Document:

exv10w1

 

Exhibit 10.1

 

 

REVOLVING CREDIT

AND

SECURITY AGREEMENT

 

 

PNC BANK, NATIONAL ASSOCIATION

(AS LENDER AND AS AGENT)

 

 

WITH

 

 

HORIZON OFFSHORE, INC.,

HORIZON OFFSHORE CONTRACTORS, INC.,

HOC OFFSHORE, S. DE R.L. DE C.V.,

HORIZON MARINE CONTRACTORS (MALAYSIA) SDN BHD,

PT HORIZON OFFSHORE INDONESIA,

HORIZON MARINE CONSTRUCTION (MAURITIUS) LTD.,

AND

HORIZON MARINE CONSTRUCTION LTD.

(BORROWERS)

 

 

April 28, 2006

 

 

Revolving Credit and Security Agreement

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	I	 	DEFINITIONS	 	 	1	 
	 
	 	1.1	 	Accounting Terms	 	 	1	 
	 
	 	1.2	 	General Terms	 	 	1	 
	 
	 	1.3	 	Uniform Commercial Code Terms	 	 	24	 
	 
	 	1.4	 	Certain Matters of Construction	 	 	24	 
	 
	 	 	 	 	 	 	 	 
	II	 	ADVANCES, PAYMENTS	 	 	25	 
	 
	 	2.1	 	Revolving Advances	 	 	25	 
	 
	 	2.2	 	Procedure for Revolving Advances Borrowing	 	 	26	 
	 
	 	2.3	 	Disbursement of Advance Proceeds	 	 	29	 
	 
	 	2.4	 	Intentionally Omitted	 	 	29	 
	 
	 	2.5	 	Maximum Advances	 	 	29	 
	 
	 	2.6	 	Repayment of Advances	 	 	29	 
	 
	 	2.7	 	Repayment of Excess Advances	 	 	30	 
	 
	 	2.8	 	Statement of Account	 	 	30	 
	 
	 	2.9	 	Letters of Credit	 	 	30	 
	 
	 	2.10	 	Issuance of Letters of Credit	 	 	30	 
	 
	 	2.11	 	Requirements For Issuance of Letters of Credit	 	 	31	 
	 
	 	2.12	 	Disbursements, Reimbursement	 	 	31	 
	 
	 	2.13	 	Repayment of Participation Advances	 	 	32	 
	 
	 	2.14	 	Documentation	 	 	33	 
	 
	 	2.15	 	Determination to Honor Drawing Request	 	 	33	 
	 
	 	2.16	 	Nature of Participation and Reimbursement Obligations	 	 	33	 
	 
	 	2.17	 	Indemnity	 	 	35	 
	 
	 	2.18	 	Liability for Acts and Omissions	 	 	35	 
	 
	 	2.19	 	Additional Payments	 	 	36	 
	 
	 	2.20	 	Manner of Borrowing and Payment	 	 	36	 
	 
	 	2.21	 	Mandatory Payments	 	 	38	 
	 
	 	2.22	 	Use of Proceeds	 	 	38	 
	 
	 	2.23	 	Defaulting Lender	 	 	39	 
	 
	 	 	 	 	 	 	 	 
	III	 	INTEREST AND FEES	 	 	39	 
	 
	 	3.1	 	Interest	 	 	39	 
	 
	 	3.2	 	Letter of Credit Fees	 	 	40	 
	 
	 	3.3	 	Closing Fee and Facility Fee	 	 	41	 
	 
	 	3.4	 	Collateral Evaluation Fee and Collateral Monitoring Fee	 	 	42	 
	 
	 	3.5	 	Computation of Interest and Fees	 	 	42	 
	 
	 	3.6	 	Maximum Charges	 	 	42	 
	 
	 	3.7	 	Increased Costs	 	 	43	 
	 
	 	3.8	 	Basis For Determining Interest Rate Inadequate or Unfair	 	 	44	 
	 
	 	3.9	 	Capital Adequacy	 	 	44	 
	 
	 	3.10	 	Gross Up for Taxes	 	 	45	 
	 
	 	3.11	 	Withholding Tax Exemption	 	 	45	 

Revolving Credit and Security Agreement

(i)

 

	 	 	 	 	 	 	 	 	 
	IV	 	COLLATERAL: GENERAL TERMS	 	 	46	 
	 
	 	4.1	 	Security Interest in the Collateral	 	 	46	 
	 
	 	4.2	 	Perfection of Security Interest	 	 	46	 
	 
	 	4.3	 	Disposition of Collateral	 	 	47	 
	 
	 	4.4	 	Preservation of Collateral	 	 	47	 
	 
	 	4.5	 	Ownership of Collateral	 	 	47	 
	 
	 	4.6	 	Defense of Agent’s and
Lenders’ Interests	 	 	48	 
	 
	 	4.7	 	Books and Records	 	 	48	 
	 
	 	4.8	 	Financial Disclosure	 	 	49	 
	 
	 	4.9	 	Compliance with Laws	 	 	49	 
	 
	 	4.10	 	Inspection of Premises	 	 	49	 
	 
	 	4.11	 	Insurance	 	 	49	 
	 
	 	4.12	 	Failure to Pay Insurance	 	 	50	 
	 
	 	4.13	 	Payment of Taxes	 	 	50	 
	 
	 	4.14	 	Payment of Leasehold Obligations	 	 	51	 
	 
	 	4.15	 	Receivables	 	 	51	 
	 
	 	4.16	 	Intentionally Omitted	 	 	53	 
	 
	 	4.17	 	Maintenance of Equipment	 	 	53	 
	 
	 	4.18	 	Exculpation of Liability	 	 	54	 
	 
	 	4.19	 	Environmental Matters	 	 	54	 
	 
	 	4.20	 	Financing Statements	 	 	56	 
	 
	 	 	 	 	 	 	 	 
	V	 	REPRESENTATIONS AND WARRANTIES	 	 	56	 
	 
	 	5.1	 	Authority	 	 	56	 
	 
	 	5.2	 	Formation and Qualification	 	 	56	 
	 
	 	5.3	 	Survival of Representations and Warranties	 	 	57	 
	 
	 	5.4	 	Tax Returns	 	 	57	 
	 
	 	5.5	 	Financial Statements	 	 	57	 
	 
	 	5.6	 	Entity Names	 	 	58	 
	 
	 	5.7	 	O.S.H.A. and Environmental Compliance	 	 	58	 
	 
	 	5.8	 	Solvency; No Litigation, Violation, Indebtedness or Default	 	 	58	 
	 
	 	5.9	 	Patents, Trademarks, Copyrights and Licenses	 	 	60	 
	 
	 	5.10	 	Licenses and Permits	 	 	60	 
	 
	 	5.11	 	Default of Indebtedness	 	 	60	 
	 
	 	5.12	 	No Default	 	 	60	 
	 
	 	5.13	 	No Burdensome Restrictions	 	 	61	 
	 
	 	5.14	 	No Labor Disputes	 	 	61	 
	 
	 	5.15	 	Margin Regulations	 	 	61	 
	 
	 	5.16	 	Investment Company Act	 	 	61	 
	 
	 	5.17	 	Disclosure	 	 	61	 
	 
	 	5.18	 	Delivery of Vessel Loan
Documentation and Subordinated Loan Documentation	 	 	61	 
	 
	 	5.19	 	Swaps	 	 	61	 
	 
	 	5.20	 	Conflicting Agreements	 	 	62	 
	 
	 	5.21	 	Application of Certain Laws and Regulations	 	 	62	 
	 
	 	5.22	 	Business and Property of Borrowers	 	 	62	 
	 
	 	5.23	 	Section 20 Subsidiaries	 	 	62	 

Revolving Credit and Security Agreement

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	 	5.24	 	Anti Terrorism Laws	 	 	62	 
	 
	 	5.25	 	Trading with the Enemy	 	 	63	 
	 
	 	 	 	 	 	 	 	 
	VI	 	AFFIRMATIVE COVENANTS	 	 	63	 
	 
	 	6.1	 	Payment of Fees	 	 	63	 
	 
	 	6.2	 	Conduct of Business and Maintenance of Existence and Assets	 	 	63	 
	 
	 	6.3	 	Violations	 	 	63	 
	 
	 	6.4	 	Government Receivables	 	 	64	 
	 
	 	6.5	 	Financial Covenants	 	 	64	 
	 
	 	6.6	 	Execution of Supplemental Instruments	 	 	64	 
	 
	 	6.7	 	Payment of Indebtedness	 	 	64	 
	 
	 	6.8	 	Standards of Financial Statements	 	 	64	 
	 
	 	 	 	 	 	 	 	 
	VII	 	NEGATIVE COVENANTS	 	 	64	 
	 
	 	7.1	 	Acquisition of Assets	 	 	65	 
	 
	 	7.2	 	Creation of Liens	 	 	65	 
	 
	 	7.3	 	Guarantees	 	 	65	 
	 
	 	7.4	 	Investments	 	 	65	 
	 
	 	7.5	 	Loans	 	 	65	 
	 
	 	7.6	 	Capital Expenditures	 	 	66	 
	 
	 	7.7	 	Dividends	 	 	66	 
	 
	 	7.8	 	Indebtedness	 	 	66	 
	 
	 	7.9	 	Nature of Business	 	 	66	 
	 
	 	7.10	 	Transactions with Affiliates	 	 	67	 
	 
	 	7.11	 	Intentionally Omitted	 	 	67	 
	 
	 	7.12	 	Subsidiaries	 	 	67	 
	 
	 	7.13	 	Fiscal Year and Accounting Changes	 	 	67	 
	 
	 	7.14	 	Pledge of Credit	 	 	67	 
	 
	 	7.15	 	Amendment of Articles of
Incorporation, By-Laws or Certificate of Formation, Operating Agreement, as Applicable	 	 	67	 
	 
	 	7.16	 	Compliance with ERISA	 	 	68	 
	 
	 	7.17	 	Intentionally Omitted	 	 	68	 
	 
	 	7.18	 	Anti Terrorism Laws	 	 	68	 
	 
	 	7.19	 	Membership/Partnership Interests	 	 	68	 
	 
	 	7.20	 	Trading with the Enemy Act	 	 	69	 
	 
	 	7.21	 	Prepayment of Indebtedness	 	 	69	 
	 
	 	7.22	 	Other Agreements	 	 	69	 
	 
	 	 	 	 	 	 	 	 
	VIII	 	CONDITIONS PRECEDENT	 	 	69	 
	 
	 	8.1	 	Conditions to Initial Advances	 	 	69	 
	 
	 	8.2	 	Conditions to Each Advance	 	 	73	 
	 
	 	 	 	 	 	 	 	 
	IX	 	INFORMATION AS TO BORROWERS	 	 	73	 
	 
	 	9.1	 	Disclosure of Material Matters	 	 	73	 
	 
	 	9.2	 	Schedules	 	 	73	 
	 
	 	9.3	 	Environmental Reports	 	 	74	 
	 
	 	9.4	 	Litigation	 	 	74	 

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	 	9.5	 	Material Occurrences	 	 	74	 
	 
	 	9.6	 	Government Receivables	 	 	75	 
	 
	 	9.7	 	Annual Financial Statements	 	 	75	 
	 
	 	9.8	 	Quarterly Financial Statements	 	 	75	 
	 
	 	9.9	 	Monthly Financial Statements	 	 	75	 
	 
	 	9.10	 	Other Reports	 	 	75	 
	 
	 	9.11	 	Additional Information	 	 	75	 
	 
	 	9.12	 	Projected Operating Budget	 	 	76	 
	 
	 	9.13	 	Variances From Operating Budget	 	 	76	 
	 
	 	9.14	 	Notice of Communications with Governmental Bodies	 	 	76	 
	 
	 	9.15	 	ERISA Notices and Requests	 	 	76	 
	 
	 	9.16	 	Additional Documents	 	 	77	 
	 
	 	 	 	 	 	 	 	 
	X	 	EVENTS OF DEFAULT	 	 	77	 
	 
	 	10.1	 	Nonpayment	 	 	77	 
	 
	 	10.2	 	Breach of Representation	 	 	77	 
	 
	 	10.3	 	Intentionally Omitted	 	 	77	 
	 
	 	10.4	 	Judicial Actions	 	 	77	 
	 
	 	10.5	 	Noncompliance	 	 	77	 
	 
	 	10.6	 	Judgments	 	 	78	 
	 
	 	10.7	 	Bankruptcy	 	 	78	 
	 
	 	10.8	 	Inability to Pay	 	 	78	 
	 
	 	10.9	 	Affiliate Bankruptcy	 	 	78	 
	 
	 	10.10	 	Material Adverse Effect	 	 	78	 
	 
	 	10.11	 	Lien Priority	 	 	78	 
	 
	 	10.12	 	Vessel Loan Default or Subordinated Loan Default	 	 	78	 
	 
	 	10.13	 	Cross Default	 	 	79	 
	 
	 	10.14	 	Breach of Guaranty	 	 	79	 
	 
	 	10.15	 	Change of Ownership	 	 	79	 
	 
	 	10.16	 	Invalidity	 	 	79	 
	 
	 	10.17	 	Licenses	 	 	79	 
	 
	 	10.18	 	Seizures	 	 	79	 
	 
	 	10.19	 	Operations	 	 	79	 
	 
	 	10.20	 	Pension Plans	 	 	79	 
	 
	 	 	 	 	 	 	 	 
	XI	 	LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT	 	 	80	 
	 
	 	11.1	 	Rights and Remedies.	 	 	80	 
	 
	 	11.2	 	Agent’s Discretion	 	 	81	 
	 
	 	11.3	 	Setoff	 	 	81	 
	 
	 	11.4	 	Rights and Remedies not Exclusive	 	 	82	 
	 
	 	11.5	 	Allocation of Payments After Event of Default	 	 	82	 
	 
	 	 	 	 	 	 	 	 
	XII	 	WAIVERS AND JUDICIAL PROCEEDINGS.	 	 	83	 
	 
	 	12.1	 	Waiver of Notice	 	 	83	 
	 
	 	12.2	 	Delay	 	 	83	 
	 
	 	12.3	 	Jury Waiver	 	 	83	 
	 
	 	12.4	 	Waiver of Rights Under Texas Deceptive Trade Practices Act	 	 	83	 

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	XIII	 	EFFECTIVE DATE AND TERMINATION	 	 	84	 
	 
	 	13.1	 	Term	 	 	84	 
	 
	 	13.2	 	Termination	 	 	84	 
	 
	 	 	 	 	 	 	 	 
	XIV	 	REGARDING AGENT.	 	 	84	 
	 
	 	14.1	 	Appointment	 	 	84	 
	 
	 	14.2	 	Nature of Duties	 	 	85	 
	 
	 	14.3	 	Lack of Reliance on Agent and Resignation	 	 	85	 
	 
	 	14.4	 	Certain Rights of Agent	 	 	86	 
	 
	 	14.5	 	Reliance	 	 	86	 
	 
	 	14.6	 	Notice of Default	 	 	86	 
	 
	 	14.7	 	Indemnification	 	 	86	 
	 
	 	14.8	 	Agent in its Individual Capacity	 	 	87	 
	 
	 	14.9	 	Delivery of Documents	 	 	87	 
	 
	 	14.10	 	Borrowers’ Undertaking to Agent	 	 	87	 
	 
	 	14.11	 	No Reliance on Agent's Customer Identification Program	 	 	87	 
	 
	 	14.12	 	Other Agreements	 	 	88	 
	 
	 	 	 	 	 	 	 	 
	XV	 	BORROWING AGENCY	 	 	88	 
	 
	 	15.1	 	Borrowing Agency Provisions	 	 	88	 
	 
	 	15.2	 	Waiver of Subrogation	 	 	88	 
	 
	 	 	 	 	 	 	 	 
	XVI	 	MISCELLANEOUS.	 	 	89	 
	 
	 	16.1	 	Governing Law	 	 	89	 
	 
	 	16.2	 	Entire Understanding.	 	 	89	 
	 
	 	16.3	 	Successors and Assigns; Participations; New Lenders.	 	 	92	 
	 
	 	16.4	 	Application of Payments	 	 	93	 
	 
	 	16.5	 	Indemnity	 	 	93	 
	 
	 	16.6	 	Notice	 	 	94	 
	 
	 	16.7	 	Survival	 	 	96	 
	 
	 	16.8	 	Severability	 	 	96	 
	 
	 	16.9	 	Expenses	 	 	96	 
	 
	 	16.10	 	Injunctive Relief	 	 	96	 
	 
	 	16.11	 	Consequential Damages	 	 	97	 
	 
	 	16.12	 	Captions	 	 	97	 
	 
	 	16.13	 	Counterparts; Facsimile Signatures	 	 	97	 
	 
	 	16.14	 	Construction	 	 	97	 
	 
	 	16.15	 	Confidentiality; Sharing Information	 	 	97	 
	 
	 	16.16	 	Publicity	 	 	98	 
	 
	 	16.17	 	Non-applicability of Chapter 346	 	 	98	 
	 
	 	16.18	 	Certifications From Banks and Participants; US PATRIOT Act	 	 	98	 

Revolving Credit and Security Agreement

(v)

 

REVOLVING CREDIT

AND

SECURITY AGREEMENT

     Revolving Credit and Security Agreement dated as of April 28, 2006 among HORIZON OFFSHORE,
INC., a Delaware corporation (“Holdings”), HORIZON OFFSHORE CONTRACTORS, INC., a Delaware
corporation (“Contractors”), HOC OFFSHORE, S.DE R.L. DE C.V., a Mexican limited liability
company (“HOC”), HORIZON MARINE CONTRACTORS (MALAYSIA) SDN BHD, a Malaysian private company
(“Malaysia”), PT HORIZON OFFSHORE INDONESIA, an Indonesia PMA (“Indonesia”),
HORIZON MARINE CONSTRUCTION (MAURITIUS) LTD., a Mauritius limited liability company
(“Mauritius”) and HORIZON MARINE CONSTRUCTION LTD., a Cayman Islands limited liability
company (“Construction”) (Holdings, Contractors, HOC, Malaysia, Indonesia, Mauritius, and
Construction, each a “Borrower”, and collectively “Borrowers”), the financial
institutions which are now or which hereafter become a party hereto (collectively, the
“Lenders” and individually a “Lender”) and PNC BANK, NATIONAL ASSOCIATION
(“PNC”), as agent for Lenders (PNC, in such capacity, the “Agent”).

     IN CONSIDERATION of the mutual covenants and undertakings herein contained, Borrowers, Lenders
and Agent hereby agree as follows:

I DEFINITIONS.

     1.1 Accounting Terms. As used in this Agreement, the Other Documents or any
certificate, report or other document made or delivered pursuant to this Agreement, accounting
terms not defined in Section 1.2 or elsewhere in this Agreement and accounting terms partly
defined in Section 1.2 to the extent not defined, shall have the respective meanings given
to them under GAAP.

     1.2 General Terms. For purposes of this Agreement the following terms shall have the
following meanings:

     “Accountants” shall have the meaning set forth in Section 9.7 hereof.

     “Advance Rate” shall have the meaning set forth in Section 2.1(a)(y)(i)
hereof.

     “Advances” shall mean and include the Revolving Advances and Letters of Credit.

     “Affiliate” of any Person shall mean (a) any Person which, directly or indirectly, is
in control of, is controlled by, or is under common control with such Person, or (b) any Person who
is a director, managing member, general partner or officer (i) of such Person, (ii) of any
Subsidiary of such Person or (iii) of any Person described in clause (a) above. For purposes of
this definition, control of a Person shall mean the power, direct or indirect, (x) to vote 10% or
more of the Equity Interests having ordinary voting power for the election of directors of such
Person or other Persons performing similar functions for any such Person, or (y) to direct or
cause the direction of the management and policies of such Person whether by ownership of
Equity Interests, contract or otherwise.

Revolving Credit and Security Agreement

1

 

     “Agent” shall have the meaning set forth in the preamble to this Agreement and shall
include its successors and assigns.

     “Agreement” shall mean this Revolving Credit and Security Agreement, as the same may
be amended, restated, supplemented or otherwise modified from time to time.

     “Alternate Base Rate” shall mean, for any day, a rate per annum equal to the higher of
(i) the Base Rate in effect on such day and (ii) the Federal Funds Open Rate in effect on such day
plus 1/2 of 1%.

     “Anti-Terrorism Laws” shall mean any Applicable Laws relating to terrorism or money
laundering, including Executive Order No. 13224, the USA PATRIOT Act, the Applicable Laws
comprising or implementing the Bank Secrecy Act, and the Applicable Laws administered by the United
States Treasury Department’s Office of Foreign Asset Control (as any of the foregoing Applicable
Laws may from time to time be amended, renewed, extended, or replaced).

     “Applicable Law” shall mean all laws, rules and regulations applicable to the Person,
conduct, transaction, covenant, Other Document or contract in question, including all applicable
common law and equitable principles; all provisions of all applicable state, federal and foreign
constitutions, statutes, rules, regulations and orders of any Governmental Body, and all orders,
judgments and decrees of all courts and arbitrators.

     “Applicable Margins” means collectively, the Applicable Revolving Domestic Rate Margin
and the Applicable Revolving Eurodollar Rate Margin.

     “Applicable Revolving Domestic Rate Margin” shall mean the per annum interest rate
margin from time to time in effect applicable to Revolving Advances, and payable in addition to the
Alternate Base Rate with respect to Domestic Rate Loans, which shall be zero percent (0.0%) as of
the Closing Date, and otherwise determined by reference to Section 3.1 of the Agreement.

