Document:

EX-10.1

 

EXHIBIT 10.1

 

STOCK PURCHASE AGREEMENT

BETWEEN

GAINSCO, INC.

MGA INSURANCE COMPANY, INC.

AND

MONTPELIER RE U.S. HOLDINGS LTD.

Dated as of August 13, 2007

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page No.	 
	ARTICLE 1 DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 2 PURCHASE AND SALE OF COMPANY SHARES
	 	 	8	 
	2.1 Basic Transaction
	 	 	8	 
	2.2 Purchase Price
	 	 	8	 
	2.3 The Closing
	 	 	8	 
	2.4 Deliveries at the Closing
	 	 	9	 
	2.5 Post-Closing Adjustment
	 	 	9	 
	 
	 	 	 	 
	ARTICLE 3 RELATED TRANSACTIONS
	 	 	10	 
	3.1 Corporate Restructuring
	 	 	10	 
	3.2 Transfer of Liabilities and Obligations
	 	 	10	 
	3.3 Reduction in Capital and Surplus
	 	 	10	 
	3.4 Elimination of Intercompany Contracts and Pools
	 	 	11	 
	 
	 	 	 	 
	ARTICLE 4 REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION
	 	 	12	 
	4.1 Representations and Warranties of the Seller Parties
	 	 	12	 
	4.2 Representations and Warranties of the Buyer
	 	 	25	 
	 
	 	 	 	 
	ARTICLE 5 PRE-CLOSING COVENANTS
	 	 	26	 
	5.1 General
	 	 	26	 
	5.2 Notices and Consents
	 	 	27	 
	5.3 Operation of Business
	 	 	27	 
	5.4 Full Access
	 	 	28	 
	5.5 Notice of Developments
	 	 	28	 
	5.6 Exclusivity
	 	 	28	 
	5.7 Preservation of Insurance Lines and Qualifications
	 	 	28	 
	5.8 Financial Statements and Reports
	 	 	28	 
	5.9 No Charter or Bylaw Amendments
	 	 	28	 
	5.10 No Issuance of Securities
	 	 	29	 
	5.11 No Dividends
	 	 	29	 
	5.12 Resignations of Directors and Officers
	 	 	29	 
	5.13 Intercompany Balances and Agreements
	 	 	29	 
	5.14 Tax Matters
	 	 	29	 
	5.15 Press Releases and Public Announcements
	 	 	29	 
	5.16 Asset List
	 	 	29	 
	5.17 State Assessments
	 	 	30	 
	5.18 Regulatory Examinations
	 	 	30	 
	5.19 Assignments
	 	 	30	 
	 
	 	 	 	 
	ARTICLE 6 CONDITIONS TO OBLIGATION TO CLOSE
	 	 	30	 
	6.1 Conditions to Obligation of the Buyer
	 	 	30	 
	6.2 Conditions to Obligations of the Seller Parties
	 	 	32	 
	 
	 	 	 	 
	ARTICLE 7 SELLER’S CLOSING DELIVERIES
	 	 	33	 

-i-

 

	 	 	 	 	 
	 	 	Page No.	 
	ARTICLE 8 BUYER’S CLOSING DELIVERIES
	 	 	34	 
	 
	 	 	 	 
	ARTICLE 9 POST-CLOSING COVENANTS
	 	 	35	 
	9.1 General
	 	 	35	 
	9.2 Litigation Support
	 	 	35	 
	9.3 Cooperation as to Tax Matters
	 	 	35	 
	9.4 Change of Name
	 	 	40	 
	 
	 	 	 	 
	ARTICLE 10 INDEMNIFICATIONS
	 	 	40	 
	10.1 The Seller Parties’ Indemnification of the Buyer
	 	 	40	 
	10.2 The Buyer’s Indemnification of the Seller Parties
	 	 	41	 
	10.3 Notice of Claims
	 	 	42	 
	10.4 Third-Party Claims
	 	 	42	 
	10.5 Interest
	 	 	43	 
	10.6 Remedies
	 	 	43	 
	10.7 Limitations on Indemnification
	 	 	44	 
	 
	 	 	 	 
	ARTICLE 11 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
	 	 	44	 
	 
	 	 	 	 
	ARTICLE 12 TERMINATION
	 	 	44	 
	12.1 Termination of Agreement
	 	 	44	 
	12.2 Effect of Termination
	 	 	46	 
	 
	 	 	 	 
	ARTICLE 13 EXPENSES
	 	 	46	 
	 
	 	 	 	 
	ARTICLE 14 CONFIDENTIALITY
	 	 	46	 
	 
	 	 	 	 
	ARTICLE 15 MISCELLANEOUS
	 	 	46	 
	15.1 No Third-Party Beneficiaries
	 	 	46	 
	15.2 Entire Agreement
	 	 	47	 
	15.3 Succession and Assignment
	 	 	47	 
	15.4 Counterparts
	 	 	47	 
	15.5 Headings
	 	 	47	 
	15.6 Notices
	 	 	47	 
	15.7 Governing Law
	 	 	49	 
	15.8 Amendments and Waivers
	 	 	49	 
	15.9 Severability
	 	 	49	 
	15.10 Construction
	 	 	49	 
	15.11 Incorporation of Exhibits and Schedules
	 	 	50	 
	15.12 Consent to Jurisdiction
	 	 	50	 
	15.13 Enforcement
	 	 	50	 
	15.14 Non-Duplication
	 	 	50	 

-ii-

 

LIST OF EXHIBITS

	 	 	 
	Exhibit 1

	 	Administration Agreement
	 
	 	 
	Exhibit 2

	 	Assumption Agreement
	 
	 	 
	Exhibit 3

	 	Quota Share Reinsurance Agreement
	 
	 	 
	Exhibit 4

	 	Reinsurance Trust Agreement
	 
	 	 
	Exhibit 5

	 	Guaranty Agreement
	 
	 	 
	Exhibit 6

	 	Transfer and Assignment Agreement

DISCLOSURE SCHEDULE

	 	 	 
	Section 1

	 	Acceptable Financial Assets
	 
	 	 
	Section 2.2

	 	Purchase Price Adjustment
	 
	 	 
	Section 4.1(c)

	 	Noncontravention
	 
	 	 
	Section 4.1(e)

	 	Shares
	 
	 	 
	Section 4.1(f)

	 	Title to the Shares
	 
	 	 
	Section 4.1(k)

	 	Securities and Assets
	 
	 	 
	Section 4.1(l)

	 	Real Property
	 
	 	 
	Section 4.1(m)

	 	Employee Benefit Plans and Employees
	 
	 	 
	Section 4.l(o)

	 	Taxes
	 
	 	 
	Section 4.1(p)

	 	Suits and Other Proceedings - The Seller Parties and the Company
	 
	 	 
	Section 4.1(r)

	 	Compliance with Insurance Laws
	 
	 	 
	Section 4.1(u)(2)

	 	Licenses and Permits – Surplus or Excess Lines Qualifications
	 
	 	 
	Section 4.1(u)(6)

	 	Licenses and Permits – Deposits
	 
	 	 
	Section 4.1(v)

	 	Reinsurance
	 
	 	 
	Section 4.l(w)(i)

	 	Contracts

-iii-

 

	 	 	 
	Section 4.l(w)(ii)

	 	Specified Contracts
	 
	 	 
	Section 4.1(x)

	 	Insurance
	 
	 	 
	Section 4.l(y)

	 	Corporate Records
	 
	 	 
	Section 4.l(z)

	 	Consents and Approvals – The Seller Parties and the Company
	 
	 	 
	Section 4.l(aa)

	 	Contracts with Agents and Powers of Attorney
	 
	 	 
	Section 4.1(ab)

	 	Bank and Financial Institution Accounts
	 
	 	 
	Section 4.1(ac)

	 	Related Party Transactions
	 
	 	 
	Section 4.2(g)

	 	Consents and Approvals – The Buyer
	 
	 	 
	Section 5.13

	 	Intercompany Balances and Agreements
	 
	 	 
	Section 6.1(m)

	 	Banks with Continuing Accounts

-iv-

 

STOCK PURCHASE AGREEMENT

     THIS STOCK PURCHASE AGREEMENT is entered into as of August 13, 2007 (this
“Agreement”), by and between Montpelier Re U.S. Holdings Ltd., a Delaware corporation (the
“Buyer”); GAINSCO, INC., a Texas corporation (the “Parent”); and MGA Insurance
Company, Inc., a stock property and casualty insurance company domiciled in the State of Texas and
a wholly-owned subsidiary of the Parent (“MGA”). The Parent and MGA are referred to herein
as the “Seller Parties” and the Seller Parties and the Buyer are referred to collectively
herein as the “Parties.”

     WHEREAS, on the date hereof the Parent owns all of the issued and outstanding capital stock of
General Agents Insurance Company of America, Inc., a stock property and casualty insurance company
domiciled in the State of Oklahoma (the “Company”) and the Company owns all of the issued
and outstanding capital stock of MGA;

     WHEREAS, the Parties have agreed that the Buyer will purchase from the Parent, and the Parent
will sell to the Buyer, all of the issued and outstanding capital stock of the Company in return
for cash;

     WHEREAS, the Buyer’s intent in acquiring the capital stock of the Company is that, as of the
Closing Date, the Company shall be a “clean shell” to wit: its assets will consist only of the
Company’s corporate franchise, its license to transact insurance as a property and casualty
insurance company pursuant to the Oklahoma Insurance Code, and certain other assets as contemplated
herein and that the Company shall have no liabilities that have not been provided for as
contemplated herein; and

     WHEREAS, in connection with this Agreement, as of the Closing Date, the Seller Parties are to
take the actions provided for herein to (i) cause one hundred percent (100%) of the Company’s
existing insurance liabilities and claims to be reinsured; (ii) provide for the Company’s remaining
liabilities; and (iii) reduce the Company’s capital and surplus, all as contemplated herein;

     NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises herein
made, and in consideration of the representations, warranties, and covenants herein contained, the
Parties agree as follows.

ARTICLE 1

DEFINITIONS

     “Acceptable Financial Assets” means only the following kinds of assets which shall be
valued at their Market Value as of the close of business on the Business Day immediately preceding
the Closing Date: (i) cash and Cash Equivalents; (ii) investment grade obligations of U.S.
corporations or state or local governments (or instrumentalities thereof) (other than Cash
Equivalents) that are listed in Section 1 of the Disclosure Schedule and are permissible

1

 

investments under Oklahoma insurance law; and (iii) existing deposits of cash, securities or other
assets with state insurance departments listed in Section 4.1(u)(6) of the Disclosure Schedule.

     “Act” means the Securities Act of 1933, as amended.

     “Administration Agreement” means the Administration Agreement between the Company and
MGA substantially in the form attached as Exhibit 1 hereto.

     “Affiliate” has the meaning set forth in Rule 12b-2 of the regulations promulgated
under the Securities Exchange Act.

     “Ancillary MGA Agreements” means the Administration Agreement, the Assumption
Agreement, the Transfer and Assignment Agreement, the Quota Share Reinsurance Agreement and the
Reinsurance Trust Agreement.

     “Assumption Agreement” means the Liability Assumption Agreement between the Company
and MGA substantially in the form attached as Exhibit 2 hereto.

     “Business Day” means any day other than a Saturday, Sunday, a day on which banking
institutions in the State of Connecticut or Texas are permitted or obligated by law to be closed or
a day on which the New York Stock Exchange is closed for trading.

     “Buyer” has the meaning set forth in the preface.

     “Buyer Indemnitees” shall have the meaning set forth in Section 10.1 below.

     “Cap” shall have the meaning set forth in Section 10.7.

     “Cash Equivalent” shall mean United States Treasury obligations or senior corporate
debt obligations issued by Entities rated “AAA” or its equivalent by one or more nationally
recognized rating organizations, in each case having a remaining term to maturity as of the last
Business Day preceding the Closing Date of less than six (6) months.

     “Claim Notice” shall have the meaning set forth in Section 10.3 below.

     “Closing” has the meaning set forth in Section 2.3 below.

     “Closing Date” has the meaning set forth in Section 2.3 below.

     “Code” means the Internal Revenue Code of 1986, as amended. Any reference to any
particular Code Section shall be interpreted to include any revision of or successor to that
section regardless of how numbered or classified.

     “Company” has the meaning set forth in the preface.

     “Company Financial Statements” has the meaning set forth in Section 4.1(g)(3) below.

-2-

 

     “Confidentiality Agreement” shall have the meaning set forth in Article 14.

     “Consolidated Tax Return” has the meaning set forth in Section 9.3(a)(1).

     “Contract” or “Contracts” has the meaning set forth in Section 4.1(w).

     “Deposit” has the meaning set forth in Section 4.1(t)(5) below.

     “Disclosure Schedule” means the Disclosure Schedule referred to in this Agreement.

     “Elections” has the meaning set forth in Section 9.3(j)(1).

     “Employee Benefit Plan” means each written or oral “employee benefits plan” (as such
term is defined in Section 3(3) of ERISA) and each bonus, profit sharing, deferred compensation,
incentive compensation, stock ownership, stock option, stock purchase, phantom stock, retirement,
savings excess benefit, supplemental unemployment, paid-time off, educational assistance, vacation,
sick leave, severance, disability, death benefit, medical, dental or life insurance plan, program
or arrangement, in each case adopted, sponsored, maintained or contributed to or required to be
adopted, sponsored, maintained or contributed to by or on behalf of the Company for the benefit of
any present or former officers, directors, employees, consultants or agents of the Company
(including any dependents or beneficiaries thereof) or as to which the Company may have any present
or future liability.

     “Encumbrance” means a Lien, voting agreement, voting trust, proxy or any other similar
arrangement or restriction of any kind whatsoever.

     “Entity” means a partnership, a corporation, a limited liability company, an
association, a joint stock company, a trust, a joint venture, an unincorporated organization or a
Governmental Authority.

     “Environmental Liability” has the meaning set forth in Section 4.1(s).

     “Escrow and/or Custodial Agreements” means the agreements entered into by the Company
pursuant to the insurance laws of the states of Louisiana and New Hampshire, including the
Custodian Agreement dated August 10, 1992 by and between the Company and First NH Investment
Services Corporation and the pledged certificates of deposit in the aggregate amount of $200,000.00
securing obligations of the Company under Louisiana insurance laws; provided that the agreement
with respect to Louisiana, and the deposit relating thereto, shall be excluded if, at the Closing,
the Company has a Surplus or Excess Lines Qualification in Louisiana and the deposit is necessary
with respect thereto.

     “Existing Reinsurance Agreements” has the meaning set forth in Section 4.1(v) below.

     “Filing Party” has the meaning set forth in Section 9.3(a)(3) below.

-3-

 

     “Final Fair Market Value” has the meaning set forth in Section 2.5(b) below.

     “Form A Filing” has the meaning set forth in Section 5.2(c) below.

     “GAAP” means United States generally accepted accounting principles as in effect from
time to time.

     “Governmental Authority” means any court, arbitral body, administrative or
governmental body, department, commission, board, agency, political subdivision or instrumentality,
or any legislative, executive or regulatory authority or agency.

     “Guaranty Agreement” means the Guaranty Agreement of the Parent in favor of the Buyer
substantially in the form of Exhibit 5 hereto.

     “Income Tax” means any federal, state, local or foreign income tax, including any
interest, penalty or addition thereto, whether disputed or not.

     “Income Tax Return” means any return, declaration, report, claim for refund, or
information return or statement relating to Income Taxes, including any schedule or attachment
thereto.

     “Indemnified Party” has the meaning set forth in Section 10.3 below.

     “Independent Accounting Firm” shall mean an independent nationally recognized
accounting firm mutually acceptable to the Buyer and the Seller Parties.

     “Indemnitor” has the meaning set forth in Section 10.3 below.

     “Information” shall have the meaning set forth in Article 14 below.

     “Insurance License” shall have the meaning set forth in Section 4.1(u)(1) below.

     “Investment” as applied to any Person means (i) any direct or indirect purchase or
other acquisition by such Person of any bond, debenture, note, instrument, stock, security or other
obligation or ownership interest (including partnership interests and joint venture interests) of
any other Person and (ii) any capital contribution by such Person to any other Person.

     “Knowledge” means the actual knowledge of the designated party or such knowledge that
should have been gained through reasonable inquiry by such party. The Seller Parties or the Buyer
shall be deemed to have knowledge of a particular fact or other matter only if any individual who
is serving as an executive officer of such party has, or at any time had, Knowledge of such fact or
other matter.

     “Latest Balance Sheet” means the unaudited statutory balance sheet of the Company as
of March 31, 2007.

     “Laws” shall have the meaning set forth in Section 4.1(q) below.

-4-

 

     “Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of
any kind (including, without limitation, any conditional sale or other title retention agreement or
lease in the nature thereof), any sale of receivables with recourse, any filing or agreement to
file a financing statement as a debtor under the Uniform Commercial Code or any similar statute
other than to reflect the ownership by a third party of property leased pursuant to a lease which
is not in the nature of a conditional sale or title retention agreement, or any subordination
arrangement in favor of another Person (other than any subordination arising in the ordinary course
of business).

     “Loss” means, with respect to any Person, any and all claims, losses, liabilities,
damages, deficiencies, obligations, costs or expenses, penalties and reasonable attorneys’ fees and
disbursements incurred by such Person (other than any Taxes or any such amounts to the extent
related to Taxes).

     “Market Value” means (i) in the case of securities (other than Cash Equivalents)
listed on an exchange or on an over-the-counter market, the closing price on such exchange or
market (or the average of the closing bid and asked prices if there is no closing price) plus all
accrued but unpaid interest on such securities through the last Business Day preceding the Closing
Date if such amount is not already reflected in such closing price (or such bid and asked prices)
and (ii) in the case of cash or Cash Equivalents, the face amount thereof.

     “Material Adverse Effect” means a change, event (including any damage, destruction or
Loss, whether or not covered by insurance), condition, state of facts or development that,
individually or in the aggregate, has had or would reasonably be expected to have a material
adverse effect on the Insurance License or Surplus or Excess Lines Qualifications held by the
Company or on the assets (tangible or intangible), liabilities, regulatory compliance or
governmental relations of the Company; provided, however, to the extent such effect results from
any of the following, such effect shall not be considered a Material Adverse Effect: (i) a change
in the Market Value of Investments made in accordance with the investment guidelines in effect
prior to the date hereof; (ii) any adverse change or effect that is caused by or that arises out of
conditions affecting the economy or securities markets generally; (iii) any adverse change or
effect that arises out of conditions effecting the insurance or financial services industries
generally, including, without limitation, circumstances, changes or effects in or affecting
interest rates, securities markets, accounting principles, practices or conventions or applicable
law (whether federal, state, local or foreign); or (iv) any adverse change or effect resulting from
the announcement or the pendency of the transactions contemplated hereby.

     “MGA” has the meaning set forth in the preface.

     “MGA Financial Statements” has the meaning set forth in Section 4.1(g)(2) below.

     “New York Trust Agreement” means the Company’s Declaration of Trust, dated October 10,
1994, creating a trust in accordance with the New York Insurance Law.

     “Parent Financial Statements” has the meaning set forth in Section 4.1(g)(1) below.

-5-

 

     “Parties” has the meaning set forth in the preface.

     “Person” means an individual or an Entity.

     “Policies” has the meaning set forth in Section 4.1(u)(3) below.

     “Pre-Closing Tax Period” shall mean any taxable period or portion thereof that ends on
or prior to the Closing Date.

     “Post-Closing Tax Period” shall mean any taxable period or portion thereof that begins
after the Closing Date.

     “Purchase Price” has the meaning set forth in Section 2.2.

     “Rebate or Kickback” has the meaning set forth in Section 4.1(t).

     “Related Transactions” means the transactions described in Sections 3.1, 3.2, 3.3 and
3.4.

     “Reinsurance Trust Agreement” means the Reinsurance Trust Agreement substantially in
the form of Exhibit 4, and subject to reasonable revisions requested by the appointed
trustee.

     “Quota Share Reinsurance Agreement” means the Quota Share Reinsurance Agreement
between the Company and MGA substantially in the form of Exhibit 3.

     “SAP” means, with respect to any Person, the statutory accounting principles and
applicable actuarial standards of practice prescribed or permitted by the rules and regulations of
the National Association of Insurance Commissioners and the insurance commissioner (or similar
authority) of such Person’s jurisdiction of domicile, applied on a basis consistent with that of
prior years (other than where a lack of consistency results from changes in the statutory
accounting principles or actuarial standards of practice so prescribed or permitted).

     “Section 2.2 Amount” has the meaning set forth in Section 2.2.

     “Securities Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Seller Parties” has the meaning set forth in the preface.

     “Seller Indemnitees” shall have the meaning set forth in Section 10.2 below.

     “Shares” has the meaning set forth in Section 4.1(e) below.

     “Straddle Taxes” has the meaning set forth in Section 9.3(f)(3) below.

     “Subsidiary” means, with respect to any Person, any corporation, limited liability
company, partnership, association or other business entity of which (i) if a corporation, a

-6-

 

majority of the total voting power of shares of stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or one or more of the
other Subsidiaries of that Person or a combination thereof, or (ii) if a limited liability company,
partnership, association or other business entity, a majority of the partnership or other similar
ownership interest thereof is at the time owned or controlled, directly or indirectly, by any
Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a limited liability
company, partnership, association or other business entity if such Person or Persons shall be
allocated a majority of limited liability company, partnership, association or other business
entity gains or losses or shall be or control any managing director or general partner of such
limited liability company, partnership, association or other business entity.

     “Surplus or Excess Lines Qualified” or “Surplus or Excess Lines Qualification” means
(i) with respect to those United States jurisdictions which maintain a list of insurance companies
which are approved, qualified or eligible to write insurance coverage on a “surplus lines” or
“excess lines” basis, as those terms are commonly understood in the United States insurance
industry, the inclusion of the Company on such list or written confirmation from a Governmental
Authority of such United States jurisdiction that the Company will appear in the next publication
of such list; (ii) with respect to those United States jurisdictions in which a surplus lines
association or excess lines association or stamping office maintains a list of insurance companies
approved, qualified or eligible to write insurance coverage on a surplus lines or excess lines
basis, the inclusion of the Company on such list or the written confirmation from the surplus lines
association or excess lines association or stamping office that the Company will appear in the next
publication of such list; and (iii) with respect to the United States jurisdictions in which
neither clause (i) nor clause (ii) above applies, the Company satisfies the requirements of such
jurisdiction for writing insurance coverage on a surplus lines or excess lines basis.

     “Tax” or “Taxes” means any and all federal, state, local, foreign and other
net income, gross income, gross receipts, sales, use, ad valorem, transfer, registration, excise,
franchise, capital stock, profits, license, stamp, lease, service, service use, payroll, wage,
employment, social security, severance, occupation, excise, premium, real or personal property,
windfall profits, customs, duties, alternative or add-on minimum, estimated and other taxes, fees,
assessments and charges of any kind whatever, together with any interest and penalties, additions
to tax or additional amounts with respect thereto, whether disputed or not.

     “Tax Indemnifying Party” has the meaning set forth in Section 9.3(a)(3) below.

     “Tax Claim” has the meaning set forth in Section 9.3(d) below.

     “Tax Return” means any return, information report or filing with respect to Taxes,
including any schedules attached thereto and including any amendment thereof.

     “Threshold” shall have the meaning set forth in Section 10.7.

-7-

 

     “Transfer and Assignment Agreement” means the Transfer and Assignment Agreement
between the Company and MGA substantially in the form attached as Exhibit 6 hereto.

     “Transfer Taxes” has the meaning set forth in Section 9.3(c) below.

ARTICLE 2

PURCHASE AND SALE OF COMPANY SHARES

     2.1 Basic Transaction. On and subject to the terms and conditions of this Agreement,
the Buyer agrees to purchase from the Seller Parties, and the Seller Parties agree to sell to the
Buyer, all of the Shares for the consideration specified in Section 2.2.

     2.2 Purchase Price. The Buyer agrees to pay to the Seller Parties (as directed by
them) at the Closing an amount equal to the sum of (i) $4,750,000, (ii) $125,000 for each of the
States of Louisiana and Colorado if the Company has a Surplus or Excess Lines Qualification that is
valid, in force, unimpaired and in good standing on the Closing Date in such state, and (iii) the
Market Value of Acceptable Financial Assets owned by the Company immediately prior to the Closing
(which shall exclude (a) the assets to be included in the transfer to the Parent pursuant to
Section 3.1, (b) the assets held in trust pursuant to the New York Trust Agreement and the Liberty
Trust, (c) the assets held pursuant to the Escrow and/or Custodial Agreement for the State of New
Hampshire and, if the Excess or Surplus Lines Qualification for Louisiana is not in force on the
Closing Date, the assets held pursuant to the Escrow and/or Custodial Agreement for the State of
Louisiana, and (d) the assets included in the transfers contemplated by Section 3.3(a)) in an
amount equal to $5,000,000 (the “Purchase Price”); provided, however, that if any of the
Company’s Surplus or Excess Lines Qualifications in the jurisdictions listed in Section 4.1(u)(2)
of the Disclosure Schedule is not valid, in force, unimpaired and in good standing on the Closing
Date, the Purchase Price shall be reduced by the amount set forth in Section 2.2 of the Disclosure
Schedule opposite the name of the jurisdiction in which such Surplus or Excess Lines Qualification
is not valid, in force, unimpaired or in good standing, or, if there is more than one such
jurisdiction, the sum of the amounts set forth in Section 2.2 of the Disclosure Schedule opposite
the names of such jurisdictions (the “Section 2.2 Amount”). At the Closing, in exchange
for the delivery by the Seller Parties to the Buyer of the Shares, the Buyer shall pay to the
Seller Parties the Purchase Price by wire transfer of immediately available funds to a bank account
designated by the Seller Parties.

     2.3 The Closing. The closing of the transactions contemplated by this Agreement (the
“Closing”) shall take place at the offices of the Parent at 3333 Lee Parkway, Suite 1200,
Dallas, Texas, commencing at 10:00 a.m., local time on a date to be mutually agreed within thirty
(30) days following the satisfaction or waiver of all conditions precedent set forth in this
Agreement (other than conditions with respect to actions that the respective Parties will take at
the Closing itself) or such other date as may otherwise be agreed
upon by the Seller Parties and the Buyer (the “Closing Date”). The Parties shall use their
best efforts to cause the Closing to be effective as of the first day of a calendar month.

-8-

 

     2.4 Deliveries at the Closing. At the Closing, (i) the Seller Parties will deliver to
the Buyer the various certificates, instruments, and documents referred to in Article 7 below, (ii)
the Buyer will deliver to the Seller Parties the various certificates, instruments, and documents
referred to in Article 8 below, (iii) the Seller Parties will deliver to the Buyer stock
certificates representing all of the Shares, endorsed in blank or accompanied by duly executed
assignment documents, and (iv) the Buyer will deliver to the Seller Parties the consideration
specified in Section 2.2.

     2.5 Post Closing Adjustment.

     (a) At least three (3) Business Days prior the Closing Date, the Seller Parties shall provide
to the Buyer a preliminary determination of the projected Market Value of the Acceptable Financial
Assets as of the Closing Date.

     (b) Within five (5) Business Days after the Closing Date, the Seller Parties shall provide to
the Buyer a final determination of the Market Value of the Acceptable Financial Assets as of the
Closing Date (“Final Fair Market Value”). If the Final Fair Market Value exceeds
$5,000,000, then the Buyer shall pay to the Seller Parties an amount equal to such excess, in
immediately available funds by wire transfer to a bank account designated in writing by the Seller
Parties. If the Final Fair Market Value is less than $5,000,000, then the Seller Parties shall pay
to the Buyer an amount equal to such shortfall, in immediately available funds by wire transfer to
a bank account designated in writing by the Buyer. Any payment due pursuant to this Section 2.5(b)
shall be made within ten (10) Business Days after the Closing Date or, if a Dispute Notice is filed
pursuant to Section 2.5(c), within five (5) Business Days after the resolution of the disagreement
described in such Dispute Notice.

     (c) In the event that the Buyer disagrees with the Final Fair Market Value of the Acceptable
Financial Assets, the Buyer shall provide notice of such disagreement and the nature or reason
therefor to the Seller Parties no later than three (3) Business Days after the delivery to the
Buyer of such final determination (the “Dispute Notice,” and the date of its delivery, the
“Dispute Notice Date”). The Seller Parties and the Buyer shall use their best efforts to
resolve such disagreement by negotiation for five (5) Business Days following the Dispute Notice
Date, and if no resolution is reached within such period, the dispute shall be jointly submitted by
the Buyer and the Seller Parties to the Independent Accounting Firm on the next Business Day
following the expiration of such period. The Independent Accounting Firm shall make its
determination of the Fair Market Value of the Acceptable Financial Assets as of the Closing Date
within fifteen (15) Business Days after submission thereof, which determination shall be binding
and conclusive on all of the Parties hereto. Each of the Parties shall cooperate fully in
assisting the Independent Accounting Firm, as it may require or request, to reach such
determination and shall take all actions necessary to expedite and to cause the Independent
Accounting Firm to expedite such determination. Upon completion of the Independent Accounting
Firm’s review, payment of any amount required pursuant to Section 2.5(b) shall be made by the
Seller Parties or the Buyer, as the case may be, within five (5) Business Days after
such determination. The Seller Parties and the Buyer shall each pay fifty percent (50%) of the
total fees and expenses of the Independent Accounting Firm; provided, however, if the Independent
Accounting Firm makes its determination of the Fair Market Value of the

-9-

 

Acceptable Financial Assets
as of the Closing Date and such determination is substantially the same as the value determined by
one of the Parties, then the other Party shall pay 100% of the total fees and expenses of the
Independent Accounting Firm.

ARTICLE 3

RELATED TRANSACTIONS

     Subject to the additional conditions precedent set forth in Article 6 of this Agreement, the
obligations of the Buyer and the Seller Parties to consummate the purchase of the Shares is subject
to and conditioned upon completion of the following transactions in form and substance reasonably
satisfactory to the Buyer and the Seller Parties:

     3.1 Corporate Restructuring. Prior to the Closing and after completion of the
transaction contemplated in Section 3.3(a), and subject to receipt of all applicable consents and
approvals identified in Section 4.1(z) of the Disclosure Schedule in form and substance reasonably
acceptable to the Parties, the Seller Parties shall cause the Company to transfer to the Parent all
of the issued and outstanding capital stock of MGA.

     3.2 Transfer of Liabilities and Obligations.

     (a) At the Closing, MGA and the Company shall enter into the Assumption Agreement, the
Transfer and Assignment Agreement, and the Administration Agreement, and the Parent shall enter
into the Guaranty Agreement.

     (b) No later than the close of business on the Business Day immediately preceding the Closing
Date, (i) the Seller Parties shall terminate and commute any and all intercompany cessions,
reinsurance agreements, retrocessions, pooling arrangements and other transfers of insurance risk
by and between the Company, on the one hand, and the Seller Parties and their Affiliates, on the
other hand; (ii) MGA shall enter into the Quota Share Reinsurance Agreement, and (iii) MGA and the
Company shall enter into the Reinsurance Trust Agreement, and MGA shall transfer to the trustee,
for deposit to the trust account thereunder, the assets described therein. The performance of MGA
under the Quota Share Reinsurance Agreement, including its financial obligations described therein,
shall be secured by the Reinsurance Trust Agreement.

     (c) The Seller Parties and the Buyer acknowledge and agree that it is their mutual intent that
the Company shall have no liabilities or obligations whatsoever at the Closing, except for the
liabilities and obligations specified in the last sentence of Section 4.1(h), and the Seller
Parties shall take all necessary steps to ensure that the Company receives full financial statement
credit for the transfers and assumptions contemplated by this Section 3.2 under the Laws of the
State of Oklahoma.

     3.3 Reduction in Capital and Surplus.

-10-

 

     (a) On the Closing Date and prior to the Closing and the transaction contemplated in Section
3.1, and subject to receipt of all applicable consents and approvals identified in Section 4.1(z)
of the Disclosure Schedule in form and substance reasonably acceptable to the Parties, the Company
shall transfer to MGA all of the assets of the Company in amounts sufficient to reduce the
remaining statutory capital and surplus of the Company (without counting its investment in MGA and
after giving effect to the initial reserve transfer contemplated by the Quota Share Reinsurance
Agreement and after taking into account the assets to be transferred pursuant to the Transfer and
Assignment Agreement) to $5,000,000. In connection with the transfer of such assets, at or prior
to the Closing the Company shall notify JP Morgan Chase Bank, as successor to Texas Commerce Bank,
trustee under the New York Trust Agreement, of the Company’s intention to terminate such Trust
Agreement. At the Closing, pursuant to the Transfer and Assignment Agreement, the Company shall
assign to MGA all of the Company’s right, title and interest in and to the New York Trust
Agreement, the Escrow and/or Custodial Agreements, and the Liberty Trust, and all proceeds thereof,
and shall designate MGA as the Company’s agent and representative in connection with all matters
relating to such trusts and other arrangements and shall authorize MGA to take all steps necessary
or desirable to terminate said arrangements, including without limitation, the power and authority
to engage a firm of independent certified public accountants to conduct the audit of the trust fund
and to negotiate with the New York Department of Insurance regarding the termination of the New
York Trust Agreement and the distribution of the proceeds thereof. MGA shall assume and be
responsible for all fees and other costs associated with the administration of the trust after the
Closing Date and all expenses, taxes and other charges and liabilities associated with the
termination of the trust; and MGA shall indemnify and hold the Company harmless from and against
any and all such fees, costs, expenses, taxes and other charges and liabilities relating thereto.

     (b) The Seller Parties and the Buyer agree that following the transfer by the Company of the
capital stock of MGA pursuant to Section 3.1 and the amount described in Section 3.3(a) and the
consummation of the transactions contemplated by the Ancillary MGA Agreements, the Company shall
not have any material assets except for the assets specified in the last sentence of Section
4.1(k).

     (c) On the Closing Date and after the Closing, the Buyer shall contribute admissible
unencumbered assets to the Company totaling $15,000,000.

     3.4 Elimination of Intercompany Contracts and Pools. Except as contemplated by
Section 5.13, prior to the Closing, and subject to all applicable consents and approvals identified
in Section 4.1(z) of the Disclosure Schedule, the Seller Parties shall remove the Company as a
party from all intercompany contracts and pools, excluding reinsurance in place to meet the terms
of this Agreement. Except as contemplated by Section 5.13, the Seller Parties and the Buyer
acknowledge and agree that it is their mutual intent that the Company shall have no liabilities or
obligations with respect to any intercompany contracts or pools whatsoever at or after the Closing.

-11-

 

ARTICLE 4

REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION

     4.1 Representations and Warranties of the Seller Parties. As a material inducement to
the Buyer to enter into this Agreement and purchase the Shares, the Seller Parties, jointly and
severally, make the following representations and warranties to the Buyer. Nothing in the
Disclosure Schedule shall be deemed adequate to disclose an exception to a representation or
warranty made herein unless the applicable Section of the Disclosure Schedule identifies the
relevant exception in reasonable detail.

          (a) Organization of the Seller Parties and the Company.

          (1) The Parent is a corporation duly organized, validly existing and in good standing
under the laws of the State of Texas and has all requisite power and authority (corporate
and otherwise) to own, lease and operate its properties and assets and to conduct its
business as it is now being conducted, to execute and deliver this Agreement and the
Guaranty Agreement, to perform its obligations hereunder and thereunder, and to carry out
the other transactions contemplated hereby and thereby.

          (2) MGA is a stock property and casualty insurance company duly organized, validly
existing and in good standing under the laws of the State of Texas and has all requisite
power and authority (corporate and otherwise) to own, lease and operate its properties and
assets and to conduct its business as it is now being conducted, to execute and deliver this
Agreement and the Ancillary MGA Agreements, to perform its obligations hereunder and
thereunder, to own, hold, sell and transfer the Shares to the Buyer (subject to the receipt
of the consents and approvals set forth in Section 4.1(z) of the Disclosure Schedule), and
to carry out the other transactions contemplated hereby and thereby.

          (3) The Company is a stock property and casualty insurance company duly organized,
validly existing and in good standing under the laws of the State of Oklahoma and has all
requisite power and authority (corporate and otherwise) to own, lease and operate its
properties and assets and to conduct its business as it is now being conducted, to execute
and deliver the Ancillary MGA Agreements, to perform its obligations thereunder and to carry
out the other transactions contemplated hereby and thereby. At the Closing, the Company
will not own and will not be obligated to in any way to acquire, either directly or
indirectly, any voting securities or other equity interest
or securities in any other Entity or be a participant in any partnership, pooling
arrangement or joint venture with any other Person.

          (4) The copies of the articles of incorporation, bylaws and other organizational
documents of the Seller Parties and the Company that have been furnished to the Buyer and
its counsel reflect all amendments made thereto at any time prior to the date of this
Agreement or the Closing, as the case may be, and are true, correct and complete.

-12-

 

          (b) Authorization of the Transactions.

          (1) The execution and delivery of this Agreement by the Seller Parties and the
performance by the Seller Parties of their respective obligations hereunder have been duly
and validly authorized by all necessary corporate action on the part of each of the Seller
Parties. This Agreement constitutes a legal, valid, and binding obligation of each the
Seller Parties and is enforceable against each of the Seller Parties in accordance with its
terms.

          (2) At the Closing, the Guaranty Agreement will have been duly executed and delivered
by the Parent and the performance by the Parent of its obligations thereunder will have been
duly and validly authorized by all necessary corporate action on the part of the Parent and
the Guaranty Agreement will constitute a legal, valid and binding obligation of the Parent
and will be enforceable against the Parent in accordance with its terms.

          (3) At the Closing, the Ancillary MGA Agreements will have been duly executed and
delivered by MGA and the performance by MGA of its obligations thereunder will have been
duly and validly authorized by all necessary corporate action on the part of MGA. At the
Closing and subject to the receipt of the consents and approvals set forth in Section 4.1(z)
of the Disclosure Schedule, the Ancillary MGA Agreements will each constitute a legal,
valid, and binding obligation of MGA and will be enforceable against MGA in accordance with
its terms.

          (c) Noncontravention.

          (1) Neither the execution and delivery of this Agreement or the Guaranty Agreement nor,
subject to the receipt of the consents and approvals set forth in Section 4.1(z) of the
Disclosure Schedule, the consummation of the transactions contemplated hereby and thereby
and the performance of and compliance with the terms hereof and thereof by the Parent will
(i) violate any constitution, statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any Governmental Authority to which the
Parent is subject, (ii) violate any provision of the articles of incorporation, bylaws or
other organizational documents of the Parent, (iii) except as set forth in Section 4.1(c) of
the Disclosure Schedule, conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate, terminate,
modify or cancel, or require any notice under, or result in
the creation of any Lien upon the Shares or any other assets of the Parent, under any
agreement, contract, lease, license, instrument, or other arrangement to which the Parent is
a party or by or to which it or its assets may be bound or subject.

          (2) Neither the execution and delivery of this Agreement, the Administration Agreement
and the Assumption Agreement nor, subject to the receipt of the consents and approvals set
forth in Section 4.1(z) of the Disclosure Schedule, the execution and delivery of the
Transfer and Assignment Agreement, the Quota Share

-13-

 

Reinsurance Agreement and the Reinsurance
Trust Agreement and the consummation of the transactions contemplated hereby and thereby and
the performance of and compliance with the terms hereof and thereof by MGA and the Company,
will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any Governmental Authority to which MGA or
the Company is subject, (ii) violate any provision of the articles of incorporation, bylaws
or other organizational documents of MGA or the Company, (iii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify or cancel, or require any notice under, or result
in the creation of any Lien upon the Shares or any other assets of MGA or the Company, under
any agreement, contract, lease, license, instrument, or other arrangement to which either
MGA or the Company is a party or by or to which either of them or their assets may be bound
or subject.

          (d) Brokers’ Fees. Neither the Seller Parties nor the Company has nor will have any
liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect
to the transactions contemplated by this Agreement.

          (e) Shares. The authorized capital stock of the Company consists of 4,000,000 shares
of common stock, par value $1.00 per share, of which 3,000,000 shares are issued and outstanding
(the “Shares”). The Company does not have any other class of authorized capital stock.
All of the Shares are duly authorized, validly issued, fully paid and non-assessable. Except as
set forth in Section 4.1(e) of the Disclosure Schedule, there are no outstanding securities, profit
participation rights, obligations, rights, subscriptions, warrants, options, phantom stock rights,
calls, commitments or demands of any character or (except for this Agreement) other contracts of
any kind that give any Person the right to (i) purchase or otherwise receive or be issued any
shares of capital stock of the Company or any security or liability of any kind convertible into or
exchangeable for any shares of capital stock of the Company or any unit, equity appreciation rights
or phantom stock rights in any equity plan, or (ii) other than the Seller Parties, receive any
benefits or rights similar to any rights enjoyed by or accruing to a holder of the Shares, or any
rights to participate in the equity, income or election of directors or officers of the Company.

