permitted by   clause (v)(A) of Section 6.01(a), such fixed or capital asset’s   fair market value at the time such security interest attaches, and in any   event, the aggregate principal amount of such Indebtedness does not exceed   $5,000,000 at any time outstanding and (D) such Liens shall not apply to   any other property of the Borrower or any Subsidiary;
  

81

	
  
 
  	
  
                    (vi)  Liens   of a collecting bank arising in the ordinary course of business under   Section 4-208 of the Uniform Commercial Code in effect in the relevant   jurisdiction covering only the items being collected upon;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
                    (vii)  Liens   representing any interest or title of a licensor, lessor or sublicensor or   sublessor under any lease or license permitted by this Agreement;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
                    (viii)  Liens   not otherwise permitted by this Section to the extent that neither   (A) the aggregate outstanding principal amount of the obligations   secured thereby nor (B) the aggregate fair market value (determined as   of the date such Lien is incurred) of the assets subject thereto exceeds   $1,000,000 at any time outstanding; and
  
	
   
  	
  
 
  
	
  
 
  	
  
                    (ix)  Liens   granted by a Subsidiary that is not a Loan Party in favor of the Borrower or   another Loan Party in respect of Indebtedness or other obligations owed by   such Subsidiary to such Loan Party.
  

                    SECTION 6.03.  Fundamental Changes.  (a)  The Borrower will not, and will not permit any Subsidiary to, merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Default shall have occurred and be continuing (i) any Person may merge into the Borrower in a transaction in which the Borrower is the surviving corporation, (ii) any Person (other than the Borrower) may merge into any Subsidiary in a transaction in which the surviving entity is a Subsidiary and (if any party to such merger is a Subsidiary Loan Party) is a Subsidiary Loan Party and (iii) any Subsidiary (other than a Subsidiary Loan Party) may liquidate or dissolve if the
Borrower determines in good faith that such liquidation or dissolution is in the best interests of the Borrower and is not materially disadvantageous to the Lenders, provided that any such merger involving a Person that is not a wholly owned Subsidiary immediately prior to such merger shall not be permitted unless also permitted by Sections 6.04, 6.05 and 6.06.

                    (b)  The Borrower will not, and will not permit any Subsidiary to, engage to any material extent in any business other than businesses of the type conducted by the Borrower and the Subsidiaries on the Effective Date and any other businesses that are related, ancillary or complementary to such business, including the operation of natural gas wells, natural gas removal, natural resource removal businesses and other businesses related to the energy and electricity generation businesses.

82

                    SECTION 6.04.  Investments, Loans, Advances, Guarantees and Acquisitions.  The Borrower will not, and will not permit any Subsidiary to, purchase, hold or acquire (including pursuant to any merger with any Person that was not a wholly owned Subsidiary prior to such merger) any Equity Interests in or evidences of Indebtedness or other securities (including any option, warrant or other right to acquire any of the foregoing) of, make or permit to exist any loans or advances to, Guarantee any obligations of, or make or permit to exist any investment or any other interest in, any other Person, or purchase or otherwise acquire (in one transaction or a series of transactions) any assets of any other Person constituting a business unit, except:

	
  
 
  	
  
          (a)  Permitted   Investments;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (b)  Permitted   Acquisitions, provided that the aggregate purchase price, which shall   be deemed to include (i) any amounts actually paid pursuant to any   post-closing payment adjustments, earn-outs or non-compete payments and   (ii) the principal amount of Indebtedness that is assumed pursuant to   Section 6.01(a)(vii) or otherwise incurred in connection with such   Permitted Acquisition, shall not exceed $25,000,000 in any fiscal year and   $50,000,000 in the aggregate plus, in each case (without duplication)   (A) an amount equal to any returns of capital or sale proceeds actually   received in cash in respect of any such Permitted Acquisition (which amount   shall not exceed the purchase price paid (including the principal amount of   Indebtedness assumed pursuant to Section 6.01(a)(vii)) in connection   therewith) in respect of such Permitted
Acquisition) and (B) any   Qualified Equity Interests issued in payment of any portion of such purchase   price and the Net Proceeds of the issuance of Qualified Equity Interests (to   the extent such Net Proceeds are used to pay any portion of such purchase   price);
  
	
   
  	
  
 
  
	
  
 
  	
  
          (c)  investments   existing on the date hereof and set forth on Schedule 6.04;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (d)  investments   by the Borrower and the Subsidiaries in Equity Interests in their respective   Subsidiaries, provided that (i) any such Equity Interests held by   a Loan Party shall be pledged pursuant to the Collateral Agreement (subject   to the limitations applicable to Equity Interests of a Foreign Subsidiary   referred to in the definition of the term “Collateral and Guarantee   Requirement”) and (ii) the aggregate amount of investments made pursuant   to this clause (ii) by Loan Parties in Subsidiaries that are not Loan Parties   (together with outstanding intercompany loans permitted under   clause (ii) to the proviso to paragraph (e) of this Section and   outstanding Guarantees permitted under the proviso to paragraph (f) of   this Section) shall not exceed $1,000,000 at any time outstanding (in each   case determined without regard to
any write-downs or write-offs);
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (e)  loans   or advances made by the Borrower to any Subsidiary and made by any Subsidiary   to the Borrower or any other Subsidiary, provided that (i) any   such loans and advances made by a Loan Party shall be evidenced by a   promissory note pledged pursuant to the Collateral Agreement and   (ii) the amount of such loans and advances made pursuant to this   clause (ii) by Loan Parties to Subsidiaries that are not Loan Parties   (together with investments permitted under clause (ii) of   paragraph (d) of this Section and outstanding Guarantees permitted under   the proviso to paragraph (f) of this Section) shall not exceed   $1,000,000 at any time outstanding (in each case determined without regard to   any write-downs or write-offs);
  

83

	
  
 
  	
  
          (f)  Guarantees   of Indebtedness of the Borrower or any Subsidiary that are permitted by   Section 6.01, provided that the aggregate principal amount of   Indebtedness of Subsidiaries that are not Loan Parties that is Guaranteed by   any Loan Party (together with investments permitted under clause (ii) to   the proviso of paragraph (d) of this Section and intercompany loans   permitted under clause (ii) to the proviso to paragraph (e) of this   Section) shall not exceed $1,000,000 at any time outstanding (in each case   determined without regard to any write-downs or write-offs);
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (g)  loans   or advances to employees of the Borrower or any Subsidiary made in the   ordinary course of business of the Borrower or any Subsidiary not exceeding   $500,000 in the aggregate outstanding at any time (determined without regard   to any write-downs or write-offs of such loans or advances);
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (h)  payroll,   travel and similar advances to cover matters that are expected at the time of   such advances ultimately to be treated as expenses of the Borrower or any   Subsidiary for accounting purposes and that are made in the ordinary course   of business;
  
	
   
  	
  
 
  
	
  
 
  	
  
          (i)  investments   received in connection with the bankruptcy or reorganization of, or   settlement of delinquent accounts and disputes with, customers and suppliers,   in each case in the ordinary course of business;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (j)  investments   in the form of Swap Agreements permitted by Section 6.07;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (k)  investments   of any Person existing at the time such Person becomes a Subsidiary or   consolidates or merges with the Borrower or any Subsidiary (including in   connection with a Permitted Acquisition) so long as such investments were not   made in contemplation of or in connection with such Person becoming a   Subsidiary or of such consolidation or merger;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (l)  investments   resulting from pledges or deposits described in clause (c) or (d) of the   definition of the term “Permitted Encumbrance”;
  
	
   
  	
  
 
  
	
  
 
  	
  
          (m)  investments   received in connection with the disposition of any asset permitted by   Section 6.05;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (n)  receivables   or other trade payables owing to the Borrower or a Subsidiary if created or   acquired in the ordinary course of business and payable or dischargeable in   accordance with customary trade terms, provided that such trade terms   may include such concessionary trade terms, as the Borrower or any Subsidiary   deems reasonable under the circumstances; and
  

84

	
  
 
  	
  
          (o)  other   investments, loans and advances by the Borrower or any Subsidiary in an   aggregate amount, as valued at cost at the time each such investment is made   and including all related commitments for future advances and the principal   amount of any Indebtedness that is assumed or otherwise incurred in   connection with such investments, loans and advances, not exceeding   $1,000,000 in the aggregate for all such investments made or committed to be   made from and after the Effective Date plus an amount equal to any   returns of capital or sale proceeds actually received in cash in respect of   any such investments (which amount shall not exceed the amount of such   investment valued at cost at the time such investment was made).
  

                    SECTION 6.05.  Asset Sales.  The Borrower will not, and will not permit any Subsidiary to, sell, transfer, lease or otherwise dispose of any asset, including any Equity Interest owned by it, nor will the Borrower permit any Subsidiary to issue any additional Equity Interest in such Subsidiary (other than issuing directors’ qualifying shares and other than issuing Equity Interests to the Borrower or another Subsidiary in compliance with Section 6.04(d)), except:

	
  
 
  	
  
          (a)  sales,   transfers, leases and other dispositions of (i) inventory,   (ii) used or surplus equipment and (iii) Permitted Investments, in   each case in the ordinary course of business;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (b)  sales,   transfers, leases and other dispositions to the Borrower or a Subsidiary, provided   that any such sales, transfers, leases or other dispositions involving a   Subsidiary that is not a Loan Party shall be made in compliance with   Section 6.09;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (c)  sales,   transfers and other dispositions of accounts receivable in connection with   the compromise, settlement or collection thereof consistent with past   practice;
  
	
   
  	
  
 
  
	
  
 
  	
  
          (d)  sales,   transfers, leases and other dispositions of property to the extent that such   property constitutes an investment permitted by clause (i), (k) or (m)   of Section 6.04 or another asset received as consideration for the   disposition of any asset permitted by this Section (in each case, other than   Equity Interests in a Subsidiary, unless all Equity Interests in such   Subsidiary are sold);
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (e)  sale   and leaseback transactions permitted by Section 6.06;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (f)  leases   entered into in the ordinary course of business, to the extent that they do   not materially interfere with the business of the Borrower or any Subsidiary;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (g)  dispositions   resulting from any casualty or other insured damage to, or any taking under   power of eminent domain or by condemnation or similar proceeding of, any   property of the Borrower or any Subsidiary; and
  

85

	
  
 
  	
  
          (h)  sales,   transfers and other dispositions of assets (other than Equity Interests in a   Subsidiary unless all Equity Interests in such Subsidiary are sold) that are   not permitted by any other clause of this Section, provided that the   aggregate fair market value of all assets sold, transferred or otherwise   disposed of in reliance upon this clause (h) shall not exceed   $10,000,000 during any fiscal year of the Borrower,
  

provided that all sales, transfers, leases and other dispositions permitted hereby (other than those permitted by clause (b)) shall be made for fair value and (other than those permitted by clause (b) (unless the disposition is to a Subsidiary that is not a Loan Party), (d) and (h) for at least 75% cash consideration payable at the time of such sale, transfer or other disposition.