     “Applicable Revolving Eurodollar Rate Margin” shall mean the per annum interest rate
margin from time to time in effect applicable to Revolving Advances, and payable in addition to the
Eurodollar Rate with respect to Eurodollar Rate Loans, which shall be two and one-half percent
(2.5%) as of the Closing Date, and otherwise determined by reference to Section 3.1 of the
Agreement.

     “Authority” shall have the meaning set forth in Section 4.19(b).

     “Base Rate” shall mean the base commercial lending rate of PNC as publicly announced
to be in effect from time to time, such rate to be adjusted automatically, without notice, on the
effective date of any change in such rate. This rate of interest is determined from time to time
by PNC as a means of pricing some loans to its customers and is neither tied to any external rate
of interest or index nor does it necessarily reflect the lowest rate of interest actually charged
by PNC to any particular class or category of customers of PNC.

     “Blocked Accounts” shall have the meaning set forth in Section 4.15(h).

     “Blocked Account Bank” shall have the meaning set forth in Section 4.15(h).

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2

 

     “Blocked Person” shall have the meaning set forth in Section 5.24(b) hereof.

     “Borrower” or “Borrowers” shall have the meaning set forth in the preamble to
this Agreement and shall extend to all permitted successors and assigns of such Persons.

     “Borrowers’ Account” shall have the meaning set forth in Section 2.8.

     “Borrowing Agent” shall mean Horizon Offshore, Inc., a Delaware corporation.

     “Borrowing Base Certificate” shall mean a certificate in substantially the form of
Exhibit 1.2 duly executed by the President, Chief Financial Officer or Controller of the
Borrowing Agent and delivered to the Agent, appropriately completed, by which such officer shall
certify to Agent the Formula Amount and calculation thereof as of the date of such certificate.

     “Business Day” shall mean any day other than Saturday or Sunday or a legal holiday on
which commercial banks are authorized or required by law to be closed for business in East
Brunswick, New Jersey and, if the applicable Business Day relates to any Eurodollar Rate Loans,
such day must also be a day on which dealings are carried on in the London interbank market.

     “Capital Expenditures” shall mean expenditures made or liabilities incurred for the
acquisition of any fixed assets or improvements, replacements, substitutions or additions thereto
which have a useful life of more than one year, including the total principal portion of
Capitalized Lease Obligations, which, in accordance with GAAP, would be classified as capital
expenditures.

     “Capitalized Dry Dock Cost” shall mean all costs associated with vessel regulatory dry
dock activity recorded on the balance sheet of Holdings on a Consolidated Basis and amortized in
accordance with the certification period.

     “Capitalized Lease Obligation” shall mean any Indebtedness of any Borrower represented
by obligations under a lease that is required to be capitalized for financial reporting purposes in
accordance with GAAP.

     “CERCLA” shall mean the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. §§9601 et seq.

     “Change of Control” shall mean (a) the occurrence of any event (whether in one or more
transactions) which results in a transfer of control of any Borrower to a Person who is not an
Original Owner or (b) any merger or consolidation or other reorganization of or with any Borrower
other than a merger or consolidation of or with one Borrower or Guarantor into another of which
Agent is given prior written notice (provided that, if a Borrower is a party thereto, a Borrower
shall be the surviving entity) or sale of all or substantially all of the property or assets of any
Borrower. For purposes of this definition, “control of Borrower” shall mean the power, direct or
indirect (x) to vote 50% or more of the Equity Interests having ordinary voting
power for the election of directors (or the individuals performing similar functions) of any
Borrower or (y) to direct or cause the direction of the management and policies of any Borrower by
contract or otherwise.

Revolving Credit and Security Agreement

3

 

     “Change of Ownership” “ means any of the following: (a) any person or group of persons
(within the meaning of the Securities Exchange Act of 1934, as amended) shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended) of 50% or more of the issued and
outstanding Equity Interests of any Borrower (including shares of common stock to be issued under
any warrants, options or similar rights as outstanding for the purpose of this definition) having
the right to vote for the election of directors any Borrower under ordinary circumstances; or (b)
any merger, consolidation or sale of substantially all of the property or assets of any Borrower
other than a merger or consolidation of or with one Borrower or Guarantor into another of which
Agent is given prior written notice (provided that, if a Borrower is a party thereto, a Borrower
shall be the surviving entity); provided, that the sale by Holdings of any Equity Interests of any
Borrower shall be deemed a sale of substantially all of Holding’s assets.

     “Charges” shall mean all taxes, charges, fees, imposts, levies or other assessments,
including all net income, gross income, gross receipts, sales, use, ad valorem, value added,
transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment,
social security, unemployment, excise, severance, stamp, occupation and property taxes, custom
duties, fees, assessments, liens, claims and charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts, imposed by any taxing or other
authority, domestic or foreign (including the Pension Benefit Guaranty Corporation or any
environmental agency or superfund), upon the Collateral, any Borrower or any of its Affiliates.

     “Charter Receivables” shall mean Receivables owed by a Customer (that is not an
Affiliate of Borrowers) to a Borrower with respect to the time charter of a vessel for a period of
time not more than six (6) months, so long as such Receivable is subject to the first-priority
security interest of Agent and is otherwise an Eligible Receivable.

     “Closing Date” shall mean April 28, 2006 or such other date as may be agreed to by the
parties hereto.

     “Code” shall mean the Internal Revenue Code of 1986, as the same may be amended or
supplemented from time to time, and any successor statute of similar import, and the rules and
regulations thereunder, as from time to time in effect.

     “Collateral” shall mean and include:

          (a) all Receivables;

          (b) all General Intangibles;

          (c) all Inventory;

          (d) all Investment Property;

          (e) all Subsidiary Stock;

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          (f) all of each Borrower’s right, title and interest in and to, whether now owned or hereafter
acquired and wherever located, (i) its respective goods and other property including, but not
limited to, all merchandise returned or rejected by Customers, relating to or securing any of the
Receivables; (ii) all of each Borrower’s rights as a consignor, a consignee, an unpaid vendor,
mechanic, artisan, or other lienor, including stoppage in transit, setoff, detinue, replevin,
reclamation and repurchase; (iii) all additional amounts due to any Borrower from any Customer
relating to the Receivables; (iv) other property, including warranty claims, relating to any goods
securing the Obligations; (v) all of each Borrower’s contract rights, rights of payment which have
been earned under a contract right, instruments (including promissory notes), documents, chattel
paper (including electronic chattel paper), warehouse receipts, deposit accounts, letters of credit
and money; (vi) all commercial tort claims (whether now existing or hereafter arising); (vii) if
and when obtained by any Borrower, all personal property of third parties in which such Borrower
has been granted a lien or security interest as security for the payment or enforcement of
Receivables; (viii) all letter of credit rights (whether or not the respective letter of credit is
evidenced by a writing); (ix) all supporting obligations; and (x) any other goods, personal
property or real property now owned or hereafter acquired in which any Borrower has expressly
granted a security interest or may in the future grant a security interest to Agent hereunder, or
in any amendment or supplement hereto or thereto, or under any other agreement between Agent and
any Borrower;

          (g) all of each Borrower’s ledger sheets, ledger cards, files, correspondence, records, books
of account, business papers, computers, computer software (owned by any Borrower or in which it has
an interest), computer programs, tapes, disks and documents relating to (a), (b), (c), (d), (e) or
(f) of this Paragraph; and

          (h) all proceeds and products of (a), (b), (c), (d), (e), (f) and (g) in whatever form,
including, but not limited to: cash, deposit accounts (whether or not comprised solely of
proceeds), certificates of deposit, insurance proceeds (including hazard, flood and credit
insurance), negotiable instruments and other instruments for the payment of money, chattel paper,
security agreements, documents, eminent domain proceeds, condemnation proceeds and tort claim
proceeds. Notwithstanding the foregoing, the term “Collateral” shall not include vessels.

     “Commitment Percentage” of any Lender shall mean the percentage set forth below such
Lender’s name on the signature page hereof as same may be adjusted upon any assignment by a Lender
pursuant to Section 16.3(b) hereof.

     “Commitment Transfer Supplement” shall mean a document in the form of Exhibit
16.3 hereto, properly completed and otherwise in form and substance satisfactory to Agent by
which the Purchasing Lender purchases and assumes a portion of the obligation of Lenders to make
Advances under this Agreement.

     “Compliance Certificate” shall mean a compliance certificate to be signed by the Chief
Financial Officer or Controller of Borrowing Agent, which shall state that, based on an examination
sufficient to permit such officer to make an informed statement, no Default or Event
of Default exists, or if such is not the case, specifying such Default or Event of Default,
its nature, when it occurred, whether it is continuing and the steps being taken by Borrowers with

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respect to such default and, such certificate shall have appended thereto calculations which set
forth Borrowers’ compliance with the requirements or restrictions imposed by Sections 6.5,
7.4, 7.5, 7.6, 7.7, 7.8, 7.10 and 7.11.

     “Consents” shall mean all filings and all licenses, permits, consents, approvals,
authorizations, qualifications and orders of Governmental Bodies and other third parties, domestic
or foreign, necessary to carry on any Borrower’s business or necessary (including to avoid a
conflict or breach under any agreement, instrument, other document, license, permit or other
authorization) for the execution, delivery or performance of this Agreement, the Other Documents,
including any Consents required under all applicable federal, state or other Applicable Law.

     “Controlled Group” shall mean, at any time, each Borrower and all members of a
controlled group of corporations and all trades or businesses (whether or not incorporated) under
common control and all other entities which, together with any Borrower, are treated as a single
employer under Section 414 of the Code.

     “Customer” shall mean and include the account debtor with respect to any Receivable
and/or the prospective purchaser of goods, services or both with respect to any contract or
contract right, and/or any party who enters into or proposes to enter into any contract or other
arrangement with any Borrower, pursuant to which such Borrower is to deliver any personal property
or perform any services.

     “Debt Payments” shall mean, without duplication, the sum of (i) the aggregate amount
of all required cash payments of interest and fees (other than non- recurring fees) on any Funded
Debt and Advances hereunder of Borrowers and their Subsidiaries, including the interest portion of
any amount paid under the Capitalized Lease Obligation and any “synthetic lease”, during such
measurement period, plus (ii) the principal amount due and payable during the next succeeding
twelve month period on the Funded Debt (excluding Funded Debt and Advances hereunder), including
the Subordinated Note and the Vessel Note (excluding payments made with proceeds of the Pemex
Litigation Receivable, the Gulf Horizon insurance proceeds or the sale of Equity Interests),
without duplication.

     “Default” shall mean an event, circumstance or condition which, with the giving of
notice or passage of time or both, would constitute an Event of Default.

     “Default Rate” shall have the meaning set forth in Section 3.1 hereof.

     “Defaulting Lender” shall have the meaning set forth in Section 2.23(a)
hereof.

     “Depository Accounts” shall have the meaning set forth in Section 4.15(h)
hereof.

     “Documents” shall have the meaning set forth in Section 8.1(c) hereof.

     “Dollar” and the sign “$” shall mean lawful money of the United States of
America.

     “Domestic Rate Loan” shall mean any Advance that bears interest based upon the
Alternate Base Rate.

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     “Drawing Date” shall have the meaning set forth in Section 2.12(b) hereof.

     “Early Termination Date” shall have the meaning set forth in Section 13.1
hereof.

     “Earnings Before Interest and Taxes” shall mean for any period the sum of (i) net
income (or loss) of Holdings on a Consolidated Basis for such period (excluding extraordinary gains
and extraordinary non-cash losses (including impairment of assets, accelerated amortization of loan
fees, discounts and warrant expenses), plus (ii) all interest expense of Holdings on a Consolidated
Basis for such period, plus (iii) all charges based on income of Holdings on a Consolidated Basis
for such period for federal, state and local taxes.

     “EBITDA” shall mean for any period the sum of (i) Earnings Before Interest and Taxes
for such period plus (ii) depreciation expenses for such period, plus (iii) amortization expenses
for such period.

     “Eligible Receivables” shall mean and include with respect to each Borrower, each
Receivable of such Borrower arising in the Ordinary Course of Business and which Agent, in its
Permitted Discretion, shall deem to be an Eligible Receivable, based on such considerations as
Agent may from time to time deem appropriate. A Receivable shall not be deemed eligible unless
such Receivable is subject to Agent’s first priority perfected security interest and no other Lien
(other than Permitted Encumbrances), and is evidenced by an invoice or other documentary evidence
satisfactory to Agent; except to the extent it constitutes Eligible Unbilled Receivables or
Eligible Retainage, without duplication. In addition, no Receivable shall be an Eligible
Receivable if:

          (a) it arises (i) out of a sale made by any Borrower to an Affiliate of any Borrower or to a
Person controlled by an Affiliate of any Borrower or (ii) in connection with the rental of any
Vessel by any Borrower other than a Charter Receivable;

          (b) it is due or unpaid more than ninety (90) days after the original invoice date;

          (c) fifty percent (50%) or more of the Receivables from such Customer are not deemed Eligible
Receivables hereunder;

          (d) any covenant, representation or warranty contained in this Agreement with respect to such
Receivable has been breached;

          (e) the Customer shall (i) apply for, suffer, or consent to the appointment of, or the taking
of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial
part of its property or call a meeting of its creditors, (ii) admit in writing its inability, or be
generally unable, to pay its debts as they become due or cease operations of its present business,
(iii) make a general assignment for the benefit of creditors, (iv) commence a voluntary case under
any state or federal bankruptcy laws (as now or hereafter in effect), (v) be adjudicated a bankrupt
or insolvent, (vi) file a petition seeking to take advantage of any other law providing
for the relief of debtors, (vii) acquiesce to, or fail to have dismissed, any petition which
is filed against it in any involuntary case under such bankruptcy laws, or (viii) take any action
for the purpose of effecting any of the foregoing;

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          (f) the sale is to a Customer outside the continental United States of America, unless the
sale is (i) on letter of credit, guaranty or acceptance terms, in each case acceptable to Agent in
its sole discretion, or (ii) subject to the standards of eligibility contained herein, made to (A)
a Customer satisfactory to Agent in its Permitted Discretion; so long as such Receivable is billed
in Dollars only and is payable directly to a bank account physically located within the continental
United States of America or (B) Pemex by HOC, so long as such Receivable is converted to Dollars
and is remitted to a bank account physically located within the continental United States of
America on the next Business Day following receipt thereof; in each case up to the Foreign
Receivable Sublimit;

          (g) the sale to the Customer is on a bill-and-hold, guaranteed sale, sale-and-return, sale on
approval, consignment, subject to retainage or any other repurchase or return basis or is evidenced
by chattel paper;

          (h) Agent determines, in its Permitted Discretion, that collection of such Receivable is
insecure or that such Receivable may not be paid by reason of the Customer’s financial inability to
pay;

          (i) the Customer is the United States of America, any state or any department, agency or
instrumentality of any of them, unless the applicable Borrower assigns its right to payment of such
Receivable to Agent pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C.
Sub-Section 3727 et seq. and 41 U.S.C. Sub-Section 15 et seq.) or has otherwise complied with other
applicable statutes or ordinances;

          (j) the goods giving rise to such Receivable have not been delivered to and accepted by the
Customer or otherwise delivered in accordance with the applicable procedures and provisions of an
executed contract with the Customer or the services giving rise to such Receivable have not been
performed by the applicable Borrower and accepted by the Customer or otherwise performed in
accordance with the applicable procedures and provisions of an executed contract with the Customer
or the Receivable represents a progress billing or is otherwise contingent upon the applicable
Borrower’s completion of any further performance (other than a progress billing in accordance with
the applicable billing procedures and other provisions of an executed contract with the Customer);

          (k) the Receivables of the Customer exceed a credit limit determined by Agent, in its
Permitted Discretion, to the extent such Receivable exceeds such limit;

          (l) the Receivable is subject to any offset, deduction, defense, dispute, or counterclaim that
has been threatened or asserted by a Customer (to the extent of such offset, deduction, defense,
dispute, or counterclaim), the Customer is also at such time a creditor or supplier of a Borrower
(to the extent of such amount owed by the Borrower to the Customer) or the Receivable is contingent
in any respect or for any reason (to the extent of such contingent amount);

          (m) the applicable Borrower has made any agreement with any Customer for any deduction
therefrom, except for discounts or allowances made in the Ordinary Course of

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Business for prompt payment, all of which discounts or allowances are reflected in the calculation of the face value of
each respective invoice related thereto;

          (n) any return, rejection or repossession of the merchandise has occurred or the rendition of
services has been disputed;

          (o) such Receivable is not payable to a Borrower;

          (p) such Receivable is not otherwise satisfactory to Agent as determined in the exercise of
its Permitted Discretion; or

          (q) such Receivable is derived from contracts that are bonded (other than unsecured bonds
issued for the benefit of HOC) or backed by a letter of credit other than Letters of Credit (to the
extent of such bond or such letter of credit) or is subject to mechanics’, workers’, materialmen’s
or other like Liens that have been threatened or asserted.

     “Eligible Retainage” shall mean Retainage in an aggregate amount not to exceed
$5,000,000, that is evidenced by documentation satisfactory to Agent in its Permitted Discretion
showing that the applicable portion of the underlying job related thereto has been completed and
accepted by the Customer, all conditions to such payment under the applicable contract have been
satisfied, such amount is due and payable and is not due or unpaid for more than ninety (90) days
after the date under the contract that such amounts are due and payable, and that, but for the
failure to satisfy clauses (g) and (j) of the definition of Eligible Receivables, otherwise
constitute Eligible Receivables.

     “Eligible Unbilled Receivables” shall mean Receivables in an aggregate amount not to
exceed $5,000,000, that are owing by Customers located within the continental United States of
America and that, but for the failure to be evidenced by an invoice, otherwise constitute Eligible
Receivables; provided that no Receivable shall be considered an Eligible Unbilled Receivable if it
is unbilled for more than thirty (30) days.

     “Environmental Complaint” shall have the meaning set forth in Section 4.19(b)
hereof.

     “Environmental Laws” shall mean all federal, state and local environmental, land use,
zoning, health, chemical use, safety and sanitation laws, statutes, ordinances and codes relating
to the protection of the environment and/or governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of Hazardous Substances and the rules,
regulations, policies, guidelines, interpretations, decisions, orders and directives of federal,
state and local governmental agencies and authorities with respect thereto.

     “Equipment” shall mean and include as to each Borrower all of such Borrower’s goods
(other than Inventory) whether now owned or hereafter acquired and wherever located including all
equipment, machinery, apparatus, motor vehicles, fittings, furniture, furnishings, fixtures, parts,
accessories and all replacements and substitutions therefor or accessions thereto.

     “Equity Interests” of any Person shall mean any and all shares, rights to purchase,
options, warrants, general, limited or limited liability partnership interests, member interests,
participation or other equivalents of or interest in (regardless of how designated) equity of such

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Person, whether voting or nonvoting, including common stock, preferred stock, convertible
securities or any other “equity security” (as such term is defined in Rule 3a11-1 of the General
Rules and Regulations promulgated by the SEC under the Exchange Act).

     “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended
from time to time and the rules and regulations promulgated thereunder.

     “Eurodollar Rate” shall mean for any Eurodollar Rate Loan for the then current
Interest Period relating thereto the interest rate per annum determined by Agent by dividing (the
resulting quotient rounded upwards, if necessary, to the nearest 1/100th of 1% per annum) (i) the
rate of interest determined by Agent in accordance with its usual procedures (which determination
shall be conclusive absent manifest error) to be the average of the London interbank offered rates
for U.S. Dollars quoted by the British Bankers’ Association as set forth on Moneyline Telerate (or
appropriate successor or, if British Banker’s Association or its successor ceases to provide such
quotes, a comparable replacement determined by Agent) display page 3750 (or such other display page
on the Moneyline Telerate system as may replace display page 3750) two (2) Business Days prior to
the first day of such Interest Period for an amount comparable to such Eurodollar Rate Loan and
having a borrowing date and a maturity comparable to such Interest Period by (ii) a number equal to
1.00 minus the Reserve Percentage. The Eurodollar Rate may also be expressed by the following
formula:

Average of London interbank offered rates quoted by BBA as shown on

Eurodollar Rate =Moneyline Telerate Service display page 3750 or appropriate successor

1.00 — Reserve Percentage.

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

     “Eurodollar Rate Loan” shall mean an Advance at any time that bears interest based on
the Eurodollar Rate.

     “Event of Default” shall have the meaning set forth in Article X hereof.

     “Exchange Act” shall have the mean the Securities Exchange Act of 1934, as amended.

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

     “Federal Funds Effective Rate” for any day shall mean the rate per annum (based on a
year of 360 days and actual days elapsed and rounded upward to the nearest 1/100 of 1%) announced
by the Federal Reserve Bank of New York (or any successor) on such day as being
the weighted average of the rates on overnight federal funds transactions arranged by federal
funds brokers on the previous trading day, as computed and announced by such Federal Reserve Bank
(or any successor) in substantially the same manner as such Federal Reserve Bank

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computes and announces the weighted average it refers to as the “Federal Funds Effective Rate” as of the date of
this Agreement; provided, if such Federal Reserve Bank (or its successor) does not announce such
rate on any day, the “Federal Funds Effective Rate” for such day shall be the Federal Funds
Effective Rate for the last day on which such rate was announced.