          (f) Title to the Shares. Except as set forth in Section 4(f) of the Disclosure
Schedule, as of the date hereof the Parent has marketable title to the Shares free and clear of all
Liens and, upon delivery of the Shares to the Buyer pursuant to Section 2.4, the Buyer will acquire
good and marketable title thereto, free and clear of any Liens other than those created by the
Buyer.

          (g) Financial Statements. The Seller Parties have furnished to the Buyer true and
complete copies of the following financial statements:

          (1) The audited consolidated financial statements of the Parent and its consolidated
Subsidiaries as of and for the three years ended December 31, 2004, through December 31,
2006, and the unaudited consolidated financial statements as of and for the quarter ended
March 31, 2007 (together with the notes relating thereto, whether or not

-14-

 

included therein)
(collectively, the “Parent Financial Statements”). Each Parent Financial Statement,
including without limitation, each consolidated balance sheet and each of the consolidated
statements of operations, shareholders’ equity and comprehensive loss and cash flows
contained therein, (i) was prepared in accordance with GAAP applied on a basis and in a
manner consistent with prior periods except as disclosed in the notes thereto, (ii) is
consistent with the books and records of the Parent and its consolidated Subsidiaries (which
are accurate and complete in all material respects), and (iii) fairly presents the
consolidated financial condition as of the date thereof, and the consolidated results of
operations, shareholders’ equity and cash flows for and during the periods covered thereby,
of the Parent. The Parent maintains, on behalf of itself and its consolidated subsidiaries,
a system of internal accounting controls sufficient to provide reasonable assurance that (1)
transactions are executed in accordance with management’s general or specific
authorizations, (2) transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain asset accountability, (3)
access to assets is permitted only in accordance with management’s general or specific
authorization and (4) the recorded accountability for assets is compared with the existing
assets at reasonable market intervals and appropriate action is taken with respect to any
differences.

          (2) MGA’s audited statutory financial statements as of and for the three years ended
December 31, 2004, through December 31, 2006, and the unaudited statutory financial
statements as of and for the quarter ended March 31, 2007 (together with the notes relating
thereto, whether or not included therein), as filed with or submitted to Texas Department of
Insurance on forms prescribed or permitted by such department (collectively, the “MGA
Financial Statements”). Each MGA Financial Statement complied in all material respects
with all applicable laws, statutes, rules and regulations when so filed, and all material
deficiencies with respect to any MGA Financial Statement have been cured or corrected. Each
MGA Financial Statement, including without limitation, each balance sheet and each of the
statements of operations, capital and surplus accounts and cash flows contained therein, (i)
was prepared in accordance with SAP applied on a basis and in a manner consistent with prior
periods except as disclosed in the notes thereto, (ii) is consistent with the books and
records of MGA (which are accurate and complete in all material respects), and (iii) fairly
presents the financial condition as of the date thereof, and the results of operations for
and during the periods covered thereby, of MGA. MGA has disclosed to the Buyer all
accounting principles or practices used in preparing the MGA Financial Statements for which
MGA has requested approval or received permission from the Texas Department of Insurance.

          (3) The Company’s audited statutory financial statements as of and for the three years
ended December 31, 2004, through December 31, 2006, and the unaudited statutory financial
statements as of and for the quarter ended March 31, 2007 (together with the notes relating
thereto, whether or not included therein), as filed with or submitted to the Oklahoma
Insurance Department on forms prescribed or permitted by such department (collectively, the
“Company Financial Statements”). Each Company Financial Statement complied in all
material respects with all applicable laws, statutes, rules and regulations when so filed,
and all material deficiencies with respect to any

-15-

 

Company Financial Statement have been
cured or corrected. Each Company Financial Statement, including without limitation, each
balance sheet and each of the statements of operations, capital and surplus accounts and
cash flows contained therein, (i) was prepared in accordance with SAP applied on a basis and
in a manner consistent with prior periods except as disclosed in the notes thereto, (ii) is
consistent with the books and records of the Company (which, in turn, are accurate and
complete in all material respects), and (iii) fairly presents the financial condition as of
the date thereof, and the results of operations for and during the periods covered thereby,
of the Company. The Seller Parties have disclosed to the Buyer all accounting principles or
practices used in preparing the Company Financial Statements for which the Company has
requested approval or received permission from the Oklahoma Insurance Department.

          (h) Absence of Undisclosed Liabilities. On the date hereof, the Company has no
liabilities or obligations of any nature (whether absolute, accrued, contingent, unliquidated and
whether for insurance liabilities or otherwise, whether or not known to the Seller Parties or the
Company, whether due or to become due and regardless of when asserted) other than liabilities and
obligations reflected in the Company Financial Statements. As of the Closing, the Company will
have no liabilities or obligations of any nature whatsoever, except for liabilities which are
transferred to and assumed by MGA pursuant to the Quota Share Reinsurance Agreement, liabilities
reinsured pursuant to the Existing Reinsurance Agreements, liabilities which are assumed by MGA
from the Company pursuant to the Assumption Agreement, obligations under the Transfer and
Assignment Agreement, liabilities the responsibility for which is delegated to MGA pursuant to the
Administration Agreement, payables to MGA with respect to reinsurance recoverables under the
Existing Reinsurance Agreements, if any, and liabilities for Taxes which are not yet due and
payable.

          (i) Absence of Certain Events. Since December 31, 2006, the Company has conducted no
business other than that reasonably related to running off of its existing insurance business and
the settlement of claims, and has not, except in furtherance of the transactions contemplated by
this Agreement, including those identified in Article 3:

          (1) issued or renewed any policies of insurance or reinsurance or otherwise engaged in
the insurance or reinsurance business, except for transactions under the Existing
Reinsurance Agreements;

          (2) issued any bonds, debentures, notes or other debt securities or any capital stock
or other equity interests or any securities convertible, exchangeable or exercisable into
any capital stock or other equity interests;

          (3) borrowed any amount or incurred or become subject to any liability or other
obligation;

          (4) declared, set aside or made any payment or distribution of cash or other property
to its shareholders or equity holders with respect to its capital stock or other equity
interests or purchased or redeemed any shares of its capital stock or other equity interests
(including, without limitation, any warrants, options or other rights to acquire its capital
stock or other equity securities);

-16-

 

          (5) mortgaged or pledged any of its properties or assets (tangible or intangible) or
subjected them to any material Lien;

          (6) sold, assigned or transferred any of its tangible assets or canceled any material
debts or claims;

          (7) sold, assigned, transferred or licensed any intangible assets;

          (8) suffered any extraordinary, material losses or waived any rights of material value,
whether or not in the ordinary course of business or consistent with past practice;

          (9) made any Investment, except for Investments in the ordinary course of business;

          (10) made any capital expenditures or commitments ;

          (11) made any loans or advances to, or guaranties for the benefit of, any other
Person;

          (12) suffered any material damage, destruction or casualty loss, whether or not covered
by insurance;

          (13) taken any steps to incorporate any Subsidiary; or

          (14) entered into any other material transaction, except Investment transactions in the
ordinary course of business.

          (j) No Material Adverse Effect. As of the date hereof, since March 31, 2007, there
has been, no Material Adverse Effect with respect to the Company.

          (k) Securities and Assets. The Company has marketable title to the stock, bonds,
notes and other securities and the other assets owned by the Company on the date of this Agreement,
free and clear of all Liens. Section 4.1(k) of the Disclosure Schedule lists all investments in
stock, bonds, notes and other securities owned by the Company on March 31, 2007, all of which
complied when made in all respects with applicable insurance laws and regulations, except for
restrictions in respect of Deposits or the rights of third parties arising out
of the Existing Reinsurance Agreements. At the Closing Date, the Company will have no assets,
except the Acceptable Financial Assets.

          (l) Real Property. Except as set forth in Section 4.1(l) of the Disclosure Schedule,
the Company does not have, and never has had, any ownership interest, security interest, leasehold
interest, license or other interest of any kind in any real property whatsoever.

          (m) Employee Benefit Plans and Employees. Except as set forth in Section 4.1(m) of
the Disclosure Schedule, the Company has not adopted, maintained, sponsored, contributed to,
participated in or incurred any liability under or with respect to any Employee Benefit Plan. At
or before the Closing Date, the Company’s participation in all Employee

-17-

 

Benefit Plans listed in
Section 4.1(m) of the Disclosure Schedule shall have been terminated and any liabilities related
thereto shall have been assumed by MGA pursuant to the Assumption Agreement. The Company has no
employees and has no obligation to pay any compensation or benefits to, and has no other existing
or contingent liability to, any of its former officers, directors or employees.

          (n) No Intercompany Liabilities. Except as contemplated by Section 5.13, as of the
Closing, there will be no outstanding liabilities or obligations between or among the Company, on
the one hand, and the Seller Parties or any Affiliate thereof, on the other hand, except under the
Ancillary MGA Agreements.

          (o) Taxes. Except as set forth in Section 4.1(o) of the Disclosure Schedule, (i) all
Tax Returns which are required to be filed by or with respect to the Company have been duly and
timely filed in accordance with all applicable Laws; (ii) all such Tax Returns are true, correct
and complete and have been prepared in compliance with all applicable laws and regulations; (iii)
all Taxes due or claimed or asserted by any Taxing authority to be due from or with respect to the
Company for the periods covered by such returns (whether or not such Taxes are shown on a Tax
Return) have been duly and timely paid; (iv) the Company is not currently the beneficiary of any
extension of time within which to file any Tax Return; (v) all Taxes which are required to be
withheld from amounts paid or owing to any employee, shareholder, creditor or third party
contractor of the Company have been withheld and paid over to the appropriate Taxing authorities;
(vi) all Taxes have been duly and fully provided for in the books and records of the Company in
accordance with SAP, including without limitation, in each of the Company Financial Statements;
(vii) no statute of limitations with respect to any Taxes has been waived and no extension of time
with respect to any Tax assessment or deficiency has been agreed to by or on behalf of the Company;
(viii) the accrual for Taxes on the Latest Balance Sheet would be adequate to pay all Tax
liabilities of the Company if its current tax year were to end on the date of the Latest Balance
Sheet (excluding any amount recorded which is attributable solely to timing differences between
book and Tax income); (ix) since the date of the Latest Balance Sheet, the Company has not incurred
any liability for Taxes; (x) an assessment of any additional Taxes for periods for which Tax
Returns have been filed by the Company would not exceed the recorded liability therefor on the
Latest Balance Sheet (excluding any amount recorded which is attributable solely to timing
differences between book and Tax income); (xi) no foreign, federal, state or local tax audits or
administrative or judicial proceedings are pending or being conducted with respect to the Company
and neither of the Seller Parties nor the Company has received any
notice indicating an intent to commence any such proceeding; (xii) no information related to
Tax matters has been requested by any foreign, federal, state or local taxing authority and no
notice indicating an intent to open an audit or other review has been received by the Seller
Parties or the Company from any foreign, federal, state or local taxing authority; (xiii) there are
no material unresolved claims concerning the Company’s Tax liabilities; (xiv) no claim has been
made by any Taxing authority that the Company is subject to Tax or required to file a Tax Return in
any jurisdiction where it has not filed Tax Returns; (xv) there are no Liens for Taxes (other than
Taxes not yet due and payable) upon any of the assets of the Company; (xvi) the Company is not
liable for the Taxes of any other Person (a) as a transferee or successor, (b) by contract or
indemnity, (c) under Treasury Regulation §1.1502-6 (or any corresponding provision of state, local
or foreign Tax law) or (d) otherwise; (xvii) the Company is not a party to or bound by any

-18-

 

Tax
indemnity, Tax sharing or Tax allocation agreement; (xviii) the Company is not jointly or severally
liable for Taxes as a result of being a member of a consolidated group, other than the consolidated
group of which the Seller Parties and their Affiliates are members; (xix) the Company will not be
required to include any material item of income in, or exclude any material item of deduction from,
taxable income for any taxable period (or portion thereof) ending after the Closing as a result of
any (a) change in method of accounting for a taxable period ending on or prior to the Closing Date,
(b) “closing agreement” as described in Section 7121 of the Code (or any corresponding provision of
state, local or foreign law) executed prior to the Closing, (c) intercompany transactions or any
excess loss account described in the Treasury Regulations under Section 1502 of the Code (or any
corresponding provision of state, local or foreign law), (d) installment sale or open transaction
disposition made prior to the Closing, or (e) prepaid amount received prior to the Closing; and
(xx) the Company has not distributed stock of another Person, or had its stock distributed by
another Person, in a transaction that was purported or intended to be governed in whole or in part
by Section 355 or 361 of the Code.

          (p) Suits and Other Proceedings. Except as set forth in Section 4.1(p) of the
Disclosure Schedule, as of the date of this Agreement there are no actions, suits, proceedings,
claims, investigations or examinations pending against either of the Seller Parties or the Company
or, to the Knowledge of the Seller Parties, threatened against or affecting either of the Seller
Parties or the Company, nor any administrative, arbitration or mediation proceedings pending
against either of the Seller Parties or the Company or, to the Knowledge of the Seller Parties,
threatened against the Seller Parties or the Company, nor is there any outstanding order, writ,
injunction, award or decree of any Governmental Authority or any arbitration tribunal or mediator
against either of the Seller Parties or the Company. Section 4.1(p) of the Disclosure Schedule
contains an accurate list and description of such pending or threatened actions or proceedings and
the amount reserved by the Company in respect of any potential liability that may arise out of or
in connection with each such action or proceeding. Except as set forth in Section 4.1(p) of the
Disclosure Schedule and except for any third party claims made or actions or other proceedings
commenced after the date of this Agreement under any insurance policy, binder, commitment,
endorsement or contract issued by the Company, at the Closing Date there will be no actions, suits,
proceedings, claims, investigations or examinations pending against either of the Seller Parties or
the Company or, to the Knowledge of the Seller Parties, threatened against or affecting either of
the Seller Parties or the Company, nor any administrative, arbitration or mediation proceedings
pending against either of the Seller Parties or the Company or, to the Knowledge of the Seller
Parties, threatened against the Seller Parties or the Company, nor will there be any outstanding
order, writ, injunction, award or decree of any Governmental
Authority or any arbitration tribunal or mediator against either of the Seller Parties or the
Company on the Closing Date, which in any such case (i) would restrain, enjoin, prohibit or in any
way impair the ability of the Seller Parties or the Company to consummate the transactions
contemplated hereby, (ii) would reasonably be expected to have a Material Adverse Effect, or (iii)
would reasonably be expected to have a material adverse effect on the ability of the Company to
conduct an insurance business after the Closing under the Insurance License or any of the Surplus
or Excess Lines Qualifications.

          (q) Compliance with Laws. To the Knowledge of the Seller Parties, the Company has
complied in all material respects with, and is now complying in all material respects with, all
foreign, federal, state and local statutes, laws, regulations, ordinances,

-19-

 

judgments, injunctions,
orders, licenses, approvals, permits and other requirements (collectively, “Laws”)
applicable to the Company or its business, properties or assets and no noncompliance therewith,
whether or not material, will have, or is reasonably likely to result in a materially adverse
effect on the condition or business of the Company, or the Insurance License or Surplus or Excess
Lines Qualifications held by the Company as of the date of this Agreement. Neither of the Seller
Parties nor the Company has received notice from any Governmental Authority of, or has any
Knowledge of, any alleged noncompliance. The Company is not relying on any exemption from or
deferral of any Law that would not be available to it after the Closing. To the Knowledge of the
Seller Parties, there are no pending changes in any Law that would prevent the Company from
conducting an insurance or reinsurance business after the Closing.

          (r) Compliance with Insurance Laws. Without limiting the representations and
warranties contained in Sections 4.1(q) and (u), except as set forth in Section 4.1(r) of the
Disclosure Schedule:

          (1) To the Knowledge of the Seller Parties, the Company is in compliance in all
material respects with the requirements of the insurance laws and regulations of the State
of Oklahoma and the insurance laws and regulations of other jurisdictions which are
applicable to its operations, and has filed all notices, reports, statements, registrations,
documents and other information required to be filed thereunder; and the Company has
received no notification from any insurance regulatory authority to the effect that any
additional permit or license from such insurance regulatory authority is needed to be
obtained by the Company.

          (2) The Company is not undergoing any statutory or similar examination of its books,
records, accounts or business by any federal or state regulatory agency or other
Governmental Authority.

          (3) The Company belongs to all guaranty fund associations, pools, bureaus, and similar
organizations required by applicable law in Oklahoma and in each other jurisdiction in which
the Company maintains a Surplus or Excess Lines Qualification in order for the Company to
conduct its business in such jurisdiction and has paid or will pay all assessments or other
amounts due to such guaranty fund associations or similar organizations for all periods
through the Closing Date.

          (s) Environmental Compliance. To the Knowledge of the Seller Parties, the Company is
not subject to, and neither of the Seller Parties nor the Company has any reason to believe that
the Company may become subject to, any material liability (contingent or otherwise) or material
corrective or remedial obligation arising under any federal, state, local or foreign law, rule or
regulation (including the common law) relating to or regulating health, safety, pollution or the
protection of the environment. Any such liability, regardless of materiality and regardless of the
Knowledge of the Seller Parties, is referred to herein as an “Environmental Liability”.

          (t) Rebates and Kickbacks. To the Knowledge of the Seller Parties, neither the
Company nor any of its officers, managers, directors, employees or agents, nor any other Person or
entity acting on behalf of the Company, acting alone or together, has unlawfully or in violation of
any policy or code of ethics of the Company or any its Affiliates: (i) received,

-20-

 

directly or
indirectly, any rebates, payments, commissions, promotional allowances or any other economic
benefits, regardless of their nature or type, from any customer, governmental employee or other
person or entity with whom the Company has done business, directly or indirectly; (ii) directly or
indirectly, given or agreed to give any contribution, gift, bribe, rebate, payoff, influence
payment, kickback or similar benefit to any customer, governmental employee or other person or
entity regardless of form, whether in money, property or services including, without limitation,
(x) to obtain favorable treatment in securing any business or in obtaining any license or approval,
(y) to pay for favorable treatment for business secured or any license or governmental approval
obtained, or (z) to obtain special concessions or pay for special concessions already obtained for
or in respect of the Company. Any such action, regardless of the Knowledge of the Seller Parties,
is referred to herein as a “Rebate or Kickback”.

          (u) Licenses and Permits.

          (1) The Company is licensed to do a property and casualty insurance business in the
State of Oklahoma (the “Insurance License”), and such Insurance License is valid and
is in full force and effect and free and clear of all Liens. The Company is not a party to
any agreement, and is not subject to any order, formal or informal, limiting the Company’s
ability to make full use of the Insurance License which has been issued to it or requiring
the Company to comply with regulatory standards, procedures or requirements different from
those generally applicable to companies with certificates of authority or licenses similar
to the Insurance License. The Company has not (i) relinquished the Insurance License or had
it revoked or suspended, (ii) been involved in a proceeding, whether formal or informal, to
revoke, suspend, limit or restrict the Insurance License or the Company’s corporate charter,
(iii) been notified by any Governmental Authority that such Governmental Authority might
have cause to revoke, suspend, limit or restrict such Insurance License or the Company’s
corporate charter, or become aware that any such suspension, revocation, or limitation has
been threatened by any Governmental Authority, or (iv) written any business in any
jurisdiction on an admitted basis other than those in which it is qualified to write
business on an admitted basis. Subject to the receipt of the consents and approvals set
forth in Section 4.1(z) of the Disclosure Schedule, the Insurance License is not subject to
termination as a result of the execution of this Agreement nor the consummation of the
transactions contemplated hereby.

          (2) Section 4.l(u)(2) of the Disclosure Schedule contains a true and correct list of
each jurisdiction in which the Company is Surplus or Excess Lines Qualified as of the date
of this Agreement. Other than as set forth in Section 4.1(u)(2) of the Disclosure Schedule,
the Company has not received a notice of suspension or termination with respect to any such
eligibility, the Seller Parties have no Knowledge of any threatened cancellation or
termination in connection therewith, nor does either of the Seller Parties have Knowledge of
any event, inquiry, investigation or proceeding that could reasonably be expected to result
in such cancellation or termination. The Company has not written or assumed any business in
any other jurisdiction on a non-admitted basis other than the class or type of business
which it is authorized to write in such jurisdiction

-21-

 

          (3) All forms of insurance policies and riders thereto issued by the Company
(collectively, the “Policies”) are, to the extent required under applicable
insurance laws, on forms approved by the applicable insurance regulatory authorities of the
jurisdiction where issued or have been filed with and not objected to by such regulatory
authorities within the period provided for objection. The Company does not have any
Policies currently issued and in force.

          (4) To the Knowledge of the Seller Parties, the Company is in material compliance with
all applicable insurance laws regulating the practices of marketing and selling the
insurance policies it is licensed and authorized to issue and no noncompliance therewith,
whether or not material, will have, or is reasonably likely to result in, a Material Adverse
Effect with respect to the Company.

          (5) The Company has (i) timely paid all guaranty fund assessments that are due, or
claimed or asserted by any insurance regulatory authority to be due from the Company, and
(ii) provided for all such assessments in the Company Financial Statements to the extent
necessary to be in conformity in all material respects with SAP.

          (6) Section 4.1(u)(6) of the Disclosure Schedule lists all funds maintained by the
Company with Governmental Authorities under any applicable insurance law (each a
“Deposit”). Section 4.1(u)(6) of the Disclosure Schedule accurately sets forth the
assets comprising each such Deposit, and the name of the bank and the number of the bank
account in which such Deposit is maintained.

          (7) The Company is not currently the subject of any investigation, examination,
supervision, conservation, rehabilitation, liquidation, receivership, insolvency or other
similar proceeding nor is the Company operating under any written or oral formal or informal
agreement or understanding with the licensing authority of any jurisdiction or any other
regulatory authority or requires it to take, or refrain from taking any action.

          (v) Reinsurance. Section 4.1(v) of the Disclosure Schedule lists all (i) reinsurance
and retrocessional treaties and agreements pursuant to which the Company is a party and has ceded
liability, under which any party to such agreement may have any liability or other obligations to
the Company, and of which the Seller Parties have Knowledge and (ii) reinsurance
and retrocessional treaties and agreements to which the Company is a party and under which the
Company may have any liability or other obligations (collectively, the “Existing Reinsurance
Agreements”). The Seller Parties have provided the Buyer with access to a true and complete
copy of each of the Existing Reinsurance Agreements. Each of the Existing Reinsurance Agreements
is valid and binding on the Company in all respects in accordance with its terms and, to the
Knowledge of the Seller Parties, each of the Existing Reinsurance Agreements is valid and binding
on the reinsurer thereto in accordance with its terms, in each case, except as enforcement may be
limited by applicable bankruptcy, reorganization, insolvency, moratorium, or similar laws affecting
generally the enforcement of creditors’ rights and by the general principles of equity (whether or
not considered in a court of law or equity). The Seller Parties have no reason to believe that any
amount recoverable by the Company pursuant to an Existing

-22-

 

Reinsurance Agreement is not fully
collectible in due course, excluding any amounts covered by the Reinsurance Trust Agreement. The
Company is not in default in any material respect as to any Existing Reinsurance Agreement, nor on
the date of this Agreement is either of the Seller Parties aware that the financial condition of
any party to an Existing Reinsurance Agreement is impaired to the extent that a default thereunder
may be reasonably anticipated. Except as disclosed in Section 4.1(v) of the Disclosure Schedule,
none of the Existing Reinsurance Agreements contains any “change of control” provision or any other
provision providing that the other party thereto may terminate such Existing Reinsurance Agreement
prior to its established expiration date as a result of the transactions contemplated by this
Agreement. On the date of this Agreement the Company is entitled to take full credit on its
statutory financial statements filed with the Oklahoma Insurance Department with respect to
liabilities ceded under all Existing Reinsurance Agreements pursuant to which the Company has ceded
reinsurance and will be entitled on and after the Closing Date to such credit with respect to all
liabilities ceded under the Quota Share Reinsurance Agreement.

          (w) Contracts. Section 4.1(w)(i) of the Disclosure Schedule sets forth a list of all
material contracts, agreements and commitments (including undertakings or commitments to any
Governmental Authority but excluding insurance policies issued by the Company in the normal course
of business) which are in force and to which the Company is a party or by which any of its assets
or properties are bound or subject (the “Contracts”). Section 4.1(w)(ii) of the Disclosure
Schedule identifies each Contract (i) which provides that a “change of control” of the Company
will cause a termination of the Contract or constitutes a default thereunder or otherwise grants to
the other party the right to terminate the Contract upon a change of control, (ii) which grants any
Person a Lien on all or any part of the assets of the Company or (iii) under which the Company may
have any liability, liquidated or unliquidated, contingent or otherwise, after the Closing. The
Seller Parties have provided the Buyer with a full, accurate and complete copy of each of the
Contracts.

          (x) Insurance. Section 4.1(x) of the Disclosure Schedule contains a true and complete
list of all policies of fire, liability, workmen’s compensation and other forms of insurance
policies and fidelity bonds presently in effect insuring the Company’s business showing the policy
limits, type of coverage, annual premiums, expiration dates and deductibles. The Seller Parties
have provided the Buyer with access to complete and correct copies of all such insurance policies
and fidelity bonds. All such policies and fidelity bonds are valid, outstanding and enforceable
policies and provide insurance coverage for the properties, assets and operations
of the Company, of the kinds, in the amounts and against the risks required to comply with
applicable Law. In the event that any such policy is a “claims made” policy, the Seller Parties
represent and warrant that the Seller Parties shall retain all liabilities for claims against such
policy made after the Closing for events occurring prior to the Closing that would have been
covered under such policy if it had been written on an occurrence basis. There are no outstanding
unpaid claims made by the Company under any of such policies or bonds, and the Company has received
no notice of cancellation or non-renewal thereof. The Company has not been refused any insurance
with respect to any aspect of its operations or businesses, nor has its coverage been limited by
any insurance carrier to which it has applied for insurance or with which it has carried insurance.
No notice of cancellation or termination has been received with respect to any such policy or
fidelity bond. The activities and operations of the Company have

-23-

 

been conducted in a manner so as
to conform in all material respects to all applicable provisions of such insurance policies and
fidelity bonds.

          (y) Corporate Records. The Seller Parties have provided the Buyer with full, accurate
and complete copies of the Company’s articles of incorporation, bylaws and other organizational
documents. The Seller Parties have also provided the Buyer with the corporate minutes and all
amendments thereto of the Company since January 1, 1997, all of which corporate minutes and
amendments thereto are correct and complete in all material respects and accurately reflect in all
material respects all proceedings of the shareholders and directors of the Company (and all
committees thereof) since January 1, 1997. Except as set forth in Schedule 4.1(y) of the
Disclosure Schedule, the stock record book of the Company contains complete and accurate records of
the stock ownership of the Company and the transfer of the shares of its capital stock.

          (z) Consents and Approvals. Except for the consents and approvals listed in Section
4.1(z) of the Disclosure Schedule, no consent, approval or authorization of, or declaration, filing
or registration with, any Person is required to be obtained or made by either of the Seller Parties
or the Company in connection with the Related Transactions or the execution, delivery and
performance by the Seller Parties and the Company of this Agreement and the other agreements and
instruments referred to herein and the consummation of the transactions contemplated hereby.

          (aa) Contracts with Agents and Powers of Attorney, Etc. Section 4.1(aa) of the
Disclosure Schedule is a complete and accurate list of all contracts that the Company has on the
date hereof with producing or general agents, and on or before the Closing all of such contracts
shall have been terminated. The Company has not granted any currently effective power of attorney
to any person, except pursuant to the Ancillary MGA Agreements.

          (ab) Bank and Financial Institution Accounts. Set forth in Section 4.1(ab) of the
Disclosure Schedule is a true, correct and complete list showing the name and address of each bank
or other financial institution with which the Company has an account, line of credit or safe
deposit box, the account numbers or box numbers relating thereto, and the name of each person
authorized to draw thereon or have access thereto. There are no credit cards issued to any present
or past officer, employee or agent of the Company under which the Company has any current or
potential future liability.

          (ac) Related Party Transactions. Except as set forth in Section 4.1(ac) of the
Disclosure Schedule, no officer, director, employee, shareholder, member or Affiliate of the Seller
Parties or any individual related by blood, marriage or adoption to any such individual or any
Entity in which any such Person or individual owns any beneficial interest, is a party to any
material agreement, contract, commitment or transaction with the Company or has any material
interest in any material assets of the Company.

          (ad) Examination Reports. The Seller Parties have furnished or will furnish to the
Buyer true and correct copies of the latest examination report of the Oklahoma Insurance Department
and copies of all independent audit reports of the Company. The Seller Parties will

-24-

 

allow the
Buyer access to complete and correct copies of all registrations, filings and submissions made by
the Company with any Governmental Authority, which are reasonably required for the conduct of the
Company’s business after the Closing and any reports of examinations issued by any such
Governmental Authority that relate to the Company.

          (ae) Disclosure. No representation or warranty by the Seller Parties contained in
this Agreement or in any certificate, notice or schedule furnished to the Buyer or any of its
representatives hereunder contains an untrue statement of a material fact or omits to state a
material fact required to be stated herein or therein or necessary to make the statements herein or
therein not misleading, and, to the Knowledge of the Seller Parties, no statement contained in any
document furnished to the Buyer or to which the Buyer was given access pursuant to this Agreement,
when taken together and with the disclosures herein and in the Disclosure Schedule, contains an
untrue statement of a material fact or omits to state a material fact required to be stated herein
or therein or necessary to make the statements herein or therein not misleading, which statement or
omission, whether related to this Agreement or any certificate, notice, schedule or other document,
affects (i) the title to the Shares, (ii) the Insurance License, (iii) the Excess or Surplus Lines
Qualifications or (iv) would reasonably be expected to have a Material Adverse Effect.

     4.2 Representations and Warranties of the Buyer. The Buyer hereby represents and
warrants to the Seller Parties as follows:

          (a) Organization of the Buyer. The Buyer is a corporation duly organized, validly
existing and in good standing under the laws of State of Delaware and has all requisite power and
authority (corporate and otherwise) to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.

          (b) Authorization of Transaction. The execution, delivery, and compliance with the
terms of this Agreement by the Buyer and the performance by the Buyer of its obligations hereunder
have been duly and validly authorized by all necessary corporate action on the part of the Buyer.
This Agreement, assuming due execution and delivery by the Seller Parties , constitutes a legal,
valid, and binding obligation of the Buyer and is enforceable against the Buyer in accordance with
its terms.

          (c) Noncontravention. Neither the execution and delivery of this Agreement nor,
subject to the receipt of the consents and approvals set forth in Section 4.2(g) of the Disclosure
Schedule, the consummation of the transactions contemplated hereby and the fulfillment of and
compliance with the terms hereof by the Buyer, will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any
Governmental Authority to which the Buyer is subject, (ii) violate any provision of the certificate
of incorporation, bylaws or other organizational documents of the Buyer, (iii) conflict with,
result in a breach of, constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify or cancel, or require any notice under, or result
in the creation of any Lien upon any assets of the Buyer, under any agreement, contract, lease,
license, instrument, or other arrangement to which either the Buyer is a party or by or to which it
or its assets may be bound or subject.

-25-

 

          (d) Brokers’ Fees. The Buyer has no liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions contemplated by this
Agreement for which the Seller Parties or the Company could become liable or obligated.

          (e) Investment. The Buyer is buying the Shares for investment only and not with a
view to resale in connection with any distribution of any of the Shares except in compliance with
the Act and all other applicable securities laws. The Buyer understands that the Shares have not
been registered under the Act or under the securities laws of any state and that the Shares may not
be sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed of in the
absence of an effective registration under the Act except pursuant to a valid exemption from such
registration. The Buyer is an “accredited investor” (as defined in Rule 501(a) of Regulation D
under the Securities Act of 1933) and has knowledge and experience in financial and business
matters such that it is capable of evaluating the merits and risks associated with the purchase of
the Shares and is able to bear the economic risks of an investment therein for an indefinite period
of time.

          (f) Suits and Other Proceedings. There are no actions, suits, proceedings, claims,
investigations or examinations pending against the Buyer or, to the Knowledge of the Buyer,
threatened against or affecting the Buyer, nor any administrative, arbitration or mediation
proceedings pending against the Buyer or, to the Knowledge of the Buyer, threatened against the
Buyer, nor is there any outstanding order, writ, injunction, award or decree of any Governmental
Authority or any arbitration tribunal or mediator against the Buyer, which in any such case would
restrain, enjoin, prohibit or in any way impair the ability of the Buyer to consummate any of the
transactions contemplated herein. Section 4.2(f) of the Disclosure Schedule contains an accurate
description of each such pending or threatened action or proceeding.

          (g) Consents and Approvals. Except for the consents and approvals listed in Section
4.2(g) of the Disclosure Schedule, no consent, approval or authorization of, or declaration, filing
or registration with, any Person (including, without limitation, any Governmental Authority) is
required to be obtained or made by the Buyer in connection with the Buyer’s execution, delivery and
performance by the Buyer of this Agreement and the other agreements and instruments referred to
herein and the consummation of the transactions contemplated hereby.

ARTICLE 5

PRE-CLOSING COVENANTS

     The Parties agree as follows with respect to the period between the execution of this
Agreement and the Closing.

     5.1 General. Each of the Parties will use its commercially reasonable efforts to take
all action and to do all things necessary, proper or advisable in order to consummate and make

-26-

 

effective the transactions contemplated by this Agreement (including satisfaction, but not waiver,
of the closing conditions set forth in Article 6 below).

     5.2 Notices and Consents.

          (a) The Seller Parties will (i) take commercially reasonable steps necessary or desirable, and
proceed diligently and in good faith and use commercially reasonable efforts to obtain as promptly
as practicable, all consents, approvals, and authorizations of the Persons (including, without
limitation, any Governmental Authorities) identified in Section 4.1(z) of the Disclosure Schedule,
(ii) make such declarations, filings and registrations with such Persons (including, without
limitation, any Governmental Authorities) identified in Section 4.1(z) of the Disclosure Schedule,
including making the necessary filings with respect to the Related Transactions within ten (10)
Business Days after the date hereof, and provide such other information and communications to such
Persons (including, without limitation, any Governmental Authorities) as the Buyer or such Persons
may reasonably request, and (iii) cooperate with the Buyer in obtaining, as promptly as
practicable, all approvals, consents and authorizations of Persons (including, without limitation,
any Governmental Authorities) identified in Section 4.2(g) of the Disclosure Schedule.

          (b) The Buyer will (i) take commercially reasonable steps necessary or desirable, and proceed
diligently and in good faith and use commercially reasonable efforts to obtain as promptly as
practicable, all consents, approvals and authorizations of the Persons (including, without
limitation, any Governmental Authorities) identified in Section 4.2(g) of the Disclosure Schedule,
(ii) make such declarations, filings and registrations with the Persons (including, without
limitation, any Governmental Authorities) identified in Section 4.2(g) of the Disclosure Schedule,
including the filing of a Form A Holding Company Acquisition Statement with the Oklahoma Insurance
Department (the “Form A Filing”) within ten (10) Business Days after the date hereof, and
provide such other information and communications to such Persons (including, without limitation,
any Governmental Authorities) as the Seller Parties or such Persons may reasonably request, and
(iii) cooperate with the Seller Parties in obtaining, as promptly as practicable, all approvals,
consents and authorizations of Persons (including, without limitation, any Governmental
Authorities) identified in Section 4.1(z) of the Disclosure Schedule.

          (c) The Seller Parties agree to provide the Buyer with prompt notice of the receipt by a
Seller Party of any approval, consent or authorization of a Person (including, without limitation,
any Governmental Authority) identified in Section 4.1(z) of the Disclosure Schedule, and the Buyer
agrees to provide the Seller Parties with prompt notice of the Buyer’s receipt of any approval,
consent, or authorization of a Person (including, without limitation, any Governmental Authority)
identified in Section 4.2(g) of the Disclosure Schedule. The Buyer agrees that not less than three
(3) Business Days prior to the Buyer’s filing of its Form A Filing, the Buyer will provide to the
Seller Parties a copy of such Form A Filing and provide the Seller Parties with three (3) Business
Days to provide comments thereon.

     5.3 Operation of Business. Except as may otherwise be contemplated by this Agreement
and except for ongoing transactions pursuant to the Quota Share Reinsurance Treaty

-27-

 

Attaching
January 1, 1993 between and among the Company, MGA and Gainsco County Mutual Insurance Company, the
Seller Parties will not cause or permit the Company to, and the Company will not, engage in any
business other than that reasonably related to running off its existing insurance business and the
settlement of claims.

     5.4 Full Access. The Seller Parties will permit, and the Seller Parties will cause
the Company to permit, representatives of the Buyer to have full access at all reasonable times,
and in a manner so as not to interfere with the normal business operations of the Company, to all
premises, properties, personnel, books, records, contracts, and documents of or pertaining to the
Company. The Buyer will treat any information it receives from the Seller Parties or the Company
in the course of the reviews contemplated by this Section 5.4 in accordance with Article 14.

     5.5 Notice of Developments. Each Party will give prompt written notice to the other
of any development causing a breach of any of its own representations and warranties in Article 4.
No disclosure by any Party pursuant to this Section 5.5, however, shall be deemed to amend or
supplement the Disclosure Schedule or to prevent or cure any misrepresentation or breach of
warranty.

     5.6 Exclusivity. The Seller Parties shall not (and the Seller Parties hereby agree to
cause their respective subsidiaries, Affiliates, shareholders, representatives, employees,
directors and officers not to), directly or indirectly through any other party, (i) initiate or
make any offer or proposal or engage in any discussions or negotiations with or provide any
non-public information to any other person, firm, entity or corporation with respect to the sale or
other transfer of all or substantially all of the assets of the Company or its outstanding capital
stock or other equity interests or a merger or consolidation with or into a third party involving
the Company, or (ii) solicit any offer or proposal relating any such transaction involving the
Company; and the Seller Parties will notify the Buyer promptly of the receipt of any unsolicited
offer or proposal relating any such transaction involving the Company.

     5.7 Preservation of Insurance Lines and Qualifications. The Seller Parties shall,
and shall cause the Company to, use commercially reasonable efforts to preserve the Company’s
Insurance License
and all Surplus Lines and Excess Lines Qualifications in effect as of the date of this Agreement in
full force and effect.

     5.8 Financial Statements and Reports. As promptly as practicable, the Seller Parties
will deliver to the Buyer true and complete copies of such financial statements, reports, or
analyses related to the Company as may be prepared or received by the Seller Parties, the Company,
or any other Affiliate of the Company to the extent such other Affiliate’s financial statements
specifically relate to the Company’s business, operations, or affairs, including without
limitation, quarterly statements, normal internal reports, and special reports (such as those of
consultants) specifically relating to the Company’s business operations and affairs.

     5.9 No Charter or Bylaw Amendments. The Seller Parties will cause the Company to
refrain from amending the Company’s articles of incorporation or bylaws and from taking any

-28-

 

action
with respect to any such amendment without first having obtained the Buyer’s written consent
thereto.

     5.10 No Issuance of Securities. The Seller Parties will cause the Company to refrain
from authorizing or issuing any shares of the Company’s capital stock or other equity interests or
entering into any contract or granting any option, warrant, or right calling for the authorization
or issuance of any such shares or other equity interests, or creating or issuing any securities
directly or indirectly convertible into or exchangeable for any such shares or other equity
interests, or issuing any options, warrants, or rights to purchase any such convertible securities.

     5.11 No Dividends. The Seller Parties will cause the Company to refrain from
declaring, setting aside, or paying any dividend or other distribution in respect of the capital
stock of the Company and from directly or indirectly redeeming, purchasing or otherwise acquiring
any capital stock of the Company or any interest in or right to acquire any such stock, except that
the Company shall make the transfers contemplated in Sections 3.1 and 3.3(a).

     5.12 Resignations of Directors and Officers. The Seller Parties will cause all of the
members of the Company’s Board of Directors and all officers of the Company to tender, effective as
of the Closing Date, their releases and resignations from the Board of Directors and as officers of
the Company, as the case may be.

     5.13 Intercompany Balances and Agreements. Except as set forth in Section 5.13 of the
Disclosure Schedule or as contemplated by the Ancillary MGA Agreements, prior to the Closing, the
Seller Parties shall (i) settle, or cause to be settled, all intercompany balances between the
Company, on the one hand, and the Seller Parties and any of their Affiliates, on the other hand,
and (ii) terminate, or cause to be terminated, each contract between the Company, on the one hand,
and any of the Seller Parties or their Affiliates, on the other hand.