                    SECTION 6.06.  Sale and Leaseback Transactions.  The Borrower will not, and will not permit any Subsidiary to, enter into any arrangement, directly or indirectly, whereby it shall sell or transfer any property used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property that it intends to use for substantially the same purpose or purposes as the property sold or transferred, except for any such sale of any fixed or capital assets by the Borrower or any Subsidiary that is made for cash consideration in an amount not less than the fair value of such fixed or capital asset and is consummated within 90 days after the Borrower or such Subsidiary acquires or completes the construction of such fixed or capital asset, provided that, if such
sale and leaseback results in a Capital Lease Obligation, such Capital Lease Obligation is permitted by Section 6.01(a)(vi) and any Lien made the subject of such Capital Lease Obligation is permitted by Section 6.02(a)(v).

                    SECTION 6.07.  Swap Agreements.  The Borrower will not, and will not permit any Subsidiary to, enter into any Swap Agreement, except (a) Swap Agreements required by Section 5.14 or entered into to hedge or mitigate risks to which the Borrower or any Subsidiary has actual exposure (other than those in respect of shares of capital stock or other equity ownership interests of the Borrower or any Subsidiary) and (b) Swap Agreements entered into in order to effectively cap, collar or exchange interest rates (from fixed to floating rates, from floating rates to fixed rates, from one floating rate to another floating rate or otherwise) with respect to any interest-bearing liability or investment of the Borrower or any Subsidiary.

                    SECTION 6.08.  Restricted Payments; Certain Payments of Indebtedness.  (a)  The Borrower will not, and will not permit any Subsidiary to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except the Subsidiaries may declare and pay dividends ratably with respect to their Equity Interests.

                    (b)  The Borrower will not, and will not permit any Subsidiary to, make or agree to pay or make, directly or indirectly, any payment or other distribution (whether in cash, securities or other property) of or in respect of principal of or interest on any Indebtedness, or any payment or other distribution (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancelation or termination of any Indebtedness, or any other payment (including any payment under any Swap Agreement) that has a substantially similar effect to any of the foregoing, except:

86

	
  
 
  	
  
                    (i)  payment   of Indebtedness created under the Loan Documents;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
                    (ii)  payment   of regularly scheduled interest and principal payments as, in the form of   payment and when due in respect of any Indebtedness;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
                    (iii)  refinancings   of Indebtedness to the extent permitted by Section 6.01; and
  
	
  
 
  	
  
 
  
	
  
 
  	
  
                    (iv)  payment   of secured Indebtedness that becomes due as a result of the voluntary sale or   transfer of the property securing such Indebtedness.
  

                    SECTION 6.09.  Transactions with Affiliates.  The Borrower will not, and will not permit any Subsidiary to, sell, lease or otherwise transfer any property to, or purchase, lease or otherwise acquire any property from, or otherwise engage in any other transactions with, any of its Affiliates, except (i) transactions in the ordinary course of business at prices and on terms and conditions not less favorable to the Borrower or such Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties, (ii) transactions between or among the Borrower and the Subsidiary Loan Parties not involving any other Affiliate, (iii) loans or advances to employees permitted under Section 6.04(g), (iv) payroll, travel and similar advances to cover matters permitted under
Section 6.04(h), (v) the payment of reasonable fees to directors of the Borrower or any Subsidiary who are not employees of the Borrower or any Subsidiary, and compensation and employee benefit arrangements paid to, and indemnities provided for the benefit of, directors, officers or employees of the Borrower or the Subsidiaries in the ordinary course of business, (vi) any issuances of securities or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment agreements, stock options and stock ownership plans approved by the Borrower’s board of directors, (vii) employment and severance arrangements entered into in the ordinary course of business between the Borrower or any Subsidiary and any employee thereof and approved by the Borrower’s board of directors and (viii) any Restricted Payment permitted by Section 6.08, provided that, prior to the consummation of any transaction contemplated by this Section,
the chief executive officer shall have delivered a certificate to the Administrative Agent, in form and substance reasonably satisfactory to the Administrative Agent, certifying that such transaction complies with this Section.

                    SECTION 6.10.  Restrictive Agreements.  The Borrower will not, and will not permit any Subsidiary to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of the Borrower or any Subsidiary to create, incur or permit to exist any Lien upon any of its property or (b) the ability of any Subsidiary to pay dividends or other distributions with respect to any of its Equity Interests or to make or repay loans or advances to the Borrower or any other Subsidiary or to Guarantee Indebtedness of the Borrower or any other Subsidiary, provided that (i) the foregoing shall not apply to restrictions and conditions imposed by (A) law or (B) any Loan Document, (ii) the foregoing shall
not apply to restrictions and conditions existing on the date hereof identified on Schedule 6.10 or to other restrictions that are not less favorable to the Lenders and are contained in the documentation governing any Indebtedness that refinances the Indebtedness that imposes such restrictions (but shall apply to any extension or renewal of, or any amendment or modification or replacement expanding the scope of, any such restriction or condition), (iii) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary or any assets pending such sale, provided that such restrictions and conditions apply only to the Subsidiary or assets that is or are to be sold and such sale is permitted hereunder, (iv) clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to
the property securing such Indebtedness and (v) clause (a) of the foregoing shall not apply to customary provisions in leases and other contracts restricting the assignment thereof.

87

                    SECTION 6.11.  Amendment of Material Documents.  The Borrower will not, and will not permit any Subsidiary to, amend, modify, waive, terminate or release (a) its certificate of incorporation, by-laws or other organizational documents, (b) any Acquisition Document, (c) any Senior Notes Documents, (d) the Existing Company Secured Notes and (e) the Indebtedness permitted under Section 6.01(a)(iii), in each case if the effect of such amendment, modification, waiver, termination or release is adverse to the Borrower, any Subsidiary or the Lenders.

                    SECTION 6.12.  Fixed Charge Coverage Ratio.  The Borrower will not permit the ratio of (a) Consolidated EBITDA to (b) Consolidated Fixed Charges, in each case for any period of four consecutive fiscal quarters ending on any date during any period set forth below, to be less than the ratio set forth below opposite such period:

	
  
Period
  	
   
 	
  
Ratio
  	
   
 
	
  

  	
  
 
  	
  

  	
   
 
	
  September 30, 2005 through September 30, 2006
  	
  
 
  	
  
1.000 to 1.00
  	
   
 
	
  
October 1, 2006 through September 30, 2007
  	
  
 
  	
  
1.125 to 1.00
  	
   
 
	
  
October 1, 2007 and thereafter
  	
  
 
  	
  
1.200 to 1.00
  	
   
 

                    SECTION 6.13.  Leverage Ratio.  The Borrower will not permit the Leverage Ratio as of any date during any period set forth below to exceed the ratio set forth opposite such period:

	
  
Period
  	
   
 	
  
Ratio
  	
   
 
	
  

  	
   
  	
  

  	
  
 
  
	
  
September 30, 2005 through September 30, 2006
  	
  
 
  	
  
2.50 to 1.00
  	
  
 
  
	
  
October 1, 2006 through September 30, 2007
  	
  
 
  	
  
2.25 to 1.00
  	
  
 
  
	
  
October 1, 2007 and thereafter
  	
  
 
  	
  
2.00 to 1.00
  	
  
 
  

88

                    SECTION 6.14.  Senior Secured Leverage Ratio.  The Borrower will not permit the Senior Secured Leverage Ratio as of any date during any period set forth below to exceed the ratio set forth opposite such period:

	
  
Period
  	
   
 	
  
Ratio
  	
   
 
	
  

  	
  
 
  	
  

  	
  
 
  
	
  
September 30, 2005 and thereafter
  	
  
 
  	
  
0.50 to 1.00
  	
  
 
  

                    SECTION 6.15.  Maximum Capital Expenditures.  (a)  The aggregate amount of Capital Expenditures made by the Borrower and the Subsidiaries in any fiscal year shall not exceed the amount set forth below opposite such fiscal year:

	
  Year
  	
   
 	
  
Amount
  	
   
 
	
  

  	
  
 
  	
  

  	
  
 
  
	
  
2005
  	
  
 
  	
  
$80,000,000
  	
  
 
  
	
  
2006 and each fiscal year thereafter
  	
  
 
  	
  
$65,000,000
  	
  
 
  

                    (b)  The amount of Capital Expenditures set forth in Section 6.15(a) in respect of any fiscal year commencing with the fiscal year ending on December 31, 2006, shall be (i) increased (but not decreased) by (A) (x) the amount of unused Capital Expenditures for the immediately preceding fiscal year less (y) the amount of unused Capital Expenditures carried forward to such immediately preceding fiscal year pursuant to this paragraph and (B) the amount of Capital Expenditures specified by the Borrower in a written notice delivered to the Administrative Agent not later than 30 days prior to the effectiveness of any increase in the amount of Capital Expenditures in respect thereof, provided that in the case of this clause (B) the amount of such increase shall not exceed the amount of Capital
Expenditures set forth in Section 6.15(a) for the immediately following fiscal year and (ii) decreased by the amount brought forward from such year to the prior fiscal year pursuant to clause (i)(B) above.

                    SECTION 6.16.  Changes in Fiscal Periods.  The Borrower will neither (a) permit its fiscal year or the fiscal year of any Subsidiary to end on a day other than December 31, nor (b) change its method of determining fiscal quarters.

                    SECTION 6.17.  Anti-Terrorism Laws.  The Loan Parties and their respective Affiliates and agents will not (a) conduct any business or engage in any transaction or dealing with any Blocked Person, including the making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, (b) deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order No. 13224; or (c) engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in the Executive Order No. 13224, the USA Patriot Act or any other Anti-Terrorism Law.