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

     “Fixed Charge Coverage Ratio” shall mean and include (a) prior to an Undrawn
Availability Event, with respect to the applicable Fixed Charge Measurement Period, the ratio of
(i) EBITDA minus the aggregate amount of federal, state and local income taxes actually paid or
required to be paid by the Borrower and their Subsidiaries during such Fixed Charge Measurement
Period; divided by (ii) the sum of (A) all Debt Payments under subsection (i) of such definition
for such Fixed Charge Measurement Period plus (B) all Debt Payments under subsection (ii) of such
definition for such Fixed Charge Measurement Period divided by twelve (12) and multiplied by (w)
three (3) on the first date of determination, (x) six (6) on the second date of determination, (y)
nine (9) on the third date of determination and (z) twelve (12) for each date of determination
thereafter; and (b) following an Undrawn Availability Event, with respect to the applicable Fixed
Charge Measurement Period, the ratio of (i) EBITDA for the twelve month period then ending minus
Capital Expenditures made during such Fixed Charge Measurement Period (excluding Capital
Expenditures to the extent financed with Funded Debt otherwise permitted under this Agreement other
than Revolving Advances), minus Capitalized Dry Dock Cost (without duplication), minus the
aggregate amount of federal, state and local income taxes actually paid or required to be paid by
the Borrower and their Subsidiaries during the twelve-month period then ending; divided by (ii) the
sum of (A) all Debt Payments under subsection (i) of such definition for the twelve-month period
then ending plus (B) all Debt Payments under subsection (ii) of such definition as of the
applicable measurement date.

     “Fixed Charge Measurement Period” shall mean the period of time measured as of (i) the
last day of each fiscal quarter ending on or before December 31, 2006 for the period from the
January 1, 2006 through each such quarter end, and (ii) the last day of each fiscal quarter
thereafter, for the four-quarter period then ending; provided however, that
following any Undrawn Availability Event, such measurement period shall be (except as otherwise set
forth in subsection (b) of the definition of Fixed Charge Coverage Ratio) the period beginning on
the first day of the fiscal quarter following an Undrawn Availability Event, through and including
the applicable date of determination, until such measurement period equals four quarters, and
thereafter it shall be for the four-quarter period then ending.

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     “Foreign Receivables Sublimit” shall mean an amount equal to (i) from the Closing Date
through and including July 31, 2006, $10,000,000, (ii) from August 1, 2006 through and including
January 31, 2007, $7,500,000, and (iii) from February 1, 2007 and thereafter, $5,000,000.

     “Formula Amount” shall have the meaning set forth in Section 2.1(a).

     “Funded Debt” shall mean, with respect to any Person, without duplication, all
Indebtedness for borrowed money evidenced by notes, bonds, debentures, or similar evidences of
Indebtedness that by its terms matures more than one year from, or is directly or indirectly
renewable or extendible at such Person’s option under a revolving credit or similar agreement
obligating the lender or lenders to extend credit over a period of more than one year from the date
of creation thereof, and specifically including Capitalized 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 Borrower, the Obligations and, without duplication,
Indebtedness consisting of guaranties of Funded Debt of other Persons.

     “GAAP” shall mean generally accepted accounting principles in the United States of
America in effect from time to time.

     “General Intangibles” shall mean and include as to each Borrower all of such
Borrower’s general intangibles, whether now owned or hereafter acquired, including all payment
intangibles, all choses in action, causes of action, corporate or other business records,
inventions, designs, patents, patent applications, equipment formulations, manufacturing
procedures, quality control procedures, trademarks, trademark applications, service marks, trade
secrets, goodwill, copyrights, design rights, software, computer information, source codes, codes,
records and updates, registrations, licenses, franchises, customer lists, tax refunds, tax refund
claims, computer programs, all claims under guaranties, security interests or other security held
by or granted to such Borrower to secure payment of any of the Receivables by a Customer (other
than to the extent covered by Receivables) all rights of indemnification and all other intangible
property of every kind and nature (other than Receivables).

     “Governmental Acts” shall have the meaning set forth in Section 2.17.

     “Governmental Body” shall mean any nation or government, any state or other political
subdivision thereof or any entity, authority, agency, division or department exercising the
legislative, judicial, regulatory or administrative functions of or pertaining to a government.

     “Gross-Up Payment” shall have the meaning set forth in Section 3.10.

     “Guarantor” shall mean Horizon Subsea Services, Inc., a Delaware corporation, Texas
Offshore Contractors Corp., a Delaware corporation, Horizon Vessels, Inc., a Delaware corporation,
Affiliated Marine Contractors Inc., a Delaware corporation, Bayou Marine Contractors Inc., a
Delaware corporation, Fleet Pipeline Services, Inc., a Delaware corporation, Gulf Offshore
Construction Inc., a Delaware corporation, HorizEN LLC, a Delaware limited
liability company, Progressive Pipeline Contractors Inc., a Delaware corporation, and any
other Person who may hereafter guarantee payment or performance of the whole or any part of the
Obligations and “Guarantors” means collectively all such Persons.

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     “Guarantor Security Agreement” shall mean any security agreement executed by any
Guarantor in favor of Agent securing the Guaranty of such Guarantor.

     “Guaranty” shall mean any guaranty of the obligations of Borrowers executed by a
Guarantor in favor of Agent for its benefit and for the ratable benefit of Lenders.

     “Hazardous Discharge” shall have the meaning set forth in Section 4.19(b)
hereof.

     “Hazardous Substance” shall mean, without limitation, any flammable explosives, radon,
radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls,
petroleum and petroleum products, methane, hazardous materials, Hazardous Wastes, hazardous or
Toxic Substances or related materials as defined in CERCLA, the Hazardous Materials Transportation
Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA, Articles 15 and 27 of the New York State
Environmental Conservation Law or any other applicable Environmental Law and in the regulations
adopted pursuant thereto.

     “Hazardous Wastes” shall mean all waste materials subject to regulation under CERCLA,
RCRA or applicable state law, and any other applicable Federal and state laws now in force or
hereafter enacted relating to hazardous waste disposal.

     “Hedge Liabilities” shall have the meaning provided in the definition of
“Lender-Provided Interest Rate Hedge”.

     “Holdings” shall mean Horizon Offshore, Inc., a Delaware corporation.

     “Holdings on a Consolidated Basis” shall mean the consolidation in accordance with
GAAP of the accounts or other items of Holdings and its respective Subsidiaries.

     “Horizon C-Bay” shall mean Horizon C-Bay Costa Afuera, S. De R.L. De C.V., a Mexican
limited liability company.

     “Indebtedness” of a Person at a particular date shall mean all obligations of such
Person which in accordance with GAAP would be classified upon a balance sheet as liabilities
(except capital stock and surplus earned or otherwise) and in any event, without limitation by
reason of enumeration, shall include all indebtedness, debt and other similar monetary obligations
of such Person whether direct or guaranteed, and all premiums, if any, due at the required
prepayment dates of such indebtedness, and all indebtedness secured by a Lien on assets owned by
such Person, whether or not such indebtedness actually shall have been created, assumed or incurred
by such Person. Any indebtedness of such Person resulting from the acquisition by such Person of
any assets subject to any Lien shall be deemed, for the purposes hereof, to be the equivalent of
the creation, assumption and incurring of the indebtedness secured thereby, whether or not actually
so created, assumed or incurred.

     “Ineligible Security” shall mean any security which may not be underwritten or dealt
in by member banks of the Federal Reserve System under Section 16 of the Banking Act of 1933 (12
U.S.C. Section 24, Seventh), as amended.

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     “Intellectual Property” shall mean property constituting under any Applicable Law a
patent, patent application, copyright, trademark, service mark, trade name, mask work, trade secret
or license or other right to use any of the foregoing.

     “Intellectual Property Claim” shall mean the assertion by any Person of a claim
(whether asserted in writing, by action, suit or proceeding or otherwise) that any Borrower’s
ownership, use, marketing, sale or distribution of any Inventory, Equipment, Intellectual Property
or other property or asset is violative of any ownership of or right to use any Intellectual
Property of such Person.

     “Intercreditor Agreements” shall mean, collectively, any Intercreditor Agreements
entered into among Agent, Borrowers and Vessel Lender.

     “Interest Period” shall mean the period provided for any Eurodollar Rate Loan pursuant
to Section 2.2(b).

     “Interest Rate Hedge” shall mean an interest rate exchange, collar, cap, swap,
adjustable strike cap, adjustable strike corridor or similar agreements entered into by any
Borrower or in order to provide protection to, or minimize the impact upon, such Borrower, and /or
its Subsidiaries with respect to the increasing floating rates of interest applicable to
Indebtedness of the Borrower and/or its Subsidiaries, as the case may be.

     “Inventory” shall mean and include as to each Borrower all of such Borrower’s now
owned or hereafter acquired goods, merchandise and other personal property, wherever located, to be
furnished under any consignment arrangement, contract of service or held for sale or lease, all raw
materials, work in process, finished goods and materials and supplies of any kind, nature or
description which are or might be used or consumed in such Borrower’s business or used in selling
or furnishing such goods, merchandise and other personal property, and all documents of title or
other documents representing them.

     “Investment Property” shall mean and include as to each Borrower, all of such
Borrower’s now owned or hereafter acquired securities (whether certificated or uncertificated),
securities entitlements, securities accounts, commodities contracts and commodities accounts.

     “Issuer” shall mean any Person who issues a Letter of Credit and/or accepts a draft
pursuant to the terms hereof.

     “Lender” and “Lenders” shall have the meaning ascribed to such term in the
preamble to this Agreement and shall include each Person which becomes a transferee, successor or
assign of any Lender.

     “Lender-Provided Interest Rate Hedge” shall mean an Interest Rate Hedge which is
provided by any Lender and with respect to which the Agent confirms meets the following
requirements: such Interest Rate Hedge (i) is documented in a standard International Swap
Dealer Association Agreement, (ii) provides for the method of calculating the reimbursable
amount of the provider’s credit exposure in a reasonable and customary manner, and (iii) is entered
into for hedging (rather than speculative) purposes. The liabilities of any Borrower to the
provider of any Lender-Provided Interest Rate Hedge (the “Hedge Liabilities”) shall be

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“Obligations” hereunder, guaranteed obligations under the Guaranty and secured obligations under
the Guarantor Security Agreement and otherwise treated as Obligations for purposes of each of the
Other Documents. The Liens securing the Hedge Liabilities shall be pari passu with the Liens
securing all other Obligations under this Agreement and the Other Documents.

     “Letter of Credit Fees” shall have the meaning set forth in Section 3.2.

     “Letter of Credit Borrowing” shall have the meaning set forth in Section
2.12(d).

     “Letter of Credit Sublimit” shall mean $10,000,000.

     “Letters of Credit” shall have the meaning set forth in Section 2.9.

     “Lien” shall mean any mortgage, deed of trust, pledge, hypothecation, assignment,
security interest, lien (whether statutory or otherwise), Charge, claim or encumbrance, or
preference, priority or other security agreement or preferential arrangement held or asserted in
respect of any asset of any kind or nature whatsoever including any conditional sale or other title
retention agreement, any lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction.

     “Lien Waiver Agreement” shall mean an agreement which is executed in favor of Agent by
a Person who owns or occupies premises on which any Collateral may be located from time to time and
by which each such Person shall waive any Lien that each such Person may ever have with respect to
any of the Collateral and shall authorize Agent from time to time to enter upon the premises to
inspect or remove the Collateral from such premises or to use such premises to store or dispose of
such Inventory.

     “Material Adverse Effect” shall mean a material adverse effect on (a) the condition
(financial or otherwise), results of operations, assets, business or properties of either (i)
Holdings on a Consolidated Basis, or (ii) Borrowers on a consolidated basis, (b) either (i)
Holdings’ on a Consolidated Basis, or (ii) Borrowers’ on a consolidated basis ability to duly and
punctually pay or perform the Obligations in accordance with the terms thereof, (c) the value of
the Collateral, or Agent’s Liens on the Collateral or the priority of any such Lien or (d) the
practical realization of the benefits of Agent’s and each Lender’s rights and remedies under this
Agreement and the Other Documents.

     “Maximum Face Amount” shall mean, with respect to any outstanding Letter of Credit,
the face amount of such Letter of Credit including all automatic increases provided for in such
Letter of Credit, whether or not any such automatic increase has become effective.

     “Maximum Rate” shall have the meaning set forth in Section 3.6.

     “Maximum Revolving Advance Amount” shall mean $30,000,000, as such amount may be
reduced in accordance with Section 2.1(d).

     “Maximum Undrawn Amount” shall mean with respect to any outstanding Letter of Credit,
the amount of such Letter of Credit that is or may become available to be drawn,

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including all automatic increases provided for in such Letter of Credit, whether or not any such automatic
increase has become effective.

     “Multiemployer Plan” shall mean a “multiemployer plan” as defined in Sections 3(37)
and 4001(a)(3) of ERISA.

     “Multiple Employer Plan” shall mean a Plan which has two or more contributing sponsors
(including any Borrower or any member of the Controlled Group) at least two of whom are not under
common control, as such a plan is described in Section 4064 of ERISA.

     “Note” shall mean the Revolving Credit Note.

     “Obligations” shall mean and include any and all loans, advances, debts, liabilities,
obligations, covenants and duties owing by any Borrower to Lenders or Agent or to any other direct
or indirect subsidiary or affiliate of Agent or any Lender of any kind or nature, present or future
(including any interest or other amounts accruing thereon after maturity, or after the filing of
any petition in bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding relating to any Borrower, whether or not a claim for post-filing or post-petition
interest or other amounts is allowed in such proceeding), whether or not evidenced by any note,
guaranty or other instrument, whether arising under any agreement, instrument or document,
(including this Agreement and the Other Documents) whether or not for the payment of money, whether
arising by reason of an extension of credit, opening of a letter of credit, loan, equipment lease
or guarantee, under any interest or currency swap, future, option or other similar agreement, or in
any other manner, whether arising out of overdrafts or deposit or other accounts or electronic
funds transfers (whether through automated clearing houses or otherwise) or out of the Agent’s or
any Lenders non-receipt of or inability to collect funds or otherwise not being made whole in
connection with depository transfer check or other similar arrangements, whether direct or indirect
(including those acquired by assignment or participation), absolute or contingent, joint or
several, due or to become due, now existing or hereafter arising, contractual or tortious,
liquidated or unliquidated, regardless of how such indebtedness or liabilities arise or by what
agreement or instrument they may be evidenced or whether evidenced by any agreement or instrument,
including, but not limited to, any and all of any Borrower’s Indebtedness and/or liabilities under
this Agreement, the Other Documents or under any other agreement between Agent or Lenders and any
Borrower and any amendments, extensions, renewals or increases and all costs and expenses of Agent
and any Lender incurred in the documentation, negotiation, modification, enforcement, collection or
otherwise in connection with any of the foregoing, including but not limited to reasonable
attorneys’ fees and expenses and all obligations of any Borrower to Agent or Lenders to perform
acts or refrain from taking any action.

     “Operating Company Borrowers” shall mean Contractors, HOC and Construction.

     “Ordinary Course of Business” shall mean with respect to any Borrower, the ordinary
course of such Borrower’s business as conducted on the Closing Date.

     “Original Owners” shall mean Elliot Associates, L.P., Elliott International, L,P.,
Manchester Securities Corp. and their Affiliates.

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     “Other Documents” shall mean any Pledge Agreement, the Note, the Questionnaire, any
Guaranty, any Guarantor Security Agreement, any Lender-Provided Interest Rate Hedge and any and all
other agreements, instruments and documents, including guaranties, pledges, powers of attorney,
consents, interest or currency swap agreements or other similar agreements and all other writings
heretofore, now or hereafter executed by any Borrower or any Guarantor and/or delivered to Agent or
any Lender in respect of the transactions contemplated by this Agreement.

     “Out-of-Formula Loans” shall have the meaning set forth in Section 15.2(b).

     “Parent” of any Person shall mean a corporation or other entity owning, directly or
indirectly at least 50% of the shares of stock or other ownership interests having ordinary voting
power to elect a majority of the directors of the Person, or other Persons performing similar
functions for any such Person.

     “Participant” shall mean each Person who shall be granted the right by any Lender to
participate in any of the Advances and who shall have entered into a participation agreement in
form and substance satisfactory to such Lender.

     “Participation Advance” shall have the meaning set forth in Section 2.12(d).

     “Participation Commitment” shall mean each Lender’s obligation to buy a participation
of the Letters of Credit issued hereunder.

     “Payee” and “Payees” shall have the meanings set forth in Section
3.10.

     “Payment Office” shall mean initially Two Tower Center Boulevard, East Brunswick, New
Jersey 08816; thereafter, such other office of Agent, if any, which it may designate by notice to
Borrowing Agent and to each Lender to be the Payment Office.

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

     “Pemex” shall mean Pemex Exploracion y Produccion.

     “Pemex Litigation Receivable” shall mean any amount payable to ECH with respect to its
commercial litigation claim against Pemex pending as of the Closing Date.

     “Pension Benefit Plan” shall mean at any time any employee pension benefit plan
(including a Multiple Employer Plan, but not a Multiemployer Plan) which is covered by Title IV of
ERISA or is subject to the minimum funding standards under Section 412 of the Code and either (i)
is maintained by any member of the Controlled Group for employees of any member of the Controlled
Group; or (ii) has at any time within the preceding five years been maintained by
any entity which was at such time a member of the Controlled Group for employees of any entity
which was at such time a member of the Controlled Group.

     “Permanent Reserve” shall mean an amount equal to $6,000,000.

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

     “Permitted Encumbrances” shall mean (a) Liens in favor of Agent for the benefit of
Agent and Lenders; (b) Liens for taxes, assessments or other governmental charges not delinquent or
being Properly Contested; (c) Liens disclosed in the financial statements referred to in
Section 5.5; (d) deposits or pledges to secure obligations under worker’s compensation,
social security or similar laws, or under unemployment insurance; (e) deposits or pledges to secure
bids, tenders, contracts (other than contracts for the payment of money), leases, statutory
obligations, surety and appeal bonds (including performance, warranty and bid bonds) to the extent
the same are permitted under Section 7.8 and other obligations of like nature arising in
the Ordinary Course of Business; (f) Liens arising by virtue of the rendition, entry or issuance
against any Borrower or any Subsidiary, or any property of any Borrower or any Subsidiary, of any
judgment, writ, order, or decree for so long as each such Lien (i) is in existence for less than 20
consecutive days after it first arises or is being Properly Contested and (ii) is at all times
junior in priority to any Liens in favor of Agent; (g) maritime, shipyard, mechanics’, workers’,
materialmen’s or other like Liens arising in the Ordinary Course of Business with respect to
obligations which are not due or which are being Properly Contested; (h) Liens placed upon fixed
assets and equipment hereafter acquired to secure a portion of the purchase price thereof, provided
that (i) any such lien shall not encumber any other property of any Borrower and (ii) the aggregate
amount of Indebtedness secured by such Liens incurred as a result of such purchases during any
fiscal year shall not exceed the amount provided for in Section 7.6; (i) Liens in favor of
the Vessel Lender securing the Vessel Loan and with respect to refinancing thereof in accordance
with Section 7.8, provided that any applicable Intercreditor Agreement is in full force and
effect; and (j) Liens disclosed on Schedule 1.2 and refinancing thereof provided that such
refinancings are for amounts not greater than the amount thereof on the Closing Date and on terms
which are no more onerous than those in effect on the Closing Date.

     “Permitted Securities” shall mean any shares, units or interests of equity securities
or ownership interests of Holdings that by their terms (or by the terms of any security into which
it is convertible or for which it is exchangeable) or upon the happening of any event or otherwise
(A) are not convertible or exchangeable for Indebtedness or any securities that are not Permitted
Securities, (B) (i) do not mature and (ii) are not putable or redeemable for cash at the option of
the holder thereof, in each case under clause (i) or (ii) in whole or in part on or prior to the
date that is the earlier to occur of the last day of the Term or the actual payment in full in
cash of the Obligations, (C) do not have payments of dividends on or prior to the date that is the
earlier to occur of the last day of the Term or the actual payment in full of the Obligations, (D)
are unsecured and by operation of law or by legally binding agreement are subordinated in right of
repayment, liens, security and remedies to all of the Obligations and to all of Agent’s and
Purchasers’ rights, Liens and remedies, (E) do not have any veto or supermajority voting rights or
approval rights with respect to any issues, and/or (F) are not sold, issued or otherwise
transferred in connection with or as a part of an Initial Public Offering.

     “Person” shall mean any individual, sole proprietorship, partnership, corporation,
business trust, joint stock company, trust, unincorporated organization, association, limited
liability company, limited liability partnership, institution, public benefit corporation, joint

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venture, entity or Governmental Body (whether federal, state, county, city, municipal or otherwise,
including any instrumentality, division, agency, body or department thereof).

     “Plan” shall mean any employee benefit plan within the meaning of Section 3(3) of
ERISA (including a Pension Benefit Plan), maintained for employees of any Borrower or any member of
the Controlled Group or any such Plan to which any Borrower or any member of the Controlled Group
is required to contribute on behalf of any of its employees.

     “Pledge Agreement” shall mean each pledge agreement executed by Borrowers in favor of
Agent.

     “PNC” shall have the meaning set forth in the preamble to this Agreement and shall
extend to all of its successors and assigns.

     “Pro Forma Balance Sheet” shall have the meaning set forth in Section 5.5(a)
hereof.

     “Pro Forma Financial Statements” shall have the meaning set forth in Section
5.5(b) hereof.

     “Projections” shall have the meaning set forth in Section 5.5(b) hereof.

     “Properly Contested” shall mean, in the case of any Indebtedness of any Person
(including any taxes) that is not paid as and when due or payable by reason of such Person’s bona
fide dispute concerning its liability to pay same or concerning the amount thereof, (i) such
Indebtedness is being properly contested in good faith by appropriate proceedings promptly
instituted and diligently conducted; (ii) such Person has established appropriate reserves as shall
be required in conformity with GAAP; (iii) no Lien is imposed upon any of such Person’s assets with
respect to such Indebtedness unless enforcement of such Lien is stayed during the period prior to
the final resolution or disposition of such dispute; and (iv) if such Indebtedness results from, or
is determined by the entry, rendition or issuance against a Person or any of its assets of a
judgment, writ, order or decree, enforcement of such judgment, writ, order or decree is stayed
pending a timely appeal or other judicial review.