     5.14 Tax Matters. Except to the extent required by law, no new elections with respect
to Taxes or any changes in current elections with respect to Taxes, to the extent any such
elections or changes could adversely affect the Taxes of the Company for any taxable period or
portion thereof beginning after the Closing Date, shall be made after the date of this Agreement
without the prior written consent of the Buyer.

     5.15 Press Releases and Public Announcements. No Party shall issue any press release
or make any public announcement relating to the subject matter of this Agreement or the
transactions contemplated hereby prior to, or on, the Closing Date without the prior written
approval of the other Party; provided, however, that any Party may make any public disclosure it
believes in good faith is required by applicable law or any listing or trading agreement concerning
its or its Affiliates’ publicly-traded securities (in which case the disclosing Party will use its
reasonable best efforts to advise the other Party prior to making the disclosure).

     5.16 Asset List. No earlier than twenty (20) Business Days prior to the Closing Date,
the Seller Parties shall provide to the Buyer a list of any investment grade obligations, other
than Acceptable Financial Assets, which are owned by the Company as of the date of delivery of such
list and will not be transferred to the Parent or MGA in connection with the Related Transactions

-29-

 

(the “Asset List”). Unless the Buyer reasonably objects in writing to the retention by the
Company of any assets set forth on the Asset List within five (5) Business Days of the Buyer’s
receipt of the Asset List, the Buyer shall be deemed to have accepted such assets as Acceptable
Financial Assets. In the event that the Buyer does so object to the retention by the Company of
any investments included on the Asset List, the Seller Parties shall, prior to Closing, substitute
the objectionable assets with assets that are reasonably acceptable to the Buyer.

     5.17 State Assessments. The Seller Parties agree to pay any and all guaranty fund and
catastrophe pool assessments, assigned risk plan assessments, board and bureau fees, whether
imposed before, on or after the Closing Date, made by any state guaranty fund, pool, board, bureau,
plan or similar entity, net of any premium tax deductions or offsets, relating to insurance
premiums earned or received by the Company on or before the Closing Date.

     5.18 Regulatory Examinations. The Seller Parties shall cooperate with the Buyer in
providing a response to any reports of examination conducted by any state insurance regulatory
authorities involving matters that occurred on or before the Closing Date and shall pay any and all
fines, penalties or assessments made against the Company (i) as a result of any examinations that
were or are conducted by an insurance regulatory authority on or before the Closing Date or (ii)
with respect to matters that occurred on or before the Closing Date.

     5.19 Assignments. The Seller Parties shall use their reasonable best efforts prior to
the Closing to cause the following assignments to occur (including reasonable best efforts to
obtain the necessary consents thereto): assignment by the Company to MGA of (i) that certain
Software License Agreement dated June 13, 2003, by and between the Company and SunGard iWorks, as
amended and (ii) that certain 3-Year Price
Contract dated April 5, 2007, by and between Financial Software Innovations, Inc. and General
Agents Insurance Companies Group. The Seller Parties shall make a request prior to the Closing of
the consent of Liberty County Mutual Insurance Company for: (i) the assignment and novation by the
Company to MGA of that certain 100% Quota Share Reinsurance Agreement dated December 2, 2002 by and
among the Company, GAINSCO County Mutual Insurance Company (now known as Liberty County Mutual
Insurance Company) and MGA Agency, Inc.; and (ii) the assignment by the Company to MGA of all
right, title and interest in and to that certain Reinsurance Trust Agreement dated December 2, 2002
among JPMorganChase Bank, GAINSCO County Mutual Insurance Company and the Company.

ARTICLE 6

CONDITIONS TO OBLIGATION TO CLOSE

     6.1 Conditions to Obligation of the Buyer. The obligation of the Buyer to consummate
the transactions to be performed by it in connection with the Closing is subject to satisfaction of
the following conditions:

     (a) the representations and warranties of the Seller Parties set forth in Section 4.1
that are qualified as to materiality shall be true and correct, and the representations and
warranties set forth in Section 4.1 that are not so qualified shall be true and correct in

-30-

 

all material respects, in each case at and as of the Closing Date, except that any
representations and warranties that are given as of a particular date or period shall be
true and correct only as of such date or period;

     (b) the Seller Parties shall have performed and complied in all material respects with
all of their respective covenants hereunder through the Closing;

     (c) no injunction, judgment, order, decree, ruling, charge or investigation shall be
pending or threatened before any Governmental Authority wherein a judgment, order, writ,
injunction, stipulation or decree would (i) prevent consummation of any of the transactions
contemplated by this Agreement, (ii) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation, or (iii) permit consummation of the
transactions contemplated by this Agreement only subject to any condition or restriction
that has had or would reasonably be expected to have a Material Adverse Effect;

     (d) the Seller Parties shall have delivered to the Buyer a certificate to the effect
that each of the conditions specified above in Sections 6.1(a) and (b) is satisfied in all
respects;

     (e) the Parties shall have received, without any conditions or limitations to which the
Buyer has a reasonable objection, all authorizations, consents and approvals of, and shall
have made such declarations, filings and registrations with, Persons (including,
without limitation, any Governmental Authorities) identified in Sections 4.l(z) and
4.2(g) of the Disclosure Schedule;

     (f) all certificates, instruments and other documents required by Article 7 to be
delivered by the Seller Parties to the Buyer shall have been so delivered;

     (g) the Seller Parties shall have tendered the Shares in exchange for the payment of
the Purchase Price as contemplated by Article 2;

     (h) the Insurance License of the Company shall be valid, in force, unimpaired and in
good standing on the Closing Date; the Surplus or Excess Lines Qualifications of the Company
shall be valid, in force, unimpaired and in good standing, to the extent that such status is
reasonably determinable, on the Closing Date in jurisdictions in which the sum of the
respective percentages of projected premiums, calculated using the percentages set forth
opposite the name of each jurisdiction in Section 2.2 of the Disclosure Schedule, total at
least seventy percent (70%);

     (i) all of the members of the Company’s Board of Directors and all of the Company’s
officers shall have tendered their written releases and resignations effective as of the
Closing Date;

     (j) the Ancillary MGA Agreements and the Guaranty Agreement shall have been duly
executed and delivered by the parties thereto;

-31-

 

     (k) each of the Related Transactions that are the responsibility of the Seller Parties
shall have been completed in accordance with Article 3;

     (l) no Material Adverse Effect shall have occurred after the date of this Agreement;

     (m) the Company shall have delivered to the Buyer signature cards with each bank listed
in Section 6.1(m) of the Disclosure Schedule at which the Company will maintain one or more
accounts that continue after the Closing, terminating the ability of any of the Company’s
officers or employees to sign checks and take other actions on behalf of the Company and
transferring such ability to the chief executive officer and chief financial officer of the
Buyer;

     (n) the Company shall have delivered to the Buyer long-form certificates of good
standing issued by the Oklahoma Secretary of State, and certificates evidencing that the
Company is in good standing in all jurisdictions where the Company is obligated to be
registered as a foreign corporation, dated as of a date not earlier than five (5) Business
Days before the Closing Date;

     (o) all corporate actions and other proceedings required to carry out the transactions
contemplated hereby or incidental hereto shall be reasonably satisfactory to and shall have
been approved by counsel for the Buyer and such counsel shall have been
furnished with certified copies of such corporate actions and other proceedings as it
shall have reasonably requested; and

     (p) the Buyer shall have received an opinion of Akin Gump Straus Hauer & Feld LLP,
counsel to the Seller Parties and the Company, in a form reasonably acceptable to the Buyer
and its counsel.

     The Buyer may waive any condition specified in this Section 6.1 if it executes a writing so
stating at or prior to the Closing.

     6.2 Conditions to Obligations of the Seller Parties. The obligations of the Seller
Parties to consummate the transactions to be performed by them in connection with the Closing are
subject to satisfaction of the following conditions:

     (a) the representations and warranties of the Buyer set forth in Section 4.2 that are
qualified as to materiality shall be true and correct, and the representations and
warranties set forth in Section 4.2 that are not so qualified shall be true and correct in
all material respects, in each case at and as of the Closing Date, except that any
representations and warranties that are given as of a particular date or period shall be
true and correct only as of such date or period;

     (b) the Buyer shall have performed and complied in all material respects with all of
its covenants hereunder through the Closing;

-32-

 

     (c) no injunction, judgment, order, decree, ruling, charge or investigation shall be
pending or threatened before any Governmental Authority wherein a judgment, order, writ,
injunction, stipulation or decree would (i) prevent consummation of any of the transactions
contemplated by this Agreement, or (ii) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation;

     (d) the Buyer shall have delivered to the Seller Parties a certificate to the effect
that each of the conditions specified above in Sections 6.2(a) and (b) is satisfied in all
respects;

     (e) the Parties shall have received, without any conditions or limitations to which the
Seller Parties have a reasonable objection, all consents, approvals and authorizations of,
and shall have made such declarations, filings and registrations with, Persons (including,
without limitation, any Governmental Authorities) identified in Sections 4.1(z) and 4.2(g)
of the Disclosure Schedule;

     (f) all certificates, instruments and other documents required by Article 8 to be
delivered by the Buyer to the Seller Parties shall have been so delivered;

     (g) the Buyer shall have tendered payment of the Purchase Price in the manner described
in Article 2 in exchange for the Shares;

     (h) the Ancillary MGA Agreements and the Guaranty Agreement shall have been duly
executed and delivered by the parties thereto; and

     (i) the Seller Parties shall have received an opinion of Shipman & Goodwin LLP, counsel
to the Buyer, in a form reasonably acceptable to the Seller Parties and their counsel.

     The Seller Parties may waive any condition specified in this Section 6.2 if they execute a
writing so stating at or prior to the Closing.

ARTICLE 7

SELLER’S CLOSING DELIVERIES

     At the Closing, the Seller Parties will deliver to the Buyer the following items against
delivery of items specified in Article 8 below:

     (a) The certificate or certificates representing the Shares duly endorsed in blank or
with stock powers duly endorsed in blank;

     (b) A certificate executed by the President or other duly authorized officer of each of
the Seller Parties certifying that all corporate action on the part of such Seller

-33-

 

Party
necessary to authorize the execution, delivery and performance of this Agreement and the
transactions contemplated thereunder by the Seller Parties have been duly taken;

     (c) The certificate required by Section 6.1(d) and the opinion required by 6.1(p);

     (d) Duly executed resignations from all of the Company’s directors and officers
effective as of the Closing Date;

     (e) Evidence of the receipt by the Seller Parties, in such form as is reasonably
acceptable to the Buyer, of the approvals, consents and authorizations of, and of such
declarations, filings or registrations with, Persons (including, without limitation, any
Governmental Authorities) identified in Section 4.1(z) of the Disclosure Schedule;

     (f) Confirmation which can reasonably be obtained, issued by each of the regulatory
authorities or surplus or excess lines associations, as appropriate, of the State of
Oklahoma and the jurisdictions listed in Section 4.1(u)(2) of the Disclosure Schedule, other
than those jurisdictions where the Company is considered Surplus or Excess Lines Qualified
pursuant to clause (iii) of the definition thereof, evidencing the licensure or Surplus or
Excess Lines Qualification, as the case may be, of the Company in such jurisdiction; and

     (g) Possession of any and all books and records of the Company (i) relating to the
Insurance License and the Surplus or Excess Lines Qualifications and the ongoing regulatory
matters (including all documents and records relating to the Deposits), (ii) the Company’s
minute books (including the original or certified copies of the Company’s articles of
incorporation and bylaws), stock record book, and the corporate seal of the Company, and
(iii) any other books and records reasonably requested by the Buyer which are related to any
assets which the Company will have title to after the Closing or to other matters for which
the Company will have any continuing responsibility after the Closing.

ARTICLE 8

BUYER’S CLOSING DELIVERIES

     At the Closing, the Buyer will deliver to the Seller Parties the following items against
delivery of items specified in Article 7:

     (a) A certificate executed by the President or other duly authorized officer of the
Buyer certifying that all corporate action on the part of the Buyer necessary to authorize
the execution, delivery and performance of this Agreement and the transactions contemplated
hereunder by the Buyer has been duly taken;

     (b) The certificate required by Section 6.2(d) and the opinion required by Section
6.2(i);

-34-

 

     (c) Copies of the documents evidencing the Buyer’s receipt, in such form as is
acceptable to the Seller Parties, of the approvals, consents and authorizations of, and of
such declarations, filings or registrations with, the Persons (including, without
limitation, any Governmental Authorities) identified in Section 4.2(g) of the Disclosure
Schedule; and

     (d) Cash by wire transfer of immediately available funds for the full amount of the
Purchase Price specified in Section 2.2 of this Agreement.

ARTICLE 9

POST-CLOSING COVENANTS

     The Parties agree as follows with respect to the period following the Closing.

     9.1 General. In case at any time after the Closing any further action is necessary or
desirable to carry out the purposes of this Agreement, each of
the Parties will take such further action (including the execution and delivery of such further
instruments and documents) as the other Party reasonably may request, all at the sole cost and
expense of the requesting Party; provided, however, that the foregoing shall not limit any Party’s
rights to indemnification under Article 10. With respect to actions referred to herein to be taken
by the Company after the Closing, the Buyer will cause the Company to take such actions.

     9.2 Litigation Support. In the event and for so long as any Party actively is
contesting or defending against any action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand in connection with any fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or
transaction on or prior to the Closing involving the Company, each of the other Parties shall
cooperate with it and its counsel in the defense or contest, make available their personnel, and
provide such testimony and access to their books and records as shall be necessary in connection
with the defense or contest, all at the sole cost and expense of the contesting or defending Party;
provided, however, that the foregoing shall not limit any Party’s rights to indemnification under
Article 10.

     9.3 Cooperation as to Tax Matters.

          (a) Preparation and Filing of Tax Returns.

          (1) The Parent shall include the income of the Company in the Parent’s federal
consolidated income Tax Returns for all taxable periods or portions thereof ending on or
before the Closing Date, shall prepare or cause to be prepared in a manner consistent with
past practice (to the extent such past practices could not in the reasonable judgment of the
Parent cause the Parent or any Affiliate thereof to incur any additions to Taxes or
penalties) and file or cause to be filed on a timely basis all (i) Tax Returns of the
Company for taxable periods ending on or before the Closing Date and (ii)

-35-

 

consolidated,
unitary, combined or similar Tax Returns (the “Consolidated Tax Returns”) that
include the Company and the Parent or any Affiliate of the Parent; and subject to the
Buyer’s indemnity for Taxes pursuant to this Section 9.3, the Seller Parties shall pay or
shall cause to be paid all Taxes attributable to such Tax returns. The Buyer shall cause
the Company to furnish all information reasonably requested by the Seller Parties with
respect to the preparation of any such Tax returns.

          (2) Except as provided in Section 9.3(a)(1), the Buyer shall prepare or cause to be
prepared and file or cause to be filed on a timely basis all Income Tax Returns with respect
to the Company for taxable periods beginning after the Closing Date and the Buyer shall be
responsible for filing all other Tax Returns of or relating to the Company to the extent
such Tax Returns are required to be filed on a date after the Closing Date and shall (except
as otherwise provided below) pay all Taxes attributable to such Tax Returns. At the
Parent’s request and expense, the Buyer shall cooperate in filing one or more amended
returns or other requests for, and pursuant to Section 9.3(b) shall promptly pay over to the
Parent, any refund of or credit for any Taxes attributable to the Pre-Closing Tax Period.

          (3) With respect to any Tax return required to be filed or caused to be filed by the
Seller Parties or the Buyer pursuant to Section 9.3(a)(1) or Section 9.3(a)(2) with respect
to the Company (such Party the “Filing Party”) and as to which an amount of Tax is
allocable to the Party that is not the Filing Party (the “Tax Indemnifying Party”),
the Filing Party shall provide the Tax Indemnifying Party and its authorized representatives
with a copy of such completed Tax Return or in the case of a Consolidated Tax Return, a pro
forma Tax Return for the Company (prepared on a separate company basis) and a statement
certifying and setting forth the calculation of the amount of Tax shown on such Tax Return
that is allocable to such Tax Indemnifying Party, together with appropriate supporting
information and schedules at least fifteen (15) Business Days prior to the due date
(including any extension thereof) for the filing of such Tax Return or Consolidated Tax
Return (as the case may be), and such Tax Indemnifying Party and its authorized
representatives shall have the right to review and comment on such Tax Return (as the case
may be) and statement prior to the filing of such Tax return.

          (4) A Tax Indemnifying Party shall pay the Filing Party the amount so allocated to it
pursuant to this Section 9.3 at least three (3) Business Days before the due date of the Tax
return required to be filed by the Filing Party or within twenty (20) Business Days
following an agreement between the Seller Parties and the Buyer that an indemnity amount is
payable by the other, or within fifteen (15) Business Days of (i) an assessment of a Tax by
a taxing authority, or (ii) a “determination” as defined in Section 1313(a) of the Code (or
any similar provision of state or local law) has been made. If liability under this Section
9.3 is in respect of costs or expenses other than Taxes, payment by the Tax Indemnifying
Party of any amounts due under this Section 9.3 shall be made within ten (10) days after the
date when the Tax Indemnifying Party has been notified by the Filing Party that the Tax
Indemnifying Party has a liability for a

-36-

 

determinable amount under this Section 9.3 and is
provided with calculations and all other materials supporting such liability.

          (b) Tax Refunds, Credit and Tax Attributes. Rights and benefits relating to all Tax
attributes of the Company arising from or relating to any Pre-Closing Tax Period shall remain with
the Parent and the Buyer shall pay to the Parent an amount equal to any Tax refund the Buyer or any
Affiliate thereof obtains from any such Tax attributes within the earlier of thirty (30) days
after: (i) the Buyer or any Affiliate thereof files a Tax return which claims, reflects or reports
such Tax benefit or (ii) the Buyer or any Affiliate thereof receives a Tax refund which relates or
is attributable to any such Pre-Closing Tax Period Tax attributes of the Company. The Buyer agrees
that it will not make any elections or take any positions with respect to Taxes that could
adversely affect the Parent’s interest and rights in the Pre-Closing Tax Period Tax attributes of
the Company. The Buyer further agrees that it shall not (unless otherwise requested by the Parent)
carry back, and shall not cause or permit the Company or any other Affiliate of the Buyer or the
Company to carry back, any net operating loss, loss from operations or any other Tax attribute of
the Company to any Pre-Closing Tax Period of the Company or the Parent or any Affiliate thereof
(including, but not limited to, any member of any Affiliated, combined or unitary group of which
the Company is or was a member). The Buyer agrees that the Seller
Parties shall not have any obligation under this Agreement to return or remit any refund or
other Tax benefit attributable to a breach by the Buyer of the immediately preceding sentence and
any Tax refund or Tax benefit resulting from any such breach will be solely for the Seller Parties’
account.

          (c) Transfer Taxes. The Seller Parties shall be liable for and shall pay, and shall
hold the Buyer and its Affiliates harmless against any real property transfer or gains, sales, use,
transfer, value added, stock transfer, stamp Taxes, any transfer, recording, registration, and
other fees, and any similar Taxes which become payable in the applicable jurisdiction in connection
with the effectuation of the transactions contemplated hereunder and imposed upon the Seller
Parties, the Company or the Buyer and any Affiliates thereof (“Transfer Taxes”).

          (d) Tax Notice; Tax Controversies. The Seller Parties and the Buyer shall provide to
each other notice within ten (10) days of receipt of any notice of deficiency, proposed adjustment,
assessment, audit, examination or other administrative or court proceeding, suit, dispute or other
claim (a “Tax Claim”) in which the IRS or any other Governmental Authority makes or
proposes to make a Tax adjustment to any Tax period which includes any period up to the Closing
Date. The Seller Parties shall control any such proceeding to the extent such proceeding could
adversely affect the Taxes of the Seller Parties or any Affiliate thereof or could result in the
Seller Party’s being liable for any amount of Taxes or losses related thereto either under the Law
or pursuant to this Agreement, and the Buyer shall control all other such proceeding, provided
that, with respect to any such Tax Claim, the Party not controlling the proceeding of such Tax
Claim or its representative shall (to the extent permitted by Law) have the right, at its expense,
to participate in any such Tax Claim. The Parties agree that they will not settle, compromise or
agree to any Tax adjustment which affects or could affect the other Party’s Tax liability without
the prior written consent of the other Party, which consent shall not be unreasonably withheld;
provided, that the Seller Parties shall have the right to settle or compromise any such proceedings
that the Seller Parties control without the consent of the Buyer

-37-

 

provided that the settlement or
compromise could not affect the Tax liability of the Company after the Closing Date.

          (e) Cooperation and Controversies. Except as provided in Section 9.3(a), the Seller
Parties, the Buyer and the Company shall reasonably cooperate, and shall cause their respective
Affiliates, agents, auditors, representatives, officers and employees reasonably to cooperate, in
preparing and filing all Tax Returns (including amended returns and claims for refund), including
maintaining and making available to each other all records necessary in connection with Taxes and
with respect to any Tax Claim, which cooperation shall include, but not be limited to (i) providing
all relevant information that is available to the Buyer, the Seller Parties and/or the Company, as
the case may be, with respect to such Tax Claim, (ii) making personnel available at reasonable
times, and (iii) preparation of responses to requests for information, provided that the foregoing
shall be done in a manner so as to not interfere unreasonably with the conduct of business by the
Buyer, the Seller Parties or the Company, as the case may be. Neither the Seller Parties, the
Company nor the Buyer shall dispose of any Tax Returns, Tax schedules, Tax work papers or any books
or records unless it first offers in writing to the other Party the right to take possession of
such materials at such other Party’s sole expense and the other Party fails to accept such offer
within fifteen (15) days of the offer being made or if
an offer is accepted fails to take possession within thirty (30) days of the date on which the
offer is made. Any information obtained under this Section 9.3(e) shall be kept confidential,
except as may be otherwise necessary in connection with the filing of Tax returns or claims for
refund or in conducting an audit or other proceeding.

          (f) Tax Indemnities.

          (1) The Seller Parties shall be liable for and shall indemnify and hold harmless the
Buyer and the Company from and against any and all damages, Taxes and expenses arising out
of (i) any breach of the Seller Parties’ covenants in this Section 9.3, and (ii) any
liability for Taxes of the Company for any Pre-Closing Tax Period.

          (2) The Buyer shall indemnify and hold harmless the Seller Parties from and against any
and all Taxes, and any damages and expenses related thereto, that relate or are attributable
to any Post-Closing Tax Period, other than those that are specifically indemnified by the
Seller Parties pursuant to paragraph (f)(1) above.

          (3) In the case of Taxes that are payable with respect to a taxable period that begins
before the Closing Date and ends after the Closing Date (“Straddle Taxes”), the
portion of any such Tax that is allocable to the portion of the period ending on the Closing
Date shall be: (i) with respect to premium Taxes the amount of such Taxes that relate to
premiums written as of the Closing Date, (ii) in the case of Taxes imposed on a periodic
basis with respect to the assets of the Company, or otherwise measured by the level of any
item (other than premiums), deemed to be the amount of such Taxes for the entire period (or,
in the case of such Taxes determined on an arrears basis, the amount of such Taxes for the
immediately preceding period), multiplied by a fraction the numerator of which is the number
of calendar days in the period ending on the Closing Date and the denominator of which is
the number of calendar days in the

-38-

 

entire period irrespective of the lien or assessment date
of such Taxes, and (iii) with respect to Taxes imposed on or measured by income, gross
receipts, wages, expenses or other similar periodic measures (other than premiums) or
imposed on sales, assignments or any other transfers of any property shall be deemed equal
to the amount which would be payable if the taxable year ended with the Closing Date (based
on an interim closing of the books as of the close of the Closing Date).

          (g) Survival. All agreements, covenants and indemnification matters contained in this
Section 9.3 shall survive the Closing until the expiration of the applicable statute of limitations
period.

          (h) Termination of Tax Sharing Agreements. As of the Closing Date, the Seller Parties
shall cause all Tax allocation, Tax sharing, Tax indemnification and reimbursement and similar
agreements and arrangements between the Seller Parties and their Affiliates, on the one hand, and
the Company, on the other, to be extinguished and terminated with respect to the Company, and any
rights or obligations existing under any such agreement or arrangement (including any obligation of
the Company to make any payment of any kind thereunder) shall be extinguished and no longer
enforceable.

          (i) Coordination. Except as provided in Section 4.1(o) with respect to
representations and warranties relating to Tax matters and Section 5.14, notwithstanding any other
provision in this Agreement to the contrary, this Section 9.3 shall control all matters relating to
Taxes and any claims, liabilities, damages, deficiencies, obligations, costs or expenses, penalties
and reasonable attorneys’ fees and disbursements related thereto.

          (j) Section 338(h)(10) Election.

          (1) The Parent and the Buyer shall jointly make timely and irrevocable elections under
Section 338(h)(10) of the Code and, if permissible, similar elections under any applicable
state or local income tax laws with respect to the purchase and sale of the Shares (the
“Elections”) through the filing of a Form 8023 (and any state equivalent). The
Parent, the Company and the Buyer shall report the transactions contemplated herein
consistent with the Elections and shall take no position contrary thereto unless and to the
extent required to do so pursuant to a determination (as defined in Section 1313(a) of the
Code or any similar state or local tax provision). The Seller Parties and the Buyer shall
cooperate in good faith to complete all necessary filings for the elections in a timely
manner. The Seller Parties shall pay all Taxes and shall be entitled to receive any tax
benefit arising as a result of the Elections.

          (2) For purposes of making the Elections, Buyer shall determine the value of the
tangible and intangible assets of the Company and shall within sixty (60) days after the
Closing Date provide the Parent with written notice setting forth the allocation of the
Buyer’s “adjusted grossed-up basis” in the shares of the Company (within the meaning of the
Treasury Regulations under Section 338 of the Code) to such assets (the “Initial
Allocation”). The Initial Allocation shall be binding upon the Buyer and the Seller
Parties for purposes of allocating the “deemed selling price” (within the

-39-

 

meaning of the
Treasury Regulations) among the assets of the affected entities; provided, however, that if
the Parent believes that all or a portion of the Initial Allocation is incorrect and
notifies the Buyer of such belief within thirty (30) days after having received the Initial
Allocation from the Buyer, the Independent Accounting Firm will determine whether the
Initial Allocation is incorrect and the determination of such Independent Accounting Firm
shall be final and the Buyer and the Seller Parties shall then be bound by the Initial
Allocation as adjusted, if necessary, to reflect the determination of the Independent
Accounting Firm (the “Final Allocation”). Notwithstanding anything to the contrary
in this Agreement, the Final Allocation shall be determined no later than twenty (20) days
prior to the date that the Buyer must file the Election forms. In the event it is
determined that the Initial Allocation was incorrect, the Buyer shall pay to the Seller
Parties the cost of the Independent Accounting Firm. The Seller Parties and the Buyer shall
bear equally all costs of the Independent Accounting Firm which are not paid by the Buyer
pursuant to the immediately preceding sentence. The Buyer and the Parent shall file, and
cause their respective Affiliates to file, all forms that relate to the Election in a manner
consistent with the Final Allocation and notwithstanding anything to the contrary in this
Agreement, shall take no position inconsistent therewith.

     9.4 Change of Name. Promptly after Closing, but in no event later than sixty (60)
days following the Closing, the Buyer shall cause the Company to (i) change its name to a name that
does not include the phrase “General Agents” and (ii) cease issuing any policies or transacting any
insurance business utilizing the name, trademarks, service marks, patents, copyrights or other
intellectual property rights of the Company or any of its Affiliates as of the date hereof,
including, without limitation, the phrase “General Agents” except to the extent (i) necessary in
connection with carrying out the transactions contemplated by the Ancillary MGA Agreements or (ii)
required to be used in regulatory filings or proceedings to describe the Company’s relationships
prior to the Closing; provided, however, that when the use of such names or intellectual property
rights is necessitated or required as set forth in (i) or (ii) above, the Buyer shall clearly
indicate in writing in conjunction therewith that such name is the Company’s former name. Neither
the Buyer nor the Company will use the name “GAINSCO” or any derivative thereof following the
Closing.

ARTICLE 10

INDEMNIFICATIONS

     10.1 The Seller Parties’ Indemnification of the Buyer. The Seller Parties, jointly
and severally, agree to defend, indemnify and hold the Buyer and its shareholders, subsidiaries,
Affiliates, officers, directors, employees, agents and other representatives, successors and
assigns (the “Buyer Indemnitees”), harmless at all times from and against any and all
Losses resulting from or relating in any way to:

     (i) any inaccuracy or breach of any representation or warranty or breach or
nonfulfillment of any covenant or agreement made by the Seller Parties which is

-40-

 

contained in
this Agreement or in any certificate furnished by either of the Seller Parties pursuant
hereto;

     (ii) any actions, omissions, operations or business of the Company, or any of its
shareholders, Affiliates, officers, directors, employees, agents and other representatives,
and their respective successors and assigns, occurring prior to the Closing the
responsibility for which has not been assumed by MGA under the Quota Share Reinsurance
Agreement or the Assumption Agreement;

     (iii) the failure of the Seller Parties or the Company to obtain the consent of any
third party or Governmental Authority required of the Seller Parties or the Company
regarding the Share purchase, the Related Transactions or any of the other transactions
contemplated hereby;

     (iv) any and all insurance and reinsurance claims, liabilities and obligations of the
Company pertaining to the operations of the Company prior to the Closing that are not
reinsured pursuant to the Quota Share Reinsurance Agreement, including without
limitation, all commissions, fees, unearned premiums and commission and/or premium
adjustments;

     (v) any of the suits or other proceedings described in Section 4.1(p) of the Disclosure
Schedule;

     (vi) any Environmental Liability arising out of events or circumstances that occurred
prior to the Closing;

     (vii) any Rebates or Kickbacks occurring prior to the Closing; and

     (viii) any enforcement of this indemnity.

     10.2 The Buyer’s Indemnification of the Seller Parties. The Buyer agrees to defend,
indemnify and hold the Seller Parties and their respective shareholders, subsidiaries, Affiliates,
officers, directors, employees, agents, successors and assigns (the “Seller Indemnitees”),
harmless at all times from and against any and all Losses resulting from or relating in any way to:

     (i) any inaccuracy or breach of any representation or warranty or breach or
nonfulfillment of any covenant or agreement made by the Buyer which is contained in this
Agreement or in any certificate or document furnished by the Buyer pursuant hereto;

     (ii) any actions, omissions, operations or business of the Company, or any of its
shareholders, Affiliates, officers, directors, employees, agents and other representatives,
and their respective successors and assigns, following the Closing; or

-41-

 

     (iii) the failure of the Buyer to obtain the consent of any third party or Governmental
Authority required of the Buyer regarding the Share purchase, the Related Transactions or
any of the other transactions contemplated hereby;

     (iv) any and all insurance and reinsurance claims, liabilities and obligations of the
Company pertaining to the operations of the Company after the Closing, including without
limitation, all commissions, fees, unearned premiums and commissions and premium
adjustments; and

     (v) any enforcement of this indemnity.

     10.3 Notice of Claims. Any party seeking indemnification under this Agreement (the
“Indemnified Party”) shall give to the party from which indemnification is sought (the
“Indemnitor”) prompt written notice (a “Claim Notice”) describing in reasonable
detail the facts giving rise to any claim for indemnification hereunder and shall include in such
Claim Notice (if then known) the amount or the method of computation of the amount of such claim,
and a reference to the provisions of this Agreement or such other agreement upon which such claim
is based; provided, that a Claim Notice in respect of any action at law or suit in equity by or
against a third Person as to which indemnification will be
sought shall be given promptly after the action or suit is commenced; and provided, further, that
failure to give such notice shall not relieve the Indemnitor of its obligations hereunder except to
the extent it shall have been prejudiced by such failure. The parties to the Administration
Agreement, the Assumption Agreement and the Transfer and Assignment Agreement shall follow and
comply with the notice requirements of this Section 10.3 in connection with the indemnification
obligations set forth in those agreements.

     10.4 Third-Party Claims. The Indemnitor shall have thirty (30) days after receipt of
any Claim Notices or information necessary to make the Claim Notice complete, relating to any third
Person claim, action or suit (collectively, “Claim”) to notify the Indemnified Party of its
election to conduct and control the defense, compromise or settlement of such Claim. Unless the
Indemnitor gives the foregoing notice, the Indemnified Party shall have the right to conduct and
control, through counsel of its own choosing, the defense, compromise or settlement of such Claim,
and in any such case the Indemnitor shall cooperate in connection with such Claim and shall furnish
such records, information and testimony and attend such conferences, discovery proceedings,
hearings, trials and appeals as may be reasonably requested by the Indemnified Party in connection
therewith; provided that, should the Indemnitor fail to timely give notice as provided above in
this Section 10.4, (i) the Indemnitor may, in any event, participate, through counsel chosen by it
and at its own expense, in the defense of any such Claim and (ii) if the Indemnitor has
acknowledged and agreed in writing that it has an obligation to provide indemnification under this
Agreement or the Assumption Agreement, for any Loss incurred in connection with or arising from
such Claim, the Indemnitor shall have the right to assume control of the defense, compromise or
settlement of such Claim from the Indemnified Party at any time by giving written notice of such
election to the Indemnified Party. If the Indemnitor timely gives notice as provided above in this
Section 10.4 or assumes control of the defense, compromise or settlement of any Claim, the
Indemnified Party shall cooperate in connection with such Claim and shall furnish such records,
information and testimony and attend such

-42-

 

conferences, discovery proceedings, hearings, trials and
appeals as may be reasonably requested by the Indemnitor in connection therewith; provided, that
the Indemnified Party may participate, through counsel chosen by it and at its own expense, in the
defense of any such Claim, as to which the Indemnitor has so elected to conduct and control the
defense thereof; and provided further, that the Indemnitor shall not, without the written consent
of the Indemnified Party (which consent shall not be unreasonably withheld) pay, compromise or
settle any such Claim (i) in any case where the Indemnitor has not acknowledged its obligation to
provide indemnification to the Indemnified Party under this Agreement or the Assumption Agreement,
or (ii) seeking any relief against an Indemnified Party other than monetary damages; and provided
further, that the Indemnitor shall, at any time prior to the settlement or commencement of trial
with respect to any Claim, tender the defense, compromise and settlement of such Claim to the
Indemnified Party should the Indemnitor reasonably determine, based upon the information furnished
to it by the Indemnified Party or obtained by the Indemnitor in the course of defending the Claim,
that the Indemnitor is not obligated to provide indemnification to the Indemnified Party under this
Agreement or the Assumption Agreement.

     10.5 Interest. In the case of any payments made or costs or damages incurred and paid
by a party, interest on the amount thereof shall accrue beginning the date any Loss is paid by the
Indemnified Party or a date thirty (30) days after
written notice of the claim is given, whichever is later, provided that such notice is accompanied
by documentation describing the basis of such claim in reasonable detail for evaluation; provided
further, however, that the claiming party shall only be entitled to receive such interest to the
extent that it is determined that such party is entitled to indemnification hereunder. Interest
shall accrue until the claim is paid in full at a variable rate equal to the prime interest rate
(as published in the Money Rates column of The Wall Street Journal) on the date that such interest
begins to accrue.

     10.6 Remedies. The Parties hereto expressly acknowledge and agree that all rights and
remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available; provided, however, the Parties agree that all such remedies shall be
subject to the limitations set forth in this Section 10.6 and in Section 10.7. No Indemnitor shall
be liable or otherwise responsible to any Person for special, consequential, incidental or punitive
damages or for diminution in value or lost profits that arise out of or relate to this Agreement or
the performance or breach hereof; provided, however, that the foregoing shall not apply to any
amounts paid or owed by an Indemnified Party with respect to any Claim by a third party. No Party
shall be liable for any indemnification pursuant to this Article 10 for any claims for
misrepresentations and breaches of warranty that are the basis upon which any other Party has
terminated its Agreement pursuant to Section 12.1 or that are based on misrepresentations and
breaches of warranty that have been expressly and specifically waived in writing. In addition to
the limitations set forth in Section 10.7, the maximum amount for which the Seller Parties shall be
liable under this Agreement with respect to a breach or failure of any representation, warranty or
covenant pertaining to a Surplus or Excess Lines Qualification because such Surplus or Excess Lines
Qualification is not valid, in force, unimpaired and in good standing on the Closing Date, shall be
equal to the amount of the adjustment to the Purchase Price provided for in Section 2.2 so long as
the sum of the respective percentages attributable to the remaining jurisdictions, calculated using
the percentages set forth opposite the name of each jurisdiction in Section 2.2 of

-43-

 

the Disclosure
Schedule, total an amount equal to or greater than the percentage set forth in Section 6.1(h).

     10.7 Limitations on Indemnification. The maximum amount for which the Seller Parties
shall be liable under Section 10.1(i) shall not exceed in the aggregate an amount equal to the
Purchase Price less Five Million Dollars ($5,000,000.00) (the “Cap”). No Loss shall be
indemnifiable under Section 10.1(i) or considered in determining the amounts for which indemnity
would otherwise be provided under Section 10.1(i) unless and until the aggregate amount of Losses
claimed under Section 10.1(i) exceeds $100,000, after which the Seller Parties shall be liable back
to and include the first dollar of aggregate Losses so claimed, such that such amount is a
threshold and not a deductible (the “Threshold”); provided that the Seller Parties’
liability under Section 10.1(i) for Losses that arise from the breach of the representations and
warranties of Seller Parties set forth in Sections 4.1(b), 4.1(c), 4.1(e), 4.1(f), 4.1(m) and
4.1(o) shall not be subject to the Cap or the Threshold. Nothing set forth in this Section 10.7
limits the Seller Parties’ liability for breach of any of the representations and warranties of the
Seller Parties of which the Seller Parties had actual knowledge at any time prior to the date on
which such representation or warranty was made or any intentional breach by the Seller Parties of
any covenant or obligation hereunder.

ARTICLE 11

SURVIVAL OF REPRESENTATIONS AND WARRANTIES

     Except as provided in Section 9.3(g), each representation and warranty made by the Seller
Parties and the Buyer shall survive the Closing and remain in effect until the expiration of two
(2) years following the Closing; provided, however, that the representations, warranties and
covenants contained in Sections 4.1(f), 4.1(o), 4.1(u)(1) and 15.14 shall survive the Closing
indefinitely and the representations and warranties contained in Section 4.1(s) shall survive the
Closing for sixty (60) days after the expiration of the applicable statute of limitations, and each
such representation and warranty shall be fully applicable and effective whether or not any of the
Parties rely in fact thereon or have knowledge (acquired either before or after the date hereof,
and whether from the other Party or from its own investigation) of any fact at variance with, or of
any breach of, any such representation or warranty.

ARTICLE 12

TERMINATION

     12.1 Termination of Agreement. Prior to the Closing, the Parties may terminate this
Agreement as provided below:

     (a) the Buyer and the Seller Parties may terminate this Agreement by mutual written
consent at any time prior to the Closing;

     (b) the Buyer may terminate this Agreement by giving written notice to the Seller
Parties at any time prior to the Closing in the event (i) the Seller Parties have given

-44-

 

the
Buyer any notice pursuant to Section 5.5 and (ii) the development that is the subject of the
notice has had or is reasonably expected to have a material adverse effect on the ability of
the Seller Parties to meet the conditions specified in Section 6.1 and Article 7 or
otherwise consummate the transactions contemplated hereby;

     (c) the Seller Parties may terminate this Agreement by giving written notice to the
Buyer at any time prior to the Closing in the event (i) the Buyer has given the Seller
Parties notice pursuant to Section 5.5 and (ii) the development that is the subject of the
notice has had a material adverse effect on the ability of the Buyer to meet the conditions
specified in Section 6.2 and Article 8 or otherwise consummate the transactions contemplated
hereby;

     (d) by any Party if all regulatory approvals required by the Oklahoma Insurance
Department and the Texas Department of Insurance have not been obtained by November 15,
2007, or the Closing shall not have been consummated by December 15, 2007, for any reason;
provided, however, that the right to terminate this Agreement under this Section 12.1(d)
shall not be available to any Party whose action or failure to act has
been the principal cause of the failure of the Closing to occur on or before such date
and such action or failure to act constitutes a material breach of this Agreement;

     (e) by the Buyer if any Governmental Authority shall have issued an injunction,
judgment, order, decree or taken any other action which, in any case, would (i) prevent
consummation of any of the transactions contemplated by this Agreement, (ii) cause any of
the transactions contemplated by this Agreement to be rescinded following the Closing, or
(iii) permit consummation of the transactions contemplated by this Agreement only subject to
one or more conditions or restrictions that has had or could have a Material Adverse Effect,
which action is final and nonappealable;

     (f) by the Buyer, upon a breach of any representation, warranty, covenant or agreement
on the part of the Seller Parties set forth in this Agreement or if any representation or
warranty of the Seller Parties shall have become untrue, in either case such that the
conditions set forth in Section 6.1 would not be satisfied as of the Closing Date; provided
that the Buyer may not terminate this Agreement under this Section 12.1(f) if such
inaccuracy in the representations and warranties or breach by the Seller Parties is cured by
the Seller Parties prior to the Closing Date, provided further that the Seller Parties and
the Company continue to exercise commercially reasonable efforts to cure such inaccuracy or
breach (it being understood that the Buyer may not terminate this Agreement pursuant to this
Section 12.1(f) if the Buyer shall have materially breached this Agreement); and

     (g) by the Seller Parties, upon a breach of any representation, warranty, covenant or
agreement on the part of the Buyer set forth in this Agreement or if any representation or
warranty of the Buyer shall have become untrue, in either case such that the conditions set
forth in Section 6.2 would not be satisfied as of the Closing Date; provided, that the
Company may not terminate this Agreement under this Section 12.1(g) if such inaccuracy in
the Buyer’s representations and warranties or breach by the Buyer is

-45-

 

cured by the Buyer
prior to the Closing Date, provided further that the Buyer continues to exercise
commercially reasonable efforts to cure such inaccuracy or breach (it being understood that
the Seller Parties may not terminate this Agreement pursuant to this Section 12.1(g) if the
Seller Parties shall have materially breached this Agreement).