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ARTICLE VII

Events of Default

                     SECTION 7.01.  Events of Default.  If any of the following events (any such event, an “Event of Default”) shall occur:

	
  
 
  	
  
          (a)  the   Borrower shall fail to pay any principal of any Loan or any reimbursement   obligation in respect of any LC Disbursement when and as the same shall   become due and payable, whether at the due date thereof or at a date fixed   for prepayment thereof or otherwise;
  
	
   
  	
  
 
  
	
  
 
  	
  
          (b)  the   Borrower shall fail to pay any interest on any Loan or any fee or any other   amount (other than an amount referred to in paragraph (a) of this   Section) payable under any Loan Document, when and as the same shall become   due and payable, and such failure shall continue unremedied for a period of   three Business Days;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (c)  any   representation or warranty made or deemed made by or on behalf of the   Borrower or any Subsidiary in or in connection with any Loan Document or any   amendment or modification thereof or waiver thereunder, or in any report,   certificate, financial statement or other document furnished pursuant to or   in connection with any Loan Document or any amendment or modification thereof   or waiver thereunder, shall prove to have been incorrect when made or deemed   made;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (d)  The   Borrower shall fail to observe or perform any covenant, condition or   agreement contained in Section 5.02, 5.04 (with respect to the existence   of the Borrower) or 5.11 or in Article VI;
  
	
   
  	
  
 
  
	
  
 
  	
  
          (e)  any   Loan Party shall fail to observe or perform any covenant, condition or   agreement contained in any Loan Document (other than those specified in   paragraph (a), (b) or (d) of this Section), and such failure shall   continue unremedied for a period of 30 days after notice thereof from   any Lender or the Administrative Agent to the Borrower;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (f)  The   Borrower or any Subsidiary shall fail to make any payment (whether of   principal or interest and regardless of amount) in respect of any Material   Indebtedness, when and as the same shall become due and payable (after giving   effect to any cure periods with respect thereto);
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (g)  any   event or condition occurs that results in any Material Indebtedness becoming   due prior to its scheduled maturity or that enables or permits (with or   without the giving of notice, the lapse of time or both) the holder or   holders of any Material Indebtedness or any trustee or agent on its or their   behalf to cause any Material Indebtedness to become due, or to require the   prepayment, repurchase, redemption or defeasance thereof, prior to its   scheduled maturity, provided that this paragraph (g) shall not   apply to secured Indebtedness that becomes due as a result of the sale,   transfer or other disposition (including as a result of a casualty or   condemnation event) of the property securing such Indebtedness (to the extent   such sale, transfer or other disposition is not prohibited under this   Agreement);
  

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          (h)  an   involuntary proceeding shall be commenced or an involuntary petition shall be   filed seeking (i) liquidation, reorganization or other relief in respect   of the Borrower or any Subsidiary or its debts, or of a substantial part of   its assets, under any Federal, state or foreign bankruptcy, insolvency,   receivership or similar law now or hereafter in effect or (ii) the   appointment of a receiver, trustee, custodian, sequestrator, conservator or   similar official for the Borrower or any Subsidiary or for a substantial part   of its assets, and, in any such case, such proceeding or petition shall continue   undismissed for 60 days or an order or decree approving or ordering any   of the foregoing shall be entered;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (i)  The   Borrower or any Subsidiary shall (i) voluntarily commence any proceeding   or file any petition seeking liquidation, reorganization or other relief   under any Federal, state or foreign bankruptcy, insolvency, receivership or   similar law now or hereafter in effect, (ii) consent to the institution   of, or fail to contest in a timely and appropriate manner, any proceeding or   petition described in paragraph (h) of this Article, (iii) apply   for or consent to the appointment of a receiver, trustee, custodian,   sequestrator, conservator or similar official for the Borrower or any   Subsidiary or for a substantial part of its assets, (iv) file an answer   admitting the material allegations of a petition filed against it in any such   proceeding, (v) make a general assignment for the benefit of creditors   or (vi) take any action for the purpose of
effecting any of the   foregoing;
  
	
   
  	
  
 
  
	
  
 
  	
  
          (j)  The   Borrower or any Subsidiary shall become unable, admit in writing its   inability or fail generally to pay its debts as they become due;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (k)  one   or more judgments for the payment of money in an aggregate amount in excess   of $5,000,000 shall be rendered against the Borrower, any Subsidiary or any   combination thereof and the same shall remain undischarged for a period of   30 consecutive days during which execution shall not be effectively   stayed, or any action shall be legally taken by a judgment creditor to attach   or levy upon any assets of the Borrower or any Subsidiary to enforce any such   judgment;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (l)  an   ERISA Event shall have occurred that, in the opinion of the Required Lenders,   when taken together with all other ERISA Events that have occurred, could   reasonably be expected to result in liability of the Borrower and the   Subsidiaries in an aggregate amount exceeding (i) $2,500,000 in any year   or (ii) $5,000,000 for all periods;
  
	
   
  	
  
 
  
	
  
 
  	
  
          (m)  any   Lien purported to be created under any Security Document shall cease to be,   or shall be asserted by any Loan Party not to be, a valid and perfected Lien   on any Collateral with a fair value in excess of $2,000,000, with the   priority required by the applicable Security Document, except (i) as a   result of the sale or other disposition of the applicable Collateral in a   transaction permitted under the Loan Documents or (ii) as a result of   the Administrative Agent’s failure to (A) maintain possession of any   stock certificates, promissory notes or other instruments delivered to it   under the Collateral Agreement or (B) file Uniform Commercial Code   continuation statements;
  

91

	
  
 
  	
  
          (n)  any   Loan Document or any Guarantee shall for any reason be asserted by any Loan   Party not to be a legal, valid and binding obligation of any Loan Party party   thereto;
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          (o)  the   Guarantees of the Loan Document Obligations by the Borrower and the   Subsidiary Loan Parties pursuant to the Collateral Agreement shall cease to   be in full force and effect (in each case, other than in accordance with the   terms of the Loan Documents); or
  
	
   
  	
  
 
  
	
  
 
  	
  
          (p)  a   Change in Control shall occur;
  

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

ARTICLE VIII

The Administrative Agent

                    Each of the Lenders and the Issuing Bank hereby irrevocably appoints the Administrative Agent as its agent and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms of the Loan Documents, together with such actions and powers as are reasonably incidental thereto.  The provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and the Issuing Bank, and the Borrower shall not have rights as a third party beneficiary of any of such provisions.

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

                    The Administrative Agent shall not have any duties or obligations except those expressly set forth in the Loan Documents.  Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) the Administrative Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated by the Loan Documents that the Administrative Agent is required to exercise in writing as directed by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary or believed by the Administrative Agent in good faith to be necessary under the circumstances as provided in
Section 2.05(b)(viii), Section 9.02 or Section 9.04(e)), and (c) except as expressly set forth in the Loan Documents, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any Subsidiary that is communicated to or obtained by the bank serving as Administrative Agent or any of its Affiliates in any capacity.  The Administrative Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 2.05(b)(viii), Section 9.02 or Section 9.04(e)) or in the absence of its own gross negligence or wilful misconduct.  The Administrative Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to the Administrative Agent by the Borrower or a
Lender, and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

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

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

                    In determining compliance with any condition hereunder to the making of a Loan, or the issuance, amendment, renewal or extension of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the Issuing Bank, the Administrative Agent may presume that such condition is satisfactory to such Lender or the Issuing Bank unless the Administrative Agent shall have received notice to the contrary from such Lender or the Issuing Bank prior to the making of such Loan or the issuance, amendment, renewal or extension of such Letter of Credit.

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

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

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                    Notwithstanding anything herein to the contrary, none of the Sole Bookrunner, Joint Lead Arrangers, Syndication Agent, Documentation Agent and Collateral Agent listed on the cover page hereof shall have any powers, duties or responsibilities under any Loan Document, except in its capacity, as applicable, as the Administrative Agent, a Lender or the Issuing Bank hereunder.

ARTICLE IX

Miscellaneous

                    SECTION 9.01.  Notices.  Any notice, request, demand, direction or other communication (for purposes of this Section 9.01 only, a “Notice”) to be given to or made upon any party hereto under any provision of this Agreement shall be given or made by telephone or in writing (which includes means of electronic transmission (i.e., “e-mail”) or facsimile transmission or by setting forth such Notice on a site on the World Wide Web (a “Website Posting”) if Notice of such Website Posting (including the information necessary to access such site) has previously been delivered to the applicable parties hereto by another means set forth in this Section 9.01) in accordance with this Section 9.01.  Any such Notice must be delivered to the applicable parties hereto
at the addresses and numbers set forth under their respective names on Schedule 9.01 hereof or in accordance with any subsequent unrevoked Notice from any such party that is given in accordance with this Section 9.01.  Any Notice shall be effective:

	
                        (a)          In   the case of hand-delivery, when delivered;

	
  
 
  	
  
 
  
	
                      (b)          If   given by mail, four days after such Notice is deposited with the United   States Postal Service, with first-class postage prepaid, return receipt   requested;

	
  
 
  	
  
 
  
	
                      (c)          In   the case of a telephonic Notice, when a party is contacted by telephone, if   delivery of such telephonic Notice is confirmed no later than the next   Business Day by hand delivery, a facsimile or electronic transmission, a   Website Posting or overnight courier delivery of a confirmatory notice   (received at or before noon on such next Business Day);

	
  
 
  	
  
 
  
	
                      (d)          In   the case of a facsimile transmission, when sent to the applicable party’s   facsimile machine’s telephone number if the party sending such Notice   receives confirmation of the delivery thereof from its own facsimile machine;

	
   
  	
  
 
  
	
                      (e)          In   the case of electronic transmission, when actually received;

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                      (f)          In   the case of a Website Posting, upon delivery of a Notice of such posting   (including the information necessary to access such web site) by another   means set forth in this Section 9.01; and

	
  
 
  	
  
 
  
	
                      (g)          If   given by any other means (including by overnight courier), when actually   received.

Any Lender giving a Notice to a Loan Party shall concurrently send a copy thereof to the Administrative Agent, and the Administrative Agent shall promptly notify the other Lenders of its receipt of such Notice.  Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto.