     “Purchasing Lender” shall have the meaning set forth in Section 16.3 hereof.

     “Questionnaire” shall mean the UCC Information Request and Authorization Form and the
responses thereto provided by Borrowing Agent and delivered to Agent.

     “RCRA” shall mean the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et
seq., as same may be amended from time to time.

     “Real Property” shall mean all of each Borrower’s right, title and interest in and to
the owned and leased premises identified on Schedule 4.19 hereto.

     “Receivables” shall mean and include, as to each Borrower, all of such Borrower’s
accounts, contract rights, instruments (including those evidencing indebtedness owed to such
Borrower by its Affiliates), documents, chattel paper (including electronic chattel paper), general
intangibles relating to accounts, drafts and acceptances, credit card receivables and all other

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forms of obligations owing to such Borrower arising out of or in connection with the sale or lease
of Inventory or the rendition of services, all supporting obligations, guarantees and other
security therefor, whether secured or unsecured, now existing or hereafter created, and whether or
not specifically sold or assigned to Agent hereunder.

     “Reimbursement Obligation” shall have the meaning set forth in Section 2.12(b)
hereof.

     “Release” shall have the meaning set forth in Section 5.7(c)(i) hereof.

     “Reportable Event” shall mean a reportable event described in Section 4043(c) of ERISA
or the regulations promulgated thereunder.

     “Required Lenders” shall mean Lenders holding at least fifty-one percent (51%) of the
Advances and, if no Advances are outstanding, shall mean Lenders holding fifty-one percent (51%) of
the Commitment Percentages.

     “Reserve Percentage” shall mean as of any day the maximum percentage in effect on such
day as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for
determining the reserve requirements (including supplemental, marginal and emergency reserve
requirements) with respect to eurocurrency funding (currently referred to as “Eurocurrency
Liabilities”.

     “Retainage” shall mean, with respect to any contract with a Customer for the
furnishing of services by a Borrower, the portion of the contract price owing to such Borrower that
in the Ordinary Course of Business is retained by such Customer pursuant to the terms of the
contract for a period of time following performance of the services by such Borrower.

     “Revenue Accrual Worksheet” means a revenue accrual worksheet reflecting (i) the
number of jobs of the Borrowers then outstanding, and (ii) for each job of the Borrowers, the
percentage complete, the estimated revenue, cost and profit at completion, the billed costs to
date, the unbilled revenue and actual job cost incurred to date, the job to date profit and job to
date profit percentage, the projected completion date, the payables listing and the vessels
utilized for each job; as prepared at the direction of and certified by the Chief Financial Officer
of each Borrower.

     “Revolving Advances” shall mean Advances made other than Letters of Credit.

     “Revolving Credit Note” shall mean the promissory note referred to in Section
2.1(a) hereof, as it may be increased, amended, extended or replaced from time to time.

     “Revolving Interest Rate” shall mean an interest rate per annum equal to (a) with
respect to Domestic Rate Loans, the lesser of (i) the sum of the Alternate Base Rate plus the
Applicable Domestic Rate Margin, and (ii) the Maximum Rate and (b) with respect to the Eurodollar
Rate Loans, the lesser of (i) the sum of the Eurodollar Rate plus the Applicable Eurodollar Rate
Margin, and (ii) the Maximum Rate.

     “SEC” shall mean the Securities and Exchange Commission or any successor thereto.

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     “Section 20 Subsidiary” shall mean the Subsidiary of the bank holding company
controlling PNC, which Subsidiary has been granted authority by the Federal Reserve Board to
underwrite and deal in certain Ineligible Securities.

     “Securities Act” shall mean the Securities Act of 1933, as amended.

     “Settlement Date” shall mean the Closing Date and thereafter Wednesday or Thursday of
each week or more frequently if Agent deems appropriate unless such day is not a Business Day in
which case it shall be the next succeeding Business Day.

     “Subordinated Debt Payments” shall mean and include all cash actually expended to make
payments of principal and interest on the Subordinated Note.

     “Subordinated Lender” shall mean Elliott Associates, L.P.; Falcon Mezzanine Partners,
LP; Lloyd I. Miller; Milfam I. L.P.; Milfam II, L.P.; Milfam LLC; Lloyd I. Miller Trust A-4; L.
Miller III Generation Skipping Trust dated 12/31/91; Catherine C. Miller Irrevocable Trust dated
3/26/91; and Alexandra B. Miller.

     “Subordinated Loan Documentation” shall mean the Amended and Restated Purchase
Agreements among Holdings as Issuer and Horizon Vessels, Inc., Contractors, Horizon Subsea
Services, Inc. , Horizon Vessels International, Ltd., HorizEn, LLC, ECH, and HOC as Guarantors and
Subordinated Lender.

     “Subordinated Note” shall mean the 8% Subordinated Secured Notes due April 31, 2010.

     “Subsidiary” of any Person shall mean a corporation or other entity of whose Equity
Interests having ordinary voting power (other than Equity Interests having such power only by
reason of the happening of a contingency) to elect a majority of the directors of such corporation,
or other Persons performing similar functions for such entity, are owned, directly or indirectly,
by such Person.

     “Subsidiary Stock” shall mean the issued and outstanding Equity Interests (not to
exceed 65% of the Equity Interests of any foreign Subsidiary) of Horizon Offshore Contractors,
Inc., HOC Offshore, S. De R.L. de C.V., Horizon Marine Contractors (Malaysia) SDN BHD, PT Horizon
Offshore Indonesia, Horizon Marine Construction (Mauritius) Ltd., Horizon Marine Construction Ltd.,
Horizon Offshore International Ltd., Horizon Offshore Contractors Ltd., Horizon Subsea Services,
Inc., Horizon Offshore Pte. Ltd., Horizon Offshore Services, Ltd., Mojarra Costa Afuera S. de R.L.
de C.V., Texas Offshore Contractors Corp., Tiburon Ingenieria S. de R.L. de C.V., Horizon Vessels
International Ltd., Horizon Vessels, Inc., Affiliated Marine Contractors Inc., Bayou Marine
Contractors Inc., ECH Offshore, S. De R.L. de C.V., Horizon Offshore Nigeria Ltd., Horizon Offshore
Contractors (Mauritius) Ltd, and any other Subsidiary owned by any Borrower that is an operating
company.

     “Tangible Net Worth” shall mean, at any particular date, (a) the aggregate amount of
all assets of Holdings on a Consolidated Basis as may be properly classified as such in accordance
with GAAP consistently applied, including deferred tax assets, all assets relating to intercompany
or affiliate transactions, plus non-cash losses due to asset impairment, but

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excluding such other
assets as are properly classified as intangible assets under GAAP, less (b) the aggregate amount of
all liabilities of Holdings on a Consolidated Basis.

     “Term” shall have the meaning set forth in Section 13.1 hereof.

     “Termination Event” shall mean (i) a Reportable Event with respect to any Plan or
Multiemployer Plan; (ii) the withdrawal of any Borrower or any member of the Controlled Group from
a Plan or Multiemployer Plan during a plan year in which such entity was a “substantial employer”
as defined in Section 4001(a)(2) of ERISA; (iii) the providing of notice of intent to terminate a
Plan in a distress termination described in Section 4041(c) of ERISA; (iv) the institution by the
PBGC of proceedings to terminate a Plan or Multiemployer Plan; (v) any event or condition (a) which
might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of
a trustee to administer, any Plan or Multiemployer Plan, or (b) that may result in termination of a
Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi) the partial or complete withdrawal
within the meaning of Sections 4203 and 4205 of ERISA, of any Borrower or any member of the
Controlled Group from a Multiemployer Plan.

     “Toxic Substance” shall mean and include any material present on the Real Property
which has been shown to have significant adverse effect on human health or which is subject to
regulation under the Toxic Substances Control Act (TSCA), 15 U.S.C. §§ 2601 et seq., applicable
state law, or any other applicable Federal or state laws now in force or hereafter enacted relating
to toxic substances. “Toxic Substance” includes but is not limited to asbestos, polychlorinated
biphenyls (PCBs) and lead-based paints.

     “Trading with the Enemy Act” shall mean the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any enabling
legislation or executive order relating thereto.

     “Transferee” shall have the meaning set forth in Section 16.3(c) hereof.

     “Undrawn Availability” at a particular date shall mean an amount equal to (a) the
lesser of (i) the Formula Amount or (ii) the Maximum Revolving Advance Amount (reduced by the
Vendor Payable Reserve), minus (b) the sum of (i) the outstanding amount of Advances, plus (ii)
fees and expenses under this Agreement for which Borrowers are liable but which have not been paid
or charged to Borrowers’ Account, plus, (c) without duplication, the sum of Borrower’s cash on hand
minus the aggregate amount of its checks then outstanding.

     “Undrawn Availability Event” shall mean such time as Undrawn Availability falls below
$15,000,000 at any reporting period under this Agreement.

     “Uniform Commercial Code” shall have the meaning set forth in Section 1.3
hereof.

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

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     “Vendor Payable Reserve” shall mean all amounts over an aggregate amount of $5,000,000
which are due to Borrower’s vendors and unpaid more than sixty (60) days after the original invoice
date therefor.

     “Vessel Debt Payments” shall mean collectively, the Vessel Debt 1 Payment, the Vessel
Debt 2 Payments, the Vessel Debt 3 Payments and the Vessel Debt 4 Payments.

     “Vessel Debt 1 Payments” shall mean and include all cash actually expended to make
payments of principal and interest on the Vessel Note 1.

     “Vessel Debt 2 Payments” shall mean and include all cash actually expended to make
payments of principal and interest on the Vessel Note 2.

     “Vessel Debt 3 Payments” shall mean and include all cash actually expended to make
payments of principal and interest on the Vessel Note 3.

     “Vessel Debt 4 Payments” shall mean and include all cash actually expended to make
payments of principal and interest on the Vessel Note 4.

     “Vessel Lender” shall mean, collectively, Vessel Lender 1, Vessel Lender 2, Vessel
Lender 3 and Vessel Lender 4.

     “Vessel Lender 1” shall mean The CIT Group/Equipment Financing, Inc. as agent, for the
other lenders specified in Vessel Loan 1 Documentation.

     “Vessel Lender 2” shall mean General Electric Capital Corporation.

     “Vessel Lender 3” shall mean General Electric Credit Corporation of Tennessee.

     “Vessel Lender 4” shall mean General Electric Capital Corporation.

     “Vessel Loan” shall mean, collectively, Vessel Loan 1, Vessel Loan 2, Vessel Loan 3
and Vessel Loan 4.

     “Vessel Loan 1” shall mean the loan evidenced by the Vessel Note 1.

     “Vessel Loan 2” shall mean the loan evidenced by the Vessel Note 2.

     “Vessel Loan 3” shall mean the loan evidenced by the Vessel Note 3.

     “Vessel Loan 4” shall mean the loan evidenced by the Vessel Note 4.

     “Vessel Loan Documentation” shall mean, collectively, the Vessel Loan 1 Documentation,
the Vessel Loan 2 Documentation, the Vessel Loan 3 Documentation and the Vessel Loan 4
Documentation.

     “Vessel Loan 1 Documentation” shall mean the Loan Agreement dated March 9, 2006
between Horizon Vessels, Inc. and Vessel Lender 1 and the material related agreements.

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     “Vessel Loan 2 Documentation” shall mean the Loan Agreement dated June 29, 2001 among
Horizon Vessels, Inc. as borrower, Holdings as guarantor and Vessel Lender 2 and the material
related agreements.

     “Vessel Loan 3 Documentation” shall mean the Loan Agreement dated June 30, 2003 among
Horizon Vessels International, Ltd. as borrower, Holdings as guarantor and Vessel Lender 3 and the
material related agreements.

     “Vessel Loan 4 Documentation” shall mean the Loan Agreement dated February 17, 2006
among Horizon Vessels International, Ltd. as borrower, Holdings as guarantor and Vessel Lender 4
and the material related agreements.

     “Vessel Note” shall mean collectively, Vessel Note 1, Vessel Note 2, Vessel Note 3 and
Vessel Note 4 and the material related agreements.

     “Vessel Note 1” shall mean the promissory note issued by Horizon Vessels, Inc. in
favor of Vessel Lender 1 dated March 9, 2006 in the principal sum of $77,403,827.05.

     “Vessel Note 2” shall mean the promissory note issued by Horizon Vessels, Inc. in
favor of Vessel Lender 2 dated June 29, 2001 in the principal sum of $11,200,000.

     “Vessel Note 3” shall mean the promissory note dated June 30, 2003 in the principal
sum of $35,000,000.00 in favor of Vessel Lender 3.

     “Vessel Note 4” shall mean the promissory note dated February 17, 2006 in the
principal sum of $11,000,000 in favor of Vessel Lender 4.

     “Week” shall mean the time period commencing with the opening of business on a
Wednesday and ending on the end of business the following Tuesday.

     1.3 Uniform Commercial Code Terms. All terms used herein and defined in the Uniform
Commercial Code as adopted in the State of Texas from time to time (the “Uniform Commercial
Code”) shall have the meaning given therein unless otherwise defined herein. Without limiting
the foregoing, the terms “accounts”, “chattel paper”, “instruments”, “general intangibles”,
“payment intangibles”, “supporting obligations”, “securities”, “investment property”, “documents”,
“deposit accounts”, “software”, “letter of credit rights”, “inventory”, “equipment” and “fixtures”,
as and when used in the description of Collateral shall have the meanings given to such terms in
Articles 8 or 9 of the Uniform Commercial Code. To the extent the definition of any category or
type of collateral is expanded by any amendment, modification or revision to the Uniform Commercial
Code, such expanded definition will apply automatically as of the date of such amendment,
modification or revision.

     1.4 Certain Matters of Construction. The terms “herein”, “hereof” and “hereunder” and other words of similar import refer to
this Agreement as a whole and not to any particular section, paragraph or subdivision. All
references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, this Agreement. Any pronoun used shall be
deemed to cover all genders. Wherever appropriate in the context, terms used herein in the
singular also include the plural and vice versa. All

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references
to statutes and related regulations shall include any amendments of same and any successor statutes
and regulations. Unless otherwise provided, all references to any instruments or agreements to
which Agent is a party, including references to any of the Other Documents, shall include any and
all modifications or amendments thereto and any and all extensions or renewals thereof. All
references herein to the time of day shall mean the time in Dallas, Texas. Unless otherwise
provided, all financial calculations shall be performed with Inventory valued on a first-in,
first-out basis. Whenever the words “including” or “include” shall be used, such words shall be
understood to mean “including, without limitation” or “include, without limitation”. A Default or
Event of Default shall be deemed to exist at all times during the period commencing on the date
that such Default or Event of Default occurs to the date on which such Default or Event of Default
is waived in writing pursuant to this Agreement or, in the case of a Default, is cured within any
period of cure expressly provided for in this Agreement; and an Event of Default shall “continue”
or be “continuing” until such Event of Default has been waived in writing by the Required Lenders.
Any Lien referred to in this Agreement or any of the Other Documents as having been created in
favor of Agent, any agreement entered into by Agent pursuant to this Agreement or any of the Other
Documents, any payment made by or to or funds received by Agent pursuant to or as contemplated by
this Agreement or any of the Other Documents, or any act taken or omitted to be taken by Agent,
shall, unless otherwise expressly provided, be created, entered into, made or received, or taken or
omitted, for the benefit or account of Agent and Lenders. Wherever the phrase “to the best of
Borrowers’ knowledge” or words of similar import relating to the knowledge or the awareness of any
Borrower are used in this Agreement or Other Documents, such phrase shall mean and refer to (i) the
actual knowledge of a senior officer of any Borrower or (ii) the knowledge that a senior officer
would have obtained if he had engaged in good faith and diligent performance of his duties,
including the making of such reasonably specific inquiries as may be necessary of the employees or
agents of such Borrower and a good faith attempt to ascertain the existence or accuracy of the
matter to which such phrase relates. All covenants hereunder shall be given independent effect so
that if a particular action or condition is not permitted by any of such covenants, the fact that
it would be permitted by an exception to, or otherwise within the limitations of, another covenant
shall not avoid the occurrence of a default if such action is taken or condition exists. In
addition, all representations and warranties hereunder shall be given independent effect so that if
a particular representation or warranty proves to be incorrect or is breached, the fact that
another representation or warranty concerning the same or similar subject matter is correct or is
not breached will not affect the incorrectness of a breach of a representation or warranty
hereunder.

II            ADVANCES, PAYMENTS.

     2.1 Revolving Advances.

          (a) Amount of Revolving Advances. Subject to the terms and conditions set forth in
this Agreement including Sections 2.1(b) and (c), each Lender, severally and not
jointly, will make Revolving Advances to Borrowers in aggregate amounts outstanding at any time
equal to such Lender’s Commitment Percentage of the lesser of (x) the Maximum Revolving Advance
Amount less the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit or (y) an
amount equal to the sum of:

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               (i) up to 85%, subject to the provisions of Section 2.1(c) hereof (“Advance
Rate”), of Eligible Receivables, minus

               (ii) the Permanent Reserve; minus

               (iii) the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit, minus

               (iv) such reserves as Agent may reasonably deem proper and necessary from time to time in its
Permitted Discretion, including, without limitation, the Vendor Payable Reserve.

     The amount derived from the sum of (x) Sections 2.1(a)(y)(i) minus (y) Section 2.1
(a)(y)(ii), (iii) and (iv) at any time and from time to time shall be referred to as
the “Formula Amount”. The Revolving Advances shall be evidenced by one or more secured
promissory notes (collectively, the “Revolving Credit Note”) substantially in the form
attached hereto as Exhibit 2.1(a).

          (b) Individual Revolving Advances. Each Lender, severally and not jointly, will make
Revolving Advances to each Borrower in aggregate amounts outstanding at any time not greater than
such Lender’s Commitment Percentage of the lesser of (x) such Borrower’s Individual Maximum
Revolving Advance Amount less the aggregate amount of outstanding Letters of Credit or (y) such
Borrower’s Individual Formula Amount less the aggregate amount of outstanding Letters of Credit.

          (c) Discretionary Rights. The Advance Rate may be increased or decreased by Agent at
any time and from time to time in the exercise of its Permitted Discretion. Each Borrower consents
to any such increases or decreases and acknowledges that decreasing the Advance Rate or increasing
or imposing reserves may limit or restrict Advances requested by Borrowing Agent. Agent agrees to
promptly notify Borrower of any such increase or decrease in the advance rates or imposition of new
reserves; provided, that any failure to give such notice shall not affect Agent’s right to
implement the same. The rights of Agent under this subsection are subject to the provisions of
Section 16.2(b).

          (d) Reduction of Maximum Revolving Advance Amount. Borrowing Agent on behalf of
Borrowers may notify Agent prior to 10:00 a.m. (Dallas, Texas time) of its request to reduce the
Maximum Revolving Advance Amount on the following Business Day (without premium), provided that
Borrowing Agent may only make such request one (1) time during the Term following the consummation
of a financing of Receivables from Customers outside the continental United States of America that
is either provided or led by Agent and guaranteed by the Export-Import Bank of the United States,
and the Maximum Revolving Advance Amount shall not be reduced by more than the aggregate amount of
such financing.

     2.2 Procedure for Revolving Advances Borrowing.

          (a) Borrowing Agent on behalf of any Borrower may notify Agent prior to 10:00 a.m. on a
Business Day of a Borrower’s request to incur, on that day, a Revolving Advance hereunder. Should
any amount required to be paid as interest hereunder, or as fees or

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other charges under this
Agreement or any other agreement with Agent or Lenders, or with respect to any other Obligation,
become due, same shall be deemed a request for a Revolving Advance as of the date such payment is
due, in the amount required to pay in full such interest, fee, charge or Obligation under this
Agreement or any other agreement with Agent or Lenders, and such request shall be irrevocable.

          (b) Notwithstanding the provisions of subsection (a) above, in the event any Borrower desires
to obtain a Eurodollar Rate Loan, Borrowing Agent shall give Agent written notice by no later than
10:00 a.m. on the day which is three (3) Business Days prior to the date such Eurodollar Rate Loan
is to be borrowed, specifying (i) the date of the proposed borrowing (which shall be a Business
Day), (ii) the type of borrowing and the amount on the date of such Advance to be borrowed, which
amount shall be an integral multiple of $1,000,000, and (iii) the duration of the first Interest
Period therefor. Interest Periods for Eurodollar Rate Loans shall be for one, two or three months;
provided, if an Interest Period would end on a day that is not a Business Day, it shall end on the
next succeeding Business Day unless such day falls in the next succeeding calendar month in which
case the Interest Period shall end on the next preceding Business Day. No Eurodollar Rate Loan
shall be made available to any Borrower during the continuance of a Default or an Event of Default.
After giving effect to each requested Eurodollar Rate Loan, including those which are converted
from a Domestic Rate Loan under Section 2.2(d), there shall not be outstanding more than
three (3) Eurodollar Rate Loans, in the aggregate.

          (c) Each Interest Period of a Eurodollar Rate Loan shall commence on the date such Eurodollar
Rate Loan is made and shall end on such date as Borrowing Agent may elect as set forth in
subsection (b)(iii) above provided that the exact length of each Interest Period shall be
determined in accordance with the practice of the interbank market for offshore Dollar deposits and
no Interest Period shall end after the last day of the Term.