     12.2 Effect of Termination. In the event of the termination of this Agreement by the
Seller Parties or the Buyer pursuant to this Article 12, this Agreement shall become null and void
and of no further force or effect, except for the provisions of (i) Article 14 relating to the
obligation of each of the parties to keep confidential certain Information obtained by it, (ii)
Article 13 relating to certain expenses, and (iii) this Article 12, and except that nothing in this
Article 12 shall be deemed to release any Party from any liability for any prior willful breach by
such Party of the terms and provisions of this Agreement.

ARTICLE 13

EXPENSES

     Except as otherwise expressly provided herein, the Buyer and the Seller Parties shall each pay
all of their own fees, expenses and costs in connection with this Agreement and the transactions
and deliveries contemplated hereby, including without limitation, fees of attorneys and financial
advisors, and any brokers or finders which may have been retained by such Party in connection with
this transaction.

ARTICLE 14

CONFIDENTIALITY

     Each of the Seller Parties and the Buyer agree to hold, and to cause their respective
Affiliates and representatives to hold, all books, records, data and information (collectively, the
“Information”) furnished to it (or its Affiliates or representatives) by or on behalf of
the other Party in connection with the transactions contemplated by this Agreement in confidence to
the extent required by, and in accordance with, Section 7 of the Letter of Intent Regarding the
Purchase of General Agents Insurance Company of America, dated May 16, 2007 (the
“Confidentiality Agreement”) between the Buyer and the Parent.

ARTICLE 15

MISCELLANEOUS

     15.1 No Third-Party Beneficiaries. Except as specifically provided in Article 10,
this Agreement shall not confer any rights or remedies upon any Person other than the Parties and
their respective successors and permitted assigns.

-46-

 

     15.2 Entire Agreement. This Agreement (including its exhibits and schedules), the
Ancillary MGA Agreements, the Guaranty Agreement and the Confidentiality Agreement constitute the
entire agreement among the Parties relating to the subject matter hereof and thereof and supersede
any prior or contemporaneous understandings, agreements, or representations by or among the
Parties, written or oral, with respect thereto, including the Letter of Intent Regarding the
Purchase of General Agents Insurance Company of America, dated May 16, 2007, among the Parent and
Montpelier Re Holdings Ltd., other than Section 7 thereof.

     15.3 Succession and Assignment. This Agreement shall be binding upon and inure to the
benefit of the Parties and their respective successors and permitted assigns. No Party may assign
either this Agreement or any of its rights, interests or obligations hereunder without the prior
written approval of the other
Parties except that the Buyer may assign its interest hereunder, without the consent of the other
Parties hereto, to any Affiliate of the Buyer, in which case the Buyer shall remain liable for all
of its obligations under this Agreement.

     15.4 Counterparts. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original but all of which together will constitute one and the same
instrument.

     15.5 Headings. The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation of this Agreement.

     15.6 Notices. All notices, requests, demands, claims, and other communications
hereunder shall be in writing. Any notice, request, demand, claim, or other communication
hereunder shall be deemed duly given if (and then two (2) Business Days after) it is sent by a
reputable overnight delivery service or by registered or certified mail, return receipt requested,
postage prepaid, and addressed to the intended recipient as set forth below:

     If to the Seller Parties, to:

     GAINSCO, INC.

     3333 Lee Parkway, Suite 1200

     Dallas, Texas 75219-5134

     Attention: Daniel J. Coots, Chief Financial Officer

     Facsimile: (972) 629-4401

     Telephone: (972) 629-4407

     With a copy to:

     John S. Daniels

     General Counsel

     GAINSCO, Inc.

     3333 Lee Parkway, Suite 1200

     Dallas, Texas 75218

     Facsimile: (972) 629-4401

-47-

 

Telephone: (972) 629-4411

And an additional copy to:

Barry Senterfitt

Akin Gump Strauss Hauer & Feld LLP

300 West 6th Street, Suite 2100

Austin, Texas 78701

Facsimile: (512) 499-6290

Telephone: (512) 499-6216

If to the Buyer, to:

Montpelier Re U.S. Holdings Ltd.

One Constitution Plaza, 5th Floor

Hartford, Connecticut 06103

Attention: Robert W. Heagney, Esq.
                  General Counsel

Facsimile: (860) 838-4492

Telephone: (860) 838-4464

E-mail: rob.heagney@montpelierus.com

With a copy to:

Montpelier Re Holdings Ltd.

Montpelier House

94 Pitts Bay Road

P.O. Box HM 2079

Hamilton HM HX Bermuda

Attention: Jonathan B. Kim, Esq.

                 General Counsel

Facsimile: (441) 296-4358

Telephone: (441) 297-9595

E-mail: jonathan.kim@montpelierre.bm

And an additional copy to:

Shipman & Goodwin LLP

One Constitution Plaza

Hartford, Connecticut 06103-1919

Attention: John H. Lawrence, Jr., Esq.

Facsimile: (860) 251-5211

Telephone: (860) 251-5139

E-mail: jlawrence@goodwin.com

-48-

 

Any Party may send any notice, request, demand, claim, or other communication hereunder to the
intended recipient at the address set forth above using any other means (including personal
delivery, messenger service, telecopy, telex, regular mail or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly given unless and
until it actually is received by the intended recipient. Any Party may change the address to which
notices, requests, demands, claims, and other communications hereunder are to be delivered by
giving the other Party notice in the manner herein set forth.

     15.7 Governing Law. This Agreement shall be governed by and construed in accordance
with the domestic laws of the State of Delaware without giving effect to any choice or conflict of
law provision or rule (whether of the State of
Delaware or any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware.

     15.8 Amendments and Waivers. No amendment of any provision of this Agreement shall be
valid unless the same shall be in writing and signed by the Buyer and the Seller Parties. No
waiver by any Party of any default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or subsequent default,
misrepresentation or breach of warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent such occurrence.

     15.9 Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability
of the remaining terms and provisions hereof or the validity or enforceability of the offending
term or provision in any other situation or in any other jurisdiction. If any term or other
provision of this Agreement is held invalid, illegal or incapable of being enforced, the Parties
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 hereby be consummated as originally contemplated to the fullest extent possible.

     15.10 Construction. The Parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption
or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any
of the provisions of this Agreement. When a reference is made in this Agreement to an Article or
to a Section, Subsection, Exhibit or Schedule, such reference shall be to an Article of, a Section
or Subsection of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated.
Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be
deemed to be followed by the words “without limitation.” The words “hereof,” “herein” and
“hereunder” and words of similar import when used in this Agreement shall refer to this Agreement
as a whole (including, without limitation, the Disclosure Schedule) and not to any particular
provision of this Agreement. The words “date hereof” shall refer to the date of this Agreement set
forth in the preface. The term “or” is not exclusive. The word “extent” in the phrase “to the
extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not
mean simply “if.” The phrase “capital stock” or “capital stock of the Company” shall refer to any
ownership, membership, voting or other equity interest in the Company. The definitions contained
in this Agreement are applicable to the singular as well as the plural forms

-49-

 

of such terms. Any
agreement or instrument defined or referred to herein or in any agreement or instrument that is
referred to herein means such agreement or instrument as from time to time amended, modified or
supplemented. References to a person are also to its successors and permitted assigns. The
covenants and agreements of the Parties shall survive until the expiration of the time period for
their performance as provided herein. Any reference to any federal, state, local, or foreign
statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder,
unless the context requires otherwise.

     15.11 Incorporation of Exhibits and Schedules. The Exhibits and Schedules identified
in this Agreement are incorporated herein by reference and made a part hereof as if fully set forth
herein.

     15.12 Consent to Jurisdiction. Any legal action, suit or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby shall be instituted in a United
States District Court located in Chicago, Illinois or in the courts of the State of Illinois
located in Chicago, and each party hereto agrees not to assert as a defense in any such action,
suit or proceeding, any claim that it is not subject personally to the jurisdiction of such court,
that its property is exempt or immune from attachment or execution, that the action, suit or
proceeding is brought in an inconvenient forum, that the venue of the action, suit or proceeding is
improper or that this Agreement or the subject matter hereof may not be enforced in or by such
court. Each Party further irrevocably submits to the jurisdiction of such court in any such
action, suit or proceeding. Any and all service of process and any other notice in any such
action, suit or proceeding shall be effective against any party if given properly pursuant to the
United States Federal Rules of Civil Procedure or other applicable rules.

     15.13 Enforcement. The Parties agree that irreparable damage might occur in the event
that any of the provisions of this Agreement were not performed in accordance with their specific
terms or were otherwise breached. It is accordingly agreed that the Parties shall be entitled to
an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the
terms and provisions of this Agreement, this being in addition to any other remedy to which they
are entitled at law or in equity.

     15.14 Non-Duplication. Notwithstanding any provision in this Agreement or in any
other agreement entered into pursuant hereto, the intent of the Parties with respect to this
Agreement and all other agreements related to the sale of the Company by the Seller Parties to the
Buyers is that any payment made, or any obligation to make a payment owed, by the Seller Parties,
or either of them, to the Buyer (or to the Company) shall not be duplicative of any other payment
or obligation made or owed under this Agreement or any other agreement entered into pursuant to the
terms of this Agreement, including without limitation any of the Ancillary MGA Agreements or the
Guaranty Agreement. This principle shall apply regardless of the number of agreements under which
an obligation may be owed by the Seller Parties and regardless of the number of different Persons
that may be individually entitled to recover.

*    *    *    *

-50-

 

     IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first above
written.

	 	 	 	 	 
	 	The Seller Parties:

GAINSCO, INC

 	 
	 	By:  	/s/ Glenn W. Anderson	 
	 	 	Name:  	Glenn W. Anderson	 
	 	 	Title:  	President and Chief Executive Officer	 
	 
	 	MGA INSURANCE COMPANY, INC.

 	 
	 	By:  	/s/ Glenn W. Anderson	 
	 	 	Name:  	Glenn W. Anderson	 
	 	 	Title:  	President and Chief Executive Officer	 
	 
	 	The Buyer:

MONTPELIER RE U.S. HOLDINGS LTD.

 	 
	 	By:  	/s/ Kernan V. Oberting	 
	 	 	Name:  	Kernan V. Oberting	 
	 	 	Title:  	President	 
	 

Signature Page to Stock Purchase Agreement

1

 

Disclosure Schedule / Section 2.2

Purchase Price Adjustment

1

 

Disclosure Schedule / Section 4.1(t)(2)

Licenses and Permits — Surplus or Excess Lines Qualifications

Alabama

Alaska

Arkansas

Connecticut

District of Columbia

Delaware

Florida

Georgia

Hawaii

Idaho

Illinois

Iowa

Kansas

Kentucky

Maryland

Massachusetts

Michigan

Minnesota

Mississippi

Missouri

Montana

Nebraska

Nevada

New Jersey

New Mexico

North Carolina

Oregon

Pennsylvania

Rhode Island

South Carolina

South Dakota

Tennessee

Utah

Vermont

Virginia

Washington

Wyoming

1

 

Disclosure Schedule / Section 4.1(u)(6)

Licenses and Permits – Deposits

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Bank	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Account	 	Security	 	Interest	 	Maturity	 	 	 	Par
	State	 	Bank	 	Number	 	Description	 	Rate	 	Date	 	Cusip #	 	Value
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

1

 

Disclosure Schedule / Section 4.1(ab)

Bank and Financial institution Accounts

	 	 	 	 	 
	Account or Safe Deposit Box	 	 	 	 
	(including address of bank.	 	 	 	 
	mutual fund or stock	 	Account or Box	 	Individuals with authority to draw
	brokerage)	 	Number	 	thereon or have access thereto
	 	 	 	 	 

1EX-10.1

 

Exhibit 10.1

$155,000,000

CREDIT AGREEMENT

among

GLOBAL PETROLEUM, INC.,

as Borrower,

The Several Lenders from Time to Time Parties Hereto,

PNC BANK, NATIONAL ASSOCIATION,

as Documentation Agent

and

Syndication Agent,

and

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

Dated as of September 18, 2006

J.P. MORGAN SECURITIES INC. and PNC CAPITAL MARKETS LLC,

as Co-Lead Arrangers and Joint Bookrunners

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page	 
	 
	 	 	 	 	 	 	 	 	 	 
	SECTION 1.	 	 	 	DEFINITIONS	 	 	1	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	1.1	 	Defined Terms	 	 	1	 
	 	 	1.2	 	Other Definitional Provisions	 	 	19	 
	 
	 	 	 	 	 	 	 	 	 	 
	SECTION 2.	 	 	 	AMOUNT AND TERMS OF COMMITMENTS	 	 	19	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	2.1	 	Commitments	 	 	19	 
	 	 	2.2	 	Procedure for Term Loan Borrowing	 	 	20	 
	 	 	2.3	 	Repayment of Term Loans	 	 	20	 
	 	 	2.4	 	Optional Prepayments	 	 	21	 
	 	 	2.5	 	Mandatory Prepayments and Commitment Reductions	 	 	22	 
	 	 	2.6	 	Conversion and Continuation Options	 	 	22	 
	 	 	2.7	 	Limitations on Eurodollar Tranches	 	 	23	 
	 	 	2.8	 	Interest Rates and Payment Dates	 	 	23	 
	 	 	2.9	 	Computation of Interest and Fees	 	 	23	 
	 	 	2.10	 	Inability to Determine Interest Rate	 	 	24	 
	 	 	2.11	 	Pro Rata Treatment and Payments	 	 	24	 
	 	 	2.12	 	Requirements of Law	 	 	25	 
	 	 	2.13	 	Taxes	 	 	26	 
	 	 	2.14	 	Indemnity	 	 	28	 
	 	 	2.15	 	Change of Lending Office	 	 	28	 
	 	 	2.16	 	Replacement of Lenders	 	 	29	 
	 	 	2.17	 	Increase in Term Commitments	 	 	29	 
	 	 	2.18	 	Intercreditor Agreement	 	 	30	 
	 
	 	 	 	 	 	 	 	 	 	 
	SECTION 3.	 	 	 	REPRESENTATIONS AND WARRANTIES	 	 	30	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	3.1	 	Financial Condition	 	 	30	 
	 	 	3.2	 	No Change	 	 	32	 
	 	 	3.3	 	Existence; Compliance with Law	 	 	32	 
	 	 	3.4	 	Power; Authorization; Enforceable Obligations	 	 	32	 
	 	 	3.5	 	No Legal Bar	 	 	32	 
	 	 	3.6	 	Litigation	 	 	32	 
	 	 	3.7	 	No Default	 	 	33	 
	 	 	3.8	 	Ownership of Property; Liens	 	 	33	 
	 	 	3.9	 	Intellectual Property	 	 	33	 
	 	 	3.10	 	Taxes	 	 	33	 
	 	 	3.11	 	Federal Regulations	 	 	33	 
	 	 	3.12	 	Labor Matters	 	 	33	 
	 	 	3.13	 	ERISA	 	 	33	 
	 	 	3.14	 	Investment Company Act; Other Regulations	 	 	34	 
	 	 	3.15	 	Subsidiaries	 	 	34	 
	 	 	3.16	 	Use of Proceeds	 	 	34	 
	 	 	3.17	 	Environmental Matters	 	 	34	 
	 	 	3.18	 	Accuracy of Information, etc.	 	 	35	 
	 	 	3.19	 	Security Documents	 	 	35	 

i

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	3.20	 	Solvency	 	 	36	 
	 	 	3.21	 	Regulation H	 	 	36	 
	 
	 	 	 	 	 	 	 	 	 	 
	SECTION 4.	 	 	 	CONDITIONS PRECEDENT	 	 	36	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	4.1	 	Conditions to Initial Extension of Credit	 	 	36	 
	 	 	4.2	 	Conditions to Each Extension of Credit	 	 	38	 
	 
	 	 	 	 	 	 	 	 	 	 
	SECTION 5.	 	 	 	AFFIRMATIVE COVENANTS	 	 	38	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	5.1	 	Financial Statements	 	 	38	 
	 	 	5.2	 	Certificates; Other Information	 	 	39	 
	 	 	5.3	 	Payment of Obligations	 	 	40	 
	 	 	5.4	 	Maintenance of Existence; Compliance	 	 	40	 
	 	 	5.5	 	Maintenance of Property; Insurance	 	 	40	 
	 	 	5.6	 	Inspection of Property; Books and Records; Discussions	 	 	40	 
	 	 	5.7	 	Notices	 	 	41	 
	 	 	5.8	 	Environmental Laws	 	 	41	 
	 	 	5.9	 	Interest Rate Protection	 	 	41	 
	 	 	5.10	 	Additional Collateral, etc.	 	 	42	 
	 	 	5.11	 	Mortgages, etc	 	 	43	 
	 
	 	 	 	 	 	 	 	 	 	 
	SECTION 6.	 	 	 	NEGATIVE COVENANTS	 	 	43	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	6.1	 	Financial Condition Covenants	 	 	44	 
	 	 	6.2	 	Indebtedness	 	 	44	 
	 	 	6.3	 	Liens	 	 	45	 
	 	 	6.4	 	Fundamental Changes	 	 	47	 
	 	 	6.5	 	Disposition of Property	 	 	47	 
	 	 	6.6	 	Restricted Payments	 	 	48	 
	 	 	6.7	 	Capital Expenditures	 	 	48	 
	 	 	6.8	 	Investments	 	 	49	 
	 	 	6.9	 	Transactions with Affiliates	 	 	50	 
	 	 	6.10	 	Sales and Leasebacks	 	 	50	 
	 	 	6.11	 	Swap Agreements	 	 	50	 
	 	 	6.12	 	Changes in Fiscal Periods	 	 	50	 
	 	 	6.13	 	Negative Pledge Clauses	 	 	50	 
	 	 	6.14	 	Clauses Restricting Subsidiary Distributions	 	 	50	 
	 	 	6.15	 	Lines of Business	 	 	50	 
	 	 	6.16	 	Amendments to Acquisition Documents	 	 	51	 
	 	 	6.17	 	Amendments to ABL Loan Documents	 	 	51	 
	 
	 	 	 	 	 	 	 	 	 	 
	SECTION 7.	 	 	 	EVENTS OF DEFAULT	 	 	51	 
	 
	 	 	 	 	 	 	 	 	 	 
	SECTION 8.	 	 	 	THE AGENTS	 	 	54	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	8.1	 	Appointment	 	 	54	 
	 	 	8.2	 	Delegation of Duties	 	 	54	 
	 	 	8.3	 	Exculpatory Provisions	 	 	54	 
	 	 	8.4	 	Reliance by Administrative Agent	 	 	54	 
	 	 	8.5	 	Notice of Default	 	 	55	 

 

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	8.6	 	Non-Reliance on Agents and Other Lenders	 	 	55	 
	 	 	8.7	 	Indemnification	 	 	55	 
	 	 	8.8	 	Agent in Its Individual Capacity	 	 	56	 
	 	 	8.9	 	Successor Administrative Agent	 	 	56	 
	 	 	8.10	 	Documentation Agent and Syndication Agent	 	 	56	 
	 
	 	 	 	 	 	 	 	 	 	 
	SECTION 9.	 	 	 	MISCELLANEOUS	 	 	56	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	9.1	 	Amendments and Waivers	 	 	56	 
	 	 	9.2	 	Notices	 	 	58	 
	 	 	9.3	 	No Waiver; Cumulative Remedies	 	 	59	 
	 	 	9.4	 	Survival of Representations and Warranties	 	 	59	 
	 	 	9.5	 	Payment of Expenses and Taxes	 	 	59	 
	 	 	9.6	 	Successors and Assigns; Participations and Assignments	 	 	60	 
	 	 	9.7	 	Adjustments; Set-off	 	 	63	 
	 	 	9.8	 	Counterparts	 	 	63	 
	 	 	9.9	 	Severability	 	 	63	 
	 	 	9.10	 	Integration	 	 	64	 
	 	 	9.11	 	GOVERNING LAW	 	 	64	 
	 	 	9.12	 	Submission To Jurisdiction; Waivers	 	 	64	 
	 	 	9.13	 	Acknowledgements	 	 	64	 
	 	 	9.14	 	Releases of Guarantees and Liens	 	 	65	 
	 	 	9.15	 	Confidentiality	 	 	65	 
	 	 	9.16	 	WAIVERS OF JURY TRIAL	 	 	66	 
	 	 	9.17	 	USA Patriot Act	 	 	66	 

 

 

SCHEDULES:

	 	 	 
	1.1A

	 	Commitments
	1.1B

	 	Mortgaged Property
	3.15

	 	Subsidiaries
	3.19(a)

	 	UCC Filing Jurisdictions
	3.19(b)

	 	Mortgage Filing Jurisdictions
	6.2(d)

	 	Existing Indebtedness
	6.3(f)

	 	Existing Liens
	6.8

	 	Existing Investments
	6.9

	 	Transactions with Affiliates

EXHIBITS:

	 	 	 
	A

	 	Form of First Lien Guarantee and Collateral Agreement
	B

	 	Form of Compliance Certificate
	C

	 	Form of Closing Certificate
	D

	 	Form of Mortgage
	E

	 	Form of Assignment and Assumption
	F

	 	Form of Exemption Certificate
	G

	 	Form of Intercreditor Agreement

iv

 

          CREDIT AGREEMENT (this “Agreement”), dated as of September 18, 2006, among SPI
PETROLEUM LLC, a Delaware limited liability company (“Holdings”), GLOBAL PETROLEUM, INC., a
Delaware corporation (the “Borrower”), the several banks and other financial institutions
or entities from time to time parties to this Agreement (the “Lenders”), PNC BANK, NATIONAL
ASSOCIATION, as documentation agent (in such capacity, the “Documentation Agent”) and
syndication agent (in such capacity, the “Syndication Agent”), and JPMORGAN CHASE BANK,
N.A., as administrative agent.

          The parties hereto hereby agree as follows:

SECTION 1. DEFINITIONS

          Defined Terms. As used in this Agreement, the terms listed in this Section 1.1 shall
have the respective meanings set forth in this Section 1.1.

          “ABL Administrative Agent”: PNC Bank, National Association, its successors and
assigns and any other administrative agent appointed or otherwise designated under the ABL Credit
Agreement.

          “ABL Credit Agreement”: the Revolving Credit and Security Agreement dated as of the
date hereof among Holdings, the Borrower, the financial institutions from time to time parties
thereto and the ABL Administrative Agent, as amended or modified in accordance with the
Intercreditor Agreement.

          “ABL Facility Liens”: Liens on assets of the Loan Parties created by the ABL Loan
Documents.

          “ABL Loan Documents”: the Loan Documents as defined in the ABL Credit Agreement and
the ABL Securitization Documents.

          “ABL Obligations”: all payment and performance obligations of Holdings, the Borrower
and their respective Subsidiaries under the ABL Loan Documents.

          “ABL Secured Parties”: the ABL Administrative Agent and the Lenders under the ABL
Loan Documents.

          “ABL Securitization Documents”: the documents entered into in connection with the
Securitization.

          “ABR”:
for any day, a rate per annum (rounded upwards, if necessary, to the
next
1/16
of 1%) equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in
effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus 1/2 of
1%. For purposes hereof: “Prime Rate” shall mean the rate of interest per annum publicly
announced from time to time by JPMorgan Chase Bank, N.A. as its prime rate in effect at its
principal office in New York City (the Prime Rate not being intended to be the lowest rate of
interest charged by JPMorgan Chase Bank, N.A. in connection with extensions of credit to debtors);
“Base CD Rate” shall mean the sum of (a) the product of (i) the Three-Month Secondary CD
Rate and (ii) a fraction, the numerator of which is one and the denominator of which is one minus
the CD Reserve Percentage and (b) the CD Assessment Rate; and “Three-Month Secondary CD
Rate” shall mean, for any day, the secondary market rate for three-month certificates of
deposit reported as being in effect on such day (or, if such day shall not be a Business Day, the
next preceding Business Day) by the Board through the public information telephone line of the
Federal Reserve Bank of New York (which rate will, under the current practices of the Board, be
published in Federal Reserve Statistical Release H.15(519) during the week following such day), or,
if

 

 

such rate shall not be so reported on such day or such next preceding Business Day, the
average of the secondary market quotations for three-month certificates of deposit of major money
center banks in New York City received at approximately 10:00 A.M., New York City time, on such day
(or, if such day shall not be a Business Day, on the next preceding Business Day) by JPMorgan Chase
Bank, N.A. from three New York City negotiable certificate of deposit dealers of recognized
standing selected by it. Any change in the ABR due to a change in the Prime Rate, the Three-Month
Secondary CD Rate or the Federal Funds Effective Rate shall be effective as of the opening of
business on the effective day of such change in the Prime Rate, the Three-Month Secondary CD Rate
or the Federal Funds Effective Rate, respectively.

          “ABR Loans”: Loans the rate of interest applicable to which is based upon the ABR.

          “Acquisition Documentation”: collectively, the Canyon Acquisition Agreement, the
Pecos Acquisition Agreement and all schedules, exhibits and annexes thereto and all side letters
and agreements affecting the terms thereof or entered into in connection therewith.

          “Acquisitions”: collectively, the Canyon Acquisition and the Pecos Acquisition.

          “Administrative Agent”: JPMorgan Chase Bank, N.A., together with its affiliates, as
the arranger of the Commitments and as the administrative agent for the Lenders under this
Agreement and the other Loan Documents, together with any of its successors.

          “Affiliate”: as to any Person, any other Person that, directly or indirectly, is in
control of, is controlled by, or is under common control with, such Person. For purposes of this
definition, “control” of a Person means the power, directly or indirectly, either to (a) vote 10%
or more of the securities having ordinary voting power for the election of directors (or persons
performing similar functions) of such Person or (b) direct or cause the direction of the management
and policies of such Person, whether by contract or otherwise.

          “Agents”: the collective reference to the Syndication Agent, the Documentation Agent
and the Administrative Agent.

          “Aggregate Exposure”: with respect to any Lender at any time, an amount equal to (a)
until the Closing Date, the aggregate amount of such Lender’s Commitments at such time and (b)
thereafter, the aggregate then unpaid principal amount of such Lender’s Term Loans then
outstanding.

          “Aggregate Exposure Percentage”: with respect to any Lender at any time, the ratio
(expressed as a percentage) of such Lender’s Aggregate Exposure at such time to the Aggregate
Exposure of all Lenders at such time.

          “Agreement”: as defined in the preamble hereto.

          “Applicable Margin”: shall be equal to (i) 3.5% in the case of ABR Loans and (ii)
4.5% in the case of Eurodollar Loans.

          The Applicable Margin for an Incremental Term Loan Facility shall be as specified in the
applicable Incremental Term Loan Assumption Agreement.

          “Approved Fund”: as defined in Section 9.6(b).

2

 

          “Asset Sale”: any Disposition of property or series of related Dispositions of
property (excluding any such Disposition permitted by clause (a), (b), (c) or (d) of Section 6.5)
that yields gross proceeds to any Loan Party (valued at the initial principal amount thereof in the
case of non-cash proceeds consisting of notes or other debt securities and valued at fair market
value in the case of other non-cash proceeds) in excess of $1,500,000.

          “Assignee”: as defined in Section 9.6(b).

          “Assignment and Assumption”: an Assignment and Assumption, substantially in the form
of Exhibit E.

          “Benefitted Lender”: as defined in Section 9.7(a).

          “Board”: the Board of Governors of the Federal Reserve System of the United States
(or any successor).

          “Borrower”: as defined in the preamble hereto.

          “Borrowing Date”: any Business Day specified by the Borrower as a date on which the
Borrower requests the relevant Lenders to make Loans hereunder.

          “Business”: as defined in Section 3.17(b).

          “Business Day”: a day other than a Saturday, Sunday or other day on which commercial
banks in New York City are authorized or required by law to close, provided, that with
respect to notices and determinations in connection with, and payments of principal and interest
on, Eurodollar Loans, such day is also a day for trading by and between banks in Dollar deposits in
the interbank eurodollar market.

          “Canyon Acquisition”: the acquisition of the capital stock of CSOC Inc. and fifty
percent (50%) of the membership interests of Canyon State Oil Company of Colorado, LLC by the
Borrower pursuant to the terms of the Canyon Acquisition Agreement.

          “Canyon Acquisition Agreement”: the Stock Purchase Agreement dated September 18, 2006
by and among Holdings, SPI Petroleum, Inc., a Texas corporation, the Thomas F. Arndt Trust under
Trust Agreement dated June 1, 2005, and Thomas F. Arndt, individually.

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

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

          “Capital Stock”: any and all shares, interests, participations or other equivalents
(however designated) of capital stock of a corporation, any and all equivalent ownership interests
in a

3

 

Person (other than a corporation) and any and all warrants, rights or options to purchase any
of the foregoing.

          “Cash Equivalents”: (a) marketable direct obligations issued by, or unconditionally
guaranteed by, the United States Government or issued by any agency thereof and backed by the full
faith and credit of the United States, in each case maturing within one year from the date of
acquisition; (b) certificates of deposit, time deposits, eurodollar time deposits or overnight bank
deposits having maturities of six months or less from the date of acquisition issued by any Lender
or by any commercial bank organized under the laws of the United States or any state thereof having
combined capital and surplus of not less than $500,000,000; (c) commercial paper of an issuer rated
at least A-1 by Standard & Poor’s Ratings Services (“S&P”) or P-1 by Moody’s Investors
Service, Inc. (“Moody’s”), or carrying an equivalent rating by a nationally recognized
rating agency, if both of the two named rating agencies cease publishing ratings of commercial
paper issuers generally, and maturing within six months from the date of acquisition; (d)
repurchase obligations of any Lender or of any commercial bank satisfying the requirements of
clause (b) of this definition, having a term of not more than 30 days, with respect to securities
issued or fully guaranteed or insured by the United States government; (e) securities with
maturities of one year or less from the date of acquisition issued or fully guaranteed by any
state, commonwealth or territory of the United States, by any political subdivision or taxing
authority of any such state, commonwealth or territory or by any foreign government, the securities
of which state, commonwealth, territory, political subdivision, taxing authority or foreign
government (as the case may be) are rated at least A by S&P or A by Moody’s; (f) securities with
maturities of six months or less from the date of acquisition backed by standby letters of credit
issued by any Lender or any commercial bank satisfying the requirements of clause (b) of this
definition; (g) money market mutual or similar funds that invest exclusively in assets satisfying
the requirements of clauses (a) through (f) of this definition; or (h) money market funds that (i)
comply with the criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940, as
amended, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of at least
$5,000,000,000.

          “CD Assessment Rate”: for any day as applied to any ABR Loan, the annual assessment
rate in effect on such day that is payable by a member of the Bank Insurance Fund maintained by the
Federal Deposit Insurance Corporation (the “FDIC”) classified as well-capitalized and
within supervisory subgroup “B” (or a comparable successor assessment risk classification) within
the meaning of 12 C.F.R. § 327.4 (or any successor provision) to the FDIC (or any successor) for
the FDIC’s (or such successor’s) insuring time deposits at offices of such institution in the
United States.

          “CD Reserve Percentage”: for any day as applied to any ABR Loan, that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the Board, for
determining the maximum reserve requirement for a Depositary Institution (as defined in Regulation
D of the Board as in effect from time to time) in respect of new non-personal time deposits in
Dollars having a maturity of 30 days or more.

          “Cessna Aircraft”: the Cessna aircraft with model no. 525, serial no. 525-0542 and
registration no. N500CW, owned jointly by Simons Petroleum, Inc., an Oklahoma corporation, the
Around the Clock Freightliner Group, Inc. and Bob Mills Furniture Co., Inc..

          “Change of Control”: the earliest to occur of (a) the Permitted Holders ceasing to
have the power, directly or indirectly, to vote or direct the voting of securities having a
majority of the ordinary voting power for the election of directors of Holdings; provided
that the occurrence of the foregoing event shall not be deemed a Change of Control if, the
Permitted Holders otherwise have the right, directly or indirectly, to designate (and do so
designate) a majority of the board of directors of Holdings or the Permitted Holders own, directly
or indirectly, of record and beneficially an amount of common stock of

4

 

Holdings equal to an amount more than fifty percent (50%) of the amount of common stock of
Holdings owned, directly or indirectly, by the Permitted Holders of record and beneficially as of
the Closing Date and such ownership by the Permitted Holders represents the largest single block of
voting securities of Holdings held by any Person or related group for purposes of Section 13(d) of
the Exchange Act; or

          (b) the Borrower ceasing to be a directly or indirectly wholly owned Subsidiary of Holdings.

          “Chevron BDF Agreements”: collectively, (i) that certain Cash Advance/Amortization
Agreement to Texaco Lubrication Marketer for Brand Conversion Program dated September 6. 2002,
among Pecos, Inc., General Petroleum Corporation, f/k/a GP Resources, Inc. and ChevronTexaco Global
Lubricants, a division of Chevron U.S.A. Inc., (ii) that certain Cash Advance/Amortization
Agreement to Texaco Lubrication Marketer for Brand Conversion Program at Texaco Xpress Lube
Operator (located at 4853 East McKinley, Fresno, California) dated March 23, 2003, among Pecos,
Inc., General Petroleum Corporation, f/k/a GP Resources, Inc. and ChevronTexaco Global Lubricants,
a division of Chevron U.S.A. Inc., (iii) that certain Cash Advance/Amortization Agreement to Texaco
Lubrication Marketer for Brand Conversion Program at Texaco Xpress Lube Operator (located at
California City Boulevard, California City, California) dated March 23, 2003, among Pecos, Inc.,
General Petroleum Corporation, f/k/a GP Resources, Inc. and ChevronTexaco Global Lubricants, a
division of Chevron U.S.A. Inc., (iv) that certain Cash Advance/Amortization Agreement to Texaco
Lubrication Marketer for Brand Conversion Program at Texaco Xpress Lube Operator (located at 438
Cecil Avenue, Delano, California) dated March 23. 2003, among Pecos, Inc., General Petroleum
Corporation, f/k/a GP Resources, Inc. and ChevronTexaco Global Lubricants, a division of Chevron
U.S.A. Inc., (v) that certain Cash Advance/Amortization Agreement to Texaco Lubrication Marketer
for Brand Conversion Program at Texaco Xpress Lube Operator (located at 5651 Auburn, Bakersfield,
California) dated March 23. 2003, among Pecos, Inc., General Petroleum Corporation, f/k/a GP
Resources, Inc. and ChevronTexaco Global Lubricants, a division of Chevron U.S.A. Inc., (vi) that
certain Cash Advance/Amortization Agreement to Texaco Lubrication Marketer for Brand Conversion
Program dated July 29, 2004, among Pecos, Inc., General Petroleum Corporation, f/k/a GP Resources,
Inc. and ChevronTexaco Global Lubricants, a division of Chevron U.S.A. Inc., and (vii) that certain
Cash Advance/Amortization Agreement to Texaco Lubrication Marketer for Equipment at
Fast-Lubrication Facilities dated July 15, 2005, among Pecos, Inc., General Petroleum Corporation,
f/k/a GP Resources, Inc. and Chevron Products Company, a division of Chevron U.S.A. Inc., as each
of the foregoing may be amended or otherwise modified from time to time.

          “Closing Date”: the date on which the conditions precedent set forth in Section 4.1
shall have been satisfied, which date is September 18, 2006.

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

          “Collateral”: all property of the Loan Parties, now owned or hereafter acquired, upon
which a Lien is created by any Security Document.

          “Commitment”: as to any Lender, the sum of the Term Commitment and the Incremental
Term Commitment of such Lender.

          “Commonly Controlled Entity”: an entity, whether or not incorporated, that is under
common control with the Borrower within the meaning of Section 4001 of ERISA or is part of a group
that includes the Borrower and that is treated as a single employer under Section 414(b), (c), (m)
or (o) of the Code.

5

 

          “Compliance Certificate”: a certificate duly executed by a Responsible Officer
substantially in the form of Exhibit B.

          “Conduit Lender”: any special purpose corporation organized and administered by any
Lender for the purpose of making Loans otherwise required to be made by such Lender and designated
by such Lender in a written instrument; provided, that the designation by any Lender of a
Conduit Lender shall not relieve the designating Lender of any of its obligations to fund a Loan
under this Agreement if, for any reason, its Conduit Lender fails to fund any such Loan, and the
designating Lender (and not the Conduit Lender) shall have the sole right and responsibility to
deliver all consents and waivers required or requested under this Agreement with respect to its
Conduit Lender, and provided, further, that no Conduit Lender shall (a) be entitled
to receive any greater amount pursuant to Section 2.12, 2.13, 2.14 or 9.5 than the designating
Lender would have been entitled to receive in respect of the extensions of credit made by such
Conduit Lender or (b) be deemed to have any Commitment.

          “Confidential Information Memorandum”: the Confidential Information Memorandum dated
July 10, 2006 and furnished to certain Lenders.

          “Consolidated Current Assets”: at any date, all amounts (other than cash and Cash
Equivalents) that would, in conformity with GAAP, be set forth opposite the caption “total current
assets” (or any like caption) on a consolidated balance sheet of Holdings and its Subsidiaries at
such date.

          “Consolidated Current Liabilities”: at any date, all amounts that would, in
conformity with GAAP, be set forth opposite the caption “total current liabilities” (or any like
caption) on a consolidated balance sheet of Holdings and its Subsidiaries at such date, but
excluding the current portion of any Funded Debt of Holdings and its Subsidiaries.

          “Consolidated Earnings Before Interest and Taxes”: for any period, Consolidated Net
Income (or loss) of Holdings on a consolidated basis for such period (excluding extraordinary gains
and losses), plus, without duplication and to the extent reflected as a charge in the
statement of consolidated net income for such period, the sum of (i) all interest expense of
Holdings on a consolidated basis for such period and (ii) all charges against income of Borrower
for such period for federal, foreign, state and local taxes and, in the case of Holdings, such
charges relating to actual distributions to its members for the payment of taxes relating to such
members’ interest in Holdings.

          “Consolidated EBITDA”: for any period, Consolidated Earnings Before Interest and
Taxes for such period, plus, without duplication and to the extent reflected as a charge in
the statement of consolidated net income for such period, the sum of (i) depreciation expenses for
such period, (ii) amortization expenses and other non-cash expenses for such period, (iii)
transaction expenses incurred in connection with the Transactions to the extent expensed in such
period, (iv) restructuring and other non-cash, non-recurring items or expenses incurred in
connection with an acquisition transaction that is an approved transaction pursuant to the terms
and conditions hereof, (v) with respect to the Transactions only: such other non-cash expenses
(including any required or permitted purchase accounting adjustments) (including non-cash write-ups
and non-cash charges relating to inventory and fixed assets), (vi) any loss recognized in
determining consolidated net income (or net loss for such period) in respect of post-retirement
benefits as a result of application of FASB 106, minus (vii) any gain recognized in
determining consolidated net income (or net loss for such period) in respect of post-retirement
benefits as a result of application of FASB 106; plus (viii) any unrealized loss as a
result of application of SFAS 133, to the extent that it has been deducted from net income, but, in
any event, only to the extent of the non-cash component thereof, minus (ix) any unrealized
gain as a result of application of SFAS 133, to the extent it has been added to net income, but, in
any event, only to the extent of the non-cash component thereof, plus (x) the proceeds of
any business interruption insurance received during such period, plus (xi)

6

 

management fees paid to the Sponsors, not to exceed $1,000,000 and plus, (xii) any
loss arising from the impairment of goodwill and other general intangibles resulting from the
application of FASB 141 and FASB 142 at the time of, and in connection with, the consummation of
the Transactions; provided that any cash payments made in a future period in respect of
items described in clauses (ii), (iv) or (vi) above shall reduce Consolidated EBITDA in such
period.