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

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                    (b)  Except
as provided in Section 2.20 with respect to any Incremental Revolving
Facility Amendment, neither any Loan Document nor any provision thereof may be
waived, amended or modified except, in the case of this Agreement, pursuant to
an agreement or agreements in writing entered into by the Borrower and the
Required Lenders or, in the case of any other Loan Document, pursuant to an
agreement or agreements in writing entered into by the Administrative Agent and
the Loan Party or Loan Parties that are parties thereto, in each case with the
consent of the Required Lenders, provided that no such agreement shall
(i) increase the Commitment of any Lender without the written consent of
such Lender, (ii) reduce the principal amount of any Loan or LC
Disbursement or reduce the rate of interest thereon, or reduce any fees payable
hereunder, without the written consent of each Lender affected thereby,
(iii) postpone the maturity of any Loan, or the required date of
reimbursement of any LC Disbursement, or extend the date on which the
Credit-Linked Deposits are required to be returned in full to the Synthetic LC
Lenders, or any date for the payment of any interest
or fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender affected thereby, (iv) change (x) Section 2.08(c) in a manner that would alter the pro rata termination or reduction of the Revolving Commitments or reduction of the Total Credit-Linked Deposit required thereby or (y) Section 2.18(b) or (c) in a manner that would alter the pro rata sharing of payments required thereby, in each case without the written consent of each Lender, (v) change any of the provisions of this Section or the percentage set forth in the definition of “Required Lenders” or any other provision of any Loan Document specifying the number or percentage of Lenders (or Revolving Lenders or Synthetic LC Lenders, as the case may be) required to waive, amend or modify any rights thereunder or make any determination or grant any
consent thereunder, without the written consent of each Lender (or each Revolving Lender or Synthetic LC Lender, as the case may be) (it being understood that, with the consent of the Required Lenders, additional extensions of credit pursuant to this Agreement may be included in the determination of the Required Lenders on substantially the same basis as the Commitments on the date hereof), (vi) release any Subsidiary Loan Party from its Guarantee under the Collateral Agreement (except as expressly provided in the Collateral Agreement), or limit its liability in respect of such Guarantee, without the written consent of each Lender, (vii) release all or substantially all of the Collateral from the Liens of the Security Documents, without the written consent of each Lender or (viii) change any provisions of any Loan Document in a manner that by its terms adversely affects the rights in respect of payments due to Lenders participating in Loans differently than those participating in
Synthetic Letters of Credit (and vice versa), without the written consent of Lenders holding a majority in interest of the outstanding Loans, or Synthetic Letters of Credit, as applicable; provided further that (A) no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent or the Issuing Bank without the prior written consent of the Administrative Agent or the Issuing Bank, as the case may be, and (B) any waiver, amendment or modification of this Agreement that by its terms affects the rights or duties under this Agreement of Lenders participating in Loans, but not the Lenders participating in Synthetic Letters of Credit (or vice versa) may be effected by an agreement or agreements in writing entered into by the Borrower and requisite percentage in interest of the affected Lenders that would be required to consent thereto under this Section if such Lenders were the only Lenders hereunder at the time.

                    (c)  In connection with any proposed amendment, modification, waiver or termination (a “Proposed Change”) requiring the consent of all affected Lenders, if the consent of the Required Lenders (and, to the extent any Proposed Change requires the consent of Lenders participating in Loans or those participating in Synthetic Letter of Credit, as the case may be, pursuant to clause (viii) or (B) of paragraph (a) of this Section, the consent of a majority in interest of the outstanding Loans, unused Commitments and Total Credit-Linked Deposits) to such Proposed Change is obtained, but the consent to such Proposed Change of other Lenders whose consent is required is not obtained (any such Lender whose consent is not obtained as described in paragraph (b) of this Section being referred to as a
“Non-Consenting Lender”)), then, so long as the Lender that is acting as Administrative Agent is not a Non-Consenting Lender, the Borrower may, at its sole expense and effort, upon notice to such Non-Consenting Lender and the Administrative Agent, require such Non-Consenting Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that (a) the Borrower shall have received the prior written consent of the Administrative Agent (and, if a Revolving Commitment is being assigned, the Issuing Bank), which consent shall not unreasonably be withheld and (b) such Non-Consenting Lender shall have received payment of an amount equal to its Credit-Linked Deposit, the outstanding principal of its Loans and
participations in Letters of Credit, accrued interest thereon, accrued fees and all other amounts payable to it hereunder from the assignee (to the extent of such deposit, outstanding principal, participations, and accrued interest and fees) or the Borrower (in the case of all other amounts).

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                    SECTION 9.03.  Expenses; Indemnity; Damage Waiver.  (a)  The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent, the Syndication Agent and their respective Affiliates, including the reasonable expenses incurred in connection with due diligence and the reasonable fees, charges and disbursements of a single New York counsel for the Administrative Agent and the Syndication Agent and of a single local counsel for the Administrative Agent in each applicable jurisdiction, in connection with the syndication of the senior secured credit facilities provided for herein, the preparation and administration of the Loan Documents or any amendments, modifications or waivers of the provisions thereof (whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all out-of-pocket expenses incurred by the Administrative Agent, the Syndication Agent, the Issuing Bank or any Lender, including the fees, charges and disbursements of any counsel for the Administrative Agent, the Syndication Agent, the Issuing Bank or any Lender, in connection with the enforcement or protection of its rights in connection with the Loan Documents, including its rights under this Section, or in connection with the Loans made, Credit-Linked Deposits deposited or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.

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

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                    (c)  To the extent that the Borrower fails to pay any amount required to be paid by it to the Administrative Agent, the Syndication Agent or the Issuing Bank under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the Administrative Agent, the Syndication Agent or the Issuing Bank, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent, the Syndication Agent or the Issuing Bank in its capacity as such.  For purposes hereof, a Lender’s “pro rata share” shall be determined
based upon its share of the sum of the aggregate Revolving Exposures, Synthetic LC Exposures and unused Commitments and Credit-Linked Deposits at the time (without duplication).

                    (d)  To the fullest extent permitted by applicable law, the Borrower shall assert, and each hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages), directly or indirectly arising out of, relating to or based upon any Loan Document or any agreement or instrument contemplated thereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.

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

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

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                    (b)  (i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more Eligible Assignees (as defined below) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans or Credit-Linked Deposits at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld or delayed) of (A) the Borrower, provided, however, that no consent of the Borrower shall be required (1) for any assignment of Credit-Linked Deposits to a Lender, an Affiliate of a Lender, an Approved Fund (as defined below) or (2) if a Default has occurred and is continuing, any other assignee, (B) the Administrative Agent, provided that no consent of the Administrative Agent shall be
required for an assignment of all or any portion of a Credit-Linked Deposit to a Lender, an Affiliate of a Lender or an Approved Fund and (C) the Issuing Bank, provided that no consent of the Issuing Bank shall be required for an assignment of all or any portion of a Credit-Linked Deposit to an Approved Fund.

                         (ii)  Assignments shall be subject to the following additional conditions: (A) except in the case of an assignment to a Lender, an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender’s Commitment, Loans or Credit-Linked Deposits, the amount of the Commitment, Loans or Credit-Linked Deposits of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than $1,000,000 or, if smaller, the entire remaining amount of the assigning Lender’s Commitment, Loans or Credit-Linked Deposits unless the Borrower and the Administrative Agent otherwise consent (such consent not to be unreasonably withheld or delayed),
provided that no such consent of the Borrower shall be required if a Default has occurred and is continuing, (B) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement, provided that this clause (B) shall not be construed to prohibit assignment of a proportionate part of all the assigning Lender’s rights and obligations in respect of Commitments, Loans or Credit-Linked Deposits, (C) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, provided that assignments made pursuant to Section 2.19(b) or Section 9.02(c) shall not require the signature of the assigning Lender to become effective and (D) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire and any tax forms required by Section 2.17(f).

                    For purposes of paragraph (b) of this Section, the terms “Approved Fund” and “CLO” have the following meanings:

                    “Approved Fund” means (a) a CLO and (b) with respect to any Lender that is a fund that invests in bank loans and similar extensions of credit, any other fund that invests in bank loans and similar extensions of credit and is managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

100

                    “CLO” means an entity (whether a corporation, partnership, trust or otherwise) that is engaged in making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and is administered or managed by a Lender or an Affiliate of such Lender.

                    “Eligible Assignee” means any Person, acting for its own account or the accounts of other Eligible Assignees, who in the aggregate owns and invests on a discretionary basis, not less than $25,000,000 in (a) securities issued by (i) entities unaffiliated with the Eligible Assignee, or (ii) entities whose securities are publicly traded; (b) real estate held for investment purposes; or (c) other “Investments”, within the meaning of Section 2(a)(51) of the Investment Company Act of 1940 and rules adopted thereunder.

                          (iii)  Subject to acceptance and recording thereof pursuant to paragraph (b)(v) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.15, 2.16, 2.17
and 9.03 and to any fees payable hereunder that have accrued for such Lender’s account but have not yet been paid).  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c)(i) of this Section.  Without the consent of the Borrower (which consent shall not be unreasonably withheld) and the Administrative Agent, the Credit-Linked Deposits of any Synthetic LC Lender shall not be released in connection with any assignment by such Synthetic LC Lender, but shall instead be purchased by the relevant assignee and continue to be held for application (to the extent not already applied) in accordance with Section 2.05 to satisfy such assignee’s obligations in respect of Synthetic LC Disbursements.

                          (iv)  The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, the principal amount of the Loans and LC Disbursements owing to, and the Credit-Linked Deposits in respect of, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent, the Issuing Bank and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary.  The Register shall be available for inspection by the Borrower, the Issuing Bank, the Syndication Agent and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

101

                          (v)  Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an Eligible Assignee, the Eligible Assignee’s completed Administrative Questionnaire and any tax forms required by Section 2.17(f) (unless the assignee shall already be a Lender hereunder), and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register.  No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

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

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

102

                    (d)  Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest, provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

                    (e)  Notwithstanding anything to the contrary contained herein, any Lender (a “Granting Lender”) may grant to a special purpose funding vehicle (an “SPV”), identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrower, the option to provide to the Borrower all or any part of any Loan that such Granting Lender would otherwise be obligated to make to the Borrower pursuant to this Agreement, provided that (i) nothing herein shall constitute a commitment by any SPV to make any Loan and (ii) if an SPV elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof.  The making of a Loan by an SPV hereunder shall
utilize the Commitment of the Granting Lender to the same extent, and as if, such Loan were made by such Granting Lender.  Each party hereto hereby agrees that no SPV shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Lender).  In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPV, such party will not institute against, or join any other person in instituting against, such SPV any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any State thereof.  In addition, notwithstanding anything to the contrary contained in this Section 9.04, any SPV may (i) with notice to, but without
the prior written consent of, the Borrower and the Administrative Agent, assign all or a portion of its interests in any Loans to the Granting Lender or to any financial institutions (consented to by the Borrower and Administrative Agent) providing liquidity or credit support to or for the account of such SPV to support the funding or maintenance of Loans and (ii) disclose on a confidential basis any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPV.