     Borrowing Agent shall elect the initial Interest Period applicable to a Eurodollar Rate Loan
by its notice of borrowing given to Agent pursuant to Section 2.2(b) or by its notice of
conversion given to Agent pursuant to Section 2.2(d), as the case may be. Borrowing Agent
shall elect the duration of each succeeding Interest Period by giving irrevocable written notice to
Agent of such duration not later than 10:00 a.m. on the day which is three (3) Business Days prior
to the last day of the then current Interest Period applicable to such Eurodollar Rate Loan. If
Agent does not receive timely notice of the Interest Period elected by Borrowing Agent, Borrowing
Agent shall be deemed to have elected to convert to a Domestic Rate Loan subject to Section
2.2(d) hereinbelow.

          (d) Provided that no Event of Default shall have occurred and be continuing, Borrowing Agent
may, on the last Business Day of the then current Interest Period applicable to any outstanding
Eurodollar Rate Loan, or on any Business Day with respect to Domestic Rate Loans, convert any such
loan into a loan of another type in the same aggregate principal amount provided that any
conversion of a Eurodollar Rate Loan shall be made only on the last Business Day of the then
current Interest Period applicable to such Eurodollar Rate Loan. If Borrowing Agent desires to
convert a loan, Borrowing Agent shall give Agent written notice by no later than 10:00 a.m. (i) on
the day which is three (3) Business Days’ prior to the date on which such conversion is to occur
with respect to a conversion from a Domestic Rate Loan to a Eurodollar

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Rate Loan, or (ii) on the
day which is one (1) Business Day prior to the date on which such conversion is to occur with
respect to a conversion from a Eurodollar Rate Loan to a Domestic Rate Loan, specifying, in each
case, the date of such conversion, the loans to be converted and if the conversion is from a
Domestic Rate Loan to any other type of loan, the duration of the first Interest Period therefor.

          (e) At its option and upon written notice given prior to 10:00 a.m. (Dallas, Texas time) at
least three (3) Business Days’ prior to the date of such prepayment, any Borrower may prepay the
Eurodollar Rate Loans in whole at any time or in part from time to time with accrued interest on
the principal being prepaid to the date of such repayment. Such Borrower shall specify the date of
prepayment of Advances which are Eurodollar Rate Loans and the amount of such prepayment. In the
event that any prepayment of a Eurodollar Rate Loan is required or permitted on a date other than
the last Business Day of the then current Interest Period with respect thereto, such Borrower shall
indemnify Agent and Lenders therefor in accordance with Section 2.2(f) hereof.

          (f) Each Borrower shall indemnify Agent and Lenders and hold Agent and Lenders harmless from
and against any and all losses or expenses that Agent and Lenders may sustain or incur as a
consequence of any prepayment, conversion of or any default by any Borrower in the payment of the
principal of or interest on any Eurodollar Rate Loan or failure by any Borrower to complete a
borrowing of, a prepayment of or conversion of or to a Eurodollar Rate Loan after notice thereof
has been given, including, but not limited to, any interest payable by Agent or Lenders to lenders
of funds obtained by it in order to make or maintain its Eurodollar Rate Loans hereunder. A
certificate as to any additional amounts payable pursuant to the foregoing sentence submitted by
Agent or any Lender to Borrowing Agent shall be conclusive absent manifest error.

          (g) Notwithstanding any other provision hereof, if any Applicable Law, treaty, regulation or
directive, or any change therein or in the interpretation or application thereof, shall make it
unlawful for any Lender (for purposes of this subsection (g), the term “Lender” shall include any
Lender and the office or branch where any Lender or any corporation or bank controlling such Lender
makes or maintains any Eurodollar Rate Loans) to make or maintain its Eurodollar Rate Loans, the
obligation of Lenders to make Eurodollar Rate Loans hereunder shall forthwith be cancelled and
Borrowers shall, if any affected Eurodollar Rate Loans are then outstanding, promptly upon request
from Agent, either pay all such affected Eurodollar Rate Loans or convert such affected Eurodollar
Rate Loans into loans of another type. If any such payment or conversion of any Eurodollar Rate
Loan is made on a day that is not the last day of the Interest Period applicable to such Eurodollar
Rate Loan, Borrowers shall pay Agent, upon Agent’s request, such amount or amounts as may be
necessary to compensate Lenders for any loss or expense sustained or incurred by Lenders in respect
of such Eurodollar Rate Loan as a result of such payment or conversion, including (but not limited
to) any interest or other amounts payable by Lenders to lenders of funds obtained by Lenders in
order to make or maintain such Eurodollar Rate Loan. A certificate as to any additional amounts
payable pursuant to the foregoing sentence submitted by Lenders to Borrowing Agent shall be
conclusive absent manifest error.

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     2.3 Disbursement of Advance Proceeds. All Advances shall be disbursed from whichever
office or other place Agent may designate from time to time and, together with any and all other
Obligations of Borrowers to Agent or Lenders, shall be charged to Borrowers’ Account on Agent’s
books. During the Term, Borrowers may use the Revolving Advances by borrowing, prepaying and
reborrowing, all in accordance with the terms and conditions hereof. The proceeds of each
Revolving Advance requested by Borrowing Agent on behalf of any Borrower or deemed to have been
requested by any Borrower under Section 2.2(a) hereof shall, with respect to requested
Revolving Advances to the extent Lenders make such Revolving Advances, be made available to the
applicable Borrower on the day so requested by way of credit to such Borrower’s operating account
at PNC, or such other bank as Borrowing Agent may designate following notification to Agent, in
immediately available federal funds or other immediately available funds or, with respect to
Revolving Advances deemed to have been requested by any Borrower, be disbursed to Agent to be
applied to the outstanding Obligations giving rise to such deemed request.

     2.4 Intentionally Omitted.

     2.5 Maximum Advances. The aggregate balance of Revolving Advances outstanding at any
time shall not exceed the lesser of (a) the Maximum Revolving Advance Amount or (b) the Formula
Amount less, in each case, the aggregate Maximum Undrawn Amount of all issued and outstanding
Letters of Credit.

     2.6 Repayment of Advances.

          (a) The Revolving Advances shall be due and payable in full on the last day of the Term
subject to earlier prepayment as herein provided.

          (b) Each Borrower recognizes that the amounts evidenced by checks, notes, drafts or any other
items of payment relating to and/or proceeds of Collateral may not be collectible by Agent on the
date received. In consideration of Agent’s agreement to conditionally credit Borrowers’ Account as
of the Business Day on which Agent receives those items of payment, each Borrower agrees that, in
computing the charges under this Agreement, all items of payment shall be deemed applied by Agent
on account of the Obligations one (1) Business Day after (i) the Business Day Agent receives such
payments via wire transfer or electronic depository check or (ii) in the case of payments received
by Agent in any other form, the Business Day such payment constitutes good funds in Agent’s
account. Agent may charge Borrowers’ Account for the amount of any item of payment which is
returned to Agent unpaid.

          (c) All payments of principal, interest and other amounts payable hereunder, or under any of
the Other Documents shall be made to Agent at the Payment Office not later than 1:00 P.M. (Dallas,
Texas time) on the due date therefor in lawful money of the United States of America in federal
funds or other funds immediately available to Agent. Agent shall have the right to effectuate
payment on any and all Obligations due and owing hereunder by charging Borrowers’ Account or by
making Advances as provided in Section 2.2 hereof.

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          (d) Borrowers shall pay principal, interest, and all other amounts payable hereunder, or under
any related agreement, without any deduction whatsoever, including, but not limited to, any
deduction for any setoff or counterclaim.

     2.7 Repayment of Excess Advances. The aggregate balance of Advances outstanding at
any time in excess of the maximum amount of Advances permitted hereunder shall be immediately due
and payable without the necessity of any demand, at the Payment Office, whether or not a Default or
Event of Default has occurred.

     2.8 Statement of Account. Agent shall maintain, in accordance with its customary
procedures, a loan account (“Borrowers’ Account”) in the name of Borrowers in which shall
be recorded the date and amount of each Advance made by Agent and the date and amount of each
payment in respect thereof; provided, however, the failure by Agent to record the date and amount
of any Advance shall not adversely affect Agent or any Lender. Each month, Agent shall send to
Borrowing Agent a statement showing the accounting for the Advances made, payments made or credited
in respect thereof, and other transactions between Agent and Borrowers during such month. The
monthly statements shall be deemed correct and binding upon Borrowers in the absence of manifest
error and shall constitute an account stated between Lenders and Borrowers unless Agent receives a
written statement of Borrowers’ specific exceptions thereto within thirty (30) days after such
statement is received by Borrowing Agent. The records of Agent with respect to the loan account
shall be conclusive evidence absent manifest error of the amounts of Advances and other charges
thereto and of payments applicable thereto.

     2.9 Letters of Credit. Subject to the terms and conditions hereof, Agent shall issue
or cause the issuance of standby and/or trade Letters of Credit (“Letters of Credit”) for
the account of any Borrower; provided, however, that Agent will not be required to issue or cause
to be issued any Letters of Credit to the extent that the issuance thereof would then cause the sum
of (i) the outstanding Revolving Advances plus (ii) the Maximum Undrawn Amount of all outstanding
Letters of Credit to exceed the lesser of (x) the Maximum Revolving Advance Amount or (y) the
Formula Amount. The Maximum Undrawn Amount of all outstanding Letters of Credit shall not exceed
in the aggregate at any time the Letter of Credit Sublimit. All disbursements or payments related
to Letters of Credit shall be deemed to be Domestic Rate Loans consisting of Revolving Advances and
shall bear interest at the Revolving Interest Rate for Domestic Rate Loans; Letters of Credit that
have not been drawn upon shall not bear interest, but the Letter of Credit Fees shall be payable
thereon as provided in Section 3.2.

     2.10 Issuance of Letters of Credit.

          (a) Borrowing Agent, on behalf of Borrowers, may request Agent to issue or cause the issuance
of a Letter of Credit by delivering to Agent at the Payment Office, prior to 10:00 a.m. (Dallas,
Texas time), at least five (5) Business Days’ prior to the proposed date of issuance, Agent’s form
of Letter of Credit Application (the “Letter of Credit Application”) completed to the
satisfaction of Agent; and, such other certificates, documents and other papers and information as
Agent may reasonably request. Borrowing Agent, on behalf of Borrowers, also has the right to give
instructions and make agreements with respect to any application, any applicable letter of credit
and security agreement, any applicable letter of credit reimbursement

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agreement and/or any other
applicable agreement, any letter of credit and the disposition of documents, disposition of any
unutilized funds, and to agree with Agent upon any amendment, extension or renewal of any Letter of
Credit.

          (b) Each Letter of Credit shall, among other things, (i) provide for the payment of sight
drafts, other written demands for payment, or acceptances of usance drafts when presented for honor
thereunder in accordance with the terms thereof and when accompanied by the documents described
therein and (ii) have an expiry date not later than twenty-four (24) months after such Letter of
Credit’s date of issuance and in no event later than the last day of the Term. Each standby Letter
of Credit shall be subject either to the Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500, and any amendments or revision
thereof adhered to by the Issuer (“UCP 500”) or the International Standby Practices
(ISP98-International Chamber of Commerce Publication Number 590) (the “ISP98 Rules”), as
determined by Agent, and each trade Letter of Credit shall be subject to UCP 500.

          (c) Agent shall use its reasonable efforts to notify Lenders of the request by Borrowing Agent
for a Letter of Credit hereunder.

     2.11 Requirements For Issuance of Letters of Credit. Borrowing Agent shall authorize
and direct any Issuer to name the applicable Borrower as the “Applicant” or “Account Party” of each
Letter of Credit. If Agent is not the Issuer of any Letter of Credit, Borrowing Agent shall
authorize and direct the Issuer to deliver to Agent all instruments, documents, and other writings
and property received by the Issuer pursuant to the Letter of Credit and to accept and rely upon
Agent’s instructions and agreements with respect to all matters arising in connection with the
Letter of Credit, the application therefor or any acceptance therefor.

     2.12 Disbursements, Reimbursement.

          (a) Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to,
and hereby irrevocably and unconditionally agrees to, purchase from Agent a participation in such
Letter of Credit and each drawing thereunder in an amount equal to such Lender’s Commitment
Percentage of the Maximum Face Amount of such Letter of Credit and the amount of such drawing,
respectively.

          (b) In the event of any request for a drawing under a Letter of Credit by the beneficiary or
transferee thereof, Agent will promptly notify Borrowing Agent. Provided that Borrowing Agent
shall have received such notice by 11:00 a.m., Dallas, Texas time, the Borrowers shall reimburse
(such obligation to reimburse Agent shall sometimes be referred to as a “Reimbursement
Obligation”) Agent prior to 12:00 Noon, Dallas, Texas time on each date that an amount is paid
by Agent under any Letter of Credit (each such date, a “Drawing Date”) in an amount equal
to the amount so paid by Agent. In the event Borrowers fail to reimburse Agent for the full amount
of any drawing under any Letter of Credit by 12:00 Noon, Dallas, Texas time, on the Drawing Date,
Agent will promptly notify each Lender thereof, and Borrowers shall be deemed to have requested
that a Domestic Rate Loan be made by the Lenders to be disbursed on the Drawing Date under such
Letter of Credit, subject to the amount of the unutilized portion of the lesser of Maximum
Revolving Advance Amount, less the aggregate Maximum Undrawn

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Amount of all issued and outstanding
Letters of Credit, or the Formula Amount and subject to Section 8.2 hereof. Any notice
given by Agent pursuant to this Section 2.12(b) may be oral if immediately confirmed in
writing.

          (c) Each Lender shall upon any notice pursuant to Section 2.12(b) make available to
Agent an amount in immediately available funds equal to its Commitment Percentage of the amount of
the drawing, whereupon the participating Lenders shall (subject to Section 2.12(d)) each be
deemed to have made a Domestic Rate Loan to Borrowers in that amount. If any Lender so notified
fails to make available to Agent the amount of such Lender’s Commitment Percentage of such amount
by no later than 2:00 p.m., Dallas, Texas time on the Drawing Date, then interest shall accrue on
such Lender’s obligation to make such payment, from the Drawing Date to the date on which such
Lender makes such payment (i) at a rate per annum equal to the Federal Funds Rate during the first
three days following the Drawing Date and (ii) at a rate per annum equal to the rate applicable to
Domestic Rate Loans on and after the fourth day following the Drawing Date. Agent will promptly
give notice of the occurrence of the Drawing Date, but failure of Agent to give any such notice on
the Drawing Date or in sufficient time to enable any Lender to effect such payment on such date
shall not relieve such Lender from its obligation under this Section 2.12(c), provided that
such Lender shall not be obligated to pay interest as provided in Section 2.12(c)(i) and
(ii) until and commencing from the date of receipt of notice from Agent of a drawing.

          (d) With respect to any unreimbursed drawing that is not converted into a Domestic Rate Loan
to Borrowers in whole or in part as contemplated by Section 2.12(b), because of Borrowers’
failure to satisfy the conditions set forth in Section 8.2 (other than any notice
requirements) or for any other reason, Borrowers shall be deemed to have incurred from Agent a
borrowing (each a “Letter of Credit Borrowing”) in the amount of such drawing. Such Letter
of Credit Borrowing shall be due and payable on demand (together with interest) and shall bear
interest at the rate per annum applicable to a Domestic Rate Loan. Each Lender’s payment to Agent
pursuant to Section 2.12(c) shall be deemed to be a payment in respect of its participation
in such Letter of Credit Borrowing and shall constitute a “Participation Advance” from such Lender
in satisfaction of its Participation Commitment under this Section 2.12.

          (e) Each Lender’s Participation Commitment shall continue until the last to occur of any of
the following events: (x) Agent ceases to be obligated to issue or cause to be issued Letters of
Credit hereunder; (y) no Letter of Credit issued or created hereunder remains outstanding and
uncancelled and (z) all Persons (other than the Borrowers) have been fully reimbursed for all
payments made under or relating to Letters of Credit.

     2.13 Repayment of Participation Advances.

          (a) Upon (and only upon) receipt by Agent for its account of immediately available funds from
Borrowers (i) in reimbursement of any payment made by the Agent under the Letter of Credit with
respect to which any Lender has made a Participation Advance to Agent, or (ii) in payment of
interest on such a payment made by Agent under such a Letter of Credit, Agent will pay to each
Lender, in the same funds as those received by Agent, the amount of such Lender’s Commitment
Percentage of such funds, except Agent shall retain the amount of

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the Commitment Percentage of such
funds of any Lender that did not make a Participation Advance in respect of such payment by Agent.

          (b) If Agent is required at any time to return to any Borrower, or to a trustee, receiver,
liquidator, custodian, or any official in any insolvency proceeding, any portion of the payments
made by Borrowers to Agent pursuant to Section 2.13(a) in reimbursement of a payment made
under the Letter of Credit or interest or fee thereon, each Lender shall, on demand of Agent,
forthwith return to Agent the amount of its Commitment Percentage of any amounts so returned by
Agent plus interest at the Federal Funds Effective Rate.

     2.14 Documentation. Each Borrower agrees to be bound by the terms of the Letter of
Credit Application and by Agent’s interpretations of any Letter of Credit issued on behalf of such
Borrower and by Agent’s written regulations and customary practices relating to letters of credit,
though Agent’s interpretations may be different from such Borrower’s own. In the event of a
conflict between the Letter of Credit Application and this Agreement, this Agreement shall govern
and control. It is understood and agreed that, except in the case of gross negligence or willful
misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment),
Agent shall not be liable for any error, negligence and/or mistakes, whether of omission or
commission (INCLUDING WITHOUT LIMITATION, WITH RESPECT TO ANY ACT OR INACTION ARISING FROM AGENT’S
NEGLIGENCE OR STRICT LIABILITY), in following the Borrowing Agent’s or any Borrower’s instructions
or those contained in the Letters of Credit or any modifications, amendments or supplements
thereto.

     2.15 Determination to Honor Drawing Request. In determining whether to honor any
request for drawing under any Letter of Credit by the beneficiary thereof, Agent shall be
responsible only to determine that the documents and certificates required to be delivered under
such Letter of Credit have been delivered and that they comply on their face with the requirements
of such Letter of Credit and that any other drawing condition appearing on the face of such Letter
of Credit has been satisfied in the manner so set forth.

     2.16 Nature of Participation and Reimbursement Obligations. Each Lender’s obligation
in accordance with this Agreement to make the Revolving Advances or Participation Advances as a
result of a drawing under a Letter of Credit, and the obligations of Borrowers to reimburse Agent
upon a draw under a Letter of Credit, shall be absolute, unconditional and irrevocable, and shall
be performed strictly in accordance with the terms of this Section 2.16 under all
circumstances, including the following circumstances:

               (i) any set-off, counterclaim, recoupment, defense or other right which such Lender may have
against Agent, any Borrower or any other Person for any reason whatsoever;

               (ii) the failure of any Borrower or any other Person to comply, in connection with a Letter of
Credit Borrowing, with the conditions set forth in this Agreement for the making of a Revolving
Advance, it being acknowledged that such conditions are not required for the making of a Letter of
Credit Borrowing and the obligation of the Lenders to make Participation Advances under Section
2.12;

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               (iii) any lack of validity or enforceability of any Letter of Credit;

               (iv) any claim of breach of warranty that might be made by Borrower or any Lender against the
beneficiary of a Letter of Credit, or the existence of any claim, set-off, recoupment,
counterclaim, crossclaim, defense or other right which any Borrower or any Lender may have at any
time against a beneficiary, any successor beneficiary or any transferee of any Letter of Credit or
the proceeds thereof (or any Persons for whom any such transferee may be acting), Agent or any
Lender or any other Person, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction (including any underlying transaction between any
Borrower or any Subsidiaries of such Borrower and the beneficiary for which any Letter of Credit
was procured);

               (v) the lack of power or authority of any signer of (or any defect in or forgery of any
signature or endorsement on) or the form of or lack of validity, sufficiency, accuracy,
enforceability or genuineness of any draft, demand, instrument, certificate or other document
presented under or in connection with any Letter of Credit, or any fraud or alleged fraud in
connection with any Letter of Credit, or the transport of any property or provisions of services
relating to a Letter of Credit, in each case even if Agent or any of Agent’s Affiliates has been
notified thereof;

               (vi) payment by Agent under any Letter of Credit against presentation of a demand, draft or
certificate or other document which does not comply with the terms of such Letter of Credit;

               (vii) the solvency of, or any acts or omissions by, any beneficiary of any Letter of Credit,
or any other Person having a role in any transaction or obligation relating to a Letter of Credit,
or the existence, nature, quality, quantity, condition, value or other characteristic of any
property or services relating to a Letter of Credit;

               (viii) any failure by the Agent or any of Agent’s Affiliates to issue any Letter of Credit in
the form requested by Borrowing Agent, unless the Agent has received written notice from Borrowing
Agent of such failure within three (3) Business Days after the Agent shall have furnished Borrowing
Agent a copy of such Letter of Credit and such error is material and no drawing has been made
thereon prior to receipt of such notice;

               (ix) any Material Adverse Effect on any Borrower or any Guarantor;

               (x) any breach of this Agreement or any Other Document by any party thereto;

               (xi) the occurrence or continuance of an insolvency proceeding with respect to any Borrower or
any Guarantor;

               (xii) the fact that a Default or Event of Default shall have occurred and be continuing;

               (xiii) the fact that the Term shall have expired or this Agreement or the Obligations
hereunder shall have been terminated; and

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               (xiv) any other circumstance or happening whatsoever, whether or not similar to any of the
foregoing.