          “Consolidated Fixed Charge Coverage Ratio”: for any period, the ratio of (a)
Consolidated EBITDA for such period less the aggregate amount actually paid by Holdings and its
Subsidiaries during such period on account of Capital Expenditures and not financed with
Indebtedness to (b) Consolidated Fixed Charges for such period.

          “Consolidated Fixed Charges”: for any period, the sum (without duplication) of (a)
Consolidated Interest Expense for such period, (b) scheduled payments made during such period on
account of principal of Indebtedness of Holdings or any of its Subsidiaries (including scheduled
principal payments in respect of the Term Loans), (c) taxes paid in cash and (d) dividends and
distributions paid in cash by the Borrower.

          “Consolidated Interest Expense”: for any period, total cash interest expense
(including that attributable to Capital Lease Obligations) of the Holdings and its Subsidiaries for
such period with respect to all outstanding Indebtedness of Holdings and its Subsidiaries
(including all commissions, discounts and other fees and charges owed with respect to letters of
credit and bankers’ acceptance financing, discounts and similar charges under the ABL
Securitization Documents and net costs under Swap Agreements in respect of interest rates to the
extent such net costs are allocable to such period in accordance with GAAP).

          “Consolidated Leverage Ratio”: as of the last day of any period, the ratio of (a)
Consolidated Total Debt on such day to (b) Consolidated EBITDA for the most recently ended
twelve-month period for which financial statements have been delivered.

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

          “Consolidated Total Debt”: at any date, the aggregate principal amount of all Funded
Debt of Holdings and its Subsidiaries at such date (including, whether or not otherwise provided
therein, the equivalent of principal under the ABL Securitization Documents), determined on a
consolidated basis in accordance with GAAP.

          “Consolidated Working Capital”: at any date, Consolidated Current Assets on such date
minus Consolidated Current Liabilities on such date.

          “Contractual Obligation”: as to any Person, any provision of any security issued by
such Person or of any agreement, instrument or other undertaking to which such Person is a party or
by which it or any of its property is bound.

7

 

          “Control Investment Affiliate”: as to any Person, any other Person that (a) directly
or indirectly, is in control of, is controlled by, or is under common control with, such Person and
(b) is organized by such Person primarily for the purpose of making equity or debt investments in
one or more companies. For purposes of this definition, “control” of a Person means the power,
directly or indirectly, to direct or cause the direction of the management and policies of such
Person whether by contract or otherwise.

          “CSOC Inc.”: Canyon State Oil Company, Inc., an Arizona corporation.

          “Default”: any of the events specified in Section 7, whether or not any requirement
for the giving of notice, the lapse of time, or both, has been satisfied, including in the case of
Section 7(e) any requirement that a period of grace in respect of any Indebtedness under the ABL
Loan Documents shall have expired.

          “Disposition”: with respect to any property, any sale, lease, sale and leaseback,
assignment, conveyance, transfer or other disposition thereof. The terms “Dispose” and
“Disposed of” shall have correlative meanings. For avoidance of doubt, the term
“Disposition” does not include the issuance of any Capital Stock.

          “Documentation Agent”: as defined in the preamble hereto.

          “Dollars” and “$”: dollars in lawful currency of the United States.

          “Domestic Subsidiary”: any Subsidiary of the Borrower organized under the laws of any
jurisdiction within the United States.

          “ECF Percentage”: 75%.

          “Environmental Laws”: any and all foreign, Federal, state, local or municipal laws,
rules having the force and effect of law, written orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements of Law (including common
law) regulating, relating to or imposing liability or standards of conduct concerning protection of
human health (to the extent related to exposures to Materials of Environmental Concern) or the
environment, as now or may at any time hereafter be in effect.

          “Equity Investors”: the Sponsors and the Management Stockholders.

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

          “Eurocurrency Reserve Requirements”: for any day as applied to a Eurodollar Loan, the
aggregate (without duplication) of the maximum rates (expressed as a decimal fraction) of reserve
requirements in effect on such day (including basic, supplemental, marginal and emergency reserves)
under any regulations of the Board or other Governmental Authority having jurisdiction with respect
thereto dealing with reserve requirements prescribed for eurocurrency funding (currently referred
to as “Eurocurrency Liabilities” in Regulation D of the Board) maintained by a member bank of the
Federal Reserve System.

          “Eurodollar Base Rate”: with respect to each day during each Interest Period
pertaining to a Eurodollar Loan, the rate per annum determined on the basis of the rate for
deposits in Dollars for a period equal to such Interest Period commencing on the first day of such
Interest Period appearing on

8

 

Page 3750 of the Telerate screen as of 11:00 A.M., London time, two Business Days prior to the
beginning of such Interest Period. In the event that such rate does not appear on Page 3750 of the
Telerate screen (or otherwise on such screen), the “Eurodollar Base Rate” shall be
determined by reference to such other comparable publicly available service for displaying
eurodollar rates as may be selected by the Administrative Agent or, in the absence of such
availability, by reference to the rate at which the Administrative Agent is offered Dollar deposits
at or about 11:00 A.M., New York City time, two Business Days prior to the beginning of such
Interest Period in the interbank eurodollar market where its eurodollar and foreign currency and
exchange operations are then being conducted for delivery on the first day of such Interest Period
for the number of days comprised therein.

          “Eurodollar Loans”: Loans the rate of interest applicable to which is based upon the
Eurodollar Rate.

          “Eurodollar Rate”: with respect to each day during each Interest Period pertaining to
a Eurodollar Loan, a rate per annum determined for such day in accordance with the following
formula (rounded upward to the nearest 1/100 of 1%):

Eurodollar Base Rate

 

1.00 - Eurocurrency Reserve Requirements

          “Eurodollar Tranche”: the collective reference to Eurodollar Loans under a particular
Facility the then current Interest Periods with respect to all of which begin on the same date and
end on the same later date (whether or not such Loans shall originally have been made on the same
day).

          “Event of Default”: any of the events specified in Section 7, provided that
any requirement for the giving of notice, the lapse of time, or both, has been satisfied.

          “Excess Cash Flow”: for any fiscal year of the Borrower, the excess, if any, of (a)
the sum, without duplication, of (i) Consolidated Net Income for such fiscal year, (ii) the amount
of all non-cash charges (including depreciation and amortization) deducted in arriving at such
Consolidated Net Income, (iii) decreases in Consolidated Working Capital for such fiscal year, and
(iv) the aggregate net amount of non-cash loss on the Disposition of property by the Borrower and
its Subsidiaries during such fiscal year (other than sales of inventory in the ordinary course of
business), to the extent deducted in arriving at such Consolidated Net Income minus (b) the
sum, without duplication, of (i) the amount of all non-cash credits included in arriving at such
Consolidated Net Income, (ii) the aggregate amount actually paid by the Borrower and its
Subsidiaries in cash during such fiscal year on account of Capital Expenditures (excluding the
principal amount of Indebtedness incurred in connection with such expenditures and any such
expenditures financed with the proceeds of any Reinvestment Deferred Amount), (iii) the aggregate
amount of all optional prepayments of the Term Loans and the Other Term Loans during such fiscal
year, (iv) the aggregate amount of all regularly scheduled principal payments of Funded Debt
(including the Term Loans and the Other Term Loans) of the Borrower and its Subsidiaries made
during such fiscal year (other than in respect of any revolving credit facility to the extent there
is not an equivalent permanent reduction in commitments thereunder), (v) increases in Consolidated
Working Capital for such fiscal year, and (vi) the aggregate net amount of non-cash gain on the
Disposition of property by the Borrower and its Subsidiaries during such fiscal year (other than
sales of inventory in the ordinary course of business), to the extent included in arriving at such
Consolidated Net Income.

          “Excess Cash Flow Application Date”: as defined in Section 2.5(c).

9

 

          “Excluded Foreign Subsidiary”: any Foreign Subsidiary in respect of which either (a)
the pledge of all of the Capital Stock of such Subsidiary as Collateral or (b) the guaranteeing by
such Subsidiary of the Obligations, would, in the good faith judgment of the Borrower, result in
adverse tax consequences to the Borrower.

          “Facility”: each of (a) the Term Commitments and the Term Loans made thereunder (the
“Term Facility”) and (b) the Incremental Term Commitments and the Incremental Term Loans
made thereunder (each, an “Incremental Term Facility”). The Term Facility and the
Incremental Term Facilities shall rank pari passu with each other.

          “Federal Funds Effective Rate”: for any day, the weighted average of the rates on
overnight federal funds transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by JPMorgan Chase, N.A. from three federal
funds brokers of recognized standing selected by it.

          “Foreign Subsidiary”: any Subsidiary of the Borrower that is not a Domestic
Subsidiary.

          “Funded Debt”: with respect to any Person, without duplication, all
Indebtedness for borrowed money evidenced by notes, bonds, debentures, or similar evidences of
Indebtedness, and specifically including Capital Lease Obligations, current maturities of long-term
debt, revolving credit and short-term debt extendible beyond one year at the option of the debtor,
and also including, in the case of the Borrower, the funded Obligations.

          “Funding Office”: the office of the Administrative Agent specified in Section 9.2 or
such other office as may be specified from time to time by the Administrative Agent as its funding
office by written notice to the Borrower and the Lenders.

          “GAAP”: generally accepted accounting principles in the United States as in effect
from time to time, except that for purposes of Section 6.1, GAAP shall be determined on the basis
of such principles in effect on the date hereof and consistent with those used in the preparation
of the most recent audited financial statements referred to in Section 3.1(b). In the event that
any “Accounting Change” (as defined below) shall occur and such change results in a change in the
method of calculation of financial covenants, standards or terms in this Agreement, then the
Borrower and the Administrative Agent agree to enter into negotiations in order to amend such
provisions of this Agreement so as to reflect equitably such Accounting Changes with the desired
result that the criteria for evaluating the Borrower’s financial condition shall be the same after
such Accounting Changes as if such Accounting Changes had not been made. Until such time as such
an amendment shall have been executed and delivered by the Borrower, the Administrative Agent and
the Required Lenders, all financial covenants, standards and terms in this Agreement shall continue
to be calculated or construed as if such Accounting Changes had not occurred. “Accounting Changes”
refers to changes in accounting principles required by the promulgation of any rule, regulation,
pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of
Certified Public Accountants or, if applicable, the SEC.

          “GECC Note”: that Promissory Note dated December 2, 2004 in the original principal
amount of $3,300,000 made by Simon Petroleum Inc., an Oklahoma corporation, the Around the Clock
Freightliner Group, Inc. and Bob Mills Furniture Co., Inc., in connection with the purchase of the
Cessna Aircraft.

10

 

          “Governmental Authority”: any nation or government, any state or other political
subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative
functions of or pertaining to government, any securities exchange and any self-regulatory
organization (including the National Association of Insurance Commissioners).

          “Group Members”: the collective reference to Holdings, the Borrower and their
respective Subsidiaries.

          “Guarantee and Collateral Agreement”: the Guarantee and Collateral Agreement to be
executed and delivered by Holdings, the Borrower and each Subsidiary Guarantor, substantially in
the form of Exhibit A.

          “Guarantee Obligation”: as to any Person (the “guaranteeing person”), any
obligation, including a reimbursement, counterindemnity or similar obligation, of the guaranteeing
Person that guarantees or in effect guarantees, or which is given to induce the creation of a
separate obligation by another Person (including any bank under any letter of credit) that
guarantees or in effect guarantees, any Indebtedness, leases, dividends or other obligations (the
“primary obligations”) of any other third Person (the “primary obligor”) in any
manner, whether directly or indirectly, including any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or any property constituting
direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or
payment of any such primary obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation
against loss in respect thereof; provided, however, that the term Guarantee
Obligation shall not include endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Guarantee Obligation of any guaranteeing person shall be
deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for
which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such
Guarantee Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person’s maximum reasonably anticipated liability
in respect thereof as determined by the Borrower in good faith.

          “Guarantors”: the collective reference to Holdings and the Subsidiary Guarantors.

          “Holdings”: as defined in the preamble hereto.

          “Incremental Term Commitment”: the commitment of any Lender, established pursuant to
Section 2.17, to make Incremental Term Loans to the Borrower.

          “Incremental Term Lender”: a Lender with an Incremental Term Commitment or an
outstanding Incremental Term Loan.

          “Incremental Term Loan Amount”: as defined in Section 2.17(a).

          “Incremental Term Loan Assumption Agreement”: an Incremental Term Loan Assumption
Agreement in form and substance reasonably satisfactory to the Administrative Agent, among the
Borrower, the Administrative Agent and one or more Incremental Term Lenders.

11

 

          “Incremental Term Loan Borrowing”: a Borrowing comprised of Incremental Term Loans.

          “Incremental Term Loan Maturity Date”: the final maturity date of any Incremental
Term Loan, as set forth in the applicable Incremental Term Loan Assumption Agreement.

          “Incremental Term Loan Repayment Dates”: the dates scheduled for the repayment of
principal of any Incremental Term Loan, as set forth in the applicable Incremental Term Loan
Assumption Agreement.

          “Incremental Term Loans”: Term Loans made by one or more Lenders to the Borrower
pursuant to Section 2.1(b). Incremental Term Loans may be made in the form of additional Term
Loans or, to the extent permitted by Section 2.17 and provided for in the relevant Incremental Term
Loan Assumption Agreement, Other Term Loans.

          “Indebtedness”: of any Person at any date, without duplication, (a) all indebtedness
of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase
price of property or services (other than current trade payables incurred in the ordinary course of
such Person’s business), (c) all obligations of such Person evidenced by notes, bonds, debentures
or other similar instruments, (d) all indebtedness created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such Person (even though the
rights and remedies of the seller or lender under such agreement in the event of default are
limited to repossession or sale of such property), (e) all Capital Lease Obligations of such
Person, (f) all obligations of such Person, contingent or otherwise, as an account party or
applicant under or in respect of acceptances, letters of credit, surety bonds or similar
arrangements, (g) the liquidation value of all mandatorily redeemable preferred Capital Stock of
such Person, (h) all Guarantee Obligations of such Person in respect of obligations of the kind
referred to in clauses (a) through (g) above, (i) all obligations of the kind referred to in
clauses (a) through (h) above secured by (or for which the holder of such obligation has an
existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts
and contract rights) owned by such Person, whether or not such Person has assumed or become liable
for the payment of such obligation, and (j) for the purposes of Section 7(e) only, all obligations
of such Person in respect of Swap Agreements. The Indebtedness of any Person shall include the
Indebtedness of any other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such Person’s ownership
interest in or other relationship with such entity, except to the extent the terms of such
Indebtedness expressly provide that such Person is not liable therefor.

          “Insolvency”: with respect to any Multiemployer Plan, the condition that such Plan is
insolvent within the meaning of Section 4245 of ERISA.

          “Insolvent”: pertaining to a condition of Insolvency.

          “Intellectual Property”: the collective reference to all rights, priorities and
privileges relating to intellectual property, whether arising under United States, multinational or
foreign laws or otherwise, including copyrights, copyright licenses, patents, patent licenses,
trademarks, trademark licenses, technology, know-how and processes, and all rights to sue at law or
in equity for any infringement or other impairment thereof, including the right to receive all
proceeds and damages therefrom.

          “Intercreditor Agreement”: the Intercreditor Agreement, substantially in the form of
Exhibit G, between the Administrative Agent on behalf of the Lenders and the ABL Administrative
Agent on behalf of the ABL Secured Parties, as amended, modified and supplemented from time to
time.

12

 

          “Interest Payment Date”: (a) as to any ABR Loan, the last day of each March, June,
September and December to occur while such Loan is outstanding and the final maturity date of such
Loan, (b) as to any Eurodollar Loan having an Interest Period of three months or less, the last day
of such Interest Period, (c) as to any Eurodollar Loan having an Interest Period longer than three
months, each day that is three months, or a whole multiple thereof, after the first day of such
Interest Period and the last day of such Interest Period and (d) as to any Loan, the date of any
repayment or prepayment made in respect thereof.

          “Interest Period”: as to any Eurodollar Loan, (a) initially, the period commencing on
the borrowing or conversion date, as the case may be, with respect to such Eurodollar Loan and
ending one, two, three or six (or, if agreed to by all Lenders under the relevant Facility, nine or
twelve) months thereafter, as selected by the Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and (b) thereafter, each period
commencing on the last day of the next preceding Interest Period applicable to such Eurodollar Loan
and ending one, two, three or six (or, if agreed to by all Lenders under the relevant Facility,
nine or twelve) months thereafter, as selected by the Borrower by irrevocable notice to the
Administrative Agent not later than 12:00 P.M. (noon), New York City time, on the date that is
three Business Days prior to the last day of the then current Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest Periods are subject to
the following:

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

     (ii) the Borrower may not select an Interest Period that would extend beyond the date
final payment is due on the Term Loans or the Other Term Loans, as the case may be;

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

     (iv) the Borrower shall select Interest Periods so as not to require a payment or
prepayment of any Eurodollar Loan during an Interest Period for such Loan.

          “Investments”: as defined in Section 6.8.

          “Lenders”: as defined in the preamble hereto; provided, that unless the
context otherwise requires, each reference herein to the Lenders shall be deemed to include any
Conduit Lender.

          “Lien”: any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge or other security interest or any preference,
priority or other security agreement or preferential arrangement of any kind or nature whatsoever
(including any conditional sale or other title retention agreement and any capital lease having
substantially the same economic effect as any of the foregoing).

          “Loan”: any loan made by any Lender pursuant to this Agreement.

          “Loan Documents”: this Agreement, the Security Documents, the Intercreditor
Agreement, the Notes, each Incremental Term Loan Assumption Agreement and any amendment, waiver,
supplement or other modification to any of the foregoing.

13

 

          “Loan Parties”: Holdings, the Borrower and each Subsidiary Guarantor.

          “Majority Facility Lenders”: with respect to any Facility, the holders of more than
50% of the aggregate unpaid principal amount of the Term Loans or Incremental Term Loans, as the
case may be, outstanding under such Facility.

          “Management Stockholders”: the members of management of Holdings or its Subsidiaries
who are investors in Holdings.

          “Management Subscription Agreements”: the collective reference to any subscription
agreement or stockholders agreement between Holdings and any present or former officer or employee
of any Group Member.

          “Material Adverse Effect”: a material adverse effect on (a) the business, property,
operations, or financial condition of the Borrower and its Subsidiaries taken as a whole or (b) the
validity or enforceability of this Agreement or any of the other Loan Documents or the rights or
remedies of the Administrative Agent or the Lenders hereunder or thereunder.

          “Materials of Environmental Concern”: any gasoline or petroleum (including crude oil
or any fraction thereof) or petroleum products or any hazardous or toxic substances, materials or
wastes, defined or regulated as such in or under any Environmental Law, including asbestos,
polychlorinated biphenyls and urea-formaldehyde insulation.

          “Mortgaged Properties”: the real properties listed on Schedule 1.1B, as to which the
Administrative Agent for the benefit of the Lenders shall be granted a Lien pursuant to the
Mortgages.

          “Mortgages”: each of the mortgages and deeds of trust made by any Loan Party in favor
of, or for the benefit of, the Administrative Agent for the benefit of the Lenders, substantially
in the form of Exhibit D (with such changes thereto as shall be advisable under the law of the
jurisdiction in which such mortgage or deed of trust is to be recorded).

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

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

          “Non-Excluded Taxes”: as defined in Section 2.13(a).

          “Non-U.S. Lender”: as defined in Section 2.13(d).

14

 

          “Notes”: the collective reference to any promissory note evidencing Loans.

          “Obligations”: the unpaid principal of and interest on (including interest accruing
after the maturity of the Loans (including the Incremental Term Loans) and interest accruing after
the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) the Loans and all other obligations and liabilities of the
Borrower to the Administrative Agent or to any Lender, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, this Agreement, any other Loan Document, or any other document made,
delivered or given in connection herewith or therewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses (including all fees, charges and
disbursements of counsel to the Administrative Agent or to any Lender that are required to be paid
by the Borrower pursuant hereto) or otherwise.

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

          “Other Term Loans”: as defined in Section 2.17(a).

          “Participant”: as defined in Section 9.6(c).

          “PBGC”: the Pension Benefit Guaranty Corporation established pursuant to Subtitle A
of Title IV of ERISA (or any successor).

          “Pecos Acquisition”: the acquisition of the capital stock of Pecos, Inc. by the
Borrower pursuant to the terms of the Pecos Acquisition Agreement.

          “Pecos Acquisition Agreement”: the Stock Purchase Agreement dated September 18, 2006
by and among the Borrower, Pecos, Inc., the Pecos Employee Stock Ownership and 401(k) Plan, the
other shareholders of Pecos, Inc. identified therein and the other Persons which are parties
thereto, as amended.

          “Permitted Holders”: means the Equity Investors other than the Management
Stockholders to the extent that the amount of the outstanding voting stock of Holdings owned
beneficially or of record by such Management Stockholders in the aggregate at any time exceeds ten
percent (10%) of the total amount of the outstanding voting stock of Holdings at such time.

          “Permitted Acquisition”: any acquisition, whether by purchase or merger or
consolidation, by the Borrower or any of its Wholly Owned Subsidiaries; provided that (i)
such acquisition is of all or substantially all the assets of, or Capital Stock in, a Person or
division or line of business or other business unit of a Person and is substantially the same as,
or reasonably related to one or more lines or lines of business conducted by the Borrower and its
Subsidiaries as of the date hereof, (ii) at the time thereof and after giving effect thereto no
Default or Event of Default shall have occurred and be continuing, (iii) such acquisition shall
have been approved by the board of directors of the Person (or similar governing body if such
Person is not a corporation) which is the subject of such acquisition, (iv) immediately after
giving effect thereto, any acquired or newly formed corporation, partnership or limited liability
company shall be a Wholly Owned Subsidiary and all actions required to be taken, if any, with
respect to any such acquired or newly formed Subsidiary not so merged or consolidated under Section
5.10 shall have been taken or will be taken within the time periods specified therein; (iv) the
aggregate

15

 

amount (or, in the case of consideration consisting of assets, fair market value) of the
consideration paid by the borrower and its subsidiaries shall not exceed $50,000,000 on accumulated
basis for all such acquisitions subsequent to the date hereof, and (v) immediately after giving
effect thereto, the Borrower and its Subsidiaries shall be in compliance, on a pro
forma basis after giving effect to such acquisition or formation, with the covenants
contained in Section 6.1 recomputed as of the last day of the most recently ended fiscal quarter of
the Borrower as if such acquisition and related financings or other transactions had occurred on
the first day of the period for testing such compliance.

          “Person”: an individual, partnership, corporation, limited liability company,
business trust, joint stock company, trust, unincorporated association, joint venture, Governmental
Authority or other entity of whatever nature.

          “Plan”: at a particular time, any employee benefit plan that is covered by ERISA and
in respect of which the Borrower or a Commonly Controlled Entity is (or, if such plan were
terminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” as
defined in Section 3(5) of ERISA.

          “Professional Services Agreement”: the Professional Services Agreement, dated as of
September 18, 2006, between NCA II Management, LLC, Waud Capital Partners, L.L.C., RBCP Energy Fund
Investments, LP, the Borrower, Simons Petroleum, Inc. and Holdings.

          “Pro Forma Balance Sheet”: as defined in Section 3.1(a).

          “Projections”: as defined in Section 5.2(c).

          “Properties”: as defined in Section 3.17(a).

          “Recovery Event”: any settlement of or payment in respect of any property or casualty
insurance claim or any condemnation proceeding relating to any asset of any Loan Party in an amount
in excess of $2,500,000.

          “Register”: as defined in Section 9.6(b).

          “Regulation U”: Regulation U of the Board as in effect from time to time.

          “Reinvestment Deferred Amount”: with respect to any Reinvestment Event, the aggregate
Net Cash Proceeds received by any Loan Party in connection therewith that are not applied to prepay
the Loans pursuant to Section 2.5(b) as a result of the delivery of a Reinvestment Notice.

          “Reinvestment Event”: any Asset Sale or Recovery Event in respect of which the
Borrower has delivered a Reinvestment Notice.

          “Reinvestment Notice”: a written notice executed by a Responsible Officer stating
that no Event of Default has occurred and is continuing and that the Borrower (directly or
indirectly through a Subsidiary) intends and expects to use all or a specified portion of the Net
Cash Proceeds of an Asset Sale or Recovery Event to acquire or repair assets useful in its
business.

          “Reinvestment Prepayment Amount”: with respect to any Reinvestment Event, the
Reinvestment Deferred Amount relating thereto less any amount expended prior to the relevant
Reinvestment Prepayment Date to acquire or repair assets useful in the Borrower’s business.

16

 

          “Reinvestment Prepayment Date”: with respect to any Reinvestment Event, the earlier
of (a) the date occurring six months after such Reinvestment Event and (b) the date on which the
Borrower shall have determined not to, or shall have otherwise ceased to, acquire or repair assets
useful in the Borrower’s business with all or any portion of the relevant Reinvestment Deferred
Amount.

          “Reorganization”: with respect to any Multiemployer Plan, the condition that such
plan is in reorganization within the meaning of Section 4241 of ERISA.

          “Reportable Event”: any of the events set forth in Section 4043(c) of ERISA, other
than those events as to which the thirty day notice period is waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Reg. § 4043.

          “Required Lenders”: at any time, the holders of more than 50% of (a) until the
Closing Date, the Commitments then in effect and (b) thereafter, the aggregate unpaid principal
amount of the Term Loans and Incremental Term Loans then outstanding.

          “Requirement of Law”: as to any Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or any of its
property is subject.

          “Responsible Officer”: the chief executive officer, president, any vice president or
chief financial officer of the Borrower, but in any event, with respect to financial matters, the
chief financial officer of the Borrower.

          “Restricted Payments”: as defined in Section 6.6.

          “SEC”: the Securities and Exchange Commission, any successor thereto and any
analogous Governmental Authority.

          “Securitization” shall mean, any receivables financing facility or arrangement
pursuant to which a Securitization Subsidiary purchases or otherwise acquires accounts receivable
of the Loan Parties and enters into a third party financing on terms that have been agreed to in
writing by the ABL Agent.

          “Security Documents”: the collective reference to the Guarantee and Collateral
Agreement, the Mortgages and all other security documents hereafter delivered to the Administrative
Agent granting a Lien on any property of any Person to secure the obligations and liabilities of
any Loan Party under any Loan Document.

          “Shell BDF Agreements”: collectively, (a) that certain Business Development Fund
Agreement as of September 1, 2001, between CSOC Inc. and Equilon Enterprises LLC, (b) that certain
Promissory Note dated September 1, 2001 in the original principal amount of $4,493,460 made by CSOC
Inc. payable to the order of Equilon Enterprises LLC, and (c) that certain Security Agreement dated
as of September 1, 2001, between CSOC Inc., as debtor and Equilon Enterprises, LLC, as secured
party.

               “Shell Subordination Agreement”: the Subordination Agreement dated as of the Closing
Date by and among Penzoil-Quaker State Company d/b/a SOPUS Producs, successor to Equilon
Enterprises LLC, CSOC Inc. and the Administrative Agent.

          “Single Employer Plan”: any Plan that is covered by Title IV of ERISA, but that is
not a Multiemployer Plan.

17

 

     “Solvent”: when used with respect to any Person, means that, as of any date of
determination, (a) the amount of the “present fair saleable value” of the assets of such Person
will, as of such date, exceed the amount of all “liabilities of such Person, contingent or
otherwise”, as of such date, as such quoted terms are determined in accordance with applicable
federal and state laws governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater than the amount that
will be required to pay the liability of such Person on its debts as such debts become absolute and
matured, (c) such Person will not have, as of such date, an unreasonably small amount of capital
with which to conduct its business, and (d) such Person will be able to pay its debts as they
mature. For purposes of this definition, (i) “debt” means liability on a “claim”, and (ii) “claim”
means any (x) right to payment, whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured or (y) right to an equitable remedy for breach of performance if such breach
gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured.

     “Sponsors”: Northwest Capital Appreciation, RBC Capital Partners, Waud Capital
Partners and their respective Affiliates, but not including, however, any portfolio companies of
any of the foregoing.

     “Subsidiary”: as to any Person, a corporation, partnership, limited liability company
or other entity of which shares of stock or other ownership interests having ordinary voting power
(other than stock or such other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the management of which is
otherwise controlled,
directly or indirectly through one or more intermediaries, or both, by such Person. Unless
otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall
refer to a Subsidiary or Subsidiaries of the Borrower.

     “Subsidiary Guarantor”: each Subsidiary of the Borrower other than any Excluded
Foreign Subsidiary.

     “Swap Agreement”: 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 any of its Subsidiaries
shall be a “Swap Agreement”.

     “Term Commitment”: as to any Lender, the obligation of such Lender to make a Term
Loan to the Borrower in a principal amount not to exceed the amount set forth under the heading
“Commitment” opposite such Lender’s name on Schedule 1.1A. The original aggregate amount of the
Commitments is $155,000,000.

     “Term Loan”: as defined in Section 2.1. Unless the context shall otherwise require,
the term “Term Loans” shall include Incremental Term Loans.

     “Term Loan Maturity Date”: September 18, 2013.

     “Term Percentage”: as to any Lender at any time, the percentage which such Lender’s
Term Commitment then constitutes of the aggregate Term Commitments (or, at any time after the
Closing

18

 

Date, the percentage which the aggregate principal amount of such Lender’s Loans then
outstanding constitutes of the aggregate principal amount of the Loans then outstanding).

     Transactions:  the transactions contemplated by the Acquisition Documentation, this
Agreement and the ABL Credit Agreement.

     “Transferee”: any Assignee or Participant.

     “Type”: as to any Loan, its nature as an ABR Loan or a Eurodollar Loan.

     “United States”: the United States of America.

     “Valvoline”: The Valvoline Company, a division of Ashland, Inc., a Kentucky
corporation.

     “Wholly Owned Subsidiary”: as to any Person, any other Person all of the Capital
Stock of which (other than directors’ qualifying shares required by law) is owned by such Person
directly and/or through other Wholly Owned Subsidiaries.

     “Wholly Owned Subsidiary Guarantor”: any Subsidiary Guarantor that is a Wholly Owned
Subsidiary of the Borrower.

     1.2 Other Definitional Provisions. (a) Unless otherwise specified therein, all terms defined in this Agreement shall have the
defined meanings when used in the other Loan Documents or any certificate or other document made or
delivered pursuant hereto or thereto.

     (b) As used herein and in the other Loan Documents, and any certificate or other document made
or delivered pursuant hereto or thereto, (i) accounting terms relating to any Group Member not
defined in Section 1.1 and accounting terms partly defined in Section 1.1, to the extent not
defined, shall have the respective meanings given to them under GAAP, (ii) the words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without limitation”, (iii)
the word “incur” shall be construed to mean incur, create, issue, assume, become liable in respect
of or suffer to exist (and the words “incurred” and “incurrence” shall have correlative meanings),
(iv) the words “asset” and “property” shall be construed to have the same meaning and effect and to
refer to any and all tangible and intangible assets and properties, including cash, Capital Stock,
securities, revenues, accounts, leasehold interests and contract rights, and (v) references to
agreements or other Contractual Obligations shall, unless otherwise specified, be deemed to refer
to such agreements or Contractual Obligations as amended, supplemented, restated or otherwise
modified from time to time.

     (c) The words “hereof”, “herein” and “hereunder” and words of similar import, when used in
this Agreement, shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwise
specified.

     (d) The meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms.

SECTION 2. AMOUNT AND TERMS OF COMMITMENTS

     2.1 Commitments. (a) Subject to the terms and conditions hereof, each Lender severally agrees to make a term
loan (a “Term Loan”) to the Borrower on the Closing Date in an amount

19

 

not to exceed the
amount of the Term Commitment of such Lender. The Term Loans may from time to time be Eurodollar
Loans or ABR Loans, as determined by the Borrower and notified to the Administrative Agent in
accordance with Sections 2.2 and 2.6.

     (b) Each Lender having an Incremental Term Commitment hereby agrees, severally and not
jointly, on the terms and subject to the conditions set forth herein and in the applicable
Incremental Term Loan Assumption Agreement and in reliance on the representations and warranties
set forth herein and in the other Loan documents, to make Incremental Term Loans to the Borrower,
in an aggregate principal amount not to exceed its Incremental Term Commitment. Amounts paid or
prepaid in respect of Incremental Term Loans may not be reborrowed.

     2.2 Procedure for Term Loan Borrowing. (a) The Borrower shall give the Administrative Agent irrevocable notice (which notice must
be received by the Administrative Agent prior to 12:00 P.M. (noon), New York City time, one
Business Day prior to the anticipated Closing Date) requesting that the Term Lenders make the Term
Loans on the Closing Date and specifying the amount to be borrowed. The Term Loans made on the
Closing Date shall initially be ABR Loans. Upon receipt of such notice the Administrative Agent
shall promptly notify each Term Lender thereof. Not later than 2:00 P.M., New York City time, on
the
Closing Date each Term Lender shall make available to the Administrative Agent at the Funding
Office an amount in immediately available funds equal to the Term Loan or Term Loans to be made by
such Lender. The Administrative Agent shall credit the account of the Borrower on the books of
such office of the Administrative Agent with the aggregate of the amounts made available to the
Administrative Agent by the Term Lenders in immediately available funds.

     (b) The Borrower shall give the Administrative Agent irrevocable notice (which notice must be
received by the Administrative Agent prior to 12:00 P.M. (noon), New York City time, one Business
Day prior to the anticipated Borrowing Date for Incremental Term Loans) requesting that the
Incremental Term Lenders make the Incremental Term Loans on such Borrowing Date and specifying the
amount to be borrowed. The Incremental Term Loans made on such Borrowing Date shall initially be
ABR Loans unless otherwise specified in the applicable Incremental Term Loan Assumption Agreement.
Upon receipt of such notice the Administrative Agent shall promptly notify each applicable
Incremental Term Lender thereof. Not later than 2:00 P.M., New York City time, on such Borrowing
Date each applicable Incremental Term Lender shall make available to the Administrative Agent at
the Funding Office an amount in immediately available funds equal to the Incremental Term Loan or
Incremental Term Loans to be made by such Lender. The Administrative Agent shall credit the
account of the Borrower on the books of such office of the Administrative Agent with the aggregate
of the amounts made available to the Administrative Agent by such Incremental Term Lenders in
immediately available funds.

     2.3 Repayment of Term Loans. (a) The Term Loan of each Lender shall mature in the following consecutive quarterly
installments, each of which shall be in an amount equal to such Lender’s Term Percentage multiplied
by the amount set forth below opposite such installment:

	 	 	 	 	 
	Installment	 	Amount	 
	 
	 	 	 	 
	September 30, 2006
	 	$	387,500	 
	December 31, 2006
	 	$	387,500	 
	March 31, 2007
	 	$	387,500	 
	June 30, 2007
	 	$	387,500	 
	September 30, 2007
	 	$	387,500	 
	December 31, 2007
	 	$	387,500	 
	March 31, 2008
	 	$	387,500	 

20

 

	 	 	 	 	 
	Installment	 	Amount	 
	June 30, 2008
	 	$	387,500	 
	September 30, 2008
	 	$	387,500	 
	December 31, 2008
	 	$	387,500	 
	March 31, 2009
	 	$	387,500	 
	June 30, 2009
	 	$	387,500	 
	September 30, 2009
	 	$	387,500	 
	December 31, 2009
	 	$	387,500	 
	March 31, 2010
	 	$	387,500	 
	June 30, 2010
	 	$	387,500	 
	September 30, 2010
	 	$	387,500	 
	December 31, 2010
	 	$	387,500	 
	March 31, 2011
	 	$	387,500	 
	June 30, 2011
	 	$	387,500	 
	September 30, 2011
	 	$	387,500	 
	December 31, 2011
	 	$	387,500	 
	March 31, 2012
	 	$	387,500	 
	June 30, 2012
	 	$	387,500	 
	September 30, 2012
	 	$	36,425,000	 
	December 31, 2012
	 	$	36,425,000	 
	March 31, 2013
	 	$	36,425,000	 
	June 30, 2013
	 	$	36,425,000	 

     The amounts set forth above maybe adjusted from time to time to reflect the amortizations of
any Incremental Term Loans made as Term Loans.

     (b) The Borrower shall pay to the Administrative Agent, for the account of the Lenders, on
each Incremental Term Loan Repayment Date, a principal amount of the Other Term Loans (as adjusted
from time to time pursuant to Section 2.4) equal to the amount set forth for such date in the
applicable Incremental Term Loan Assumption Agreement, together in each case with accrued and
unpaid interest on the principal amount to be paid to but excluding the date of such payment.

     2.4 Optional Prepayments. (a) The Borrower may at any time and from time to time prepay the Loans, in whole or in
part, without premium or penalty, upon irrevocable notice delivered to the Administrative Agent no
later than 1:00 P.M., New York City time, three Business Days prior thereto, in the case of
Eurodollar Loans, and no later than 1:00 P.M., New York City time, one Business Day prior thereto,
in the case of ABR Loans, which notice shall specify the date and amount of prepayment and whether
the prepayment is of Eurodollar Loans or ABR Loans; provided, that if a Eurodollar Loan is
prepaid on any day other than the last day of the Interest Period applicable thereto, the Borrower
shall also pay any amounts owing pursuant to Section 2.14. Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof. If any such notice is
given, the amount specified in such notice shall be due and payable on the date specified therein,
together with accrued interest to such date on the amount prepaid. Partial prepayments of Loans
shall be in an aggregate principal amount of $1,000,000 or a whole multiple thereof.

     (b) During the period from the Closing Date to but excluding the first anniversary of the
Closing Date, any prepayment of the Loans of any Lender using proceeds of Indebtedness incurred by
Holdings, the Borrower or any of its Subsidiaries from a substantially concurrent issuance or
incurrence of syndicated term loans provided by one or more banks or other financial institutions
for which the interest rate payable thereon is lower than the Eurodollar Rate on the date of such
prepayment plus the

21

 

Applicable Margin with respect to the Loans shall be accompanied by payment of
a 1% prepayment premium on the principal amount of such Lender’s Loan prepaid (unless such
prepayment premium is waived by such Lender).

     2.5 Mandatory Prepayments and Commitment Reductions. (a) If any Indebtedness shall be issued or incurred by any Group Member (excluding any
Indebtedness issued or incurred in accordance with Section 6.2), an amount equal to 100% of the Net
Cash Proceeds thereof shall be applied on the date of such issuance or incurrence toward the
prepayment of the Loans as set forth in Section 2.5(d).

     (b) If on any date any Group Member shall receive Net Cash Proceeds from any Asset Sale or
Recovery Event then, unless a Reinvestment Notice shall be delivered in respect thereof or, in the
case of any Asset Sale permitted by Section 6.5(i), the commitments under the ABL Credit Facility
are reduced by such Net Cash Proceeds, such Net Cash Proceeds shall be applied on such date toward
the prepayment of the Loans as set forth in Section 2.5(d) and (ii) on each Reinvestment Prepayment
Date, an amount equal to the Reinvestment Prepayment Amount with respect to the relevant
Reinvestment Event shall be applied toward the prepayment of the Loans as set forth in Section
2.5(d).

     (c) If, for any fiscal year of the Borrower commencing with the fiscal year ending June 30,
2007, there shall be Excess Cash Flow, the Borrower shall, on the relevant Excess Cash Flow
Application Date, apply the ECF Percentage of such Excess Cash Flow toward the prepayment of the
Loans as set forth in Section 2.5(d). Each such prepayment shall be made on a date (an “Excess
Cash Flow Application Date”) no later than five days after the earlier of (i) the date on which
the financial statements of the Borrower referred to in Section 5.1(a), for the fiscal year with
respect to which such prepayment is made, are required to be delivered to the Lenders and (ii) the
date such financial statements are actually delivered.

     (d) Amounts to be applied in connection with prepayments made pursuant to Section 2.5 shall be
applied to the prepayment of the Term Loans (and, if applicable, the Other Term Loans), subject to
the terms of the Intercreditor Agreement. The application of any prepayment pursuant to Section
2.5 shall be made, first, to ABR Loans and, second, to Eurodollar Loans. Each
prepayment of the Loans under Section 2.5 shall be accompanied by accrued interest to the date of
such prepayment on the amount prepaid.