                    SECTION 9.05.  Survival.  All covenants, agreements, representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to any Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent, the Issuing Bank or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued
interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated and the Credit-Linked Deposits have not been returned in full to the Synthetic LC Lenders.  The provisions of Sections 2.15, 2.16, 2.17, 2.18 and 9.03 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the return of the Credit-Linked Deposits, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof.

103

                    SECTION 9.06.  Counterparts; Integration; Effectiveness.  This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  This Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.  Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have
received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.  Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.

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

                    SECTION 9.08.  Right of Setoff.  If an Event of Default shall have occurred and be continuing, each Lender, the Issuing Bank and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender, the Issuing Bank or any such Affiliate to or for the credit or the account of the Borrower against any of and all the obligations of the Borrower now or hereafter existing under this Agreement held by such Lender or the Issuing Bank, irrespective of whether or not such Lender or the Issuing Bank shall have made any demand under this Agreement and
although such obligations may be unmatured or are owed to a branch or office of such Lender or Issuing Bank different from the branch or office holding such deposit or obligated on such Indebtedness.  The applicable Lender and the Issuing Bank shall notify the Borrower and the Administrative Agent of such setoff and application, provided that any failure to give or any delay in giving such notice shall not affect the validity of any such setoff and application under this Section.  The rights of each Lender, the Issuing Bank and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, the Issuing Bank and their respective Affiliates may have.

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                    SECTION 9.09.  Governing Law; Jurisdiction; Consent to Service of Process.  (a)  This Agreement shall be construed in accordance with and governed by the law of the State of New York (without giving effect to the conflict of law principles thereof).

                    (b)  Each of the Borrower and the Subsidiaries hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding directly or indirectly arising out of, relating to or based upon any Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court.  Each of the parties hereto agrees that a final judgment in any such action
or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing in any Loan Document shall affect any right that the Administrative Agent, the Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to any Loan Document against the Borrower, the Subsidiaries or their respective properties in the courts of any jurisdiction.

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

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

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

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

                    SECTION 9.12.  Confidentiality.  Each of the Administrative Agent, the Syndication Agent, the Issuing Bank and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise
of any remedies hereunder or any suit, action or proceeding relating to any Loan Document or the enforcement of rights thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any Swap Agreement relating to the Borrower and its obligations hereunder, (g) with the consent of the Borrower or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent, the Syndication Agent, the Issuing Bank or any Lender on a nonconfidential basis from a source other than the Borrower.  For the purposes of this Section, “Information” means all information received from the Borrower or
any Subsidiary relating to the Borrower, any Subsidiary or any of their respective businesses, other than any such information that is available to the Administrative Agent, the Syndication Agent, the Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by the Borrower, provided that, in the case of information received from the Borrower or any Subsidiary after the date hereof, such information is clearly identified at the time of delivery as confidential.  Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.  Notwithstanding anything herein to the contrary, the information subject to this Section 9.12 shall not include, and the Administrative 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 Administrative 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 transaction 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.

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                    SECTION 9.13.  Interest Rate Limitation.  Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan or participation in any LC Disbursement, together with all fees, charges and other amounts that are treated as interest on such Loan or LC Disbursement or participation therein under applicable law (collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) that may be contracted for, charged, taken, received or reserved by the Lender holding such Loan or LC Disbursement or participation therein in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the
interest and Charges that would have been payable in respect of such Loan or LC Disbursement or participation therein but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or LC Disbursement or participation therein or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Open Rate to the date of repayment, shall have been received by such Lender.

                    SECTION 9.14.  USA Patriot Act.  Each Lender or assignee or participant of a Lender that is not incorporated under the laws of the United States of America or a state thereof (and is not excepted from the certification requirement contained in Section 313 of the USA Patriot Act and the applicable regulations because it is both (a) an affiliate of a depository institution or foreign bank that maintains a physical presence in the United States of America or a foreign county, and (b) subject to supervision by a banking authority regulating such affiliated depository institution or foreign bank) shall deliver to the Administrative Agent the certification, or, if applicable, recertification, certifying that such Lender is not a “shell” and certifying to other matters as required by Section 313
of the USA Patriot Act and the applicable regulations: (i) within 10 days after the Effective Date, and (ii) as such other times as are required under the USA Patriot Act.

                    SECTION 9.15.  No Reliance on Administrative Agent’s Customer Identification Program.  Each Lender acknowledges and agrees that neither such Lender, nor any of its Affiliates, participants or assignees, may rely on the Administrative Agent to carry out such Lender’s, Affiliate’s, participant’s or assignee’s customer identification program, or other obligations required or imposed under or pursuant to the USA Patriot Act or the regulations thereunder, including the regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the “CIP Regulations”), or any other Anti-Terrorism Law, including any programs involving any of the following items relating to or in connection with any of the Loan Parties, their Affiliates or their agents, the Loan Documents or the
transactions hereunder or contemplated hereby:  (a) any identity verification procedures, (b) any recordkeeping, (c) comparisons with government lists, (d) customer notices or (e) other procedures required under the CIP Regulations or such other Laws.

[Remainder of this page intentionally left blank]

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

	
  
 
  	
  
JAMES RIVER   COAL COMPANY,
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
by
  	
  
/s/ Samuel   M. Hopkins II
  
	
  
 
  	
  
 
  	
  

  
	
  
 
  	
  
Name:
  	
  
Samuel M.   Hopkins II
  
	
  
 
  	
  
Title:
  	
  
Vice   President & 
  
	
  
 
  	
  
 
  	
  
Chief Accounting   Officer
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
PNC BANK,   NATIONAL ASSOCIATION, individually and as Administrative Agent and the   Issuing Bank,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
by
  	
  
/s/   Christopher N. Moravec
  
	
  
 
  	
  
 
  	
  

  
	
  
 
  	
  
Name:
  	
  
Christopher   N. Moravec
  
	
  
 
  	
  
Title:
  	
  
SVP
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
MORGAN   STANLEY SENIOR FUNDING, INC.,
  
	
  
 
  	
  
individually   and as Syndication Agent,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
by
  	
  
/s/ Jaap L.   Tonckens
  
	
  
 
  	
  
 
  	
  

  
	
  
 
  	
  
Name:
  	
  
Jaap L.   Tonckens
  
	
  
 
  	
  
Title:
  	
  
Vice   President
  
	
  
 
  	
  
 
  	
  
Morgan   Stanley Senior Funding
  

108

	
  
SIGNATURE   PAGE TO THE CREDIT AGREEMENT DATED AS OF MAY 31, 2005, AMONG JAMES RIVER COAL   COMPANY, AS BORROWER, THE LENDER PARTY THERETO, PNC BANK, NATIONAL   ASSOCIATION, AS ADMINISTRATIVE AGENT, AND MORGAN STANLEY SENIOR FUNDING,   INC., AS SYNDICATION AGENT,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
by
  	
  
CATERPILLAR   FINANCIAL SERVICES CORP.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
/s/ Martin   Donner
  
	
  
 
  	
  
 
  	
  

  
	
   
  	
  
Name:
  	
  
Martin   Donner
  
	
  
 
  	
  
Title:
  	
  
Syndications   Sales Manager
  

109

	
  
SIGNATURE   PAGE TO THE CREDIT AGREEMENT DATED AS OF MAY 31, 2005, AMONG JAMES RIVER COAL   COMPANY, AS BORROWER, THE LENDER PARTY THERETO, PNC BANK, NATIONAL   ASSOCIATION, AS ADMINISTRATIVE AGENT, AND MORGAN STANLEY SENIOR FUNDING,   INC., AS SYNDICATION AGENT,
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
by
  	
  
BEARS   STEARNS CORPORATE LENDING INC.
  
	
   
  	
   
  	
   
  
	
   
  	
   
  	
  /s/ Victor Bulzacchelli
  
	
   
  	
   
  	
  

  
	
   
  	
  Name:
  	
  Victor   Bulzacchelli
  
	
   
  	
  Title:
  	
  Vice   President
  

110Exhibit 10.1

                              EMPLOYMENT AGREEMENT

        This Employment Agreement ("Agreement"), between Luby's, Inc., a
Delaware corporation ("Luby's" or the "Company"), and Christopher J. Pappas, a
resident of Houston, Texas, ("Executive") is executed this 9th day of November,
2005 to be effective as of the 1st day of September, 2005 ("Effective Date").
For purposes of this Agreement, "Luby's" or the "Company" shall include the
subsidiaries of Luby's. Luby's and Executive are sometimes referred to herein
individually as a "Party," and collectively as the "Parties." The Parties hereby
agree as follows:

        1.      Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:

        "Affiliate" means, with respect to any Person, any other Person
directly, or indirectly through one or more intermediaries, controlling,
controlled by or under common control with such Person. For purposes of this
definition and this Agreement, the term "control" (and correlative terms
"controlling," "controlled by" and "under common control with") means possession
of the power, whether by contract, equity ownership or otherwise, to direct the
policies or management of a Person.

        "Associate" has the meaning ascribed to such term in Rule 12b-2 under
the Exchange Act.

        "Beneficially Own" or "Beneficial Ownership" is defined in Rules 13d-3
and 13d-5 of the Exchange Act, but without taking into account any contractual
restrictions or limitations on voting or other rights.

        "Board" or "Board of Directors" means the Board of Directors of the
Company.

        "Business Combination" means (i) any consolidation, merger, share
exchange or similar business combination transaction involving the Company with
any Person or (ii) the sale, assignment, conveyance, transfer, lease or other
disposition by the Company of all or substantially all of its assets.