     2.17 Indemnity. In addition to amounts payable as provided in Section 16.5,
each Borrower hereby agrees to protect, indemnify, defend, pay and save harmless Agent and any of
Agent’s Affiliates that have issued a Letter of Credit from and against any and all claims,
demands, liabilities, damages, taxes, penalties, interest, judgments, settlements, losses, costs,
charges and expenses (including reasonable fees, expenses and disbursements of counsel and
allocated costs of internal counsel) which the Agent or any of Agent’s Affiliates may incur or be
subject to as a consequence, direct or indirect, of the issuance of any Letter of Credit, other
than as a result of (A) the gross negligence or willful misconduct of the Agent as determined by a
final and non-appealable judgment of a court of competent jurisdiction or (b) the wrongful dishonor
by the Agent or any of Agent’s Affiliates of a proper demand for payment made under any Letter of
Credit (INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO ANY OTHERWISE INDEMNIFIED MATTER ARISING
FROM AGENT’S NEGLIGENCE OR STRICT LIABILITY), except if such dishonor resulted from any act or
omission, whether rightful or wrongful, of any present or future de jure or de facto Governmental
Body (all such acts or omissions herein called “Governmental Acts”).

     2.18 Liability for Acts and Omissions. As between Borrowers and Agent and Lenders,
each Borrower assumes all risks of the acts and omissions of, or misuse of the Letters of Credit
by, the respective beneficiaries of such Letters of Credit (INCLUDING, WITHOUT LIMITATION, ALL
RISKS ATTRIBUTABLE TO ANY ACT OR OMISSION ARISING FROM AGENT’S OR LENDER’S NEGLIGENCE OR STRICT
LIABILITY). In furtherance and not in limitation of the respective foregoing, Agent shall not be
responsible for: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the application for an issuance of any such
Letter of Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged (even if Agent shall have been notified thereof);
(ii) the validity or sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii)
the failure of the beneficiary of any such Letter of Credit, or any other party to which such
Letter of Credit may be transferred, to comply fully with any conditions required in order to draw
upon such Letter of Credit or any other claim of any Borrower against any beneficiary of such
Letter of Credit, or any such transferee, or any dispute between or among any Borrower and any
beneficiary of any Letter of Credit or any such transferee; (iv) errors, omissions, interruptions
or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi)
any loss or delay in the transmission or otherwise of any document required in order to make a
drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the
beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of
Credit; or (viii) any consequences arising from causes beyond the control of Agent, including any
governmental acts, and none of the above shall affect or impair, or prevent the vesting of, any of
Agent’s rights or powers hereunder. Nothing in the preceding sentence shall relieve Agent from
liability for Agent’s gross negligence or willful misconduct (as determined by a court of competent
jurisdiction in a final non-appealable judgment) in connection with actions or omissions described
in such clauses (i)

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through (viii) of such sentence. In no event shall Agent or Agent’s Affiliates
be liable to any Borrower for any indirect, consequential, incidental, punitive, exemplary or
special damages or expenses (including without limitation attorneys’ fees), or for any damages
resulting from any change in the value of any property relating to a Letter of Credit.

     Without limiting the generality of the foregoing, Agent and each of its Affiliates (i) may
rely on any oral or other communication believed in good faith by Agent or such Affiliate to have
been authorized or given by or on behalf of the applicant for a Letter of Credit, (ii) may honor
any presentation if the documents presented appear on their face substantially to comply with the
terms and conditions of the relevant Letter of Credit; (iii) may honor a previously dishonored
presentation under a Letter of Credit, whether such dishonor was pursuant to a court order, to
settle or compromise any claim of wrongful dishonor, or otherwise, and shall be entitled to
reimbursement to the same extent as if such presentation had initially been honored, together with
any interest paid by Agent or its Affiliates; (iv) may honor any drawing that is payable upon
presentation of a statement advising negotiation or payment, upon receipt of such statement (even
if such statement indicates that a draft or other document is being delivered separately), and
shall not be liable for any failure of any such draft or other document to arrive, or to conform in
any way with the relevant Letter of Credit; (v) may pay any paying or negotiating bank claiming
that it rightfully honored under the laws or practices of the place where such bank is located; and
(vi) may settle or adjust any claim or demand made on Agent or its Affiliate in any way related to
any order issued at the applicant’s request to an air carrier, a letter of guarantee or of
indemnity issued to a carrier or any similar document (each an “Order”) and honor any
drawing in connection with any Letter of Credit that is the subject of such Order, notwithstanding
that any drafts or other documents presented in connection with such Letter of Credit fail to
conform in any way with such Letter of Credit.

     In furtherance and extension and not in limitation of the specific provisions set forth above,
any action taken or omitted by Agent under or in connection with the Letters of Credit issued by it
or any documents and certificates delivered thereunder, if taken or omitted in good faith and
without gross negligence (as determined by a court of competent jurisdiction in a final
non-appealable judgment), shall not put Agent under any resulting liability to any Borrower or any
Lender.

     2.19 Additional Payments. Any sums expended by Agent or any Lender due to any
Borrower’s failure to perform or comply with its obligations under this Agreement or any Other
Document including any Borrower’s obligations under Sections 4.2, 4.4,
4.12, 4.13, 4.14 and 6.1 hereof, may be charged to Borrowers’
Account as a Revolving Advance and added to the Obligations.

     2.20 Manner of Borrowing and Payment.

          (a) Each borrowing of Revolving Advances shall be advanced according to the applicable
Commitment Percentages of Lenders.

          (b) Each payment (including each prepayment) by any Borrower on account of the principal of
and interest on the Revolving Advances, shall be applied to the Revolving Advances pro rata
according to the applicable Commitment Percentages of Lenders. Except as

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expressly provided
herein, all payments (including prepayments) to be made by any Borrower on account of principal,
interest and fees shall be made without set off or counterclaim and shall be made to Agent on
behalf of the Lenders to the Payment Office, in each case on or prior to 1:00 p.m., Dallas, Texas
time, in Dollars and in immediately available funds.

          (c)

               (i) Notwithstanding anything to the contrary contained in Sections 2.20(a) and
(b) hereof, commencing with the first Business Day following the Closing Date, each
borrowing of Revolving Advances shall be advanced by Agent and each payment by any Borrower on
account of Revolving Advances shall be applied first to those Revolving Advances advanced by Agent.
On or before 1:00 P.M., Dallas, Texas time, on each Settlement Date commencing with the first
Settlement Date following the Closing Date, Agent and Lenders shall make certain payments as
follows: (I) if the aggregate amount of new Revolving Advances made by Agent during the preceding
Week (if any) exceeds the aggregate amount of repayments applied to outstanding Revolving Advances
during such preceding Week, then each Lender shall provide Agent with funds in an amount equal to
its applicable Commitment Percentage of the difference between (w) such Revolving Advances and (x)
such repayments and (II) if the aggregate amount of repayments applied to outstanding Revolving
Advances during such Week exceeds the aggregate amount of new Revolving Advances made during such
Week, then Agent shall provide each Lender with funds in an amount equal to its applicable
Commitment Percentage of the difference between (y) such repayments and (z) such Revolving
Advances.

               (ii) Each Lender shall be entitled to earn interest at the applicable Revolving Interest Rate
on outstanding Advances which it has funded.

               (iii) Promptly following each Settlement Date, Agent shall submit to each Lender a certificate
with respect to payments received and Advances made during the Week immediately preceding such
Settlement Date. Such certificate of Agent shall be conclusive in the absence of manifest error.

          (d) If any Lender or Participant (a “benefited Lender”) shall at any time receive any
payment of all or part of its Advances, or interest thereon, or receive any Collateral in respect
thereof (whether voluntarily or involuntarily or by set-off) in a greater proportion than any such
payment to and Collateral received by any other Lender, if any, in respect of such other Lender’s
Advances, or interest thereon, and such greater proportionate payment or receipt of Collateral is
not expressly permitted hereunder, such benefited Lender shall purchase for cash from the other
Lenders a participation in such portion of each such other Lender’s Advances, or shall provide such
other Lender with the benefits of any such Collateral, or the proceeds thereof, as shall be
necessary to cause such benefited Lender to share the excess payment or benefits of such Collateral
or proceeds ratably with each of the other Lenders; provided, however, that if all or any portion
of such excess payment or benefits is thereafter recovered from such benefited Lender, such
purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. Each Lender so purchasing a portion of another Lender’s Advances
may exercise all rights of payment (including rights of set-off) with respect to such portion as
fully as if such Lender were the direct holder of such portion.

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          (e) Unless Agent shall have been notified by telephone, confirmed in writing, by any Lender
that such Lender will not make the amount which would constitute its applicable Commitment
Percentage of the Advances available to Agent, Agent may (but shall not be obligated to) assume
that such Lender shall make such amount available to Agent on the next Settlement Date and, in
reliance upon such assumption, make available to Borrowers a corresponding amount. Agent will
promptly notify Borrowing Agent of its receipt of any such notice from a Lender. If such amount is
made available to Agent on a date after such next Settlement Date, such Lender shall pay to Agent
on demand an amount equal to the product of (i) the daily average Federal Funds Rate (computed on
the basis of a year of 360 days) during such period as quoted by Agent, times (ii) such amount,
times (iii) the number of days from and including such Settlement Date to the date on which such
amount becomes immediately available to Agent. A certificate of Agent submitted to any Lender with
respect to any amounts owing under this paragraph (e) shall be conclusive, in the absence of
manifest error. If such amount is not in fact made available to Agent by such Lender within three
(3) Business Days after such Settlement Date, Agent shall be entitled to recover such an amount,
with interest thereon at the rate per annum then applicable to such Revolving Advances hereunder,
on demand from Borrowers; provided, however, that Agent’s right to such recovery shall not
prejudice or otherwise adversely affect Borrowers’ rights (if any) against such Lender.

     2.21 Mandatory Payments. Subject to Section 4.3 hereof, when any Borrower
sells or otherwise disposes of any Collateral other than Inventory in the Ordinary Course of
Business, Borrowers shall repay the Advances in an amount equal to the net proceeds of such sale
(i.e., gross proceeds less the reasonable costs of such sales or other dispositions), such
repayments to be made promptly but in no event more than one (1) Business Day following receipt of
such net proceeds, and until the date of payment, such proceeds shall be held in trust for Agent.
The foregoing shall not be deemed to be implied consent to any such sale otherwise prohibited by
the terms and conditions hereof. Such repayments shall be applied to the Advances in such order as
Agent may determine, subject to Borrowers’ ability to reborrow Revolving Advances in accordance
with the terms hereof.

     2.22 Use of Proceeds.

          (a) Borrowers shall apply the proceeds of Advances to (i) repay existing indebtedness owed to
certain creditors of Borrowers, (ii) pay fees and expenses relating to this transaction, and (iii)
provide for the working capital needs of their businesses as conducted on the Closing Date, and
(iv) reimburse drawings under Letters of Credit, each as otherwise permitted (or not prohibited)
under this Agreement.

          (b) Without limiting the generality of Section 2.22(a) above, neither the Borrowers,
the Guarantors nor any other Person which may in the future become party to this Agreement or the
Other Documents as a Borrower or Guarantor, intends to use nor shall they use any portion of the
proceeds of the Advances, directly or indirectly, for any purpose in violation of the Trading with
the Enemy Act.

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     2.23 Defaulting Lender.

          (a) Notwithstanding anything to the contrary contained herein, in the event any Lender (x) has
refused (which refusal constitutes a breach by such Lender of its obligations under this Agreement)
to make available its portion of any Advance or to refund its portion of any excess interest
received as provided in Section 3.6 or (y) notifies either Agent or Borrowing Agent that it
does not intend to make available its portion of any Advance (if the actual refusal would
constitute a breach by such Lender of its obligations under this Agreement) (each, a “Lender
Default”), all rights and obligations hereunder of such Lender (a “Defaulting Lender”)
as to which a Lender Default is in effect and of the other parties hereto shall be modified to the
extent of the express provisions of this Section 2.23 while such Lender Default remains in
effect.

          (b) Advances shall be incurred pro rata from Lenders (the “Non-Defaulting Lenders”)
which are not Defaulting Lenders based on their respective Commitment Percentages, and no
Commitment Percentage of any Lender or any pro rata share of any Advances required to be advanced
by any Lender shall be increased as a result of such Lender Default. Amounts received in respect
of principal of any type of Advances shall be applied to reduce the applicable Advances of each
Lender pro rata based on the aggregate of the outstanding Advances of that type of all Lenders at
the time of such application; provided, that, such amount shall not be applied to any Advances of a
Defaulting Lender at any time when, and to the extent that, the aggregate amount of Advances of any
Non-Defaulting Lender exceeds such Non-Defaulting Lender’s Commitment Percentage of all Advances
then outstanding.

          (c) A Defaulting Lender shall not be entitled to give instructions to Agent or to approve,
disapprove, consent to or vote on any matters relating to this Agreement and the Other Documents.
All amendments, waivers and other modifications of this Agreement and the Other Documents may be
made without regard to a Defaulting Lender and, for purposes of the definition of “Required
Lenders”, a Defaulting Lender shall be deemed not to be a Lender and not to have Advances
outstanding.

          (d) Other than as expressly set forth in this Section 2.23, the rights and obligations
of a Defaulting Lender (including the obligation to indemnify Agent) and the other parties hereto
shall remain unchanged. Nothing in this Section 2.23 shall be deemed to release any
Defaulting Lender from its obligations under this Agreement and the Other Documents, shall alter
such obligations, shall operate as a waiver of any default by such Defaulting Lender hereunder, or
shall prejudice any rights which any Borrower, Agent or any Lender may have against any Defaulting
Lender as a result of any default by such Defaulting Lender hereunder.

          (e) In the event a Defaulting Lender retroactively cures to the satisfaction of Agent the
breach which caused a Lender to become a Defaulting Lender, such Defaulting Lender shall no longer
be a Defaulting Lender and shall be treated as a Lender under this Agreement.

III INTEREST AND FEES.

     3.1 Interest. Interest on Advances shall be payable in arrears on the first day of
each month with respect to Domestic Rate Loans and, with respect to Eurodollar Rate Loans, at the
end of each Interest Period. Interest charges shall be computed on the actual principal amount of

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Advances outstanding during the month at a rate per annum equal to the applicable Revolving
Interest Rate. Whenever, subsequent to the date of this Agreement, the Alternate Base Rate is
increased or decreased, the Revolving Interest Rate for Domestic Rate Loans shall be similarly
changed without notice or demand of any kind by an amount equal to the amount of such change in the
Alternate Base Rate during the time such change or changes remain in effect. The Eurodollar Rate
shall be adjusted with respect to Eurodollar Rate Loans without notice or demand of any kind on the
effective date of any change in the Reserve Percentage as of such effective date. Upon and after
the occurrence of an Event of Default, and during the continuation thereof, at the option of Agent
or at the direction of Required Lenders, the Obligations shall bear interest at the lesser of (x)
the Maximum Rate, and (y) the Revolving Interest Rate plus two (2%) percent per annum (the
“Default Rate”).

     The Applicable Margin with respect to the Revolving Advances will be adjusted (up or down)
prospectively on a quarterly basis as determined by the financial performance of Holdings on a
Consolidated Basis, commencing with the first day of the first calendar month that occurs after
delivery of Borrowers’ quarterly financial statements to Agent for the fiscal quarter ending [June
30, 2006].

	 	 	 	 	 
	 	 	Applicable Revolving	 	 
	 	 	Eurodollar Rate	 	Applicable Revolving
	If the Fixed Charge Coverage Ratio is:	 	Margin :	 	Domestic Rate Margin:
	Greater than or equal to
1.10:1.00 and less than 1.50:1.00
	 	2.75%	 	0.25%
	Greater than or equal to
1.50:1.00 and less than 2.00:1.00
	 	2.50%	 	0.00%
	Greater than or equal to 2.00:1.00
	 	2.25%	 	0.00%

     All adjustments in the Applicable Margins after [October 31, 2006] will be implemented
quarterly on a prospective basis, for each calendar month commencing after the date of delivery to
Lenders of the quarterly unaudited or annual audited (as applicable) financial statements of
Borrowers evidencing the need for an adjustment. Concurrently with the delivery of such financial
statements, Borrowing Agent shall deliver to Agent and Lenders a certificate, signed by its chief
financial officer, setting forth in reasonable detail the basis for the continuance of, or any
change in, the Applicable Margins. Failure to timely deliver such financial statements shall, in
addition to any other remedy provided for in this Agreement, result in an increase in the
Applicable Margins to the highest level set forth in the foregoing grid, until the first day of the
first calendar month following the delivery of those financial statements demonstrating that such
an increase is not required. If a Default or Event of Default shall have occurred or be continuing
at the time any reduction in the Applicable Margins is to be implemented, that reduction shall be
deferred until the first day of the first calendar month following the date on which such Default
or Event of Default is waived or cured.

     3.2 Letter of Credit Fees.

          (a) Borrowers shall pay (x) to Agent, for the ratable benefit of Lenders, fees for each Letter
of Credit for the period from and excluding the date of issuance of same to and

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including the date of expiration or termination, equal to the average daily face amount of each outstanding Letter of
Credit multiplied by two and one-half percent (2.5%) per annum, such fees to be calculated on the
basis of a 360-day year for the actual number of days elapsed and to be payable quarterly in
arrears on the first day of each quarter and on the last day of the Term, and (y) to the Issuer, a
fronting fee of one quarter of one percent (0.25%) per annum, together with any and all
administrative, issuance, amendment, payment and negotiation charges with respect to Letters of
Credit and all fees and expenses as agreed upon by the Issuer and the Borrowing Agent in connection
with any Letter of Credit, including in connection with the opening, amendment or renewal of any
such Letter of Credit and any acceptances created thereunder and shall reimburse Agent for any and
all fees and expenses, if any, paid by Agent to the Issuer (all of the foregoing fees, the
“Letter of Credit and Acceptance Fees”). All such charges shall be deemed earned in full
on the date when the same are due and payable hereunder and shall not be subject to rebate or
pro-ration upon the termination of this Agreement for any reason. Any such charge in effect at the
time of a particular transaction shall be the charge for that transaction, notwithstanding any
subsequent change in the Issuer’s prevailing charges for that type of transaction. All Letter of
Credit Fees and Acceptance Fees payable hereunder shall be deemed earned in full on the date when
the same are due and payable hereunder and shall not be subject to rebate or pro-ration upon the
termination of this Agreement for any reason.

     On demand, following the occurrence of a Default or an Event of Default, Borrowers will cause
cash to be deposited and maintained in an account with Agent, as cash collateral, in an amount
equal to one hundred and five percent (105%) of the Maximum Undrawn Amount of all
outstanding Letters of Credit, and each Borrower hereby irrevocably authorizes Agent, in its
Permitted Discretion, on such Borrower’s behalf and in such Borrower’s name, to open such an
account and to make and maintain deposits therein, or in an account opened by such Borrower, in the
amounts required to be made by such Borrower, out of the proceeds of Receivables or other
Collateral or out of any other funds of such Borrower coming into any Lender’s possession at any
time. Agent will invest such cash collateral (less applicable reserves) in such short-term
money-market items as to which Agent and such Borrower mutually agree and the net return on such
investments shall be credited to such account and constitute additional cash collateral. No
Borrower may withdraw amounts credited to any such account except upon the occurrence of all of the
following: (x) payment and performance in full of all Obligations, (y) expiration of all Letters of
Credit and (z) termination of this Agreement.

     3.3 Closing Fee and Facility Fee.

          (a) Closing Fee. Upon the execution of this Agreement, Borrowers shall pay to Agent
for the ratable benefit of Lenders a closing fee of $150,000 less that portion of the deposit of
$65,000 heretofore paid by Borrowers to Agent remaining after application of such deposit to out of
pocket expenses.

          (b) Facility Fee. If, for any month during the Term, the average daily unpaid balance
of the Revolving Advances and undrawn amount of any outstanding Letters of Credit for each day of
such month does not equal the Maximum Revolving Advance Amount, then Borrowers shall pay to Agent
for the ratable benefit of Lenders a fee at a rate equal to one-quarter of one percent (.25%) per
annum on the amount by which the Maximum Revolving

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Advance Amount exceeds such average daily unpaid
balance. Such fee shall be payable to Agent in arrears on the first day of each month with respect
to the previous month.

     3.4 Collateral Evaluation Fee and Collateral Monitoring Fee.

          (a) Collateral Evaluation Fee. Borrowers shall pay Agent a collateral evaluation fee
equal to $1,000 per month commencing on the first day of the month following the Closing Date and
on the first day of each month thereafter during the Term. The collateral evaluation fee shall be
deemed earned in full on the date when same is due and payable hereunder and shall not be subject
to rebate or proration upon termination of this Agreement for any reason.

          (b) Collateral Monitoring Fee. Borrowers shall pay to Agent on the first day of each
month following any month in which Agent performs any collateral monitoring — namely any field
examination, collateral analysis or other business analysis, the need for which is to be determined
by Agent and which monitoring is undertaken by Agent or for Agent’s benefit — a collateral
monitoring fee in an amount equal to $750 per day for each person employed to perform such
monitoring, plus all costs and disbursements incurred by Agent in the performance of such
examination or analysis; provided that, if (a) no Default or Event of Default has occurred during
the applicable calendar year, and (b) no circumstance arises with respect to Borrowers’ and
Guarantors’ business operations or Collateral giving Agent a reasonable concern about such business
operations or Collateral, then Borrowers shall not be obligated to pay for more than four (4) field
examinations during any calendar year.

     3.5 Computation of Interest and Fees. Interest and fees hereunder shall be computed
on the basis of a year of 360 days and for the actual number of days elapsed. If any payment to be
made hereunder becomes due and payable on a day other than a Business Day, the due date thereof
shall be extended to the next succeeding Business Day and interest thereon shall be payable at the
Revolving Interest Rate for Domestic Rate Loans during such extension.