     2.6 Conversion and Continuation Options. (a) The Borrower may elect from time to time to convert Eurodollar Loans to ABR Loans by
giving the Administrative Agent prior irrevocable notice of such election no later than 12:00 P.M.
(noon), New York City time, on the Business Day preceding the proposed conversion date,
provided that any such conversion of Eurodollar Loans may only be made on the last day of
an Interest Period with respect thereto. The Borrower may elect from time to time to convert ABR
Loans to Eurodollar Loans by giving the Administrative Agent prior irrevocable notice of such
election no later than 12:00 P.M. (noon), New York City time, on the third Business Day preceding
the proposed conversion date (which notice shall specify the length of the initial Interest Period
therefor), provided that no ABR Loan under a particular Facility may be converted into a
Eurodollar Loan when any Event of Default has occurred and is continuing and the Administrative
Agent or the Majority Facility Lenders in respect of such Facility have determined in its or their
sole discretion not to permit such conversions. Upon receipt of any such notice the Administrative
Agent shall promptly notify each relevant Lender thereof.

     (b) Any Eurodollar Loan may be continued as such upon the expiration of the then current
Interest Period with respect thereto by the Borrower giving irrevocable notice to the
Administrative Agent, in accordance with the applicable provisions of the term “Interest Period”
set forth

22

 

in Section 1.1, of the length of the next Interest Period to be applicable to such Loans,
provided that no Eurodollar Loan under a particular Facility may be continued as such when
any Event of Default has occurred and is continuing and the Administrative Agent has or the
Majority Facility Lenders in respect of such Facility have determined in its or their sole
discretion not to permit such continuations, and provided, further, that if the
Borrower shall fail to give any required notice as described above in this paragraph or if such
continuation is not permitted pursuant to the preceding proviso such Loans shall be
automatically converted to ABR Loans on the last day of such then expiring Interest Period.
Upon receipt of any such notice the Administrative Agent shall promptly notify each relevant Lender
thereof.

     2.7 Limitations on Eurodollar Tranches. (a) Notwithstanding anything to the contrary in this Agreement, all borrowings, conversions and
continuations of Eurodollar Loans and all selections of Interest Periods shall be in such amounts
and be made pursuant to such elections so that, (a) after giving effect thereto, the aggregate
principal amount of the Eurodollar Loans comprising each Eurodollar Tranche shall be equal to
$5,000,000 or a whole multiple of $1,000,000 in excess thereof and (b) no more than ten (10)
Eurodollar Tranches shall be outstanding at any one time.

     2.8 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall bear interest for each day during each Interest Period with
respect thereto at a rate per annum equal to the Eurodollar Rate determined for such day plus the
Applicable Margin.

     (b) Each ABR Loan shall bear interest at a rate per annum equal to the ABR plus the Applicable
Margin.

     (c) (i) If all or a portion of the principal amount of any Loan shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear
interest at a rate per annum equal to the rate that would otherwise be applicable thereto pursuant
to the foregoing provisions of this Section plus 2% per annum, and (ii) if all or a portion
of any interest payable on any Loan or other amount payable hereunder shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear
interest at a rate per annum equal to the rate then applicable to ABR Loans under the relevant
Facility plus 2% per annum, in each case, with respect to clauses (i) and (ii) above, from
the date of such non-payment until such amount is paid in full (as well after as before judgment).

     (d) Interest shall be payable in arrears on each Interest Payment Date, provided that
interest accruing pursuant to paragraph (c) of this Section shall be payable from time to time on
written demand.

     2.9 Computation of Interest and Fees. (a) Interest and fees payable pursuant hereto shall be calculated on the basis of a
360-day year for the actual days elapsed, except that, with respect to ABR Loans the rate of
interest on which is calculated on the basis of the Prime Rate, the interest thereon shall be
calculated on the basis of a 365- (or 366-, as the case may be) day year for the actual days
elapsed. The Administrative Agent shall as soon as practicable notify the Borrower and the
relevant Lenders of each determination of a Eurodollar Rate. Any change in the interest rate on a
Loan resulting from a change in the ABR or the Eurocurrency Reserve Requirements shall become
effective as of the opening of business on the day on which such change becomes effective. The
Administrative Agent shall as soon as practicable notify the Borrower and the relevant Lenders of
the effective date and the amount of each such change in interest rate.

     (b) Each determination of an interest rate by the Administrative Agent pursuant to any
provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the
absence of manifest error. The Administrative Agent shall, at the request of the Borrower, deliver
to the

23

 

Borrower a statement showing the quotations used by the Administrative Agent in determining
any interest rate pursuant to Section 2.8(a).

     2.10 Inability to Determine Interest Rate. If prior to the first day of any Interest Period:

     (a) the Administrative Agent shall have determined (which determination shall be
conclusive and binding upon the Borrower) that, by reason of circumstances affecting the
relevant market, adequate and reasonable means do not exist for ascertaining the Eurodollar
Rate for such Interest Period, or

     (b) the Administrative Agent shall have received notice from the Majority Facility
Lenders in respect of the relevant Facility that the Eurodollar Rate determined or to be
determined for such Interest Period will not adequately and fairly reflect the cost to such
Lenders (as conclusively certified by such Lenders) of making or maintaining their affected
Loans during such Interest Period,

the Administrative Agent shall give telecopy or telephonic notice thereof to the Borrower and the
relevant Lenders as soon as practicable thereafter. If such notice is given (x) any Eurodollar
Loans under the relevant Facility requested to be made on the first day of such Interest Period
shall be made as ABR Loans, (y) any Loans under the relevant Facility that were to have been
converted on the first day of such Interest Period to Eurodollar Loans shall be continued as ABR
Loans and (z) any outstanding Eurodollar Loans under the relevant Facility shall be converted, on
the last day of the then-current Interest Period, to ABR Loans. Until such notice has been
withdrawn by the Administrative Agent, no further Eurodollar Loans under the relevant Facility
shall be made or continued as such, nor shall the Borrower have the right to convert Loans under
the relevant Facility to Eurodollar Loans.

     2.11 Pro Rata Treatment and Payments. (a) Each borrowing by the Borrower from the Lenders hereunder and any reduction of the
Commitments of the Lenders shall be made pro rata according to the respective Term
Percentages and Incremental Term Percentages, as the case may be, of the relevant Lenders.

     (b) Each payment by the Borrower on account of principal of and interest on the Term Loans and
Other Term Loans shall be made pro rata according to the respective outstanding
principal amounts of the Term Loans and Other Term Loans then held by the Term Lenders and
applicable Incremental Term Lenders. Optional prepayment of the Term Loans and Other Term Loans
shall be applied to the respective installments thereof pro rata first to
scheduled installments thereof occurring with the next 12 months in direct order of maturity and
second to reduce the then remaining installments of the Term Loans pro rata based
upon the respective then remaining principal amounts thereof. Mandatory prepayments of the Term
Loans shall be applied to the respective installments thereof ratably in accordance with the then
outstanding amounts thereof. Other Term Loans shall share in mandatory prepayments pursuant to
Section 2.5 only to the extent provided in the applicable Incremental Term Loan Assumption
Agreement. The amount of each principal prepayment of the Other Term Loans pursuant to Section 2.5
shall be applied to reduce the then remaining installments in the order specified in the applicable
Incremental Term Loan Assumption Agreement. Amounts prepaid on account of the Term Loans and
Incremental Term Loans may not be reborrowed.

     (c) All payments (including prepayments) to be made by the Borrower hereunder, whether on
account of principal, interest, fees or otherwise, shall be made without setoff or counterclaim and
shall be made prior to 1:00 P.M., New York City time, on the due date thereof to the Administrative
Agent, for the account of the Lenders, at the Funding Office, in Dollars and in immediately
available

24

 

funds. The Administrative Agent shall distribute such payments to the Lenders promptly
upon receipt in like funds as received. If any payment hereunder (other than payments on the
Eurodollar Loans) becomes due and payable on a day other than a Business Day, such payment shall be
extended to the next succeeding Business Day. If any payment on a Eurodollar Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day unless the result of such extension would be to extend such payment into
another calendar month, in which event such payment shall be made on the immediately preceding
Business Day. In the case of any extension of any payment of principal pursuant to the preceding
two sentences, interest thereon shall be payable at the then applicable rate during such extension.

     (d) Unless the Administrative Agent shall have been notified in writing by any Lender prior to
a borrowing that such Lender will not make the amount that would constitute its share of such
borrowing available to the Administrative Agent, the Administrative Agent may assume that such
Lender is making such amount available to the Administrative Agent, and the Administrative Agent
may, in reliance upon such assumption, make available to the Borrower a corresponding amount. If
such amount is not made available to the Administrative Agent by the required time on the Borrowing
Date therefor, such Lender shall pay to the Administrative Agent, on demand, such amount with
interest thereon, at a rate equal to the greater of (i) the Federal Funds Effective Rate and (ii) a
rate determined by the Administrative Agent in accordance with banking industry rules on interbank
compensation, for the period until such Lender makes such amount immediately available to the
Administrative Agent. A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this paragraph shall be conclusive in the absence of manifest
error. If such Lender’s share of such borrowing is not made available to the Administrative Agent
by such Lender within three Business Days after such Borrowing Date, the Administrative Agent shall
also be entitled to recover such amount with interest thereon at the rate per annum applicable to
ABR Loans under the relevant Facility, on written demand, from the Borrower.

     (e) Unless the Administrative Agent shall have been notified in writing by the Borrower prior
to the date of any payment due to be made by the Borrower hereunder that the Borrower will not make
such payment to the Administrative Agent, the Administrative Agent may assume that the Borrower is
making such payment, and the Administrative Agent may, but shall not be required to, in reliance
upon such assumption, make available to the Lenders their respective pro rata
shares of a corresponding amount. If such payment is not made to the Administrative Agent by the
Borrower within three Business Days after such due date, the Administrative Agent shall be entitled
to recover, on demand, from each Lender to which any amount which was made available pursuant to
the preceding sentence, such amount with interest thereon at the rate per annum equal to the daily
average Federal Funds Effective Rate. Nothing herein shall be deemed to limit the rights of the
Administrative Agent or any Lender against the Borrower.

     2.12 Requirements of Law. (a) If the adoption of or any change in any Requirement of Law or in the interpretation or
application thereof or compliance by any Lender with any request or directive (whether or not
having the force of law) from any central bank or other Governmental Authority made subsequent to
the date hereof:

     (i) shall subject any Lender to any tax of any kind whatsoever with respect to this
Agreement or any Eurodollar Loan made by it, or change the basis of taxation of payments to
such Lender in respect thereof (except for Non-Excluded Taxes covered by Section 2.13 and
changes in the rate of tax on the overall net income of such Lender);

     (ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory
loan or similar requirement against assets held by,
deposits or other liabilities in or for the

25

 

account of, advances, loans or other extensions of credit by, or any other acquisition
of funds by, any office of such Lender that is not otherwise included in the determination
of the Eurodollar Rate; or

     (iii) shall impose on such Lender any other condition;

and the result of any of the foregoing is to increase the cost to such Lender, by an amount that
such Lender deems to be material, of making, converting into, continuing or maintaining Eurodollar
Loans, or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the
Borrower shall promptly pay such Lender, within ten (10) days of such Lender’s written demand, any
additional amounts necessary to compensate such Lender for such increased cost or reduced amount
receivable; provided, that the Borrower shall not be required to compensate any Lender
pursuant to this Section for any amounts incurred more than 180 days prior to the date that such
Lender notifies the Borrower, in writing of the amounts and of such Lender’s intention to claim
compensation therefor. If any Lender becomes entitled to claim any additional amounts pursuant to
this paragraph, it shall promptly notify the Borrower (with a copy to the Administrative Agent) of
the event by reason of which it has become so entitled.

     (b) If any Lender shall have determined that the adoption of or any change in any Requirement
of Law regarding capital adequacy or in the interpretation or application thereof or compliance by
such Lender or any corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental Authority made
subsequent to the date hereof shall have the effect of reducing the rate of return on such Lender’s
or such corporation’s capital as a consequence of its obligations hereunder to a level below that
which such Lender or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration such Lender’s or such corporation’s policies with respect to
capital adequacy) by an amount deemed by such Lender to be material, then from time to time, after
submission by such Lender to the Borrower (with a copy to the Administrative Agent) of a written
request therefor, the Borrower shall pay to such Lender within ten (10) days of such Lender’s
written demand, such additional amount or amounts as will compensate such Lender or such
corporation for such reduction; provided, that the Borrower shall not be required to
compensate any Lender pursuant to this Section for any amounts incurred more than 180 days prior to
the date that such Lender notifies the Borrower, in writing of the amounts and of such Lender’s
intention to claim compensation therefor.

     (c) A certificate as to any additional amounts payable pursuant to this Section shall be
submitted by any Lender claiming compensation under this Section 2.12 to the Borrower (with a copy
to the Administrative Agent) shall be conclusive in the absence of manifest error. Notwithstanding
anything to the contrary in this Section, the Borrower shall not be required to compensate a Lender
pursuant to this Section for any amounts incurred more than six (6) months prior to the date that
such Lender notifies the Borrower of such Lender’s intention to claim compensation therefor;
provided that, if the circumstances giving rise to such claim have a retroactive effect,
then such six-month period shall be extended to include the period of such retroactive effect. The
obligations of the Borrower pursuant to this Section shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.

     2.13 Taxes. (a) Except as set forth in Section 2.13(b), all payments made by the Borrower under this
Agreement shall be made free and clear of, and without deduction or withholding for or on account
of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by
any Governmental Authority,
excluding net income taxes and franchise taxes (imposed in lieu of net
income taxes) imposed on the Administrative Agent or any Lender as a result of a present or former
connection between the Administrative Agent or such Lender and the jurisdiction of the Governmental
Authority

26

 

imposing such tax or any political subdivision or taxing authority thereof or therein
(other than any such connection arising solely from the Administrative Agent or such Lender having
executed, delivered or performed its obligations or received a payment under, or enforced, this
Agreement or any other Loan Document). If any such non-excluded taxes, levies, imposts, duties,
charges, fees, deductions or withholdings (“Non-Excluded Taxes”) or Other Taxes are
required to be withheld from any amounts payable to the Administrative Agent or any Lender
hereunder, the amounts so payable to the Administrative Agent or such Lender shall be increased to
the extent necessary to yield to the Administrative Agent or such Lender (after payment of all
Non-Excluded Taxes and Other Taxes) interest or any such other amounts payable hereunder at the
rates or in the amounts specified in this Agreement. In addition, the Borrower shall pay any Other
Taxes to the relevant Governmental Authority in accordance with applicable law.

     (b) The Borrower shall not be required to increase any such amounts payable to any Lender with
respect to any Non-Excluded Taxes or any Other Taxes (i) that are attributable to such Lender’s
failure to comply with the requirements of paragraph (d) or (e) of this Section or (ii) that are
United States withholding taxes imposed on amounts payable to such Lender at the time such Lender
becomes a party to this Agreement, except to the extent that such Lender’s assignor (if any) was
entitled, at the time of assignment, to receive additional amounts from the Borrower with respect
to such Non-Excluded Taxes pursuant to this paragraph.

     (c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the Borrower, within thirty
(30) days after written demand therefor, the Borrower shall send to the Administrative Agent for
its own account or for the account of the relevant Lender, as the case may be, a copy of an
official receipt received by the Borrower showing payment thereof. If the Borrower fails to pay
any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing authority subject to
Section 2.13(b) or fails to remit to the Administrative Agent the required receipts or other
required documentary evidence, the Borrower shall indemnify the Administrative Agent and the
Lenders for any incremental taxes, interest or penalties that may become payable by the
Administrative Agent or any Lender as a result of any such failure.

     (d) Each Lender (or Transferee) that is not a “U.S. Person” as defined in Section 7701(a)(30)
of the Code (a “Non-U.S. Lender”) shall deliver to the Borrower and the Administrative
Agent (or, in the case of a Participant, to the Lender from which the related participation shall
have been purchased) two copies of either U.S. Internal Revenue Service Form W-8BEN, W-8IMY or Form
W-8ECI, or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax
under Section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest”, a
statement substantially in the form of Exhibit F and a Form W-8BEN, or any subsequent versions
thereof or successors thereto, properly completed and duly executed by such Non-U.S. Lender
claiming complete exemption from, or a reduced rate of, U.S. federal withholding tax on all
payments by the Borrower under this Agreement and the other Loan Documents. Such forms shall be
delivered by each Non-U.S. Lender on or before the date it becomes a party to this Agreement (or,
in the case of any Participant, on or before the date such Participant purchases the related
participation). In addition, each Non-U.S.
Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form
previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify the
Borrower at any time it determines that it is no longer in a position to provide any previously
delivered certificate to the Borrower (or any other form of certification adopted by the U.S.
taxing authorities for such purpose). Notwithstanding any other provision of this paragraph, a
Non-U.S. Lender shall not be required to deliver any form pursuant to this paragraph that such
Non-U.S. Lender is not legally able to deliver.

     (e) A Lender that is entitled to an exemption from or reduction of non-U.S. withholding tax
under the law of the jurisdiction in which the Borrower is located, or any treaty to which such

27

 

jurisdiction is a party, with respect to payments under this Agreement shall deliver to the
Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable
law or reasonably requested by the Borrower, such properly completed and executed documentation
prescribed by applicable law as will permit such payments to be made without withholding or at a
reduced rate, provided that such Lender is legally entitled to complete, execute and
deliver such documentation and in such Lender’s judgment such completion, execution or submission
would not materially prejudice the legal position of such Lender.

     (f) If the Administrative Agent or any Lender determines, in its sole discretion, that it has
received a refund of any Non-Excluded Taxes or Other Taxes as to which it has been indemnified by
the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this
Section 2.13, it shall pay over such refund to the Borrower (but only to the extent of indemnity
payments made, or additional amounts paid, by the Borrower under this Section 2.13 with respect to
the Non-Excluded Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of the Administrative Agent or such Lender and without interest (other than any interest
paid by the relevant Governmental Authority with respect to such refund); provided, that
the Borrower, upon the request of the Administrative Agent or such Lender, agrees to repay the
amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to the Administrative Agent or such Lender in the event the
Administrative Agent or such Lender is required to repay such refund to such Governmental
Authority. This paragraph shall not be construed to require the Administrative Agent or any Lender
to make available its tax returns (or any other information relating to its taxes which it deems
confidential) to the Borrower or any other Person.

     (g) The agreements in this Section shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder.

     2.14 Indemnity. The Borrower agrees to indemnify each Lender for, and to hold each Lender harmless from,
any loss or expense that such Lender may sustain or incur as a consequence of (a) default by the
Borrower in making a borrowing of, conversion into or continuation of Eurodollar Loans after the
Borrower has given a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrower in making any prepayment of or conversion from Eurodollar
Loans after the Borrower has given a notice thereof in accordance with the provisions of this
Agreement or (c) the making of a prepayment of Eurodollar Loans on a day that is not the last day
of an Interest Period with respect thereto. Such indemnification may include an amount equal to
the excess, if any, of (i) the amount of interest that would have accrued on the amount so prepaid,
or not so borrowed, converted or continued, for the period from the date of such prepayment or of
such failure to borrow, convert or continue to the last day of such Interest Period (or, in the
case of a failure to borrow, convert or continue, the Interest Period that would have commenced on
the date of such failure) in each case at the applicable rate of interest for such Loans provided
for herein (excluding, however, the Applicable Margin included
therein, if any) over (ii) the amount of interest (as reasonably determined by such
Lender) that would have accrued to such Lender on such amount by placing such amount on deposit for
a comparable period with leading banks in the interbank eurodollar market. Any Lender claiming
compensation under this Section 2.14 shall submit a certificate to the Borrower as to any amounts
payable pursuant to this Section which certificate shall be conclusive in the absence of manifest
error. This covenant shall survive the termination of this Agreement and the payment of the Loans
and all other amounts payable hereunder.

     2.15 Change of Lending Office. Each Lender agrees that, upon the occurrence of any event giving rise to the operation of
Section 2.12 or 2.13(a) with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to designate another
lending office for any Loans affected by such event with the object of avoiding the consequences of
such event; provided, that such designation is made on terms that, in the

28

 

sole judgment of
such Lender, cause such Lender and its lending office(s) to suffer no economic, legal or regulatory
disadvantage, and provided, further, that nothing in this Section shall affect or
postpone any of the obligations of the Borrower or the rights of any Lender pursuant to Section
2.12 or 2.13(a).

     2.16 Replacement of Lenders. The Borrower shall be permitted to replace any Lender that (a) requests reimbursement for
amounts owing pursuant to Section 2.12 or 2.13(a), (b) defaults in its obligation to make Loans
hereunder or (c) fails to consent to a proposed amendment or waiver which is consented to by the
Required Lenders but which requires a unanimous approval of all Lenders, with a replacement
financial institution; provided that (i) such replacement does not conflict with any
Requirement of Law, (ii) no Event of Default shall have occurred and be continuing at the time of
such replacement, (iii) prior to any such replacement, such Lender shall have taken no action under
Section 2.15 so as to eliminate the continued need for payment of amounts owing pursuant to Section
2.12 or 2.13(a), (iv) the replacement financial institution shall purchase, at par, all Loans and
other amounts owing to such replaced Lender on or prior to the date of replacement, (v) the
Borrower shall be liable to such replaced Lender under Section 2.14 if any Eurodollar Loan owing to
such replaced Lender shall be purchased other than on the last day of the Interest Period relating
thereto, (vi) the replacement financial institution shall be reasonably satisfactory to the
Administrative Agent, (vii) the replaced Lender shall be obligated to make such replacement in
accordance with the provisions of Section 9.6 (provided that the Borrower shall be obligated to pay
the registration and processing fee referred to therein), (viii) until such time as such
replacement shall be consummated, the Borrower shall pay all additional amounts (if any) required
pursuant to Section 2.12 or 2.13(a), as the case may be, and (ix) any such replacement shall not be
deemed to be a waiver of any rights that the Borrower, the Administrative Agent or any other Lender
shall have against the replaced Lender.

     2.17 Increase in Term Commitments. (a) The Borrower may, by written notice to the Administrative Agent from time to time,
request Incremental Term Commitments in an amount not to exceed $75,000,000 the “Incremental
Term Loan Amount” from one or more Incremental Term Lenders (which may include any existing
Lender) willing to provide such Incremental Term Loans in their own discretion; provided,
that (i) before submitting any such request to a Person that is not a Lender, the Borrower shall
first give each existing Lender the opportunity to provide such Incremental Term Commitments (in
which case, existing Lenders shall have no more than two (2) Business Days from the date of such
notice to indicate whether they are willing to provide such Incremental Term Loans) and (ii) each
Incremental Term Lender, if not already a
Lender hereunder, shall be subject to the approval of the Administrative Agent (which approval
shall not be unreasonably withheld). Such notice shall set forth (i) the amount of the Incremental
Term Commitments being requested (which shall be in a minimum amount of $25,000,000 or equal to the
remaining Incremental Term Loan Amount), (ii) the date on which such Incremental Term Commitments
are requested to become effective (which shall not be less than 10 Business Days after the date of
such notice) and (iii) whether such Incremental Term Commitments are to be Term Commitments or
commitments to make term loans with terms different from the Term Loans (“Other Term
Loans”).

     (b) The Borrower and each Incremental Term Lender shall execute and deliver to the
Administrative Agent an Incremental Term Loan Assumption Agreement and such other documentation as
the Administrative Agent shall reasonably specify to evidence the Incremental Term Commitment of
such Incremental Term Lender. Each Incremental Term Loan Assumption Agreement shall specify the
terms of the Incremental Term Loans to be made thereunder; provided, that, without the
prior written consent of the Required Lenders, (i) the final maturity date of any Other Term Loans
shall be no earlier than the Term Loan Maturity Date and (ii) the average life to maturity of any
Other Term Loans shall be no shorter than the average life to maturity of the Term Loans and
provided, further, that, if the interest rate margin in respect of any Other Term
Loan would exceed the Applicable Margin for the Term Loans by more than 1/2 of 1% (it being
understood that any such increase may take the form of original issue

29

 

discount (“OID”),
with OID being equated to the interest rates in a manner determined by the Administrative Agent
based on an assumed three-year life to maturity), the Applicable Margin for the Term Loans shall be
increased so that the interest rate margin in respect of such Other Term Loan (giving effect to any
OID issued in connection with such Other Term Loan) is no more than 1/2 of 1% higher than the
Applicable Margin for the Term Loans. The Administrative Agent shall promptly notify each Lender
as to the effectiveness of each Incremental Term Loan Assumption Agreement. Each of the parties
hereto hereby agrees that, upon the effectiveness of any Incremental Term Loan Assumption
Agreement, this Agreement shall be amended to the extent (but only to the extent) necessary to
reflect the existence and terms of the Incremental Term Commitment evidenced thereby as provided
for in Section 9.1. Any such deemed amendment may be memorialized in writing by the Administrative
Agent with the Borrower’s consent (not to be unreasonably withheld) and furnished to the other
parties hereto.

     Notwithstanding the foregoing, no Incremental Term Commitment shall become effective under
this Section 2.17 unless (i) on the date of such effectiveness, the conditions set forth in Section
4.2 shall be satisfied and the Administrative Agent shall have received a certificate to that
effect dated such date and executed by a Responsible Officer of the Borrower, (ii) the
Administrative Agent shall have received (with sufficient copies for each of the Incremental Term
Lenders) legal opinions, board resolutions and other closing certificates and documentation
consistent with those delivered on the Closing Date under Section 4.1 and (iii) the Borrower would
be in pro forma compliance with its financial covenants set forth in Section 6.1;
provided that the pro forma Consolidated Leverage Ratio of the Borrower
shall be 0.25 lower than is otherwise required under Section 6.1(a) after giving effect to such
Incremental Term Commitment and the Loans to be made thereunder and the application of the proceeds
therefrom as if made and applied on such date.

     (c) Each of the parties hereto hereby agrees that the Administrative Agent may take any and
all action as may be reasonably necessary to ensure that all Incremental Term Loans (other than
Other Term Loans), when originally made, are included in each Borrowing of outstanding Term Loans
on a pro rata basis, and the Borrower agrees that Section 2.14 shall apply to any conversion of
Eurodollar Term Loans to ABR Term Loans reasonably required by the Administrative Agent to effect
the foregoing. In addition, to the extent any Incremental Term Loans are not Other Term Loans, the
scheduled amortization payments under Sections 2.3(a) required to be made after the making of such
Incremental Term Loans shall be ratably increased by the aggregate principal amount of such
Incremental Term Loans.

     2.18 Intercreditor Agreement. The Lenders (a) acknowledge and agree to the terms of the Intercreditor Agreement and (b)
authorize the Administrative Agent to perform the Intercreditor Agreement on their behalf and to
take any action thereunder as determined by it to be necessary or advisable to protect the interest
of the holders of First Priority Liens (as defined in the Intercreditor Agreement).

SECTION 3. REPRESENTATIONS AND WARRANTIES

     To induce the Administrative Agent and the Lenders to enter into this Agreement and to make
the Loans, Holdings and the Borrower hereby jointly and severally represent and warrant to the
Administrative Agent and each Lender that:

     3.1 Financial Condition. (a) The unaudited pro forma consolidated balance sheet of the Holdings
and its consolidated Subsidiaries as at June 30, 2006 (the “Pro Forma Balance Sheet”),
copies of which have heretofore been furnished to each Lender, has been prepared giving effect (as
if such events had occurred on such date) to (i) the Loans to be made on the Closing Date and the
use of proceeds thereof and (ii) the payment of fees and expenses in connection with the foregoing.
The Pro Forma Balance Sheet has been prepared based on the best information available to the
Borrower as of the

30

 

date of delivery thereof, and presents fairly on a pro forma
basis the estimated financial position of Holdings and its consolidated Subsidiaries as at June 30,
2006, assuming that the events specified in the preceding sentence had actually occurred at such
date.

     (b) The audited consolidated balance sheets of Holdings as at June 30, 2005 and the related
consolidated statements of income and of cash flows for the fiscal years ended on such dates,
reported on by and accompanied by an unqualified report from Grant Thornton, LLP, present fairly
the consolidated financial condition of Holdings as at such date, and the consolidated results of
its operations and its consolidated cash flows for the respective fiscal years then ended. The
unaudited consolidated balance sheet of Holdings as at March 31, 2006, and the related unaudited
consolidated statements of income and cash flows for the nine-month period ended on such date,
present fairly the consolidated financial condition of Holdings as at such date, and the
consolidated results of its operations and its consolidated cash flows for the nine-month period
then ended (subject to normal year-end audit adjustments). All such financial statements,
including the related schedules and notes thereto, have been prepared in accordance with GAAP
applied consistently throughout the periods involved (except as approved by the aforementioned firm
of accountants and disclosed therein). No Group Member has any material Guarantee Obligations,
contingent liabilities and liabilities for taxes, or any long-term leases or unusual forward or
long-term commitments, including any interest rate or foreign currency swap or exchange transaction
or other obligation in respect of derivatives, that are not reflected in the most recent financial
statements referred to in this paragraph.

     (c) The audited consolidated balance sheets of Pecos, Inc as at September 30, 2005 and the
related consolidated statements of income and of cash flows for the fiscal years ended on such
dates, reported on by and accompanied by an unqualified report from Windes & McClaughry Accountancy
Corporation, present fairly the consolidated financial condition of Pecos, Inc. as at such date,
and the consolidated results of its operations and its consolidated cash flows for the respective
fiscal years then ended. The unaudited consolidated balance sheet of Pecos, Inc. as at June
30, 2006, and the related unaudited consolidated statements of income for the nine-month period
ended on such date, present fairly the consolidated financial condition of Pecos, Inc. as at such
date, and the consolidated results of its operations for the nine-month period then ended (subject
to normal year-end audit adjustments). All such financial statements, including the related
schedules and notes thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by the aforementioned firm of accountants and
disclosed therein). No Group Member has any material Guarantee Obligations, contingent liabilities
and liabilities for taxes, or any long-term leases or unusual forward or long-term commitments,
including any interest rate or foreign currency swap or exchange transaction or other obligation in
respect of derivatives, that are not reflected in the most recent financial statements referred to
in this paragraph.

     (d) The audited consolidated balance sheets of CSOC Inc. as at June 30, 2005, and the related
consolidated statements of income and of cash flows for the fiscal years ended on such dates,
reported on by and accompanied by an unqualified report from Wallace, Plese & Dreher, LLP, present
fairly the consolidated financial condition of CSOC Inc. as at such date, and the consolidated
results of its operations and its consolidated cash flows for the respective fiscal years then
ended. All such financial statements, including the related schedules and notes thereto, have been
prepared in accordance with GAAP applied consistently throughout the periods involved (except as
approved by the aforementioned firm of accountants and disclosed therein). The unaudited
consolidated balance sheet of CSOC Inc. as at June 30, 2006 and the related unaudited consolidated
statements of income for the twelve-month period ended on such date, present fairly the
consolidated financial condition of CSOC Inc. as at such date, and the consolidated results of its
operations for the twelve-month period then ended (subject to normal year-end audit adjustments).
All such financial statements, including the related schedules and notes thereto, have been
reconciled in accordance with GAAP applied consistently throughout the periods

31

 

involved (except as
approved by the aforementioned firm of accountants and disclosed therein), copies of which have
heretofore been furnished to each Lender, and present fairly the information contained therein. No
Group Member has any material Guarantee Obligations, contingent liabilities and liabilities for
taxes, or any long-term leases or unusual forward or long-term commitments, including any interest
rate or foreign currency swap or exchange transaction or other obligation in respect of
derivatives, that are not reflected in the most recent financial statements referred to in this
paragraph.

     3.2 No Change. Since June 30, 2005, there has been no development or event that has had or could
reasonably be expected to have a Material Adverse Effect.

     3.3 Existence; Compliance with Law. Each Loan Party (a) is duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization, (b) has the power and authority, and the legal right, to
own and operate its property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign corporation or other
organization and in good standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification except to the
extent that the failure to so qualify could not reasonably be expected to have a Material Adverse
Effect and (d) is in compliance with all Requirements of Law except to the extent that the failure
to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.

     3.4 Power; Authorization; Enforceable Obligations. Each Loan Party has the power and authority, and the legal right, to make, deliver and
perform the Loan Documents to which it is a party and, in the case of the Borrower, to obtain
extensions of credit hereunder. Each Loan Party has taken all necessary organizational action to
authorize the execution, delivery and performance of the Loan Documents to which it is a party and,
in the case of the Borrower, to authorize the extensions of credit on the terms and conditions of
this Agreement. No consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required in connection with the
Acquisitions and the extensions of credit hereunder or with the execution, delivery, performance,
validity or enforceability of this Agreement or any of the Loan Documents, except (i) consents,
authorizations, filings and notices which have been obtained or made and are in full force and
effect except those which the failure to obtain could not reasonably be expected to have a Material
Adverse Effect and (ii) the filings referred to in Section 3.19. Each Loan Document has been duly
executed and delivered on behalf of each Loan Party party thereto. This Agreement constitutes, and
each other Loan Document upon execution will constitute, a legal, valid and binding obligation of
each Loan Party party thereto, enforceable against each such Loan Party in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally
and by general equitable principles (whether enforcement is sought by proceedings in equity or at
law).

     3.5 No Legal Bar. The execution, delivery and performance of this Agreement and the other Loan Documents, the
borrowings hereunder and the use of the proceeds thereof will not violate any Requirement of Law,
the Certificate of Incorporation and By-Laws or other organizational or governing documents
(collectively the “Organizational Documents”) of any Loan Party, or any Contractual
Obligation of any Loan Party and will not result in, or require, the creation or imposition of any
Lien on any of their respective properties or revenues pursuant to any Requirement of Law or any
such Organizational Documents or Contractual Obligation (other than the Liens created by the
Security Documents). No Requirement of Law, Organizational Document or Contractual Obligation
applicable to the Borrower or any of its Subsidiaries could reasonably be expected to have a
Material Adverse Effect.

     3.6 Litigation. No litigation, investigation or proceeding of or before any arbitrator or Governmental
Authority is pending or, to the knowledge of Holdings or the Borrower, threatened by or

32

 

against any
Group Member or against any of their respective properties or revenues (a) with respect to any of
the Loan Documents or any of the transactions contemplated hereby or thereby, or (b) that could
reasonably be expected to have a Material Adverse Effect.

     3.7 No Default. No Loan Party is in default under or with respect to any of its Contractual Obligations in
any respect that could reasonably be expected to have a Material Adverse Effect. No Default or
Event of Default has occurred and is continuing.

     3.8 Ownership of Property; Liens. Each Loan Party has title in fee simple to, or a valid leasehold interest in, all its real
property, and good title to, or a valid leasehold interest in, all its other property, and none of
such property is subject to any Lien except as permitted by Section 6.3.

     3.9 Intellectual Property. Each Loan Party owns, or is licensed to use, all Intellectual Property necessary for the
conduct of its business as currently conducted. No material claim has been asserted and is pending
by any Person challenging or questioning the use of any Intellectual Property or the validity or
effectiveness of any Intellectual Property, nor does Holdings or the Borrower know of any valid
basis for any such claim. The use of Intellectual Property by each Loan Party does not infringe on
the rights of any Person in any material respect.

     3.10 Taxes. Each Loan Party has filed or caused to be filed all Federal, state and other material tax
returns that are required to be filed and has paid all taxes shown to be due and payable on said
returns or on any assessments made against it or any of its property and all other taxes, fees or
other charges imposed on it or any of its property by any Governmental Authority (other than any
the amount or validity of which are currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been provided on the
books of the relevant Loan Party); no tax Lien has been filed, and, to the knowledge of Holdings
and the Borrower, no claim is being asserted, with respect to any such tax, fee or other charge.

     3.11 Federal Regulations. No part of the proceeds of any Loans, and no other extensions of credit hereunder, will be
used (a) for “buying” or “carrying” any “margin stock” within the respective meanings of each of
the quoted terms under Regulation U as now and from time to time hereafter in effect for any
purpose that violates the provisions of the Regulations of the Board or (b) for any purpose that
violates the provisions of the Regulations of the Board. If requested by any Lender or the
Administrative Agent, the Borrower will furnish to the Administrative Agent and each Lender a
statement to the foregoing effect in conformity with the requirements of FR Form G-3 or FR Form
U-1, as applicable, referred to in Regulation U.

     3.12 Labor Matters. Except as, in the aggregate, could not reasonably be expected to have a Material Adverse
Effect: (a) there are no strikes or other labor disputes against any Group Member pending or, to
the knowledge of Holdings or the Borrower, threatened; (b) hours worked by and payment made to
employees of each Loan Party have not been in violation of the Fair Labor Standards Act or any
other applicable Requirement of Law dealing with such matters; and (c) all payments due from any
Loan Party on account of employee health and welfare insurance have been paid or accrued as a
liability on the books of the relevant Loan Party.

     3.13 ERISA. Neither a Reportable Event nor an “accumulated funding deficiency” (within the meaning of
Section 412 of the Code or Section 302 of ERISA) has occurred during the five-year period prior to
the date on which this representation is made or deemed made with respect to any Plan, and each
Plan has complied in all material respects with the applicable provisions of ERISA and the Code.
No termination of a Single Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan
has arisen, during such five-year period. The present value of all accrued benefits under each
Single

33

 

Employer Plan (based on those assumptions used to fund such Plans) did not, as of the last
annual
valuation date prior to the date on which this representation is made or deemed made, exceed
the value of the assets of such Plan allocable to such accrued benefits by a material amount.
Neither the Borrower nor any Commonly Controlled Entity has had a complete or partial withdrawal
from any Multiemployer Plan that has resulted or could reasonably be expected to result in a
material liability under ERISA, and neither the Borrower nor any Commonly Controlled Entity would
become subject to any material liability under ERISA if the Borrower or any such Commonly
Controlled Entity were to withdraw completely from all Multiemployer Plans as of the valuation date
most closely preceding the date on which this representation is made or deemed made. No such
Multiemployer Plan is in Reorganization or Insolvent.

     3.14 Investment Company Act; Other Regulations. No Loan Party is an “investment company”, or a company “controlled” by an “investment
company”, within the meaning of the Investment Company Act of 1940, as amended. No Loan Party is
subject to regulation under any Requirement of Law (other than Regulation X of the Board) that
limits its ability to incur Indebtedness.

     3.15 Subsidiaries. Except as disclosed to the Administrative Agent by the Borrower in writing from time to
time after the Closing Date, (a) Schedule 3.15 sets forth the name and jurisdiction of
incorporation of each Subsidiary and, as to each such Subsidiary, the percentage of each class of
Capital Stock owned by any Loan Party and (b) there are no outstanding subscriptions, options,
warrants, calls, rights or other agreements or commitments (other than stock options granted to
employees or directors and directors’ qualifying shares) of any nature relating to any Capital
Stock of the Borrower or any Subsidiary, except as set forth in such Schedule.

     3.16 Use of Proceeds. The proceeds of the Term Loans shall be used to finance a portion of the Acquisitions, to
pay related fees and expenses, to repay existing subordinated indebtedness and to repay existing
purchase money indebtedness. The proceeds of the Incremental Term Loans shall be used to finance
Permitted Acquisitions, to finance working capital needs and for general corporate purposes.

     3.17 Environmental Matters. Except as, in the aggregate, could not reasonably be expected to have a Material Adverse
Effect:

     (a) the facilities and properties owned, leased or operated by any Loan Party (the
“Properties”) do not contain, and have not previously contained, any conditions of
contamination by Materials of Environmental Concern in amounts or concentrations or under
circumstances that constitute or constituted a violation of, or could reasonably be expected to
give rise to liability under, any applicable Environmental Law;

     (b) no Loan Party has received or is aware of any written notice of violation, alleged
violation, non-compliance, liability or potential liability regarding environmental matters or
compliance with Environmental Laws with regard to any of the Properties or the business operated by
any Loan Party (the “Business”), nor does Holdings or the Borrower have knowledge or reason
to believe that any such notice will be received or is being threatened;

     (c) Materials of Environmental Concern have not been transported or disposed of from the
Properties in violation of, or in a manner or to a location that could reasonably be expected to
give rise to liability under, any Environmental Law, nor have any Materials of Environmental
Concern been generated, treated, stored or disposed of at, on or under any of the Properties in
violation of, or in a manner that could reasonably be expected to give rise to liability under, any
applicable Environmental Law;

34

 

          (d) no judicial proceeding or governmental or administrative action is pending or, to the
knowledge of Holdings and the Borrower, threatened, with respect to violations of, or liability
under any Environmental Law to which any Loan Party is or will be named as a party with respect to
the Properties or the Business, nor are there any consent decrees or other decrees, consent orders,
administrative orders or other written orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to the Properties or the Business;

          (e) there has been no release or threat of release of Materials of Environmental Concern at or
from the Properties, or arising from or related to the operations of any Loan Party in connection
with the Properties or otherwise in connection with the Business, in violation of or in amounts or
in a manner that could give rise to liability under applicable Environmental Laws;

          (f) the Properties and all operations at the Properties are in compliance, and have in the
last five years been in compliance, with all applicable Environmental Laws; and

          (g) no Loan Party has contractually assumed any liability of any other Person under
Environmental Laws.