        "Change of Control" shall means the occurrence of any of the events
described in subsections (i) through (iv) below:

                        (i)     The Rights Agreement shall have been determined
                to be invalid or is otherwise abrogated by a court of competent
                jurisdiction in a final and non-appealable judgment rendered in
                connection with a contest for control of the Company and a
                substitute defense mechanism having the effectiveness of the
                Rights Agreement is not promptly adopted or, if adopted, is
                determined to be invalid or is otherwise abrogated, and either
                (y) the Company has received a report on Schedule 13D, or an
                amendment to such a report, filed with the SEC pursuant to
                Section 13(d) of the Exchange Act disclosing that any Person or
                13d Group other than Christopher J. Pappas or Harris J. Pappas,
                individually or

                                        1
<PAGE>

                together with their Affiliates and Associates and any 13d Group
                of which they are a part, Beneficially Owns, directly or
                indirectly, twenty percent or more of the combined voting power
                of the outstanding Common Stock, or (z) the Board of Directors
                has actual knowledge of facts on the basis of which any Person
                or 13d Group other than Christopher J. Pappas or Harris J.
                Pappas, individually or together with their Affiliates and
                Associates and any 13d Group of which they are a part, is
                required to file such a report on Schedule 13D, or to make an
                amendment to such a report, with the SEC (or would be required
                to file such a report or amendment upon the lapse of the
                applicable period of time specified in Section 13(d) of the
                Securities Act) disclosing that such Person or 13d Group other
                than Christopher J. Pappas or Harris J. Pappas, individually or
                together with their Affiliates and Associates and any 13d Group
                of which they are a part, Beneficially Owns, directly or
                indirectly, twenty percent or more of the combined voting power
                of the outstanding Common Stock.

                        (ii)    Either (y) the purchase by any Person, other
                than the Company or a wholly-owned subsidiary of the Company or
                Christopher J. Pappas or Harris J. Pappas, individually or
                together with their Affiliates and Associates and any 13d Group
                of which they are a part, of shares of Common Stock pursuant to
                a tender or exchange offer to acquire any Common Stock (or
                securities convertible into Common Stock) for cash, securities
                or any other consideration or (z) any Person, other than the
                Company or a wholly-owned subsidiary of the Company or
                Christopher J. Pappas or Harris J. Pappas or any of their
                Affiliates, Associates or members of any 13d Group of which they
                are a part, individually or together, shall make any such offer
                to acquire any Common Stock pursuant to a tender or exchange
                offer for cash, securities or any other consideration and either
                (1) the Company shall have recommended that stockholders accept
                such offer or (2) within 10 business days (as such term is used
                in Rule 14e-2 under the Exchange Act), the Company shall have
                made no recommendation that stockholders reject such offer or
                (3) the Company shall have recommended that stockholders reject
                such offer and the Rights Agreement shall have been determined
                to be invalid or is otherwise abrogated by a court of competent
                jurisdiction in a final and non-appealable judgment rendered in
                connection with a contest for control of the Company and a
                substitute defense mechanism having the effectiveness of the
                Rights Agreement is not promptly adopted or, if adopted, is
                determined to be invalid or is otherwise abrogated, provided
                that, after consummation of any such offer, such Person
                Beneficially Owns, or would Beneficially Own, directly or
                indirectly, twenty percent or more of the combined voting power
                of the outstanding Common Stock (calculated as provided in
                paragraph (d) of Rule 13d-3 under the Exchange Act in the case
                of rights to acquire stock).

                        (iii)   The Company shall, after approval by its Board
                of Directors or an authorized committee thereof, enter into any
                agreement contemplating a transaction described below, other
                than any such transaction with Christopher J. Pappas or Harris
                J. Pappas, individually or together with their Affiliates and
                Associates and any 13d Group of which they are a part: (v) a
                transaction pursuant to which the Company agrees to issue or
                sell, regardless of the consideration

                                        2
<PAGE>

                therefor, a number of its shares of Common Stock that would
                result in any Person acquiring Beneficial Ownership, directly or
                indirectly, of twenty percent or more of the combined voting
                power of the outstanding Common Stock, calculated as in clause
                (ii) above; (w) any consolidation, merger or similar transaction
                involving the Company in which the Company is not the continuing
                or surviving corporation or pursuant to which shares of Common
                Stock would be converted into cash, securities or other
                property, other than a consolidation, merger or similar
                transaction involving the Company in which holders of its Common
                Stock immediately prior to the consolidation or merger or
                similar transaction own at least a majority of the combined
                voting power of the outstanding capital stock of the surviving
                corporation immediately after the consolidation, merger or
                similar transaction (or at least a majority of the combined
                voting power of the outstanding capital stock of a corporation
                which owns directly or indirectly all of the voting stock of the
                surviving corporation); (x) any consolidation, merger or similar
                transaction involving the Company in which the Company is the
                continuing or surviving corporation but in which the
                stockholders of the Company immediately prior to the
                consolidation, merger or similar transaction do not hold at
                least a majority of the combined voting power of the outstanding
                Common Stock of the continuing or surviving corporation (except
                where such holders of Common Stock hold at least a majority of
                the combined voting power of the outstanding capital stock of
                the corporation which owns directly or indirectly all of the
                voting stock of the Company); (y) any sale, lease, exchange or
                other transfer (in one transaction or a series of related
                transactions) of all or substantially all the assets of the
                Company (except such a transfer to a corporation which is wholly
                owned, directly or indirectly, by the Company), or any complete
                liquidation of the Company; or (z) any consolidation, merger or
                similar transaction involving the Company where, after the
                consolidation, merger or similar transaction, one Person owns
                100% of the shares of Common Stock (except where the holders of
                the Company's voting stock immediately prior to such
                consolidation, merger or similar transaction own at least a
                majority of the combined voting power of the outstanding capital
                stock of such Person immediately after such consolidation,
                merger or similar transaction).

                        (iv)    A change in the majority of the members of the
                board of directors of the Company within a 24-month period
                unless the election or nomination for election by the
                shareholders of each new director was approved by the vote of at
                least two-thirds of the directors then still in office who were
                in office at the beginning of the 24-month period.

        For purposes of this Agreement, the "effective date of a Change of
        Control" is the date that an event described in subsection (i), (ii),
        (iii) or (iv) occurs or the date upon which all the events necessary to
        constitute the Change of Control shall have occurred.

        "Common Stock" means the Company's common stock, par value $.32 per
share, and any capital stock for or into which such Common Stock hereafter is
exchanged, converted, reclassified or recapitalized by the Company or pursuant
to an agreement or Business Combination to which the Company is a party.

                                        3
<PAGE>

        "Covenant Period" means:

                        (i)     twenty-four (24) months if Employee is
                terminated by the Company for Cause or if Executive terminates
                his employment without Good Reason; or (ii) if Executive's
                employment is terminated for any other reason;

                                (x)     twelve (12) months for the activities
                                        prohibited by clauses (ii) and (iv) of
                                        Section 11(b); and

                                (y)     twenty-four (24) months for the
                                        activities prohibited by any other
                                        provision of Section 11.

        "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations of the SEC promulgated
thereunder.

        "Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, limited liability company, joint
venture, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.

        "Rights Agreement" means the Rights Agreement dated April 16, 1991
between the Company and Ameritrust Company, N.A. as Agent, as amended from time
to time.

        "SEC" means the Securities and Exchange Commission.

        "13d Group" means a group within the meaning of Section 13(d)(3) of the
Exchange Act.

        2.      Employment. Luby's hereby employs Executive, and Executive
hereby accepts employment with Luby's, subject to the terms and conditions set
forth in this Agreement.

        3.      Term. Subject to the provisions for termination of employment as
provided in Section 8(a), Executive's employment under this Agreement shall be
for a period beginning on the Effective Date and ending on August 31, 2008
("Term").

        4.      Compensation. Executive's compensation during his employment
under the terms of this Agreement shall be as follows:

                (a)     Base Salary. Luby's shall pay to Executive a fixed
                        -----------
        annual base salary (the "Base Salary") of Four Hundred Thousand Dollars
        ($400,000) for each year of the Term. The Base Salary shall be payable
        in equal, semi-monthly installments on the 15th day and last day of each
        month or at such other times and in such installments as may be agreed
        between Luby's and Executive. All payments shall be subject to the
        deduction of payroll taxes, income tax withholdings, and similar
        deductions and withholdings as required by law.

                                        4
<PAGE>

                (b)     Bonus. During each year of the Term, in addition to the
                        -----
        Base Salary, Executive shall be eligible, but not entitled, to receive
        bonus compensation as the Board of Directors of Luby's or an authorized
        committee thereof shall from time to time determine in its sole
        discretion.

        5.      Expenses and Benefits.

                (a)     During his employment hereunder, Executive is authorized
        to incur reasonable and appropriate expenses related to the business of
        Luby's, including expenses for entertainment, travel, and similar
        matters. Luby's will reimburse Executive for such expenses upon
        presentation by Executive of such accounts and records as Luby's may
        from time to time reasonably require.

                (b)     Luby's also agrees to provide Executive with the
        following benefits during his employment hereunder:

                        (i)     Employee Benefit Plans. Executive and, to the
                                ----------------------
                extent applicable, Executive's spouse, dependents, and
                beneficiaries, shall be allowed to participate on the same terms
                in all benefits, plans, and programs, including improvements or
                modifications of the same, which are now, or may hereafter be,
                available to other executive employees of Luby's; provided that
                Executive shall not be permitted without the express consent of
                the Board of Directors of Luby's to participate in any bonus,
                incentive, profit-sharing, or similar cash payment plan. Such
                benefits, plans, and programs may include, without limitation,
                stock option or thrift plans, health insurance or health care
                plans, life insurance, disability insurance, supplemental
                retirement plans, vacation, and sick leave. Luby's shall not,
                however, by reason of this paragraph be obligated to institute,
                maintain, or refrain from changing, amending, or discontinuing
                any such benefit plan or program, so long as such changes are
                similarly applicable to executive employees generally.

                        (ii)    Vacations. Executive shall be entitled (in
                                ---------
                addition to the usual Luby's holidays) to paid vacation time for
                periods in each calendar year not exceeding four (4) weeks.

                        (iii)   Working Facilities. Executive shall be furnished
                                ------------------
                by Luby's with an office at the Company's principal office in
                Houston, Texas, secretarial help and other facilities and
                services, including but not limited to, full use of Luby's mail
                and communication facilities and services reasonably suitable to
                his position and reasonably necessary for the performance of his
                duties under this Agreement.

        6.      Positions and Duties. Executive is employed hereunder as Chief
Executive Officer of Luby's or in such other positions as the Parties may
mutually agree. In addition, if requested to do so, Executive shall serve as the
chief executive officer or other officer or as a member of the Board of
Directors, or both, of any subsidiary or affiliate of Luby's. Executive agrees
to serve in the position referred to above and to perform diligently and to the
best of his abilities the duties and services appertaining to such office, as
well as such additional duties and services appropriate to such offices which
the Parties mutually may agree upon from time to time.