     3.6 Maximum Charges. It is the intention of the parties to comply strictly with
applicable usury laws. Accordingly, notwithstanding any provision to the contrary in this
Agreement or the Other Documents, in no event shall any Obligations require the payment or permit
the payment, taking, reserving, receiving, collection or charging of any sums constituting interest
under Applicable Laws that exceed the maximum amount permitted by such laws, as the same may be
amended or modified from time to time (the “Maximum Rate”). If any such excess interest is
called for, contracted for, charged, taken, reserved or received in connection herewith or
therewith, or in any communication by Agent, any Lender or any other Person to any Borrower, any
Guarantor or any other Person liable for the Obligations, or in the event that all or part of the
principal or interest hereof or thereof shall be prepaid or accelerated, so that under any of such
circumstances or under any other circumstance whatsoever the amount of interest contracted for,
charged, taken, reserved or received on the amount of principal actually outstanding from time to
time under the Obligations shall exceed the Maximum Rate, then in such event it is agreed that: (a)
the provisions of this paragraph shall govern and control; (b) neither any Borrower, any Guarantor
nor any other Person now or hereafter liable for the payment of any of the Obligations shall be
obligated to pay the amount of such interest to the extent it is in excess of the Maximum Rate; (c)
any such excess interest which is or has been

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received by Agent or any Lender, notwithstanding this
paragraph, shall be credited against the then unpaid principal balance of the Obligations (or, if
the principal amount of the Obligations shall have been paid in full, refunded by Lenders to the
party primarily liable on the Obligation, and each Lender shall refund its pro rata share of such
interest); and (d) the provisions of this Agreement and the Obligations, and any other
communication to any Borrower or any Guarantor, shall immediately be deemed reformed and such
excess interest reduced, without the necessity of executing any other document, to the Maximum
Rate. The right to accelerate the maturity of the Obligations does not include the right to
accelerate, collect or charge unearned interest, but only such interest that has otherwise accrued
as of the date of acceleration. Without limiting the foregoing, all calculations of the rate of
interest contracted for, charged, taken, reserved or received in connection with any of the
Obligations which are made for the purpose of determining whether such rate exceeds the Maximum
Rate shall be made to the extent permitted by Applicable Laws by amortizing, prorating, allocating
and spreading during the period of the full term of such Obligations, including all prior and
subsequent renewals and extensions hereof or thereof, all interest at any time contracted for,
charged, taken, reserved or received by Agent or any Lender. To the extent that either Chapter 303
or 306, or both, of the Texas Finance Code apply in determining the Maximum Rate, Agent and Lenders
hereby elect to determine the applicable rate ceiling by using the weekly ceiling from time to time
in effect, subject to Agent’s right subsequently to change such method in accordance with
Applicable Law, as the same may be amended or modified from time to time.

     3.7 Increased Costs. In the event that any Applicable Law, treaty or governmental
regulation, or any change therein or in the interpretation or application thereof, or compliance by
any Lender (for purposes of this Section 3.7, the term “Lender” shall include Agent or any
Lender and any corporation or bank controlling Agent or any Lender) and the office or branch where
Agent or any Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any request
or directive (whether or not having the force of law) from any central bank or other financial,
monetary or other authority, shall:

          (a) subject Agent or any Lender to any tax of any kind whatsoever with respect to this
Agreement or any Other Document or change the basis of taxation of payments to Agent or any Lender
of principal, fees, interest or any other amount payable hereunder or under any Other Documents
(except for changes in the rate of tax on the overall net income of Agent or any Lender by the
jurisdiction in which it maintains its principal office);

          (b) impose, modify or hold applicable any reserve, special deposit, assessment or similar
requirement against assets held by, or deposits in or for the account of, advances or loans by, or
other credit extended by, any office of Agent or any Lender, including pursuant to Regulation D of
the Board of Governors of the Federal Reserve System; or

          (c) impose on Agent or any Lender or the London interbank Eurodollar market any other
condition with respect to this Agreement or any Other Document;

and the result of any of the foregoing is to increase the cost to Agent or any Lender of making,
renewing or maintaining its Advances hereunder by an amount that Agent or such Lender deems to be
material or to reduce the amount of any payment (whether of principal, interest or otherwise) in
respect of any of the Advances by an amount that Agent or such Lender deems to

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be material, then, in any case Borrowers shall promptly pay Agent or such Lender, upon its demand, such additional
amount as will compensate Agent or such Lender for such additional cost or such reduction, as the
case may be, provided that the foregoing shall not apply to increased costs which are reflected in
the Eurodollar Rate, as the case may be. Agent or such Lender shall certify the amount of such
additional cost or reduced amount to Borrowing Agent, and such certification shall be conclusive
absent manifest error.

     3.8 Basis For Determining Interest Rate Inadequate or Unfair. In the event that Agent
or any Lender shall have determined that:

          (a) reasonable means do not exist for ascertaining the Eurodollar Rate applicable pursuant to
Section 2.2 hereof for any Interest Period; or

          (b) Dollar deposits in the relevant amount and for the relevant maturity are not available in
the London interbank Eurodollar market, with respect to an outstanding Eurodollar Rate Loan, a
proposed Eurodollar Rate Loan, or a proposed conversion of a Domestic Rate Loan into a Eurodollar
Rate Loan,

then Agent shall give Borrowing Agent prompt written, telephonic or telegraphic notice of such
determination. If such notice is given, (i) any such requested Eurodollar Rate Loan shall be made
as a Domestic Rate Loan, unless Borrowing Agent shall notify Agent no later than 10:00 a.m.
(Dallas, Texas time) two (2) Business Days prior to the date of such proposed borrowing, that its
request for such borrowing shall be cancelled or made as an unaffected type of Eurodollar Rate
Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which was to have been converted to an
affected type of Eurodollar Rate Loan shall be continued as or converted into a Domestic Rate Loan,
or, if Borrowing Agent shall notify Agent, no later than 10:00 a.m. (Dallas, Texas time) two (2)
Business Days prior to the proposed conversion, shall be maintained as an unaffected type of
Eurodollar Rate Loan, and (iii) any outstanding affected Eurodollar Rate Loans shall be converted
into a Domestic Rate Loan, or, if Borrowing Agent shall notify Agent, no later than 10:00 a.m.
(Dallas, Texas time) two (2) Business Days prior to the last Business Day of the then current
Interest Period applicable to such affected Eurodollar Rate Loan, shall be converted into an
unaffected type of Eurodollar Rate Loan, on the last Business Day of the then current Interest
Period for such affected Eurodollar Rate Loans. Until such notice has been withdrawn, Lenders
shall have no obligation to make an affected type of Eurodollar Rate Loan or maintain outstanding
affected Eurodollar Rate Loans and no Borrower shall have the right to convert a Domestic Rate Loan
or an unaffected type of Eurodollar Rate Loan into an affected type of Eurodollar Rate Loan.

     3.9 Capital Adequacy.

          (a) In the event that Agent or any Lender shall have determined that any Applicable Law, rule,
regulation or guideline regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any Governmental Body, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance by Agent or any
Lender (for purposes of this Section 3.9, the term “Lender” shall include Agent or any
Lender and any corporation or bank controlling Agent or any Lender) and the office or branch where
Agent or any Lender (as so defined) makes or maintains any

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Eurodollar Rate Loans with any request or directive regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of reducing the rate of
return on Agent or any Lender’s capital as a consequence of its obligations hereunder to a level
below that which Agent or such Lender could have achieved but for such adoption, change or
compliance (taking into consideration Agent’s and each Lender’s policies with respect to capital
adequacy) by an amount deemed by Agent or any Lender to be material, then, from time to time,
Borrowers shall pay upon demand to Agent or such Lender such additional amount or amounts as will
compensate Agent or such Lender for such reduction. In determining such amount or amounts, Agent
or such Lender may use any reasonable averaging or attribution methods. The protection of this
Section 3.9 shall be available to Agent and each Lender regardless of any possible
contention of invalidity or inapplicability with respect to the Applicable Law, regulation or
condition.

          (b) A certificate of Agent or such Lender setting forth such amount or amounts as shall be
necessary to compensate Agent or such Lender with respect to Section 3.9(a) hereof when
delivered to Borrowing Agent shall be conclusive absent manifest error.

     3.10 Gross Up for Taxes. If any Borrower shall be required by Applicable Law to withhold or deduct any taxes from or
in respect of any sum payable under this Agreement or any of the Other Documents to Agent, or any
Lender, assignee of any Lender, or Participant (each, individually, a “Payee” and
collectively, the “Payees”), (a) the sum payable to such Payee or Payees, as the case may
be, shall be increased as may be necessary so that, after making all required withholding or
deductions, the applicable Payee or Payees receives an amount equal to the sum it would have
received had no such withholding or deductions been made (the “Gross-Up Payment”), (b) such
Borrower shall make such withholding or deductions, and (c) such Borrower shall pay the full amount
withheld or deducted to the relevant taxation authority or other authority in accordance with
Applicable Law. Notwithstanding the foregoing, no Borrower shall be obligated to make any portion
of the Gross-Up Payment that is attributable to any withholding or deductions that would not have
been paid or claimed had the applicable Payee or Payees properly claimed a complete exemption with
respect thereto pursuant to Section 3.11 hereof.

     3.11 Withholding Tax Exemption.

          (a) Each Payee that is not incorporated under the Laws of the United States of America or a
state thereof (and, upon the written request of Agent, each other Payee) agrees that it will
deliver to Borrowing Agent and Agent two (2) duly completed appropriate valid Withholding
Certificates (as defined under §1.1441-1(c)(16) of the Income Tax Regulations
(“Regulations”)) certifying its status (i.e., U.S. or foreign person) and, if appropriate,
making a claim of reduced, or exemption from, U.S. withholding tax on the basis of an income tax
treaty or an exemption provided by the Code. The term “Withholding Certificate” means a Form W-9;
a Form W-8BEN; a Form W-8ECI; a Form W-8IMY and the related statements and certifications as
required under §1.1441-1(e)(2) and/or (3) of the Regulations; a statement described in
§1.871-14(c)(2)(v) of the Regulations; or any other certificates under the Code or Regulations that
certify or establish the status of a payee or beneficial owner as a U.S. or foreign person.

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          (b) Each Payee required to deliver to Borrowing Agent and Agent a valid Withholding
Certificate pursuant to Section 3.11(a) hereof shall deliver such valid Withholding
Certificate as follows: (A) each Payee which is a party hereto on the Closing Date shall deliver
such valid Withholding Certificate at least five (5) Business Days prior to the first date on which
any interest or fees are payable by any Borrower hereunder for the account of such Payee; (B) each
Payee shall deliver such valid Withholding Certificate at least five (5) Business Days before the
effective date of such assignment or participation (unless Agent in its sole discretion shall
permit such Payee to deliver such Withholding Certificate less than five (5) Business Days before
such date in which case it shall be due on the date specified by Agent). Each Payee which so
delivers a valid Withholding Certificate further undertakes to deliver to Borrowing Agent and Agent
two (2) additional copies of such Withholding Certificate (or a successor form) on or before the
date that such Withholding Certificate expires or becomes obsolete or after the occurrence of any
event requiring a change in the most recent Withholding Certificate so delivered by it, and such
amendments thereto or extensions or renewals thereof as may be reasonably requested by Borrowing
Agent or Agent.

          (c) Notwithstanding the submission of a Withholding Certificate claiming a reduced rate of or
exemption from U.S. withholding tax required under Section 3.11(b) hereof,
Agent shall be entitled to withhold United States federal income taxes at the full 30%
withholding rate if in its reasonable judgment it is required to do so under the due diligence
requirements imposed upon a withholding agent under §1.1441-7(b) of the Regulations. Further,
Agent is indemnified under §1.1461-1(e) of the Regulations against any claims and demands of any
Payee for the amount of any tax it deducts and withholds in accordance with regulations under §1441
of the Code.

IV COLLATERAL: GENERAL TERMS

     4.1 Security Interest in the Collateral. To secure the prompt payment and performance
to Agent and each Lender of the Obligations, each Borrower hereby assigns, pledges and grants to
Agent for its benefit and for the ratable benefit of each Lender a continuing security interest in
and to and Lien on all of its Collateral, whether now owned or existing or hereafter acquired or
arising and wheresoever located. Each Borrower shall mark its books and records as may be
necessary or appropriate to evidence, protect and perfect Agent’s security interest. Each Borrower
shall promptly provide Agent with written notice of all material commercial tort claims, such
notice to contain the case title together with the applicable court and a brief description of the
claim(s). Upon delivery of each such notice, such Borrower shall be deemed to hereby grant to
Agent a security interest and lien in and to such commercial tort claims and all proceeds thereof.

     4.2 Perfection of Security Interest. Each Borrower shall take all action that may be
necessary or desirable, or that Agent may request, so as at all times to maintain the validity,
perfection, enforceability and priority of Agent’s security interest in and Lien on the Collateral
or to enable Agent to protect, exercise or enforce its rights hereunder and in the Collateral,
including, but not limited to, (i) immediately discharging all Liens other than Permitted
Encumbrances, (ii) obtaining Lien Waiver Agreements, (iii) delivering to Agent, endorsed or
accompanied by such instruments of assignment as Agent may specify, and stamping or marking, in
such manner as Agent may specify, any and all chattel paper, instruments, letters of

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credits and advices thereof and documents evidencing or forming a part of the Collateral, (iv) entering into
warehousing, lockbox and other custodial arrangements satisfactory to Agent, and (v) executing and
delivering financing statements, control agreements, instruments of pledge, mortgages, notices and
assignments, in each case in form and substance satisfactory to Agent, relating to the creation,
validity, perfection, maintenance or continuation of Agent’s security interest and Lien under the
Uniform Commercial Code or other Applicable Law. By its signature hereto, each Borrower hereby
authorizes Agent to file against such Borrower, one or more financing, continuation or amendment
statements pursuant to the Uniform Commercial Code in form and substance satisfactory to Agent
(which statements may have a description of collateral which is broader than that set forth
herein). All charges, expenses and fees Agent may incur in doing any of the foregoing, and any
local taxes relating thereto, shall be charged to Borrowers’ Account as a Revolving Advance of a
Domestic Rate Loan and added to the Obligations, or, at Agent’s option, shall be paid to Agent for
its benefit and for the ratable benefit of Lenders immediately upon demand.

     4.3 Disposition of Collateral. Each Borrower will safeguard and protect all
Collateral for Agent’s general account and make no disposition thereof whether by sale, lease,
transfer or otherwise unless Agent has been provided with 5 days prior written notice thereof and
has consented thereto, except (a) the sale of Inventory in the Ordinary Course of Business and (b)
the disposition or transfer of obsolete and worn out Equipment in the Ordinary Course of Business.

     4.4 Preservation of Collateral. In addition to the rights and remedies set forth in
Section 11.1 hereof, Agent: (a) upon the occurrence and during the continuation of an Event
of Default, may at any time take such steps as Agent deems necessary to protect Agent’s interest in
and to preserve the Collateral, including the hiring of such security guards or the placing of
other security protection measures as Agent may deem appropriate; (b) upon the occurrence and
during the continuation of an Event of Default, may employ and maintain at any of any Borrower’s
premises a custodian who shall have full authority to do all acts necessary to protect Agent’s
interests in the Collateral; (c) upon the occurrence and during the continuation of an Event of
Default, may lease warehouse facilities to which Agent may move all or part of the Collateral; (d)
upon the occurrence and during the continuation of an Event of Default, may use any Borrower’s
owned or leased lifts, hoists, trucks and other facilities or equipment for handling or removing
the Collateral; and (e) shall have, and is hereby granted, a right of ingress and egress to the
places where the Collateral is located, and may proceed over and through any of Borrower’s owned or
leased property. Each Borrower shall cooperate fully with all of Agent’s efforts to preserve the
Collateral and will take such actions to preserve the Collateral as Agent may direct. All of
Agent’s expenses of preserving the Collateral, including any expenses relating to the bonding of a
custodian, shall be charged to Borrowers’ Account as a Revolving Advance and added to the
Obligations.

     4.5 Ownership of Collateral.

          (a) With respect to the Collateral, at the time the Collateral becomes subject to Agent’s
security interest: (i) each Borrower shall be the sole owner of and fully authorized and able to
sell, transfer, pledge and/or grant a first priority security interest in each and every item of
the its respective Collateral to Agent; and, except for Permitted Encumbrances the Collateral shall
be free and clear of all Liens and encumbrances whatsoever; (ii) each document

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and agreement executed by each Borrower or delivered to Agent or any Lender in connection with this Agreement
shall be true and correct in all respects; (iii) all signatures and endorsements of each Borrower
that appear on such documents and agreements shall be genuine and each Borrower shall have full
capacity to execute same; and (iv) each Borrower’s Inventory shall be located as set forth on
Schedule 4.5 and shall not be removed from such location(s) without the prior written
consent of Agent except with respect to the sale of Inventory in the Ordinary Course of Business.

          (b) (i) There is no location at which any Borrower has any Inventory (except for Inventory in
transit) other than those locations listed on Schedule 4.5; (ii) Schedule 4.5
hereto contains a correct and complete list, as of the Closing Date, of the legal names and
addresses of each warehouse at which Inventory of any Borrower is stored; (iii) Schedule 4.5 hereto
sets forth a correct and complete list as of the Closing Date of (A) each place of business of each
Borrower and (B) the chief executive office of each Borrower; and (iv) Schedule 4.5 hereto
sets forth a correct and complete list as of the Closing Date of the location, by state and street
address, of all Real Property owned or leased by each Borrower, together with the names and
addresses of any landlords.

     4.6 Defense of Agent’s and Lenders’ Interests. Until (a) payment and performance in
full of all of the Obligations and (b) termination of this Agreement, Agent’s interests in the
Collateral shall continue in full force and effect. During such period no Borrower shall, without
Agent’s prior written consent, pledge, sell, assign, transfer (except any sale, assignment or
transfer to the extent permitted in Section 4.3 hereof), create or suffer to exist a Lien
upon or encumber or allow or suffer to be encumbered in any way except for Permitted Encumbrances,
any part of the Collateral. Each Borrower shall defend Agent’s interests in the Collateral against
any and all Persons whatsoever. Upon the occurrence and during the continuance of an Event of
Default, Agent shall have the right to take possession of the indicia of the Collateral and the
Collateral in whatever physical form contained, including: labels, stationery, documents,
instruments and advertising materials. If Agent exercises this right to take possession of the
Collateral, Borrowers shall, upon demand, assemble it in the best manner possible and make it
available to Agent at a place reasonably convenient to Agent. In addition, with respect to all
Collateral, Agent and Lenders shall be entitled to all of the rights and remedies set forth herein
and further provided by the Uniform Commercial Code or other Applicable Law. Each Borrower shall,
and Agent may, at its option, instruct all suppliers, carriers, forwarders, warehousers or others
receiving or holding cash, checks, documents or instruments in which Agent holds a security
interest to deliver same to Agent and/or subject to Agent’s order and if they shall come into any
Borrower’s possession, they, and each of them, shall be held by such Borrower in trust as Agent’s
trustee, and such Borrower will immediately deliver them to Agent in their original form together
with any necessary endorsement.

     4.7 Books and Records. Each Borrower shall (a) keep proper books of record and
account in which full, true and correct entries will be made of all dealings or transactions of or
in relation to its business and affairs; (b) set up on its books accruals with respect to all
taxes, assessments, charges, levies and claims; and (c) on a reasonably current basis set up on its
books, from its earnings, allowances against doubtful Receivables, advances and investments and all
other proper accruals (including by reason of enumeration, accruals for premiums, if any, due on
required payments and accruals for depreciation, obsolescence, or amortization of properties),

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which should be set aside from such earnings in connection with its business. All determinations
pursuant to this subsection shall be made in accordance with, or as required by, GAAP consistently
applied.

     4.8 Financial Disclosure. Each Borrower hereby irrevocably authorizes and directs all
accountants and auditors employed by such Borrower at any time during the Term to exhibit and
deliver to Agent and each Lender copies of any of such Borrower’s financial statements, trial balances or other
accounting records of any sort in the accountant’s or auditor’s possession, and to disclose to
Agent and each Lender any information such accountants may have concerning such Borrower’s
financial status and business operations. Each Borrower hereby authorizes all Governmental Bodies
to furnish to Agent and each Lender copies of reports or examinations relating to such Borrower,
whether made by such Borrower or otherwise; however, Agent and each Lender will attempt to obtain
such information or materials directly from such Borrower prior to obtaining such information or
materials from such accountants or Governmental Bodies.

     4.9 Compliance with Laws. Each Borrower shall comply with all Applicable Laws with
respect to the Collateral or any part thereof or to the operation of such Borrower’s business the
non-compliance with which could reasonably be expected to have a Material Adverse Effect. Each
Borrower may, however, contest or dispute any Applicable Laws in any reasonable manner, provided
that any related Lien is inchoate or stayed and sufficient reserves are established to the
reasonable satisfaction of Agent to protect Agent’s Lien on or security interest in the Collateral.
The assets of Borrowers at all times shall be maintained in accordance with the requirements of
all insurance carriers which provide insurance with respect to the assets of Borrowers so that such
insurance shall remain in full force and effect.

     4.10 Inspection of Premises. At all reasonable times Agent and each Lender shall have
full access to and the right to audit, check, inspect and make abstracts and copies from each
Borrower’s books, records, audits, correspondence and all other papers relating to the Collateral
and the operation of each Borrower’s business. If (a) no Event of Default has occurred and is
continuing, upon one (1) Business Days’ prior notice to Borrower, Agent, any Lender and their
agents may enter upon any premises of any Borrower at any time during business hours, and (b) an
Event of Default has occurred and is continuing, Agent, any Lender and their agents may enter upon
any premises of any Borrower at any time during business hours and at any other reasonable time,
and from time to time, for the purpose of inspecting the Collateral and any and all records
pertaining thereto and the operation of such Borrower’s business.