          This Section 3.17 and Section 3.1 contain the sole and exclusive representations and
warranties with respect to the environmental, health or safety matters, including without
limitation any arising under any Environmental Laws.

          3.18 Accuracy of Information, etc.
No statement or information contained in this Agreement, any other Loan Document, the
Confidential Information Memorandum or any other document, certificate or statement furnished by
any Loan Party to the Administrative Agent or the Lenders, or any of them, for use in connection
with the transactions contemplated by this Agreement or the other Loan Documents, contained as of
the date such statement, information, document or certificate was so furnished (or, in the case of
the Confidential Information Memorandum, as of the date of this Agreement), any untrue statement of
a material fact or omitted to state a material fact necessary to make the statements contained
herein or therein not misleading. The projections and pro forma financial
information contained in the materials referenced above are based upon good faith estimates and
assumptions believed by management of the Borrower to be reasonable at the time made, it being
recognized by the Lenders that such financial information as it relates to future events is not to
be viewed as fact and that actual results during the period or periods covered by such financial
information may differ from the projected results set forth therein by a material amount. There is
no fact known to any Loan Party that could reasonably be expected to have a Material Adverse Effect
that has not been expressly disclosed herein, in the other Loan Documents, in the Confidential
Information Memorandum or in any other documents, certificates and statements furnished to the
Administrative Agent and the Lenders by such Loan Party for use in connection with the transactions
contemplated hereby and by the other Loan Documents.

          3.19 Security Documents. (a) The Guarantee and Collateral Agreement is effective to create in favor of the
Administrative Agent, for the benefit of the Lenders, a legal, valid and enforceable security
interest in the Collateral described therein and proceeds thereof. In the case of the Pledged
Stock and other possessory collateral described in the Guarantee and Collateral Agreement, when
stock certificates representing such Pledged Stock and such possessory collateral are delivered to
the Administrative Agent, and in the case of the other Collateral described in the Guarantee and
Collateral Agreement, when financing statements and other filings specified on Schedule 3.19(a) in
appropriate form are filed in the offices specified on Schedule 3.19(a), the Guarantee and
Collateral Agreement shall constitute a fully perfected Lien on, and security interest in, all
right, title and interest of the Loan Parties in such Collateral and the proceeds thereof, as
security for the Obligations (as defined in the Guarantee

35

 

and Collateral Agreement), in each case
prior and superior in right to any other Person (except, in the case of Collateral other than
Pledged Stock, Liens permitted by Section 6.3).

          (b) Each of the Mortgages is effective to create in favor of the Administrative Agent, for the
benefit of the Lenders, a legal, valid and enforceable Lien on the Mortgaged Properties described
therein and proceeds thereof, and when the Mortgages are filed in the offices specified on Schedule
3.19(b), each such Mortgage shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the Loan Parties in the Mortgaged Properties and the proceeds
thereof, as security for the Obligations (as defined in the relevant Mortgage), in each case prior
and superior in right to any other Person other than the Liens permitted by Section 6.3 (excluding
the ABL Facility Liens). Schedule 1.1B lists, as of the Closing Date, each parcel of owned real
property and each leasehold interest in real property located in the United States and held by the
Borrower or any of its Subsidiaries that has a value, in the reasonable opinion of the Borrower, in
excess of $500,000.

          3.20 Solvency. The Loan Parties taken as a whole are, and after giving effect to the incurrence of all
Indebtedness and obligations being incurred in connection herewith and therewith will be and will
continue to be, Solvent.

          3.21 Regulation H. No Mortgage encumbers improved real property that is located in an area that has been
identified by the Secretary of Housing and Urban Development as an area having special flood
hazards and in which flood insurance has been made available under the National Flood Insurance Act
of 1968.

SECTION 4. CONDITIONS PRECEDENT

          4.1 Conditions to Initial Extension of Credit. The agreement of each Lender to make the initial extension of credit requested to be made
by it is subject to the satisfaction, prior to or concurrently with the making of such extension of
credit on the Closing Date, of the following conditions precedent:

     (a) Credit Agreement; Guarantee and Collateral Agreement. The Administrative
Agent shall have received (i) this Agreement, executed and delivered by the Administrative
Agent, Holdings, the Borrower and each Person listed on Schedule 1.1A, (ii) the Guarantee
and Collateral Agreement, executed and delivered by Holdings, the Borrower and each
Subsidiary Guarantor and (iii) an Acknowledgement and Consent in the form attached to the
Guarantee and
Collateral Agreement, executed and delivered by each Issuer (as defined therein), if
any, that is not a Loan Party.

     (b) Acquisition Documentation. The Administrative Agent shall have received
final executed copies of the Acquisition Agreements and all related agreements, documents
and instruments as in effect on the Closing Date and the transactions contemplated by such
documentation shall be consummated prior to or concurrently with the making of the Loans on
the Closing Date, including without limitation the consummation of equity financing
transactions from which Parent shall have received a minimum of gross proceeds of
$22,500,000 arising from the equity sponsor group consisting of Waud Capital Partners, LLC,
Northwest Capital Appreciation and RBC Capital Partners, or affiliates thereof, all pursuant
to equity financing transaction documentation and instruments reasonably acceptable to the
Administrative Agent.

     (c) ABL Loan Documents. The Administrative Agent shall have received final
executed copies of the ABL Loan Documents and all related agreements, documents and
instruments as in

36

 

effect on the Closing Date and the transactions contemplated by such
documentation shall be consummated concurrently with the making of the Loans on the Closing
Date.

     (d) Projections. The Lenders shall have received satisfactory projections
through 2011.

     (e) Approvals. All governmental and third party approvals necessary in
connection with the Acquisitions, and the transactions contemplated hereby shall have been
obtained and be in full force and effect except those for which the failure to obtain could
not reasonably be expected to have a Material Adverse Effect, and all applicable waiting
periods shall have expired without any action being taken by any competent authority that
would restrain, prevent or otherwise impose adverse conditions on the Acquisitions or the
financing contemplated hereby.

     (f) Lien Searches. The Administrative Agent shall have received the results of
a recent lien search in each of the jurisdictions where assets of the Loan Parties are
located, and such search shall reveal no liens on any of the assets of the Loan Parties
except for liens permitted by Section 6.3 or discharged on or prior to the Closing Date
pursuant to documentation reasonably satisfactory to the Administrative Agent.

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

     (h) Closing Certificate; Certified Certificate of Incorporation; Good Standing
Certificates. The Administrative Agent shall have received (i) a certificate of each
Loan Party,
dated the Closing Date, substantially in the form of Exhibit C, with appropriate
insertions and attachments, including the certificate of incorporation of each Loan Party
that is a corporation certified by the relevant authority of the jurisdiction of
organization of such Loan Party, and (ii) a long form good standing certificate for each
Loan Party from its jurisdiction of organization.

     (i) Legal Opinions. The Administrative Agent shall have received the legal
opinion of Kirkland & Ellis LLP, counsel to the Borrower and certain of its Domestic
Subsidiaries, in form and substance reasonably satisfactory to the Administrative Agent.
Such legal opinion shall cover such other matters incident to the transactions contemplated
by this Agreement as the Administrative Agent may reasonably require.

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

     (k) Filings, Registrations and Recordings. Each document (including any
Uniform Commercial Code financing statement) required by the Security Documents or under law
or reasonably requested by the Administrative Agent to be filed, registered or recorded in
order to create in favor of the Administrative Agent, for the benefit of the Lenders, a
perfected Lien on the Collateral described therein, prior and superior in right to any other
Person (other than with

37

 

respect to Liens expressly permitted by Section 6.3), shall be in
proper form for filing, registration or recordation.

     (l) Insurance. The Administrative Agent shall have received insurance
certificates satisfying the requirements of Section 5.2(b) of the Guarantee and Collateral
Agreement.

     (m) Shell BDF Agreements. The Administrative Agent shall have received copies
of the Shell BDF Agreements and the Shell Subordination Agreement, which Subordination
Agreement shall contain such terms and provisions including, without limitation,
subordination terms reasonably satisfactory to the Administrative Agent.

     (n) Chevron BDF Agreements. The Administrative Agent shall have received
copies of the Chevron BDF Agreements.

     (o) Leasehold Agreements. The Administrative Agent shall have received
landlord, mortgagee or warehouseman agreements reasonably satisfactory to the Administrative
Agent with respect to all premises leased by the Loan Parties at which inventory is located.

          4.2 Conditions to Each Extension of Credit. The agreement of each Lender to make any extension of credit requested to be made by it on
any date (including its initial extension of credit) is subject to the satisfaction of the
following conditions precedent:

     (a) Representations and Warranties. Each of the representations and warranties
made by any Loan Party in or pursuant to the Loan Documents shall be true and correct on and
as of
such date as if made on and as of such date except those which expressly refer to an
earlier date, which shall be made as of such specified date.

     (b) No Default. No Default or Event of Default shall have occurred and be
continuing on such date or after giving effect to the extensions of credit requested to be
made on such date.

Each borrowing by the Borrower hereunder shall constitute a representation and warranty by the
Borrower as of the date of such extension of credit that the conditions contained in this Section
4.2 have been satisfied.

SECTION 5. AFFIRMATIVE COVENANTS

          Holdings and the Borrower hereby jointly and severally agree that until payment in full of the
Obligations (other than contingent indemnification Obligations to the extent no unsatisfied claim
giving rise thereto has been asserted), each of Holdings and the Borrower shall and shall cause
each of its Subsidiaries to:

          5.1 Financial Statements. Furnish to the Administrative Agent:

     (a) as soon as available, but in any event within 100 days after the end of each fiscal
year of the Borrower (except in case of the fiscal year of the Borrower ended June 30, 2006,
within 120 days after the end of such fiscal year of the Borrower), a copy of the audited
consolidated balance sheet of Holdings and its consolidated Subsidiaries as at the end of
such year and the related audited consolidated statements of income and of cash flows for
such year, setting forth in each case in comparative form the figures for the previous year,
reported on without a “going concern” or like qualification or exception, or qualification
arising out of the scope of the audit,

38

 

by Grant Thornton, LLP or other independent certified
public accountants of nationally recognized standing;

     (b) as soon as available, but in any event not later than 45 days after the end of each
of the first three quarterly periods of each fiscal year of the Borrower, the unaudited
consolidated balance sheet of Holdings and its consolidated Subsidiaries as at the end of
such quarter and the related unaudited consolidated statements of income and of cash flows
for such quarter and the portion of the fiscal year through the end of such quarter, setting
forth in each case in comparative form the figures for the previous year, certified by a
Responsible Officer as being fairly stated in all material respects (subject to normal
year-end audit adjustments); and

     (c) as soon as available, but in any event not later than 30 days after the end of each
month occurring during each fiscal year of the Borrower (other than the third, sixth, ninth
and twelfth such month), the unaudited consolidated balance sheets of Holdings and its
Subsidiaries as at the end of such month and the related unaudited consolidated statements
of income and of cash flows for such month and the portion of the fiscal year through the
end of such month, commencing 12 months after the Closing Date, certified by a Responsible
Officer as being fairly stated in all material respects (subject to normal year-end audit
adjustments).

All such financial statements shall be complete and correct in all material respects and shall be
prepared in accordance with GAAP applied (except as approved by such accountants or officer, as the
case may
be, and disclosed in reasonable detail therein) consistently throughout the periods reflected
therein and with prior periods.

          5.2 Certificates; Other Information. Furnish to the Administrative Agent:

     (a) concurrently with the delivery of the financial statements referred to in Section
5.1(a), a certificate of the independent certified public accountants reporting on such
financial statements stating that in making the examination necessary therefor no knowledge
was obtained of any Event of Default under Section 6.1, except as specified in such
certificate;

     (b) concurrently with the delivery of any financial statements pursuant to Section 5.1,
(i) a certificate of a Responsible Officer stating that, to the best of each such
Responsible Officer’s knowledge, each Loan Party during such period has observed or
performed all of its covenants and other agreements, and satisfied every condition contained
in this Agreement and the other Loan Documents to which it is a party to be observed,
performed or satisfied by it, and that such Responsible Officer has obtained no knowledge of
any Default or Event of Default except as specified in such certificate and (ii) in the case
of quarterly or annual financial statements, (x) a Compliance Certificate containing all
information and calculations necessary for determining compliance by each Loan Party with
the provisions of this Agreement referred to therein as of the last day of the fiscal
quarter or fiscal year of the Borrower, as the case may be, (y) to the extent not previously
disclosed to the Administrative Agent, a description of any change in the jurisdiction of
organization of any Loan Party and a list of any Intellectual Property acquired by any Loan
Party since the date of the most recent report delivered pursuant to this clause (y) (or, in
the case of the first such report so delivered, since the Closing Date) and (z) to the
extent applicable, a notice of the Borrower’s intent to exercise its Cure Right pursuant to
Section 7;

     (c) as soon as available, and in any event no later than 45 days after the end of each
fiscal year of the Borrower, a detailed consolidated budget for the fiscal year following
such fiscal year then ended (including a projected consolidated balance sheet of Holdings
and its Subsidiaries as of the end of the fiscal year following such fiscal year then ended,
the related

39

 

consolidated statements of projected cash flow, projected changes in financial
position and projected income and a description of the underlying assumptions applicable
thereto), and, as soon as available, significant revisions, if any, of such budget and
projections with respect to such fiscal year (collectively, the “Projections”),
which Projections shall in each case be accompanied by a certificate of a Responsible
Officer stating that such Projections are based on good faith estimates, information and
assumptions believed by management of the Borrower to be reasonable at the time made, it
being recognized by the Lenders that such information as it relates to future events is not
to be viewed as fact and that actual results during the period or periods covered by such
projections may differ from the projected results by a material amount;

     (d) within (i) 45 days after the end of each of the first three fiscal quarter of the
Borrower and (ii) 90 days after the end of each fiscal year of the Borrower, a narrative
discussion and analysis of the financial condition and results of operations of the Borrower
and its Subsidiaries for such fiscal quarter and for the period from the beginning of the
then current fiscal year to the end of such fiscal quarter, as compared to the portion of
the Projections covering such periods and to the comparable periods of the previous year;

     (e) within five Business Days after the same are sent, copies of all financial
statements and reports that Holdings or the Borrower sends to the holders of any class of
its debt securities or public equity securities and, within five Business Days after the
same are filed, copies of all financial statements and reports that Holdings or the Borrower
may make to, or file with, the SEC; and

     (f) promptly, such additional financial and other information as any Lender may from
time to time reasonably request.

          5.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or before maturity or before they become delinquent,
as the case may be, all its material obligations of whatever nature, except where the amount or
validity thereof is currently being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP with respect thereto have been provided on the books of the relevant Group
Member.

          5.4 Maintenance of Existence; Compliance. (a)(i) Preserve, renew and keep in full force and effect its organizational existence and
(ii) take all reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business, except, in each case, as otherwise permitted by
Section 6.4 and except, in the case of clause (ii) above, to the extent that failure to do so could
not reasonably be expected to have a Material Adverse Effect; and (b) comply with all Contractual
Obligations and Requirements of Law except to the extent that failure to comply therewith could
not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

          5.5 Maintenance of Property; Insurance. (a) Keep all property useful and necessary in its business in good working order and
condition, ordinary wear and tear excepted and (b) maintain with financially sound and reputable
insurance companies insurance on all its property in at least such amounts and against at least
such risks (but including in any event public liability, product liability and business
interruption) as are usually insured against in the same general area by companies engaged in the
same or a similar business.

          5.6 Inspection of Property; Books and Records; Discussions. (a) Keep proper books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings and transactions in
relation to its business and activities and (b) permit representatives of any Lender to visit and
inspect any of its properties and

40

 

examine and make abstracts from any of its books and records at
any reasonable time and as often as may reasonably be desired and to discuss the business,
operations, properties and financial and other condition of the Group Members with officers and
employees of the Group Members and with their independent certified public accountants;
provided, that in the absence of an Event of Default, such visit and inspection shall be at
the Borrower’s expense no more than once per fiscal year of the Borrower.

          5.7 Notices. Promptly give notice to the Administrative Agent of:

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

     (b) any (i) default or event of default under any Contractual Obligation of any Group
Member or (ii) litigation, investigation or proceeding that may exist at any time between
any Group Member and any Governmental Authority, that in either case, if not cured or if
adversely determined, as the case may be, could reasonably be expected to have a Material
Adverse Effect;

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

     (d) the following events, as soon as possible and in any event within 30 days after the
Borrower knows or has reason to know thereof: (i) the occurrence of any Reportable Event
with respect to any Plan, a failure to make any required contribution to a Plan, the
creation of any Lien in favor of the PBGC or a Plan or any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer Plan or (ii) the institution
of proceedings or the taking of any other action by the PBGC or the Borrower or any Commonly
Controlled Entity or any Multiemployer Plan with respect to the withdrawal from, or the
termination, Reorganization or Insolvency of, any Plan; and

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

Each notice pursuant to this Section 5.7 shall be accompanied by a statement of a Responsible
Officer setting forth details of the occurrence referred to therein and stating what action the
relevant Group Member proposes to take with respect thereto.

          5.8 Environmental Laws. (a) Comply in all material respects with, and undertake commercially reasonable efforts to
ensure compliance in all material respects by all tenants and subtenants, if any, with, all
applicable Environmental Laws, and obtain and comply in all material respects with and maintain,
and undertake commercially reasonable efforts to ensure that all tenants and subtenants obtain and
comply in all material respects with and maintain, any and all licenses, approvals, notifications,
registrations or permits required by applicable Environmental Laws; and

          (b) Conduct and complete all investigations, studies, sampling and testing, and all remedial,
removal and other actions required under Environmental Laws and promptly comply in all material
respects with all written lawful orders and directives of all Governmental Authorities regarding
Environmental Laws.

          5.9 Interest Rate Protection. In the case of the Borrower, within 90 days after the Closing Date, enter into, and
thereafter maintain, Swap Agreements to the extent necessary to provide that at least 40% of the
aggregate principal amount of Loans is subject to either a fixed interest rate or interest rate
protection on terms and conditions satisfactory to the Administrative Agent.

41

 

          5.10 Additional Collateral, etc.. (a) With respect to any property acquired after the Closing Date by any Loan Party (other
than (x) any property described in paragraph (b), (c) or (d) below, (y) any property subject to a
Lien expressly permitted by Section 6.3(g) and (z) property acquired by any Excluded Foreign
Subsidiary) as to which the Administrative Agent, for the benefit of the Lenders, does not have a
perfected Lien, promptly (i) execute and deliver to the Administrative Agent such amendments to the
Guarantee and Collateral Agreement or such other documents as the Administrative Agent deems
necessary or advisable to grant to the Administrative Agent, for the benefit of the Lenders, a
security interest in such property and (ii) take all actions necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a perfected security interest in such
property (having the priority set forth in the Intercreditor Agreement and subject to the other
Liens permitted under Section 6.3), including the filing of Uniform Commercial Code financing
statements in such jurisdictions as may be required by the Guarantee and Collateral Agreement or by
law or as may be requested by the Administrative Agent.

          (b) With respect to any fee interest in any real property having a value (together with
improvements thereof) of at least $1,000,000 acquired after the Closing Date by any Loan Party
(other than (x) any such real property subject to a Lien expressly permitted by Section 6.3(g) and
(z) real property acquired by any Excluded Foreign Subsidiary), promptly (i) execute and deliver a
first priority Mortgage, in favor of the Administrative Agent, for the benefit of the Lenders,
covering such real property, (ii) if requested by the Administrative Agent, provide the Lenders
with (x) title and extended coverage insurance covering such real property in an amount at least
equal to the purchase price of such real property (or such other amount as shall be reasonably
specified by the Administrative Agent) as well as a current ALTA survey thereof, together with a
surveyor’s certificate and (y) any consents or estoppels reasonably deemed necessary or advisable
by the Administrative Agent in connection with such Mortgage, each of the foregoing in form and
substance reasonably satisfactory to the Administrative Agent and (iii) if requested by the
Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters
described above, which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.

          (c) With respect to any new Subsidiary (other than an Excluded Foreign Subsidiary and, to the
extent prohibited by the ABL Securitization Documents, any Subsidiary created in connection with
the execution and delivery of the ABL Securitization Documents (a “Securitization
Subsidiary”) created or acquired after the Closing Date by any Loan Party (which, for the
purposes of this paragraph (c), shall include any existing Subsidiary that ceases to be an Excluded
Foreign Subsidiary), promptly (i) execute and deliver to the Administrative Agent such amendments
to the Guarantee and Collateral Agreement as the Administrative Agent deems necessary or advisable
to grant to the Administrative Agent, for the benefit of the Lenders, a perfected first priority
security interest (or in the case of a Securitization Subsidiary, a second priority security
interest) in the Capital Stock of such new Subsidiary that is owned by such Loan Party, (ii)
deliver to the Administrative Agent the certificates representing such Capital Stock (other than in
the case of a Securitization Subsidiary), together with undated stock powers, in blank, executed
and delivered by a duly authorized officer of the relevant Group Member, (iii) cause such new
Subsidiary (A) to become a party to the Guarantee and Collateral Agreement, (B) to take such
actions necessary or advisable to grant to the Administrative Agent for the benefit of the Lenders
a perfected security interest in the Collateral described in the Guarantee and Collateral Agreement
with respect to such new Subsidiary, including the filing of Uniform Commercial Code financing
statements in such jurisdictions as may be required by the Guarantee and Collateral Agreement or by
law or as may be requested by the Administrative Agent and (C) to deliver to the Administrative
Agent a certificate of such Subsidiary, substantially in the form of Exhibit C, with appropriate
insertions and attachments, and (iv) if requested by the Administrative Agent, deliver to the
Administrative Agent legal opinions relating
to the matters described above, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Administrative Agent.

42

 

          (d) With respect to any new Excluded Foreign Subsidiary created or acquired after the Closing
Date by any Group Member (other than by any Group Member that is an Excluded Foreign Subsidiary),
promptly (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and
Collateral Agreement as the Administrative Agent deems necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a perfected first priority security interest
in the Capital Stock of such new Subsidiary that is owned by any such Group Member (provided that
in no event shall more than 66% of the total outstanding voting Capital Stock of any such
Subsidiary be required to be so pledged), (ii) deliver to the Administrative Agent the certificates
representing such Capital Stock, together with undated stock powers, in blank, executed and
delivered by a duly authorized officer of the relevant Group Member, and take such other action as
may be necessary or, in the opinion of the Administrative Agent, desirable to perfect the
Administrative Agent’s security interest therein, and (iii) if requested by the Administrative
Agent, deliver to the Administrative Agent legal opinions relating to the matters described above,
which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.

          5.11 Mortgages, etc. (a) Within 60 days after the Closing Date, the Administrative Agent shall have received
the Mortgages covering each of the Mortgaged Properties owned by any Loan Party, executed and
delivered by a duly authorized officer of such Loan Party.

          (b) If requested by the Administrative Agent, the Administrative Agent shall have received,
and the title insurance company issuing the policy referred to in clause (iii) below (the
“Title Insurance Company”) shall have received, maps or plats of an as-built survey of the
sites of the Mortgaged Properties certified to the Administrative Agent and the Title Insurance
Company in a manner reasonably satisfactory to them, dated a date reasonably satisfactory to the
Administrative Agent and the Title Insurance Company by an independent professional licensed land
surveyor reasonably satisfactory to the Administrative Agent and the Title Insurance Company.

          (c) The Administrative Agent shall have received in respect of each Mortgaged Property a
mortgagee’s title insurance policy (or policies) or marked up unconditional binder for such
insurance, in each case in form and substance reasonably satisfactory to the Administrative Agent.
The Administrative Agent shall have received evidence satisfactory to it that all premiums in
respect of each such policy, all charges for mortgage recording tax, and all related expenses, if
any, have been paid.

          (d) If requested by the Administrative Agent, the Administrative Agent shall have received (A)
a policy of flood insurance that (1) covers any parcel of improved real property that is encumbered
by any Mortgage (2) is written in an amount not less than the outstanding principal amount of the
indebtedness secured by such Mortgage that is reasonably allocable to such real property or the
maximum limit of coverage made available with respect to the particular type of property under the
National Flood Insurance Act of 1968, whichever is less, and (3) has a term ending not later than
the maturity of the Indebtedness secured by such Mortgage and (B) confirmation that the Borrower
has received the notice required pursuant to Section 208(e)(3) of Regulation H of the Board.

          (e) The Administrative Agent shall have received a copy of all recorded documents referred to,
or listed as exceptions to title in, the title policy or policies referred to in clause (iii) above
and a copy of all other material documents affecting the Mortgaged Properties.

SECTION 6. NEGATIVE COVENANTS

          Holdings and the Borrower hereby jointly and severally agree that until payment in full of the
Obligations (other than contingent indemnification Obligations to the extent no unsatisfied claim

43

 

giving rise thereto has been asserted),each of Holdings and the Borrower shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly:

          6.1 Financial Condition Covenants.

          (a) Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio as at the
last day of any period of four consecutive fiscal quarters of the Borrower (or, if less, the number
of full fiscal quarters subsequent to the Closing Date) to exceed 5.00 to 1.00.

          (b) Consolidated Fixed Charge Coverage Ratio. Permit the Consolidated Fixed Charge
Coverage Ratio for any period of four consecutive fiscal quarters of the Borrower (or, if less, the
number of full fiscal quarters subsequent to the Closing Date) to be less than 1.15 to 1.00.

          6.2 Indebtedness. Create, issue, incur, assume, become liable in respect of or suffer to exist any
Indebtedness, except:

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

     (b) Indebtedness of the Borrower to any Subsidiary and of any Wholly Owned Subsidiary
Guarantor to the Borrower or any other Subsidiary;

     (c) Guarantee Obligations (i) incurred in the ordinary course of business by the
Borrower or any of its Subsidiaries of obligations of any Wholly Owned Subsidiary, (ii)
incurred in connection with surety and appeal bonds, performance bonds and other similar
obligations, (iii) arising under indemnity agreements in connection with title insurance
policies required hereunder or Dispositions permitted hereunder, (iv) that certain Corporate
Guaranty dated December 1, 2004 made by Parent which guarantees the obligations of Simons
Petroleum, Inc., an Oklahoma corporation, arising under the GECC Note, (v) those certain
Guaranty and Suretyship Agreements made by Parent in favor of Sovereign CS, LLC which
guarantee the obligations of CSOC Inc. under its lease agreements with Sovereign CS, LLC and
(vi) other Guarantee Obligations not exceeding $5,000,000 in the aggregate at any time
outstanding;

     (d) Indebtedness outstanding on the date hereof and listed on Schedule 6.2(d) and any
refinancings, refundings, renewals or extensions thereof (without increasing, or shortening
the maturity of, the principal amount thereof);

     (e) Indebtedness (including, without limitation, Capital Lease Obligations) secured by
Liens permitted by Section 6.3(g) in an aggregate principal amount not to exceed $10,000,000
at any one time outstanding;

     (f) Indebtedness of the Borrower under the ABL Loan Documents not to exceed
$255,000,000 in the aggregate and guarantees thereof by Holdings and by Subsidiaries of the
Borrower as long as such Subsidiaries are Subsidiary Guarantors;

     (g) Indebtedness consisting of the financing of insurance premiums in the ordinary
course of the Borrower’s business;

     (h) Indebtedness for bank overdrafts or returned items incurred in the ordinary course
of the Borrower’s business that are promptly repaid;

44

 

     (i) Indebtedness of Excluded Foreign Subsidiaries in an aggregate principal amount not
to exceed $5,000,000 at any time outstanding;

     (j) unsecured Indebtedness of Holdings in an aggregate principal amount not to exceed
$5,000,000 at any time outstanding, evidencing the purchase price of capital stock or
options or warrants thereof purchased by Holdings from current or former officers, directors
and employees, provided such Indebtedness is subordinated to the Obligations on terms
acceptable to the Administrative Agent;

     (k) Indebtedness arising under the Shell BDF Agreements in an aggregate principal
amount not to exceed $2,000,000;

     (l) Indebtedness arising under the Chevron BDF Agreements in an aggregate principal
amount not to exceed $2,000,000;

     (m) Indebtedness owed to Valvoline in an aggregate principal amount not to exceed
$1,500,000;

     (n) Indebtedness arising under the GECC Note in an aggregate principal amount not to
exceed $3,300,000; and

     (o) additional Indebtedness of the Borrower or any of its Subsidiaries not listed above
in an aggregate principal amount (for the Borrower and all Subsidiaries) not to exceed
$10,000,000 at any one time outstanding.

          6.3 Liens. Create, incur, assume or suffer to exist any Lien upon any of its property, whether now
owned or hereafter acquired, except:

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

     (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like
Liens arising in the ordinary course of business that are not overdue for a period of more
than 45 days or that are being contested in good faith by appropriate proceedings;

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

     (d) Liens consisting of bonds or deposits to secure the performance of bids, trade
contracts (other than for borrowed money), warranty obligations, leases, statutory or
regulatory obligations, surety, stay and appeal bonds, bids, performance bonds and other
obligations of a similar nature incurred in the ordinary course of business;

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

45

 

     (f) Liens in existence on the date hereof listed on Schedule 6.3(f), securing
Indebtedness permitted by Section 6.2(d), provided that no such Lien is spread to
cover any additional property after the Closing Date and that the amount of Indebtedness
secured thereby is not increased;

     (g) Liens securing Indebtedness of the Borrower or any other Subsidiary incurred
pursuant to Section 6.2(e) to finance the acquisition of fixed or capital assets,
provided that (i) such Liens shall be created substantially simultaneously with the
acquisition of such fixed or capital assets, (ii) such Liens do not at any time encumber any
property other than the property financed by such Indebtedness and (iii) the amount of
Indebtedness secured thereby is not increased;

     (h) Liens created pursuant to the Security Documents;

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

     (j) the ABL Facility Liens;

     (k) Liens arising from precautionary uniform commercial code financing statements filed
under any lease permitted by this Agreement;

     (l) licenses, sublicenses, leases or subleases granted to third parties in the ordinary
course of business (including any licenses or sublicenses of intellectual property) not
interfering in any material respect with the business of the Loan Parties or any of their
Subsidiaries;

     (m) Liens (i) in favor of collecting banks arising under Section 4-210 of the UCC on
items in the course of collection and (ii) in favor of a banking institution arising as a
matter of law encumbering deposits (including the right of set-off) and which are within the
general parameters customary to the banking industry;

     (n) Liens arising out of conditional sale, consignment or similar arrangements for the
sale of goods entered into by the Borrower or any of its Subsidiaries in the ordinary course
of business;

     (o) Liens arising by operation of law or contract on insurance policies and proceeds
thereof to secure premiums payable thereunder;

     (p) Liens attaching solely to cash earnest money deposits in connection with
Investments permitted under this Agreement;

     (q) Liens on assets of Excluded Foreign Subsidiaries securing Indebtedness permitted by
Section 6.2(i);

     (r) Liens securing Indebtedness permitted by Sections 6.2(k), 6.2(l), 6.2(m) and
6.2(n); and

     (s) Liens not otherwise permitted by this Section so long as neither (i) the aggregate
outstanding principal amount of the obligations secured thereby nor (ii) the aggregate fair
market value (determined as of the date such Lien is incurred) of the assets subject thereto
exceeds (as to the Borrower and all Subsidiaries) $5,000,000 at any one time.

46

 

          6.4 Fundamental Changes. Enter into any merger, consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution), or Dispose of all or substantially all of its
property or business, except that:

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

     (b) any Subsidiary of the Borrower may Dispose of any or all of its assets (i) to the
Borrower or any Wholly Owned Subsidiary Guarantor (upon voluntary liquidation or otherwise)
or (ii) pursuant to a Disposition permitted by Section 6.5; and

     (c) any Investment expressly permitted by Section 6.8 may be structured as a merger,
consolidation or amalgamation.

          6.5 Disposition of Property. Dispose of any of its property, whether now owned or hereafter acquired, or, in the case of
any Subsidiary, issue or sell any shares of such Subsidiary’s Capital Stock to any Person, except:

     (a) the Disposition of obsolete, used, surplus or worn out property in the ordinary
course of business;

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

     (c) Dispositions permitted by Section 6.4(a) and clause (i) of Section 6.4(b);

     (d) the sale or issuance of any Subsidiary’s Capital Stock to the Borrower or any
Wholly Owned Subsidiary Guarantor;

     (e) licenses, sublicenses, leases or subleases granted to third parties in the ordinary
course of business not interfering in any material respect with the business of the Loan
Parties or any of their Subsidiaries provided that all Dispositions permitted by
this paragraph shall be made for fair value and for at least 85% cash consideration;

     (f) sales or discounting, on a non-recourse basis and in the ordinary course of
business, past due accounts receivable in connection with the collection or compromise
thereof;

     (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 or
asset of any Loan Party provided the proceeds thereof are applied in accordance with Section
2.5(b);

     (h) the abandonment or other disposition of intellectual property that is, in the
reasonable good faith judgment of a Loan Party, no longer economically practicable or
commercially desirable to maintain or useful in the conduct of the business of such Loan
Party;

     (i) dispositions of accounts receivables and related assets under the ABL
Securitization Documents; and

47

 

     (j) the Disposition of other property having a fair market value not to exceed
$5,000,000 in the aggregate for any fiscal year of the Borrower.

          6.6 Restricted Payments. Declare or pay any dividend (other than dividends payable solely in common stock of the
Person making such dividend) on, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any Capital Stock of any Group Member, whether now or hereafter outstanding, or
make any other distribution in respect thereof, either directly or indirectly, whether in cash or
property or in obligations of any Group Member (collectively, “Restricted Payments”),
except that:

     (a) any Subsidiary may make Restricted Payments to the Borrower or any Wholly Owned
Subsidiary Guarantor;

     (b) so long as no Default or Event of Default shall have occurred and be continuing,
the Borrower may pay dividends to Holdings to permit Holdings to (i) purchase Holdings’
common stock or common stock options or warrants from present or former officers or
employees of any Group Member upon the death, disability, resignation or termination of
employment of such officer or employee, provided, that the aggregate amount of
payments under this clause (b) after the date hereof (net of any proceeds received by
Holdings and contributed to the Borrower after the date hereof in connection with resales of
any common stock or common stock options so purchased) shall not exceed $2,000,000 per
fiscal year of the Borrower and (ii) pay management fees expressly permitted by the last
sentence of Section 6.9;

     (c) the Borrower may pay dividends to Holdings as shall only be necessary to permit
Holdings to (i) pay corporate overhead expenses, professional fees and expenses and
directors fees and expenses all incurred in the ordinary course of business, so long as such
payments are paid as and when needed by Holdings and (ii) pay any taxes that are due and
payable by Holdings and the Borrower as part of a consolidated group;

     (d) Holdings may declare and make dividend payments or other distributions payable
solely in its common stock or other equity securities; and

     (e) the Borrower may make distributions to Holdings which are promptly used by Holdings
to pay post-closing purchase price adjustments under the Acquisition Agreements, any
deferred post-closing fees in accordance with Section 18(c) of the Professional Services
Agreement and post-closing bonus payments in accordance with Section 2.2(b)(V)(P) of the
Pecos Acquisition Agreement in an aggregate principal amount not to exceed $4,000,000, in
each case to the extent required by and pursuant to the terms thereof.

          6.7 Capital Expenditures. Make or commit to make any Capital Expenditure, except Capital Expenditures of the Borrower
and its Subsidiaries, in the aggregate, in the ordinary course of business not exceeding the
maximum amount set forth below for such fiscal year:

	 	 	 
	Fiscal Year Ending	 	Maximum Capital Expenditures
	 	 	 
	June 30, 2007
	 	$17,500,000
	June 30, 2008
	 	$17,500,000
	June 30, 2009
	 	$20,000,000
	June 30, 2010
	 	$20,000,000
	June 30, 2011
	 	$20,000,000
	June 30, 2012
	 	$22,500,000
	June 30, 2013
	 	$22,500,000

48

 

          ; provided, that (a) any such amount referred to above, if not so expended in the
fiscal year for which it is permitted, may be carried over for expenditure in the next succeeding
fiscal year and (b) Capital Expenditures made pursuant to this Section during any fiscal year shall
be deemed made, first, in respect of amounts carried over from the prior fiscal year
pursuant to clause (a) above and, second, in respect of amounts permitted for such fiscal
year as provided above.

          6.8 Investments. Make any advance, loan, extension of credit (by way of guaranty or otherwise) or capital
contribution to, or purchase any Capital Stock, bonds, notes, debentures or other debt securities
of, or any assets constituting a business unit of, or make any other investment in, any Person (all
of the foregoing, “Investments”), except:

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

     (b) investments in cash and Cash Equivalents;

     (c) Guarantee Obligations permitted by Section 6.2;

     (d) loans and advances to employees of any Group Member in the ordinary course of
business (including for travel, entertainment and relocation expenses) in an aggregate
amount for all Group Members not to exceed $5,000,000 at any one time outstanding;

     (e) consummation of the Acquisitions;

     (f) Investments in assets useful in the business of the Borrower and its Subsidiaries
made by the Borrower or any of its Subsidiaries with the proceeds of any Reinvestment
Deferred Amount;

     (g) intercompany Investments by any Group Member in the Borrower or any Person that,
prior to such investment, is a Wholly Owned Subsidiary Guarantor;

     (h) Capital Expenditures permitted hereunder;

     (i) Investments in Excluded Foreign Subsidiaries in an aggregate amount not to exceed
$2,500,000;

     (j) Investments in connection with the settlement of delinquent accounts in the
ordinary course of business or in connection with the bankruptcy or reorganization of
suppliers or customers;

     (k) Investments existing on the Closing Date and set forth on Schedule 6.8;

     (l) Investments in newly created Subsidiaries contemplated by the ABL Securitization
Documents to the extent reasonably required thereby;

     (m) Permitted Acquisitions; and

     (n) in addition to Investments otherwise expressly permitted by this Section,
Investments by the Borrower or any of its Subsidiaries in an aggregate amount (valued at
cost) not to exceed $10,000,000 during the term of this Agreement.

49

 

          6.9 Transactions with Affiliates. Enter into any transaction, including any purchase, sale, lease or exchange of property,
the rendering of any service or the payment of any management, advisory or similar fees, with any
Affiliate (other than Holdings, the Borrower or any Wholly Owned Subsidiary Guarantor) unless such
transaction is (a) otherwise permitted under this Agreement, (b) as set forth in Schedule 6.9, or
(c) in the ordinary course of business of the relevant Group Member, and upon fair and reasonable
terms no less favorable to the relevant Group Member than it would obtain in a comparable arm’s
length transaction with a Person that is not an Affiliate. Notwithstanding the foregoing, the
Borrower and its Subsidiaries may pay to the Sponsors fees and expenses pursuant to a management
agreement approved by the board of directors of the Borrower in an aggregate amount for such fees
not to exceed $1,500,000 in any fiscal year of the Borrower.

          6.10 Sales and Leasebacks. Enter into any arrangement with any Person providing for the leasing by any Group Member of
real or personal property that has been or is to be sold or transferred by such Group Member to
such Person or to any other Person to whom funds have been or are to be advanced by such Person on
the security of such property or rental obligations of such Group Member.

          6.11 Swap Agreements. Enter into any Swap Agreement, except (a) Swap Agreements entered into to hedge or mitigate
risks to which the Borrower or any Subsidiary has actual exposure (other than those in respect of
Capital Stock), (b) Swap Agreements entered into in order to effectively cap, collar or
exchange interest rates (from fixed to floating rates, from one floating rate to another floating
rate or otherwise) with respect to any interest-bearing liability or investment of the Borrower or
any Subsidiary and (c) Swap Agreements required under Section 5.9.

          6.12 Changes in Fiscal Periods. Permit the fiscal year of the Borrower to end on a day other than June 30 or change the
Borrower’s method of determining fiscal quarters.

          6.13 Negative Pledge Clauses. Enter into or suffer to exist or become effective any agreement that prohibits or limits
the ability of any Loan Party to create, incur, assume or suffer to exist any Lien upon any of its
property or revenues, whether now owned or hereafter acquired, to secure its obligations under the
Loan Documents to which it is a party other than (a) this Agreement and the other Loan Documents,
(b) any agreements governing any purchase money Liens or Capital Lease Obligations otherwise
permitted hereby (in which case, any prohibition or limitation shall only be effective against the
assets financed thereby), (c) the ABL Loan Documents, (d) documents evidencing Indebtedness of
Excluded Foreign Subsidiaries to the extent permitted hereunder, (e) the Shell BDF Agreements and
(f) the Chevron BDF Agreements.