                                        5
<PAGE>

Executive's employment shall also be subject to the policies maintained and
established by Luby's that are of general applicability to Luby's executive
employees, as such policies may be amended from time to time. Executive's duties
shall be performed principally at Luby's principal place of business in Houston,
Texas and at the locations of its operations. Executive acknowledges and agrees
that Executive owes a fiduciary duty of loyalty to act at all times in the best
interests of Luby's. In keeping with such duty, Executive represents that he
owes no duty to any other entity or person regarding, and shall make full
disclosure to Luby's of, all business opportunities pertaining to Company's
business which have not been previously renounced by the Board of Directors, as
contemplated by Section 11 hereof, and shall not appropriate for Executive's own
benefit any such business opportunities.

        7.      Extent of Service. Executive shall, during the term of this
Agreement, devote his primary working time, attention, energies and business
efforts to his duties as an employee of Luby's and to the business and affairs
of Luby's generally, and shall not, during the term of this Agreement, engage,
directly or indirectly, in any other business activity whatsoever, whether or
not such business activity is pursued for gain, profit or other pecuniary
advantage, except with the consent of the Board of Directors of Luby's; however,
this Section 7 shall not be construed to prevent Executive from, nor require
board consent with respect to, (i) continuing executive's senior level
management of non-cafeteria style restaurant businesses operated by executive's
privately-held family company ("Executive's Family Company"), (ii) serving as a
member of the board of directors or board of trustees of Executive's Family
Company or other companies or not-for-profit entities, or (iii) from investing
his personal, private assets as a passive investor in such form or manner as
will not require any active services on the part of Executive in the management
or operation of the affairs of the companies, partnerships, or other business
entities in which any such passive investments are made; provided in case of
clause (i), (ii), or (iii) such activities do not conflict with the business and
affairs of Luby's or interfere with Executive's ability to perform the services
and discharge the duties required of him hereunder.

        8.      Termination.

                (a)     Termination of Employment. Notwithstanding the
                        -------------------------
        provisions of Section 2, the employment of the Executive pursuant to
        this Agreement shall terminate prior to the expiration of the Term, upon
        the occurrence of any of the following events:

                        (i)     the death of the Executive;

                        (ii)    the termination of the Executive's employment by
                Luby's due to the Executive's Disability (as defined in Section
                8(b));

                        (iii)   the termination of the Executive's employment by
                the Executive for "Good Reason" (as defined in Section 8(d));

                        (iv)    the termination of the Executive's employment by
                Luby's for "Cause" (as defined in Section 8(c)); or

                        (v)     for any reason whatsoever in the discretion of
                the Executive or Luby's.

                                        6
<PAGE>

                (b)     Disability. For the purposes of this Agreement, the term
                        ----------
        "Disability" shall mean Executive becoming incapacitated by accident,
        sickness, or other circumstance that renders him physically or mentally
        unable to carry out the duties and services required of him hereunder on
        a full-time basis for more than one hundred twenty (120) days in any one
        hundred eighty (180) day period. If a dispute arises between the
        Executive and the Company concerning the Executive's physical or mental
        ability to continue or return to the performance of his duties as
        aforesaid, the Executive shall submit to examination by a competent
        physician mutually agreeable to both parties or, if the parties are
        unable to agree, by a physician appointed by the president of the Harris
        County Medical Association, and such physician's opinion shall be final
        and binding.

                (c)     Cause. For purposes of this Agreement, the term "Cause"
                        -----
        shall mean:

                        (i)     Executive's conviction of a crime constituting a
                felony, or a misdemeanor involving moral turpitude;

                        (ii)    The commission by Executive, or participation
                in, an illegal act or acts that were intended to defraud Luby's;

                        (iii)   the willful refusal by Executive to fulfill the
                duties and responsibilities as Chief Executive Officer;

                        (iv)    the breach by Executive of material provisions
                of this Agreement, a policy of Luby's, or the code of conduct of
                Luby's in each case after written notice from the Board of
                Directors and, if correctible, the failure to correct such
                breach within 30 days from the date such notice is given;

                        (v)     gross negligence or willful misconduct by
                Executive in the performance of his duties and obligations to
                Luby's;

                        (vi)    willful engagement by Executive in conduct known
                (or which should have been known) to be materially injurious to
                Luby's.

                (d)     Good Reason. For purposes of this Agreement, "Good
                        -----------
        Reason" shall mean the occurrence of any of the following circumstances,
        without the consent of the Executive, unless such circumstances are
        remedied in all material respects by Luby's 30 days after Luby's receipt
        of written notice thereof given by the Executive:

                        (i)     the material diminution in the nature, scope, or
                duties of the Executive or assignment of duties inconsistent
                with those of the Chief Executive Officer or a change in the
                location of the principal business office of the Company in
                which his services are to be carried out, to a place outside of
                Texas;

                        (ii)    any breach of a material provision of this
                Agreement by Luby's after written notice from Employee and, if
                correctible, the failure to correct such breach within 30 days
                from the date such notice is given;

                                        7
<PAGE>

                        (iii)   within two years after sale by Luby's of all or
                substantially all of its assets or the merger, share exchange,
                or other reorganization of Luby's into or with another
                corporation or entity (with respect to which Luby's does not
                survive), a diminution in employee benefits (including but not
                limited to medical, dental, life insurance, and long-term
                disability plans) and perquisites applicable to Executive from
                the greater of (A) the employee benefits and perquisites
                provided by Luby's to executives with comparable duties or (B)
                the employee benefits and perquisites to which Executive was
                entitled immediately prior to the date on which a change in
                control occurs.

                (e)     Notice of Termination. If Luby's or Executive desires to
                        ---------------------
        terminate Executive's employment hereunder at any time prior to
        expiration of the Term, it or he shall do so by giving written notice to
        the other party that it or he has elected to terminate Executive's
        employment hereunder and stating the proposed effective date and reason
        for such termination, provided that no such action shall alter or amend
        any other provisions hereof or rights arising hereunder.

        9.      Consequences of Termination.

                (a)     By Expiration. If Executive's employment hereunder shall
                        -------------
        terminate upon expiration of the Term, then all compensation for periods
        subsequent to termination and all benefits to Executive hereunder, other
        than (i) the nonqualified stock option to purchase 1,120,000 shares of
        Common Stock of Luby's, with an exercise price per share equal to five
        dollars ($5.00) per share dated March 9, 2001 and (ii) any other equity
        based compensation awards granted to Executive by Luby's (collectively,
        the "Awards"), each of which is governed by its own terms in such
        circumstances, shall terminate contemporaneously with termination of his
        employment.

                (b)     Death or Disability. If the Executive's employment is
                        -------------------
        terminated during the Term by reason of the Executive's death or
        Disability, all Compensation and benefits to Executive under this
        Agreement, other than the Awards, each of which is governed by its own
        terms in such circumstances, shall terminate contemporaneously with the
        termination of employment and without further obligation to the
        Executive or the Executive's legal representatives under the Agreement
        (other than payment of the Executive's Base Salary in respect of the
        period through his date of death or termination for Disability).

                (c)     Termination by the Executive without Good Reason or by
                        ------------------------------------------------------
        the Company For Cause. If the Executive's employment is terminated by
        ---------------------
        the Executive without Good Reason, or by the Company for Cause, all
        compensation and benefits to Executive under this Agreement, other than
        the Awards, each of which is governed by its own terms in such
        circumstances, shall terminate contemporaneously with such termination
        of employment and without further obligation to Executive or Executive's
        legal representatives under this Agreement (other than payment of
        Executive's Base Salary in respect of the period through his date of
        termination).

                                        8
<PAGE>

                (d)     Termination by the Executive for Good Reason or by the
                        ------------------------------------------------------
        Company without Cause.
        ---------------------

                        (i)     If the Executive's employment is terminated by
                the Company without Cause or by the Executive for Good Reason,
                the Company shall be obligated to pay to, or make available to,
                the Executive Executive's monthly Base Salary and benefits in
                effect on the date of termination for the remainder of the Term.
                The Executive shall have no obligation to seek other employment
                during any time period for which he may receive payment pursuant
                to this subsection (d), and in the event the Executive obtains
                other employment during such period, the Company's obligations
                to make payments pursuant to this subsection (d) shall not be
                reduced. In the event that continued participation in any Luby's
                benefit plan contemplated by Section 5(b)(i) hereof is for
                whatever reason impermissible during the remainder of the Term,
                Company shall arrange upon comparable terms benefits
                substantially equivalent to those that may not be so provided
                under the plan maintained by Luby's. The parties agree that the
                payments provided for herein constitute part of the
                consideration provided by the Company for the Executive's
                agreements contained in Section 6 hereof.

                        (ii)    Notwithstanding clause (i) of this subsection
                (d), if, at any time during which the Executive would otherwise
                be entitled to receive any payment pursuant to clause (i) of
                subsection (d), the Executive engages in any activity or takes
                any action which would be prohibited under Sections 10 and 11
                hereof, then the Executive shall be deemed to have irrevocably
                forfeited any right to receive any further payments pursuant to
                this Agreement, provided such forfeiture shall not limit Luby's
                rights to seek to enforce such provision or to seek damages;
                provided, however, that the Awards and the benefits thereof
                shall not be in any way affected by this clause (d)(ii) of this
                Section 9.