          6.14 Clauses Restricting Subsidiary Distributions. Enter into or suffer to exist or become effective any consensual encumbrance or restriction
on the ability of any Subsidiary of the Borrower to (a) make Restricted Payments in respect of any
Capital Stock of such Subsidiary held by, or pay any Indebtedness owed to, the Borrower or any
other Subsidiary of the Borrower, (b) make loans or advances to, or other Investments in, the
Borrower or any other Subsidiary of the Borrower or (c) transfer any of its assets to the Borrower
or any other Subsidiary of the Borrower, except for such encumbrances or restrictions existing
under or by reason of (i) any restrictions existing under the Loan Documents, (ii) any restrictions
with respect to a Subsidiary imposed pursuant to an agreement that has been entered into in
connection with the Disposition of all or substantially all of the Capital Stock or assets of such
Subsidiary, (iii) restrictions under the ABL Loan Documents and (iv) restrictions under documents
evidencing Indebtedness of Excluded Foreign Subsidiaries permitted hereunder.

          6.15 Lines of Business. Enter into any business, either directly or through any Subsidiary, except for those
businesses in which the Borrower and its Subsidiaries are engaged on the date of this Agreement or
that are reasonably related thereto.

50

 

          6.16 Amendments to Acquisition Documents. (a) Amend, supplement or otherwise modify (pursuant to a waiver or otherwise) the terms
and conditions of the indemnities and licenses furnished to the Borrower or any of its Subsidiaries
pursuant to the Acquisition Documentation such that after giving effect thereto such indemnities or
licenses shall be materially less favorable to the interests of the Loan Parties or the Lenders
with respect thereto or (b) otherwise amend, supplement or otherwise modify the terms and
conditions of the Acquisition Documentation or any such other documents except for any such
amendment, supplement or
modification that (i) becomes effective after the Closing Date and (ii) could not reasonably
be expected to have a Material Adverse Effect.

          6.17 Amendments to ABL Loan Documents. Amend, modify or change in any manner adverse to the interests of the Lenders of any
provision or term of the ABL Loan Documents except in accordance with the terms of the
Intercreditor Agreement.

SECTION 7. EVENTS OF DEFAULT

          If any of the following events shall occur and be continuing:

     (a) the Borrower shall fail to pay any principal of any Loan when due in accordance
with the terms hereof; or the Borrower shall fail to pay any interest on any Loan, or any
other amount payable hereunder or under any other Loan Document, within five days after any
such interest or other amount becomes due in accordance with the terms hereof; or

     (b) any representation or warranty made or deemed made by any Loan Party herein or in
any other Loan Document or that is contained in any certificate, document or financial or
other statement furnished by it at any time under or in connection with this Agreement or
any such other Loan Document shall prove to have been inaccurate in any material respect on
or as of the date made or deemed made; or

     (c) any Loan Party shall default in the observance or performance of any agreement
contained in clause (i) or (ii) of Section 5.4(a) (with respect to Holdings and the Borrower
only), Section 5.7(a) or Section 6 of this Agreement or Sections 5.5 and 5.7(b) of the
Guarantee and Collateral Agreement; or

     (d) any Loan Party shall default in the observance or performance of any other
agreement contained in this Agreement or any other Loan Document (other than as provided in
paragraphs (a) through (c) of this Section), and such default shall continue unremedied for
a period of 30 days after notice to the Borrower from the Administrative Agent or the
Required Lenders; or

     (e) (1) any Loan Party shall (i) default in making any payment of any principal of any
Indebtedness (including any Guarantee Obligation, but excluding the Loans) on the scheduled
due date with respect thereto; or (ii) default in making any payment of any interest on any
such Indebtedness beyond the period of grace, if any, provided in the instrument or
agreement under which such Indebtedness was created; or (iii) default in the observance or
performance of any other agreement or condition relating to any such Indebtedness or
contained in any instrument or agreement evidencing, securing or relating thereto, or any
other event shall occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or beneficiary of such Indebtedness (or a
trustee or agent on behalf of such holder or beneficiary) to cause, with the giving of
notice if required, such Indebtedness to become due prior to its stated maturity or (in the
case of any such Indebtedness constituting a Guarantee Obligation) to become payable;
provided, that a default, event or condition described in clause (i), (ii) or (iii)
of this

51

 

paragraph (e) shall not at any time constitute an Event of Default unless, at such
time, one or more defaults, events or conditions of the type described in clauses (i), (ii)
and (iii) of this paragraph (e) shall have occurred and be continuing with respect to
Indebtedness the outstanding
principal amount of which exceeds in the aggregate $10,000,000 or (2) any accounts
receivable securitization program under the ABL Securitization Documents shall be terminated
and not refinanced by the financing parties thereunder prior to the scheduled termination
date therefor; or

     (f) (i) any Loan Party shall commence any case, proceeding or other action (A) under
any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (B) seeking appointment of a receiver,
trustee, custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or any Group Member shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced against any Loan Party any case,
proceeding or other action of a nature referred to in clause (i) above that (A) results in
the entry of an order for relief or any such adjudication or appointment or (B) remains
undismissed or undischarged for a period of 60 days; or (iii) there shall be commenced
against any Loan Party any case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any substantial part of
its assets that results in the entry of an order for any such relief that shall not have
been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry
thereof; or (iv) any Loan Party shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii),
or (iii) above; or (v) any Loan Party shall generally not, or shall be unable to, or shall
admit in writing its inability to, pay its debts as they become due; or

     (g) (i) any Person shall engage in any “prohibited transaction” (as defined in Section
406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any “accumulated funding
deficiency” (as defined in Section 302 of ERISA), whether or not waived, shall exist with
respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of
any Group Member or any Commonly Controlled Entity, (iii) a Reportable Event shall occur
with respect to, or proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of a trustee is, in the
reasonable opinion of the Required Lenders, likely to result in the termination of such Plan
for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA, (v) any Group Member or any Commonly Controlled Entity shall,
or in the reasonable opinion of the Required Lenders is likely to, incur any liability in
connection with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist with respect to a Plan;
provided, that in each case in clauses (i) through (vi) above, such event or
condition, together with all other such events or conditions, if any, could, in the sole
judgment of the Required Lenders, reasonably be expected to have a Material Adverse Effect;
or

     (h) one or more judgments or decrees shall be entered against any Loan Party involving
in the aggregate a liability (not paid or fully covered by insurance as to which the
relevant insurance company has acknowledged coverage) of $5,000,000 or more, and all such
judgments or decrees shall not have been vacated, discharged, stayed or bonded pending
appeal within 60 days from the entry thereof; or

52

 

     (i) any of the Security Documents shall cease, for any reason, to be in full force and
effect, or any Loan Party or any Affiliate of any Loan Party shall so assert, or any Lien
created
by any of the Security Documents shall cease to be enforceable and of the same effect
and priority purported to be created thereby, subject to the Intercreditor Agreement; or

     (j) the guarantee contained in Section 2 of the Guarantee and Collateral Agreement
shall cease, for any reason, to be in full force and effect or any Loan Party or any
Affiliate of any Loan Party shall so assert; or

     (k) a Change of Control shall occur; or

     (l) [Reserved];

then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or
(ii) of paragraph (f) above with respect to the Borrower, automatically the Loans (with accrued
interest thereon) and all other amounts owing under this Agreement and the other Loan Documents
shall immediately become due and payable, and (B) if such event is any other Event of Default,
either or both of the following action may be taken: with the consent of the Required Lenders, the
Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent
shall, by notice to the Borrower, declare the Loans (with accrued interest thereon) and all other
amounts owing under this Agreement and the other Loan Documents to be due and payable forthwith,
whereupon the same shall immediately become due and payable. Except as expressly provided above in
this Section, presentment, demand, protest and all other notices of any kind are hereby expressly
waived by the Borrower.

Notwithstanding anything to the contrary contained in this Section 7, in the event that the
Borrower would otherwise fail to comply with the requirements of Sections 6.1(a) or (b) (each, a
“Financial Performance Covenant”) at the end of any fiscal quarter or fiscal year, Holdings
shall have the right, exercisable at any time during the term of this Agreement within ten days
after the date on which a Compliance Certificate must be delivered for the end of any such fiscal
quarter or fiscal year (provided that such right may not be exercised with respect to more than two
consecutive fiscal quarters or more than four fiscal quarters during any consecutive eight fiscal
quarter period), to issue Permitted Cure Securities (as defined below) for cash or otherwise
receive cash contributions to the capital of Holdings, and to contribute any such cash to the
capital of the Borrower (the “Cure Right”), and upon the receipt by the Borrower of such
cash (the “Cure Amount”) pursuant to the exercise by Holdings of such Cure Right, the
Financial Performance Covenants shall be recalculated giving effect to the following pro forma
adjustments:

          (i) Consolidated EBITDA shall be increased solely for the purpose of measuring the
Financial Performance Covenants and not for any other purpose under this Agreement, by an
amount equal to the Cure Amount (with the Cure Amount not to exceed the amount necessary for
the Borrower to be in compliance with the requirements of all Financial Performance
Covenants); and

          (ii) if, after giving effect to the foregoing recalculations, the Borrower shall then
be in compliance with the requirements of all Financial Performance Covenants, the Borrower
shall be deemed to have satisfied the requirements of the Financial Performance Covenants as
of the relevant date of determination with the same effect as though there had been no
failure to comply therewith at such date, and the applicable breach or default of any such
Financial Performance Covenant that would have otherwise occurred on such date but for the
application of the foregoing recalculations shall be deemed not to have occurred.

53

 

As used in this Section 8, the term “Permitted Cure Securities” shall mean an equity security of
Holdings having no mandatory redemption, repurchase, repayment or similar requirements and upon
which all dividends or distributions may be payable in additional shares of such equity security.

SECTION 8. THE AGENTS

          8.1 Appointment. Each Lender hereby irrevocably designates and appoints the Administrative Agent as the
agent of such Lender under this Agreement and the other Loan Documents, and each such Lender
irrevocably authorizes the Administrative Agent, in such capacity, to take such action on its
behalf under the provisions of this Agreement and the other Loan Documents and to exercise such
powers and perform such duties as are expressly delegated to the Administrative Agent by the terms
of this Agreement and the other Loan Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall not have any duties or responsibilities, except those expressly set
forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other
Loan Document or otherwise exist against the Administrative Agent.

          8.2 Delegation of Duties. The Administrative Agent may execute any of its duties under this Agreement and the other
Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys in-fact selected by it with
reasonable care.

          8.3 Exculpatory Provisions. Neither any Agent nor any of their respective officers, directors, employees, agents,
attorneys-in-fact or affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any other Loan Document
(except to the extent that any of the foregoing are found by a final and nonappealable decision of
a court of competent jurisdiction to have resulted from its or such Person’s own gross negligence
or willful misconduct) or (ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any Loan Party or any officer thereof contained
in this Agreement or any other Loan Document or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agents under or in connection with,
this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or for any failure of
any Loan Party a party thereto to perform its obligations hereunder or thereunder. The Agents
shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this Agreement or any other
Loan Document, or to inspect the properties, books or records of any Loan Party.

          8.4 Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely, and shall be fully protected in
relying, upon any instrument, writing, resolution, notice, consent, certificate, affidavit, letter,
telecopy,
telex or teletype message, statement, order or other document or conversation believed by it
to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and
upon advice and statements of legal counsel (including counsel to Holdings or the Borrower),
independent accountants and other experts selected by the Administrative Agent. The Administrative
Agent may deem and treat the payee of any Note as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been filed with the
Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to
take any

54

 

action under this Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Required Lenders (or, if so specified by this Agreement, all Lenders)
as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against
any and all liability and expense that may be incurred by it by reason of taking or continuing to
take any such action. The Administrative Agent shall in all cases be fully protected in acting, or
in refraining from acting, under this Agreement and the other Loan Documents in accordance with a
request of the Required Lenders (or, if so specified by this Agreement, all Lenders), and such
request and any action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Loans.

          8.5 Notice of Default. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence
of any Default or Event of Default unless the Administrative Agent has received notice from a
Lender, Holdings or the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a “notice of default”. In the event that the
Administrative Agent receives such a notice, the Administrative Agent shall give notice thereof to
the Lenders. The Administrative Agent shall take such action with respect to such Default or Event
of Default as shall be reasonably directed by the Required Lenders (or, if so specified by this
Agreement, all Lenders); provided that unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or Event of Default as it
shall deem advisable in the best interests of the Lenders.

          8.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly acknowledges that neither the Agents nor any of their respective
officers, directors, employees, agents, attorneys-in-fact or affiliates have made any
representations or warranties to it and that no act by any Agent hereafter taken, including any
review of the affairs of a Loan Party or any affiliate of a Loan Party, shall be deemed to
constitute any representation or warranty by any Agent to any Lender. Each Lender represents to
the Agents that it has, independently and without reliance upon any Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their affiliates and made its own decision to make its
Loans hereunder and enter into this Agreement. Each Lender also represents that it will,
independently and without reliance upon any Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and the other Loan
Documents, and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and creditworthiness of the Loan
Parties and their affiliates. Except for notices, reports and other documents expressly required
to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative Agent
shall not have any duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, condition (financial or otherwise),
prospects or
creditworthiness of any Loan Party or any affiliate of a Loan Party that may come into the
possession of the Administrative Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates.

          8.7 Indemnification. The Lenders agree to indemnify each Agent in its capacity as such (to the extent not
reimbursed by Holdings or the Borrower and without limiting the obligation of Holdings or the
Borrower to do so), ratably according to their respective Aggregate Exposure Percentages in effect
on the date on which indemnification is sought under this Section (or, if indemnification is sought
after the date upon which the Commitments shall have terminated and the Loans shall have been paid
in full, ratably in accordance with such Aggregate Exposure Percentages immediately prior to such
date), from and against any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time
(whether before or

55

 

after the payment of the Loans) be imposed on, incurred by or asserted against
such Agent in any way relating to or arising out of, the Commitments, this Agreement, any of the
other Loan Documents or any documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or any action taken or omitted by such Agent under or
in connection with any of the foregoing; provided that no Lender shall be liable for the
payment of any portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements that are found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted from such Agent’s gross negligence
or willful misconduct. The agreements in this Section shall survive the payment of the Loans and
all other amounts payable hereunder.

          8.8 Agent in Its Individual Capacity. Each Agent and its affiliates may make loans to, accept deposits from and generally engage
in any kind of business with any Loan Party as though such Agent were not an Agent. With respect
to its Loans made or renewed by it, each Agent shall have the same rights and powers under this
Agreement and the other Loan Documents as any Lender and may exercise the same as though it were
not an Agent, and the terms “Lender” and “Lenders” shall include each Agent in its individual
capacity.

          8.9 Successor Administrative Agent. The Administrative Agent may resign as Administrative Agent upon 30 days’ notice to the
Lenders and the Borrower. If the Administrative Agent shall resign as Administrative Agent under
this Agreement and the other Loan Documents, then the Required Lenders shall appoint from among the
Lenders a successor agent for the Lenders, which successor agent shall (unless an Event of Default
under Section 7(a) or Section 7(f) with respect to the Borrower shall have occurred and be
continuing) be subject to approval by the Borrower (which approval shall not be unreasonably
withheld or delayed), whereupon such successor agent shall succeed to the rights, powers and duties
of the Administrative Agent, and the term “Administrative Agent” shall mean such successor agent
effective upon such appointment and approval, and the former Administrative Agent’s rights, powers
and duties as Administrative Agent shall be terminated, without any other or further act or deed on
the part of such former Administrative Agent or any of the parties to this Agreement or any holders
of the Loans. If no successor agent has accepted appointment as Administrative Agent by the date
that is 30 days following a retiring Administrative Agent’s notice of resignation, the retiring
Administrative Agent’s resignation shall nevertheless thereupon become effective, and the Lenders
shall assume and perform all of the duties of the Administrative Agent hereunder until such time,
if any, as the Required Lenders appoint a successor agent as provided for above, with the consent
of the Borrower, if applicable, as provided
above. After any retiring Administrative Agent’s resignation as Administrative Agent, the
provisions of this Section 8 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Administrative Agent under this Agreement and the other Loan Documents.

          8.10 Documentation Agent and Syndication Agent. Neither the Documentation Agent nor the Syndication Agent shall have any duties or
responsibilities hereunder in its capacity as such.

SECTION 9. MISCELLANEOUS

          9.1 Amendments and Waivers. Neither this Agreement, any other Loan Document, nor any terms hereof or thereof may be
amended, supplemented or modified except in accordance with the provisions of this Section 9.1.
The Required Lenders and each Loan Party party to the relevant Loan Document may, or, with the
written consent of the Required Lenders, the Administrative Agent and each Loan Party party to the
relevant Loan Document may, from time to time, (a) enter into written amendments, supplements or
modifications hereto and to the other Loan Documents for the purpose of adding any provisions to
this Agreement or the other Loan Documents or changing in any manner the rights of the Lenders or
of the Loan Parties hereunder or thereunder or (b) waive, on such terms and

56

 

conditions as the
Required Lenders or the Administrative Agent, as the case may be, may specify in such instrument,
any of the requirements of this Agreement or the other Loan Documents or any Default or Event of
Default and its consequences; provided, however, that no such waiver and no such
amendment, supplement or modification shall (i) forgive the principal amount or extend the final
scheduled date of maturity of any Loan, extend the scheduled date of any amortization payment in
respect of any Term Loan, reduce the stated rate of any interest or fee payable hereunder (except
(x) in connection with the waiver of applicability of any post-default increase in interest rates
(which waiver shall be effective with the consent of the Majority Facility Lenders of each
adversely affected Facility) and (y) that any amendment or modification of defined terms used in
the financial covenants in this Agreement shall not constitute a reduction in the rate of interest
or fees for purposes of this clause (i)) or extend the scheduled date of any payment thereof
without the written consent of each Lender directly affected thereby; (ii) eliminate or reduce the
voting rights of any Lender under this Section 9.1 without the written consent of such Lender;
(iii) reduce any percentage specified in the definition of Required Lenders, consent to the
assignment or transfer by the Borrower of any of its rights and obligations under this Agreement
and the other Loan Documents, release all or substantially all of the Collateral or release all or
substantially all of the Subsidiary Guarantors from their obligations under the Guarantee and
Collateral Agreement, in each case without the written consent of all Lenders; (iv) amend, modify
or waive any provision of Section 2.11 without the written consent of the Majority Facility Lenders
in respect of each Facility adversely affected thereby; (v) reduce the amount of Net Cash Proceeds
or Excess Cash Flow required to be applied to prepay Loans under this Agreement without the written
consent of the Majority Facility Lenders with respect to each Facility adversely affected thereby;
(vi) reduce the percentage specified in the definition of Majority Facility Lenders with respect to
any Facility without the written consent of all Lenders under such Facility; or (vii) amend, modify
or waive any provision of Section 8 without the written consent of the Administrative Agent. Any
such waiver and any such amendment, supplement or modification shall apply equally to each of the
Lenders and shall be binding upon the Loan Parties, the Lenders, the Administrative Agent and all
future holders of the Loans. In the case of any waiver, the Loan Parties, the Lenders and the
Administrative Agent shall be restored to their former position and rights hereunder and under the
other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and
not continuing;
but no such waiver shall extend to any subsequent or other Default or Event of Default, or
impair any right consequent thereon.

          Notwithstanding the foregoing, this Agreement may be amended (or amended and restated) with
the written consent of the Required Lenders, the Administrative Agent and the Borrower (a) to add
one or more additional credit facilities to this Agreement and to permit the extensions of credit
from time to time outstanding thereunder and the accrued interest and fees in respect thereof to
share ratably in the benefits of this Agreement and the other Loan Documents with the Term Loans
and the accrued interest and fees in respect thereof and (b) to include appropriately the Lenders
holding such credit facilities in any determination of the Required Lenders and Majority Facility
Lenders.

          In addition, notwithstanding the foregoing, this Agreement may be amended with the written
consent of the Administrative Agent, the Borrower and the Lenders providing the relevant
Replacement Term Loans (as defined below) to permit the refinancing, replacement or modification of
all outstanding Term Loans or Incremental Term Loans (“Replaced Term Loans”) with a
replacement “B” term loan tranche hereunder (“Replacement Term Loans”), provided
that (a) the aggregate principal amount of such Replacement Term Loans shall not exceed the
aggregate principal amount of such Replaced Term Loans, (b) the Applicable Margin for such
Replacement Term Loans shall not be higher than the Applicable Margin for such Replaced Term Loans
and (c) the weighted average life to maturity of such Replacement Term Loans shall not be shorter
than the weighted average life to maturity of such Replaced Term Loans at the time of such
refinancing.

57

 

     In addition, notwithstanding the foregoing, the Borrower, Holdings and the Administrative
Agent may enter into one or more amendments to the Loan Documents to effect the provisions of
Section 2.17 upon the effectiveness of any Incremental Term Loan Assumption Agreement (and any such
amendment shall in any event be deemed to have occurred upon such effectiveness).

     9.2 Notices. All notices, requests and demands to or upon the respective parties hereto to be effective
shall be in writing (including by telecopy), and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when received,
addressed as follows in the case of Holdings, the Borrower and the Administrative Agent, and as set
forth in an administrative questionnaire delivered to the Administrative Agent in the case of the
Lenders, or to such other address as may be hereafter notified by the respective parties hereto:

	 	 	 
	Holdings:

	 	SPI Petroleum LLC
	 

	 	1120 NW 63rd Street, Suite 300
	 

	 	Oklahoma City, OK 73116
	 

	 	Attention: Chief Financial Officer
	 

	 	Telecopy: 405-302-1502
	 

	 	Telephone: 405-302-1500
	 
	 	 
	Borrower:

	 	Global Petroleum, Inc.
	 

	 	c/o SPI Petroleum LLC
	 

	 	1120 NW 63rd Street, Suite 300
	 

	 	Oklahoma City, OK 73116
	 

	 	Attention: Chief Financial Officer
	 

	 	Telecopy: 405-302-1502
	 

	 	Telephone: 405-302-1500
	 
	 	 
	Copies to:
	 	 
	 
	 	 
	 

	 	Northwest Capital Appreciation, Inc.
	 

	 	One Union Square
	 

	 	600 University Street, Suite 1720
	 

	 	Seattle, WA 98101
	 

	 	Attn: E. Perot Bissel
	 

	 	Bradford N. Creswell
	 

	 	Telephone: (206) 689-5615
	 

	 	Telecopy: (206) 689-5614
	 
	 	 
	 

	 	RBCP Energy Fund Investments, LP
	 

	 	c/o Cadent Energy Partners, LLC
	 

	 	287 Bowman Avenue, 4th Floor
	 

	 	Purchase, NY 10577
	 

	 	Attn: Bruce Rothstein
	 

	 	Telephone: (914) 253-0404
	 

	 	Telecopy: (914) 253-0406
	 
	 	 
	 

	 	Waud Capital Partners, L.P.
	 

	 	560 Oakwood Avenue, Suite 203
	 

	 	Lake Forest, IL 60045
	 

	 	Attn: Reeve B. Waud

58

 

	 	 	 
	 

	 	Telephone: (847) 604-9550
	 

	 	Telecopy: (847) 604-9554
	 
	 	 
	 

	 	Kirkland & Ellis LLP
	 

	 	200 East Randolph Drive
	 

	 	Chicago, Illinois 60601
	 

	 	Attn: Richard W. Porter, P.C. and James C. Anderson
	 

	 	Telephone: (312) 861-2000
	 

	 	Telecopy: (312) 861-2200
	 
	 	 
	Administrative Agent:

	 	JPMorgan Chase Bank, N.A.
	 

	 	1111 Fannin Street
	 

	 	Houston, Texas 77002
	 

	 	Attention: Sharon S Bosch
	 

	 	Telecopy: (312) 385-7019
	 

	 	Telephone: (312) 385-7107

provided that any notice, request or demand to or upon the Administrative Agent or the
Lenders shall not be effective until received.

     Notices and other communications to the Lenders hereunder may be delivered or furnished by
electronic communications pursuant to procedures approved by the Administrative Agent;
provided that the foregoing shall not apply to notices pursuant to Section 2 unless
otherwise agreed by the Administrative Agent and the applicable Lender. The Administrative Agent
or the Borrower may, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it; provided that
approval of such procedures may be limited to particular notices or communications.

     9.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Administrative Agent
or any Lender, any right, remedy, power or privilege hereunder or under the other Loan Documents
shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and privileges herein
provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided
by law.

     9.4 Survival of Representations and Warranties. All representations and warranties made hereunder, in the other Loan Documents and in any
document, certificate or statement delivered pursuant hereto or in connection herewith shall
survive the execution and delivery of this Agreement and the making of the Loans and other
extensions of credit hereunder.

     9.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or reimburse the Administrative Agent for all its
out-of-pocket costs and expenses incurred in connection with the development, preparation and
execution of, and any amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith, and the
consummation and administration of the transactions contemplated hereby and thereby, including the
reasonable fees and disbursements of counsel to the Administrative Agent and filing and recording
fees and expenses, with statements with respect to the foregoing to be submitted to the Borrower
prior to the Closing Date (in the case of amounts to be paid on the Closing Date) and from time to
time thereafter on a quarterly basis or such other periodic basis as the Administrative Agent shall
deem appropriate, (b) to pay or reimburse each Lender and the Administrative Agent for all its
costs and

59

 

expenses incurred in connection with the enforcement or preservation of any rights under
this Agreement, the other Loan Documents and any such other documents, including the fees and
disbursements of counsel to the Administrative Agent and one counsel for all other Lenders, (c)
subject to Section 2.13(b) to pay, indemnify, and hold each Lender and the Administrative Agent
harmless from, any and all recording and filing fees and any and all liabilities with respect to,
or resulting from any delay in paying, stamp, excise and other taxes, if any, that may be payable
or determined to be payable in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, this Agreement, the other Loan
Documents and any such other documents, and (d) subject to Section 2.13(b) to pay, indemnify, and
hold each Lender and the Administrative Agent and their respective officers, directors, employees,
affiliates, agents and controlling persons (each, an “Indemnitee”) harmless from and
against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this Agreement, the other Loan
Documents and any such other documents, including any of the foregoing relating to the use of
proceeds of the Loans or the violation of, noncompliance with or liability under, any Environmental
Law applicable to the operations of any Loan
Party or any of the Properties and the reasonable fees and expenses of legal counsel in
connection with claims, actions or proceedings by any Indemnitee against any Loan Party under any
Loan Document (all the foregoing in this clause (d), collectively, the “Indemnified
Liabilities”), provided, that the Borrower shall have no obligation hereunder to any
Indemnitee with respect to Indemnified Liabilities to the extent such Indemnified Liabilities are
found by a final decision of a court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of such Indemnitee or its officers, directors, employees,
affiliates, agents or controlling persons. Without limiting the foregoing, and to the extent
permitted by applicable law, the Borrower agrees not to assert and to cause its Subsidiaries not to
assert, and hereby waives and agrees to cause its Subsidiaries to waive, all rights for
contribution or any other rights of recovery with respect to all claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever kind or nature, under or related
to Environmental Laws, that any of them might have by statute or otherwise against any Indemnitee.
All amounts due under this Section 9.5 shall be payable not later than 10 days after written demand
therefor. Statements payable by the Borrower pursuant to this Section 9.5 shall be submitted to
Chief Financial Officer (Telephone No. 405-302-1500) (Telecopy No. 405-302-1502), at the address of
the Borrower set forth in Section 9.2, or to such other Person or address as may be hereafter
designated by the Borrower in a written notice to the Administrative Agent. The agreements in this
Section 9.5 shall survive repayment of the Loans and all other amounts payable hereunder.

     9.6 Successors and Assigns; Participations and Assignments. (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, 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.

     (b) (1) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign
to one or more assignees (each, an “Assignee”) all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitments and the Loans at
the time owing to it) with the prior written consent of:

	 	(A)	 	the Borrower (such consent not to
be unreasonably withheld), provided that no consent of
the Borrower shall be required for an assignment to a Lender, an
affiliate of a Lender, an Approved

60

 

	 	 	 	Fund (as defined below) or,
if an Event of Default under Section 7(a) or (f) has occurred
and is continuing, any other Person; and
	 
	 	(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
Term Loan to a Lender, an affiliate of a Lender or 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 Approved
Fund or an assignment of the entire remaining amount of the
assigning Lender’s Commitments or Loans under any Facility, the
amount of the Commitments or
Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Assumption with
respect to such assignment is delivered to the Administrative
Agent) shall not be less than $1,000,000 unless each of the
Borrower and the Administrative Agent otherwise consent,
provided that (1) no such consent of the Borrower
shall be required if an Event of Default under Section 7(a)
or (f) has occurred and is continuing and (2) such amounts
shall be aggregated in respect of each Lender and its
affiliates or Approved Funds, if any;
	 
	 	(B)	 	the parties to each assignment
shall execute and deliver to the Administrative Agent an
Assignment and Assumption, together with a processing and
recordation fee of $3,500; and
	 
	 	(C)	 	the Assignee, if it shall not be
a Lender, shall deliver to the Administrative Agent an
administrative questionnaire in which the Assignee designates
one or more credit contacts to whom all syndicate-level
information (which may contain material non-public information
about the Borrower and its Affiliates and their related parties
or their respective securities) will be made available and who
may receive such information in accordance with the assignee’s
compliance procedures and applicable laws, including Federal and
state securities laws.

     For the purposes of this Section 9.6, “Approved Fund” means any Person (other than a
natural person) that is engaged in making, purchasing, holding or investing in bank loans and
similar extensions of credit in the ordinary course of its business and that is administered or
managed by (a) a Lender, (b) an affiliate of a Lender or (c) an entity or an affiliate of an entity
that administers or manages a Lender.

     (iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) below, 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

61

 

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 2.12, 2.13, 2.14 and 9.5 for the periods in which such Lender was a party to this
Agreement). Any assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this Section 9.6 shall be treated for purposes of this Agreement as a
sale by such Lender of a participation in such rights and obligations in accordance with paragraph
(c) of this Section.

     (iv) The Administrative Agent, acting for this purpose as an agent of the Borrower, shall
maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the Commitments of, and
principal amount of the Loans owing to, each Lender pursuant to the terms hereof from time to time
(the “Register”). The entries in the Register shall be conclusive, and the Borrower, the
Administrative Agent
and the Lenders may treat each Person whose name is recorded in the Register pursuant to the
terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to
the contrary.

     (v) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning
Lender and an Assignee, the Assignee’s completed administrative questionnaire (unless the Assignee
shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph
(b) of this Section and any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Assumption and record the
information contained therein in the Register. 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 or the Administrative Agent, 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
Commitments and the Loans owing to it); provided that (A) such Lender’s obligations under
this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (C) the Borrower, the Administrative
Agent 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 pursuant
to which a Lender sells such a participation shall provide that such Lender shall retain the sole
right to enforce this Agreement and to approve any amendment, modification or waiver of any
provision of this Agreement; provided that such agreement may provide that such Lender will
not, without the consent of the Participant, agree to any amendment, modification or waiver that
(1) requires the consent of each Lender directly affected thereby pursuant to the proviso to the
second sentence of Section 9.1 and (2) directly affects such Participant. Subject to paragraph
(c)(ii) of this Section, the Borrower agrees that each Participant shall be entitled to the
benefits and limits of Sections 2.12, 2.13 and 2.14 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 9.7(b) as
though it were a Lender, provided such Participant shall be subject to Section 9.7(a) as though it
were a Lender.

     (ii) A Participant shall not be entitled to receive any greater payment under Section 2.12 or
2.13 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. Any Participant that is a Non-U.S. Lender shall
not be entitled to the benefits of Section 2.13 unless such Participant complies with Sections
2.13(d) and (e).

     (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

62

 

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) The Borrower, upon receipt of written notice from the relevant Lender, agrees to issue
Notes to any Lender requiring Notes to facilitate transactions of the type described in paragraph
(d) above.

     (f) Notwithstanding the foregoing, any Conduit Lender may assign any or all of the Loans it
may have funded hereunder to its designating Lender without the consent of the Borrower or the
Administrative Agent and without regard to the limitations set forth in Section 9.6(b).

     9.7 Adjustments; Set-off. (a) Except to the extent that this Agreement expressly provides for payments to be
allocated to a particular Lender or to the Lenders under a particular Facility, if any Lender (a
“Benefitted Lender”) shall, at any time after the Loans and other amounts payable hereunder
shall immediately become due and payable pursuant to Section 7, receive any payment of all or part
of the Obligations owing to it, or receive any collateral in respect thereof (whether voluntarily
or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in
Section 7(f), or otherwise), in a greater proportion than any such payment to or collateral
received by any other Lender, if any, in respect of the Obligations owing to such other Lender,
such Benefitted Lender shall purchase for cash from the other Lenders a participating interest in
such portion of the Obligations owing to each such other Lender, or shall provide such other
Lenders with the benefits of any such collateral, as shall be necessary to cause such Benefitted
Lender to share the excess payment or benefits of such collateral ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or benefits is
thereafter recovered from such Benefitted Lender, such purchase shall be rescinded, and the
purchase price and benefits returned, to the extent of such recovery, but without interest.

     (b) In addition to any rights and remedies of the Lenders provided by law, each Lender shall
have the right, without prior notice to Holdings or the Borrower, any such notice being expressly
waived by Holdings and the Borrower to the extent permitted by applicable law, upon any amount
becoming due and payable by Holdings or the Borrower hereunder (whether at the stated maturity, by
acceleration or otherwise), to set off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute
or contingent, matured or unmatured, at any time held or owing by such Lender or any branch or
agency thereof to or for the credit or the account of Holdings or the Borrower, as the case may be.
Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such
setoff and application made by such Lender, provided that the failure to give such notice
shall not affect the validity of such setoff and application.

     9.8 Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any
number of separate counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. Delivery of an executed signature page of this Agreement
by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.
A set of the copies of this Agreement signed by all the parties shall be lodged with the Borrower
and the Administrative Agent.

     9.9 Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any such

63

 

prohibition or
unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.

     9.10 Integration. This Agreement and the other Loan Documents represent the entire agreement of Holdings, the
Borrower, the Administrative Agent and the Lenders with respect to the subject matter
hereof and thereof, and there are no promises, undertakings, representations or warranties by
the Administrative Agent or any Lender relative to the subject matter hereof not expressly set
forth or referred to herein or in the other Loan Documents.

     9.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

     9.12 Submission To Jurisdiction; Waivers. Each of Holdings and the Borrower hereby irrevocably and unconditionally:

     (a) submits for itself and its property in any legal action or proceeding relating to
this Agreement and the other Loan Documents to which it is a party, or for recognition and
enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of
the courts of the State of New York, the courts of the United States for the Southern
District of New York, and appellate courts from any thereof;

     (b) consents that any such action or proceeding may be brought in such courts and
waives any objection that it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;

     (c) agrees that service of process in any such action or proceeding may be effected by
mailing a copy thereof by registered or certified mail (or any substantially similar form of
mail), postage prepaid, to Holdings or the Borrower, as the case may be at its address set
forth in Section 9.2 or at such other address of which the Administrative Agent shall have
been notified pursuant thereto;

     (d) agrees that nothing herein shall affect the right to effect service of process in
any other manner permitted by law or shall limit the right to sue in any other jurisdiction;
and

     (e) waives, to the maximum extent not prohibited by law, any right it may have to claim
or recover in any legal action or proceeding referred to in this Section any special,
exemplary, punitive or consequential damages.

9.13 Acknowledgements. Each of Holdings and the Borrower hereby acknowledges that:

     (a) it has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Loan Documents;

     (b) neither the Administrative Agent nor any Lender has any fiduciary relationship with
or duty to Holdings or the Borrower arising out of or in connection with this Agreement or
any of the other Loan Documents, and the relationship between Administrative Agent and
Lenders, on

64

 

one hand, and Holdings and the Borrower, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and

     (c) no joint venture is created hereby or by the other Loan Documents or otherwise
exists by virtue of the transactions contemplated hereby among the Lenders or among
Holdings, the Borrower and the Lenders.

     9.14 Releases of Guarantees and Liens. (a) Notwithstanding anything to the contrary contained herein or in any other Loan
Document, the Administrative Agent is hereby irrevocably authorized by each Lender (without
requirement of notice to or consent of any Lender except as expressly required by Section 9.1) to
take any action requested by the Borrower having the effect of releasing any Collateral or
guarantee obligations (i) to the extent necessary to permit consummation of any transaction not
prohibited by any Loan Document or that has been consented to in accordance with Section 9.1 or
(ii) under the circumstances described in paragraph (b) below.

     (b) At such time as the Loans and the other obligations under the Loan Documents (other than
obligations under or in respect of Swap Agreements and contingent indemnification obligations)
shall have been paid in full, the Commitments have been terminated and no Letters of Credit shall
be outstanding other than those for which the Borrower has provided cash collateral or backup
Letters of Credit, the Collateral shall be released from the Liens created by the Security
Documents, and the Security Documents and all obligations (other than those expressly stated to
survive such termination) of the Administrative Agent and each Loan Party under the Security
Documents shall terminate, all without delivery of any instrument or performance of any act by any
Person.

     9.15 Confidentiality. Each of the Administrative Agent and each Lender agrees to keep confidential all non-public
information provided to it by any Loan Party, the Administrative Agent or any Lender pursuant to or
in connection with this Agreement that is designated by the provider thereof as confidential;
provided that nothing herein shall prevent the Administrative Agent or any Lender from
disclosing any such information (a) to the Administrative Agent, any other Lender or any affiliate
thereof, (b) subject to an agreement to comply with the provisions of this Section, to any actual
or prospective Transferee or any direct or indirect counterparty to any Swap Agreement (or any
professional advisor to such counterparty), (c) to its employees, directors, agents, attorneys,
accountants and other professional advisors or those of any of its affiliates, (d) upon the request
or demand of any Governmental Authority, (e) in response to any order of any court or other
Governmental Authority or as may otherwise be required pursuant to any Requirement of Law, (f) if
requested or required to do so in connection with any litigation or similar proceeding, (g) that
has been publicly disclosed, (h) to the National Association of Insurance Commissioners or any
similar organization or any nationally recognized rating agency that requires access to information
about a Lender’s investment portfolio in connection with ratings issued with respect to such
Lender, or (i) in connection with the exercise of any remedy hereunder or under any other Loan
Document.

     Each Lender acknowledges that information furnished to it pursuant to this Agreement or the
other Loan Documents may include material non-public information concerning the Borrower and its
Affiliates and their related parties or their respective securities, and confirms that it has
developed compliance procedures regarding the use of material non-public information and that it
will handle such material non-public information in accordance with those procedures and applicable
law, including Federal and state securities laws.

     All information, including requests for waivers and amendments, furnished by the Borrower or
the Administrative Agent pursuant to, or in the course of administering, this Agreement or the
other Loan Documents will be syndicate-level information, which may contain material non-public

65

 

information about the Borrower and its Affiliates and their related parties or their respective
securities. Accordingly, each Lender represents to the Borrower and the Administrative Agent that
it has identified in its administrative questionnaire a credit contact who may receive information
that may contain material non-public information in accordance with its compliance procedures and
applicable law, including Federal and state securities laws.

     9.16 WAIVERS OF JURY TRIAL. HOLDINGS, THE BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

9.17 USA Patriot Act. Each Lender which is subject to Section 326 of the USA Patriot Act (Title III of Pub. L.
107-56 (signed into law October 26, 2001)) (the “Act”), hereby notifies the Borrower that,
pursuant to the requirements of the Act, it is required to obtain, verify and record information
that identifies the Borrower, which information includes the name and address of the Borrower and
other information that will allow such Lender to identify the Borrower in accordance with the
Act.

66

 

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

	 	 	 	 	 
	 	SPI PETROLEUM LLC

 	 
	 	By:  	/s/
George
Fastuca	 
	 	 	Name:  	George
Fastuca	 
	 	 	Title:  	 	 
	 

Term Credit Agreement

 

 

	 	 	 	 	 
	 	GLOBAL PETROLEUM, INC.

 	 
	 	By:  	/s/
George Fastuca	 
	 	 	Name:  	George Fastuca	 
	 	 	Title:  	 	 
	 

Term Credit Agreement

 

 

	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A., as Administrative 

Agent and as a Lender

 	 
	 	By:  	/s/
Terry Streusand	 
	 	 	Name:  	Terry Streusand	 
	 	 	Title:  	Vice President	 
	 

Term Credit Agreement

 

 

	 	 	 	 	 
	 	                                        , as Syndication Agent and

as a Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Term Credit Agreement

 

 

	 	 	 	 	 
	 	PNC BANK, NATIONAL ASSOCIATION, as 

Documentation Agent and as a Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Term Credit Agreement

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00128-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00128-of-00352.parquet"}]]