        10.     Disclosure of Confidential Information. Executive acknowledges
that Luby's will disclose to Executive, or place Executive in a position to have
access to or develop, trade secrets or Confidential Information of Luby's or its
affiliates, and shall entrust Executive with business opportunities of Luby's or
its affiliates, and shall place Executive in a position to develop business
goodwill on behalf of Luby's or its affiliates. Except to the extent required in
the performance of his duties and obligations to Luby's as expressly authorized
herein, or by prior written consent of a duly authorized officer or director of
Luby's, Executive will not, directly or indirectly, at any time during his
employment with Luby's, or for 18 months subsequent to the termination thereof,
for any reason whatsoever, with or without cause, breach the confidence reposed
in him by Luby's by using, disseminating, disclosing, divulging, or in any
manner whatsoever disclosing or permitting to be divulged or disclosed in any
manner Confidential Information to any person, firm, corporation, association,
or other business entity. As used herein, the term "Confidential Information"
means any and all information concerning ideas, concepts, products, processes,
and services related to the business of Luby's, including information relating
to research, development, inventions, manufacture, purchasing, accounting,
engineering, marketing, merchandising, or the selling of any product or products
to any customers of Luby's, disclosed to Executive or known by Executive as a
consequence of or through his employment by Luby's (or any parent, subsidiary or
affiliated corporations of Luby's)

                                        9
<PAGE>

including, but not necessarily limited to, any person, firm, corporation,
association, or other business entity with which Luby's has any type of agency
agreement, or any shareholders, directors, or officers of any such person, firm,
corporation, association, or other business entity; provided, however, that
Confidential Information shall not include information generally known in any
industry in which Luby's is or may become engaged during the term of this
Agreement, information disclosed publicly by Luby's or any information, ideas,
products, processes, services, and concepts existing and known to Executive
prior to his employment by Luby's. On termination of employment with Luby's, all
documents, records, notebooks, e-mails, or similar repositories of or containing
Confidential Information, including all copies of any documents, records,
notebooks, e-mail, or similar repositories of or containing Confidential
Information, then in Executive's possession or in the possession of any third
party under the control of Executive or pursuant to any agreement with
Executive, whether prepared by Executive or any other person, firm, corporation,
association, or other business entity, will be delivered to Luby's by Executive.

        11.     Noncompetition; Standstill.

                (a)     Executive recognizes and understands that in performing
        the responsibilities of his employment, he will occupy a position of
        fiduciary trust and confidence, pursuant to which he will develop and
        acquire experience and knowledge with respect to Luby's business. It is
        the expressed intent and agreement of Executive and Luby's that such
        knowledge and experience shall be used exclusively in the furtherance of
        the interests of Luby's and not in any manner which would be detrimental
        to Luby's interests. In consideration of the benefits herein, Executive
        therefore agrees that so long as he is employed by Luby's and for the
        Covenant Period after termination of Executive's employment, Executive
        will not directly or indirectly:

                        (i)     engage in any other "cafeteria-style" restaurant
                business (as defined in the resolution of the Board of Directors
                of the Company dated March 7, 2001 adopted in connection with
                Executive's initial employment by the Company) or own any
                interests whether as an owner, shareholder, joint venturer,
                partner or otherwise, in any other association or entity that
                engages, directly or indirectly, in any "cafeteria-style"
                restaurant business in each case in any state where Luby's or
                any of its affiliates are conducting business on the date of
                this Agreement or in any contiguous state; provided, however,
                that nothing herein shall prohibit Executive from holding or
                making passive investments in limited partnerships or
                corporations whose securities are traded in a generally
                recognized market provided that Executive's interest, together
                with those of his affiliates and family do not exceed 1% of the
                outstanding shares or interests in such corporation or
                partnership; or

                        (ii)    render advice or services to, or otherwise
                assist, any other person, association, or entity engaged,
                directly or indirectly, in any "cafeteria-style" restaurant
                business in any state where Luby's or its affiliates conduct
                business on the date of this Agreement or in any contiguous
                state; or

                                       10
<PAGE>

                        (iii)   contact or solicit any employee of Luby's or any
                of its affiliates to induce them to terminate his or her
                employment with Luby's or such affiliates.

                (b)     Executive agrees that for so long as he is employed by
        Luby's and for the Covenant Period he will not without the prior written
        consent of the Company: (i) knowingly, after due inquiry, sell any
        shares of Common Stock, or right to acquire Common Stock, to any person
        or group (as defined in Section 13(d)(3) of the Exchange Act, as
        amended, and the regulations promulgated thereunder) that would
        subsequent to such sale Beneficially Own in excess of 10% of the
        Company's issued and outstanding Common Stock (1% in the case of
        industry competitors), (ii) solicit, or participate in a solicitation of
        proxies or votes or consents to vote any voting securities of the
        Company or grant (except to the Company or its representatives or
        representatives of the Executive) any proxies to vote such securities or
        subject their shares in the Company to any voting trust or other voting
        arrangement or agreement, (iii) form, join, or in any way participate
        in, any group (as defined in Section 13(d)(3) of the Exchange Act, as
        amended, and the regulations promulgated thereunder) with respect to
        voting securities of the Company, or (iv) seek, propose, or make any
        public statement regarding any merger, tender or exchange offer or other
        business combination involving the Company or any sale, assignment,
        transfer, lease or other disposition by the Company of all or
        substantially all of its assets; provided, however, the covenants
        contained in this subsection (b) shall terminate and shall be of no
        further force or effect upon the occurrence of a Change of Control.

        12.     Enforcement and Remedies. Executive understands that the
restrictions set forth here may limit Executive's ability to engage in certain
businesses in certain geographic regions during the period provided for above,
but acknowledges that Executive will receive sufficiently high remuneration and
other benefits under this Agreement to justify such restriction. Executive
acknowledges that money damages would not be sufficient remedy for any breach of
Section 10 or 11 by Executive, and Luby's shall be entitled to enforce the
provisions thereof by terminating any payments then owing to Executive under
this Agreement and/or by specific performance and injunctive relief as remedies
for such breach or any threatened breach. Such remedies shall not be deemed the
exclusive remedies for a breach, but shall be in addition to all remedies
available at law or in equity to Luby's, including without limitation, the
recovery of damages from Executive and Executive's agents involved in such
breach and remedies available to Luby's pursuant to other agreements with
Executive.

        13.     Insurance. Luby's may, in its sole and absolute discretion, at
any time after the Effective Date, apply for and procure, as owner and for its
own benefit, insurance on the life of Executive, in such amounts and in such
forms as Luby's may choose. Unless otherwise agreed by Luby's, Executive shall
have no interest whatsoever in any such policy or policies, but Executive shall,
at Luby's request, submit to such medical examinations, supply such information,
and execute and deliver such documents as may be required by the insurance
company or companies to which Luby's has applied for such insurance.

                                       11
<PAGE>

        14.     Notice. All notices and communications hereunder shall be in
writing and shall be deemed given if delivered personally or mailed by
registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):

           If to Executive:     Christopher J. Pappas
                                642 Yale
                                Houston, Texas 77007

           with a copy to:      Frank Markantonis
                                645 Heights Blvd.
                                Houston, Texas 77007

           and                  Fulbright & Jaworski, L.L.P.
                                1301 McKinney Suite 5100
                                Houston, Texas 77010-3095
                                Attn:  Charles H. Still

           If to Luby's:        Luby's, Inc.
                                13111 Northwest Freeway, Suite 600
                                Houston, Texas 77040
                                Attention:  Chairman of the Board and
                                            General Counsel

           With a copy to:      Hornberger Sheehan Fuller & Beiter Incorporated
                                7373 Broadway, Suite 300
                                San Antonio, Texas 78209
                                Attention:  Drew R. Fuller, Jr.

        Any of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered, on the date of receipt, if telecopied, three Business Days
after the date of mailing, if mailed by registered or certified mail, return
receipt requested, and one Business Day after the date of sending, if sent by
Federal Express or other recognized overnight courier

        15.     CONTROLLING LAW. THIS AGREEMENT SHALL BE DETERMINED AND GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT
GIVING EFFECT TO ANY CONFLICTS OF LAW PROVISIONS.

        16.     Additional Instruments. This Agreement governs the rights and
obligations of Executive and Luby's with respect to Executive's base salary and
certain perquisites of employment. Executive's rights and obligations both
during the term of his employment and thereafter with respect to stock options,
life insurance policies insuring the life of Executive, and other benefits under
the plans and programs maintained by Luby's shall be governed by the separate
agreements, plans, and other documents and instruments governing such matters.

                                       12
<PAGE>

        17.     Liquidated Damages. In light of the difficulties in estimating
the damages for any early termination of employment, Luby's and Executive hereby
agree that the payments, if any, to be received by Executive pursuant to this
Agreement shall be received by Executive as liquidated damages. Payment of the
amounts set forth in this Agreement, if any, shall be in lieu of any severance
benefit Executive may be entitled to under any severance plan or policy of
Luby's.

        18.     Severability. If any term or other provision of this Agreement
is invalid, illegal, or incapable of being enforced by any rule of applicable
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated herein are not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal, or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated herein are
consummated as originally contemplated to the fullest extent possible.

        19.     Miscellaneous. No provision of this Agreement may be modified,
waived or discharged orally, but only by a waiver, modification or discharge in
writing signed by the Executive, and such officer of the Company as may be
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the time or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. Wherever
appropriate to the intention of the parties hereto, the respective rights and
obligations of the parties hereto, will survive any termination or expiration of
the term of this Agreement as specifically set forth herein; in addition
Sections 9, 10, 11, 12, 14, 15, 16, 17, 18, 19, 20, 21 and 23 shall survive such
termination or expiration to the extent the context thereof requires.

        20.     Entire Agreement. This Agreement (which term shall be deemed to
include the exhibits hereto and any other certificates, documents or instruments
delivered hereunder), the Purchase Agreement dated March 9, 2001 among the
Company, Executives, and the other signatories thereto, as amended from time to
time (the "Purchase Agreement"), and the other Transaction Documents (as defined
in the Purchase Agreement) constitute the entire agreement of the Parties hereto
and supercede all prior agreements and understandings, both written and oral,
among the parties as to the subject matter hereof. There are no representations
or warranties, agreements, or covenants other than those expressly set forth
herein, in the Purchase Agreement and in the other Transaction Documents.

        21.     Effect of Agreement. This Agreement shall be binding upon
Executive and his heirs, executors, legal representatives, successors and
assigns, and Luby's and its legal representatives, successors and assigns.
Except as provided in the preceding sentence, this Agreement, and the rights and
obligations of the Parties hereunder, are personal and neither this Agreement,
nor any right, benefit, or obligation of either Party hereto, shall be subject
to voluntary or involuntary assignment, alienation, or transfer, whether by
operation of law or otherwise, without the prior written consent of the other
Party.

                                       13
<PAGE>

        22.     Execution. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other parties, it being understood that all parties need not sign the
same counterpart.

        23.     Deemed Resignations. Any termination of Executive's employment
shall constitute an automatic resignation as an officer and director of Luby's
and each subsidiary or affiliate of Luby's.

        IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
Effective Date.

                                                     ---------------------------
                                                     Christopher J. Pappas

                                                     Luby's, Inc.

                                                     ---------------------------
                                                     Gasper Mir, III
                                                     Chairman of the Board

                                       14

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