     4.11 Insurance. The assets and properties of each Borrower at all times shall be
maintained in accordance with the requirements of all insurance carriers which provide insurance
with respect to the assets and properties of such Borrower so that such insurance shall remain in
full force and effect. Each Borrower shall bear the full risk of any loss of any nature whatsoever
with respect to the Collateral. At each Borrower’s own cost and expense in amounts and with
carriers acceptable to Agent (for purposes hereof, the carriers of Borrowers’ insurance on the
Closing Date are acceptable to Agent), each Borrower shall (a) keep all its material insurable
properties and properties in which such Borrower has an interest insured against the hazards of
fire, flood, sprinkler leakage, those hazards covered by extended coverage insurance and such other
hazards, and for such amounts, as is customary in

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the case of companies engaged in businesses similar to such Borrower’s; (b) maintain a bond in such amounts as is customary in the case of
companies engaged in businesses similar to such Borrower insuring against larceny, embezzlement or other
criminal misappropriation of insured’s officers and employees who may either singly or jointly with
others at any time have access to the assets or funds of such Borrower either directly or through
authority to draw upon such funds or to direct generally the disposition of such assets; (c)
maintain public and product liability insurance against claims for personal injury, death or
property damage suffered by others; (d) maintain all such worker’s compensation or similar
insurance as may be required under the laws of any state or jurisdiction in which such Borrower is
engaged in business; (e) furnish Agent with (i) copies of all policies and evidence of the
maintenance of such policies by the renewal thereof at least thirty (30) days before any expiration
date, and (ii) appropriate loss payable endorsements in form and substance satisfactory to Agent,
naming Agent as an additional insured and loss payee as its interests may appear with respect to
all insurance coverage referred to in clauses (a), and (c) above, and providing (A) that all
proceeds thereunder shall be payable to Agent, (B) no such insurance shall be affected by any act
or neglect of the insured or owner of the property described in such policy, and (C) that such
policy and loss payable clauses may not be cancelled, amended or terminated unless at least thirty
(30) days’ prior written notice is given to Agent. In the event of any loss thereunder, the
carriers named therein hereby are directed by Agent and the applicable Borrower to make payment for
such loss to Agent and not to such Borrower and Agent jointly. If any insurance losses are paid by
check, draft or other instrument payable to any Borrower and Agent jointly, Agent may endorse such
Borrower’s name thereon and do such other things as Agent may deem advisable to reduce the same to
cash. Following the occurrence of an Event of Default, Agent is hereby authorized to adjust and
compromise claims under insurance coverage referred to in clauses (a) and (b) above. All loss
recoveries received by Agent upon any such insurance may be applied to the Obligations, in such
order as Agent in its sole discretion shall determine. Any surplus shall be paid by Agent to
Borrowers or applied as may be otherwise required by law. Any deficiency thereon shall be paid by
Borrowers to Agent, on demand.

     4.12 Failure to Pay Insurance. If any Borrower fails to obtain insurance as
hereinabove provided, or to keep the same in force, Agent, if Agent so elects, may obtain such
insurance and pay the premium therefor on behalf of such Borrower, and charge Borrowers’ Account
therefor as a Revolving Advance of a Domestic Rate Loan and such expenses so paid shall be part of
the Obligations.

     4.13 Payment of Taxes. Unless such changes are being Properly Contested, each
Borrower will pay, when due, all taxes, assessments and other Charges lawfully levied or assessed
upon such Borrower or any of the Collateral including real and personal property taxes, assessments
and charges and all franchise, income, employment, social security benefits, withholding, and sales
taxes. If any tax by any Governmental Body is or may be imposed on or as a result of any
transaction between any Borrower and Agent or any Lender which Agent or any Lender may be required
to withhold or pay or if any taxes, assessments, or other Charges remain unpaid after the date
fixed for their payment, or if any claim shall be made which, in Agent’s or any Lender’s opinion,
may possibly create a valid Lien on the Collateral, Agent may without notice to Borrowers pay the
taxes, assessments or other Charges and each Borrower hereby agrees to indemnify, defend and hold
Agent and each Lender harmless in respect thereof. The amount of any payment by Agent under
this Section 4.13 shall be charged to Borrowers’ Account as a Revolving Advance and
added to the Obligations and, until Borrowers shall furnish Agent with an indemnity therefor (or
supply Agent with evidence satisfactory to Agent that due

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provision for the payment thereof has been made), Agent may hold without interest any balance standing to Borrowers’ credit and Agent
shall retain its security interest in and Lien on any and all Collateral held by Agent.

     4.14 Payment of Leasehold Obligations. Unless such payments are being Properly
Contested, each Borrower shall at all times pay, when and as due, its rental obligations under all
leases under which it is a tenant, and shall otherwise comply, in all material respects, with all
other terms of such leases and keep them in full force and effect and, at Agent’s request will
provide evidence of having done so.

     4.15 Receivables.

          (a) Nature of Receivables. Each of the Receivables shall be a bona fide and valid
account representing a bona fide indebtedness incurred by the Customer therein named, for a fixed
sum as set forth in the invoice relating thereto (provided immaterial or unintentional invoice
errors shall not be deemed to be a breach hereof) with respect to an absolute sale or lease and
delivery of goods upon stated terms of a Borrower, or work, labor or services theretofore rendered
by a Borrower as of the date each Receivable is created. Same shall be due and owing in accordance
with the applicable contract therefore without dispute, setoff or counterclaim except for setoff
rights existing, but not threatened or asserted, under the terms of the applicable contract and as
otherwise may be stated on the accounts receivable schedules delivered by Borrowers to Agent.

          (b) Solvency of Customers. Each Customer, to the best of each Borrower’s knowledge,
as of the date each Receivable is created, is and will be solvent and able to pay all Receivables
on which the Customer is obligated in full when due or with respect to such Customers of any
Borrower who are not solvent such Borrower has set up on its books and in its financial records bad
debt reserves adequate to cover such Receivables.

          (c) Location of Borrowers. Each Borrower’s chief executive office is located at the
location set forth on Schedule 4.5. Until written notice is given to Agent by Borrowing
Agent of any other office at which any Borrower keeps its records pertaining to Receivables, all
such records shall be kept at such executive office.

          (d) Collection of Receivables. Until any Borrower’s authority to do so is terminated
by Agent (which notice Agent may give at any time following the occurrence of an Event of Default),
each Borrower will, at such Borrower’s sole cost and expense, but on Agent’s behalf and for Agent’s
account, collect as Agent’s property and in trust for Agent all amounts received on Receivables,
and shall not commingle such collections with any Borrower’s funds or use the same except to pay
Obligations. Each Borrower shall deposit in the Blocked Account or, upon request by Agent, deliver
to Agent, in original form and on the date of receipt thereof, all checks, drafts, notes, money
orders, acceptances, cash and other evidences of Indebtedness.

          (e) Notification of Assignment of Receivables. At any time following the occurrence
of an Event of Default, Agent shall have the right to send notice of the assignment of,
and Agent’s security interest in and Lien on, the Receivables to any and all Customers or any
third party holding or otherwise concerned with any of the Collateral. Thereafter, Agent shall

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have the sole right to collect the Receivables, take possession of the Collateral, or both.
Agent’s actual collection expenses, including, but not limited to, stationery and postage,
telephone and telegraph, secretarial and clerical expenses and the salaries of any collection
personnel used for collection, may be charged to Borrowers’ Account and added to the Obligations.

          (f) Power of Agent to Act on Borrowers’ Behalf. Agent shall have the right to
receive, endorse, assign and/or deliver in the name of Agent or any Borrower any and all checks,
drafts and other instruments for the payment of money relating to the Receivables, and each
Borrower hereby waives notice of presentment, protest and non-payment of any instrument so
endorsed. Each Borrower hereby constitutes Agent or Agent’s designee as such Borrower’s attorney
with power (i) following the occurrence of an Event of Default to endorse such Borrower’s name upon
any notes, acceptances, checks, drafts, money orders or other evidences of payment or Collateral;
(ii) following the occurrence of an Event of Default to sign such Borrower’s name on any invoice or
bill of lading relating to any of the Receivables, drafts against Customers, assignments and
verifications of Receivables; (iii) to send verifications of Receivables to any Customer; (iv) to
sign such Borrower’s name on all financing statements or any other documents or instruments deemed
necessary or appropriate by Agent to preserve, protect, or perfect Agent’s interest in the
Collateral and to file same; (v) following the occurrence of an Event of Default to demand payment
of the Receivables; (vi) following the occurrence of an Event of Default to enforce payment of the
Receivables by legal proceedings or otherwise; (vii) following the occurrence of an Event of
Default to exercise all of such Borrower’s rights and remedies with respect to the collection of
the Receivables and any other Collateral; (viii) following the occurrence of an Event of Default to
settle, adjust, compromise, extend or renew the Receivables; (ix) following the occurrence of an
Event of Default to settle, adjust or compromise any legal proceedings brought to collect
Receivables; (x) following the occurrence of an Event of Default to prepare, file and sign such
Borrower’s name on a proof of claim in bankruptcy or similar document against any Customer; (xi)
following the occurrence of an Event of Default to prepare, file and sign such Borrower’s name on
any notice of Lien, assignment or satisfaction of Lien or similar document in connection with the
Receivables; and (xii) to do all other acts and things necessary to carry out this Agreement. All
acts of said attorney or designee are hereby ratified and approved, and said attorney or designee
shall not be liable for any acts of omission or commission nor for any error of judgment or mistake
of fact or of law (INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO AN ACT OR INACTION ARISING FROM
AGENT’S NEGLIGENCE OR STRICT LIABILITY), unless done with willful misconduct or with gross (not
mere) negligence (as determined by a court of competent jurisdiction in a final non-appealable
judgment); this power being coupled with an interest is irrevocable while any of the Obligations
remain unpaid. Agent shall have the right at any time to change the address for delivery of mail
addressed to any Borrower to such address as Agent may designate and to receive, open and dispose
of all mail addressed to any Borrower.

     (g) No Liability. Neither Agent nor any Lender shall, under any circumstances or in
any event whatsoever, have any liability for any error or omission or delay of any kind (INCLUDING,
WITHOUT LIMITATION, WITH RESPECT TO AN ACT OR INACTION ARISING FROM AGENT’S OR LENDER’S NEGLIGENCE
OR STRICT LIABILITY) occurring in the settlement, collection or payment of any of the Receivables or any
instrument received in payment thereof, or for any damage resulting therefrom unless done with

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willful misconduct or with gross (not mere) negligence (as determined by a court of competent
jurisdiction in a final non-appealable judgment). Following the occurrence of an Event of Default,
Agent may, without notice or consent from any Borrower, sue upon or otherwise collect, extend the
time of payment of, compromise or settle for cash, credit or upon any terms any of the Receivables
or any other securities, instruments or insurance applicable thereto and/or release any obligor
thereof. Agent is authorized and empowered to accept the return of the goods represented by any of
the Receivables, without notice to or consent by any Borrower, all without discharging or in any
way affecting any Borrower’s liability hereunder.

          (h) Establishment of a Lockbox Account, Dominion Account. All proceeds of Collateral
shall be deposited by Borrowers into either (i) a lockbox account, dominion account or such other
“blocked account” (“Blocked Accounts”) established at a bank or banks (each such bank, a
“Blocked Account Bank”) pursuant to an arrangement with such Blocked Account Bank as may be
selected by Borrowing Agent and be acceptable to Agent or (ii) depository accounts (“Depository
Accounts”) established at the Agent for the deposit of such proceeds. Each applicable
Borrower, Agent and each Blocked Account Bank shall enter into a deposit account control agreement
in form and substance satisfactory to Agent directing such Blocked Account Bank to transfer such
funds so deposited to Agent, either to any account maintained by Agent at said Blocked Account Bank
or by wire transfer to appropriate account(s) of Agent. All funds deposited in such Blocked
Accounts shall immediately become the property of Agent and Borrowing Agent shall obtain the
agreement by such Blocked Account Bank to waive any offset rights against the funds so deposited.
Neither Agent nor any Lender assumes any responsibility for such blocked account arrangement,
including any claim of accord and satisfaction or release with respect to deposits accepted by any
Blocked Account Bank thereunder. All deposit accounts and investment accounts of each Borrower and
its Subsidiaries are set forth on Schedule 4.15(h). Notwithstanding anything to the
contrary in this Section 4.15(h), so long as no Default or Event of Default shall have
occurred, Agent, following the written request of Borrowing Agent with respect to the same, shall
give the Blocked Account Bank instructions in accordance with the applicable agreement regarding
the Blocked Account to disburse funds on deposit in the account referenced therein to such account
as the Borrowing Agent may specify to Agent in writing until such time as an Event of Default shall
have occurred and Agent shall otherwise instruct the Blocked Account Bank.

          (i) Adjustments. No Borrower will, without Agent’s consent, compromise or adjust any
Receivables (or extend the time for payment thereof) or accept any returns of merchandise or grant
any additional discounts, allowances or credits thereon except for those compromises, adjustments,
returns, discounts, credits and allowances as have been heretofore customary in the business of
such Borrower.

     4.16 Intentionally Omitted.

     4.17 Maintenance of Equipment. The material Equipment shall be maintained in good
operating condition and repair (reasonable wear and tear excepted) and all necessary replacements
of and repairs thereto shall be made so that the operating efficiency of the material Equipment shall be maintained and
preserved. Each Borrower shall have the right to sell Equipment constituting Collateral to the
extent set forth in Section 4.3 hereof.

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     4.18 Exculpation of Liability. Nothing herein contained shall be construed to
constitute Agent or any Lender as any Borrower’s agent for any purpose whatsoever, nor shall Agent
or any Lender be responsible or liable for any shortage, discrepancy, damage, loss or destruction
of any part of the Collateral wherever the same may be located and regardless of the cause thereof
unless done with willful misconduct or with gross (not mere) negligence (as determined by a court
of competent jurisdiction in a final non-appealable judgment). Following the occurrence of an
Event of Default (INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO AN ACT OR INACTION ARISING FROM
AGENT’S NEGLIGENCE OR STRICT LIABILITY). Neither Agent nor any Lender, whether by anything herein
or in any assignment or otherwise, assume any of any Borrower’s obligations under any contract or
agreement assigned to Agent or such Lender, and neither Agent nor any Lender shall be responsible
in any way for the performance by any Borrower of any of the terms and conditions thereof.

     4.19 Environmental Matters.

          (a) Borrowers shall ensure that the Real Property and all operations and businesses conducted
thereon (including disposal of any Hazardous Waste generated thereon) remains in material
compliance with all Environmental Laws and they shall not place or permit to be placed any
Hazardous Substances on any Real Property except as permitted by Applicable Law or appropriate
governmental authorities.

          (b) In the event any Borrower obtains, gives or receives notice of any Release or threat of
Release of a reportable quantity of any Hazardous Substances at the Real Property (any such event
being hereinafter referred to as a “Hazardous Discharge”) or receives any notice of
violation, request for information or notification that it is potentially responsible for
investigation or cleanup of environmental conditions at the Real Property, demand letter or
complaint, order, citation, or other written notice with regard to any Hazardous Discharge or
violation of Environmental Laws affecting the Real Property or any Borrower’s interest therein (any
of the foregoing is referred to herein as an “Environmental Complaint”) from any Person,
including any state agency responsible in whole or in part for environmental matters in the state
in which the Real Property is located or the United States Environmental Protection Agency (any
such person or entity hereinafter the “Authority”), then Borrowing Agent shall, within five
(5) Business Days, give written notice of same to Agent detailing facts and circumstances of which
any Borrower is aware giving rise to the Hazardous Discharge or Environmental Complaint;
provided, however, that Borrowers shall only be required to deliver such
information to Agent to the extent any Borrower is required to give notice of the same to any
lender financing its Real Property. Such information is to be provided to allow Agent to protect
its security interest in and Lien on the Collateral and is not intended to create nor shall it
create any obligation upon Agent or any Lender with respect thereto.

          (c) Borrowing Agent shall promptly forward to Agent copies of any material request for
information, notification of potential liability, demand letter relating to potential
responsibility with respect to the investigation or cleanup of Hazardous Substances at any other
site owned, operated or used by any Borrower to dispose of Hazardous Substances and shall continue
to forward copies of correspondence between any Borrower and the Authority regarding such claims to
Agent until the claim is settled. Borrowing Agent shall promptly

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forward to Agent copies of all material documents and reports concerning a Hazardous Discharge at the Real Property that any
Borrower is required to file under any Environmental Laws. Such information is to be provided
solely to allow Agent to protect Agent’s security interest in and Lien on the Collateral.

          (d) Borrowers shall respond promptly to any Hazardous Discharge or Environmental Complaint and
take all necessary action in order to safeguard the health of any Person and to avoid subjecting
the Collateral to any Lien. If any Borrower shall fail to respond promptly to any Hazardous
Discharge or Environmental Complaint or any Borrower shall fail to comply with any of the
requirements of any Environmental Laws, Agent on behalf of Lenders may, but without the obligation
to do so, for the sole purpose of protecting Agent’s interest in the Collateral: (A) give such
notices or (B) enter onto the Real Property (or authorize third parties to enter onto the Real
Property) and take such actions as Agent (or such third parties as directed by Agent) deem
reasonably necessary or advisable, to clean up, remove, mitigate or otherwise deal with any such
Hazardous Discharge or Environmental Complaint. All reasonable costs and expenses incurred by
Agent and Lenders (or such third parties) in the exercise of any such rights, including any sums
paid in connection with any judicial or administrative investigation or proceedings, fines and
penalties, together with interest thereon from the date expended at the Default Rate for Domestic
Rate Loans constituting Revolving Advances shall be paid upon demand by Borrowers, and until paid
shall be added to and become a part of the Obligations secured by the Liens created by the terms of
this Agreement or any other agreement between Agent, any Lender and any Borrower.

          (e) Borrowers shall promptly provide Agent, at Borrowers’ expense, with any environmental site
assessment or environmental audit report prepared at the direction of any lender financing any
Borrower’s Real Property.

          (f) Borrowers shall defend and indemnify Agent and Lenders and hold Agent, Lenders and their
respective employees, agents, directors and officers harmless from and against all loss, liability
(INCLUDING, WITHOUT LIMITATION, ANY STRICT LIABILITY), damage and expense, claims, costs, fines and
penalties, including attorney’s fees, suffered or incurred by Agent or Lenders under or on account
of any Environmental Laws, including the assertion of any Lien thereunder, with respect to any
Hazardous Discharge, the presence of any Hazardous Substances affecting the Real Property, whether
or not the same originates or emerges from the Real Property or any contiguous real estate,
including any loss of value of the Real Property as a result of the foregoing except to the extent
such loss, liability, damage and expense is attributable to any Hazardous Discharge resulting from
the willful misconduct or with gross (not mere) negligence of Agent or any Lender (as determined by
a court of competent jurisdiction in a final non-appealable judgment), but INCLUDING, WITHOUT
LIMITATION, WITH RESPECT TO ANY ACT OR INACTION ARISING FROM AGENT’S OR ANY LENDER’S NEGLIGENCE OR
STRICT LIABILITY. Borrower’s obligations under this Section 4.19 shall arise upon the discovery of the presence of
any Hazardous Substances at the Real Property, whether or not any federal, state, or local
environmental agency has taken or threatened any action in connection with the presence of any
Hazardous Substances. Borrowers’ obligation and the indemnifications hereunder shall survive the
termination of this Agreement.

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          (g) For purposes of Section 4.19 and 5.7, all references to Real Property
shall be deemed to include all of each Borrower’s right, title and interest in and to its owned and
leased premises.

     4.20 Financing Statements. Except as to the financing statements filed by Agent and
the financing statements described on Schedule 1.2, no financing statement covering any of
the Collateral or any proceeds thereof is on file in any public office.

V REPRESENTATIONS AND WARRANTIES.

     Each Borrower represents and warrants on behalf of itself and, as applicable, each Guarantor,
as follows:

     5.1 Authority. Each Borrower has full power, authority and legal right to enter into
this Agreement and the Other Documents and to perform all of its respective Obligations hereunder
and thereunder. This Agreement and the Other Documents have been duly executed and delivered by
each Borrower, and this Agreement and the Other Documents constitute the legal, valid and binding
obligation of such Borrower enforceable in accordance with their terms, except as such
enforceability may be limited by any applicable bankruptcy, insolvency, moratorium or similar laws
affecting creditors’ rights generally. The execution, delivery and performance of this Agreement
and of the Other Documents (a) are within such Borrower’s corporate or limited liability company
powers, as applicable, have been duly authorized by all necessary corporate or company action, as
applicable, are not in contravention of law or the terms of such Borrower’s by-laws, certificate of
incorporation or operating agreement, certificate of formation, as applicable, or other applicable
documents relating to such Borrower’s formation or to the conduct of such Borrower’s business or of
any material agreement or undertaking to which such Borrower is a party or by which such Borrower
is bound, including the Vessel Loan Documentation or the Subordinated Loan Documentation, (b) will
not conflict with or violate any law or regulation, or any judgment, order or decree of any
Governmental Body, (c) will not require the Consent of any Governmental Body or any other Person,
except those Consents set forth on Schedule 5.1 hereto, all of which will have been duly
obtained, made or compiled prior to the Closing Date and which are in full force and effect and (d)
will not conflict with, nor result in any breach in any of the provisions of or constitute a
default under or result in the creation of any Lien except Permitted Encumbrances upon any asset of
such Borrower under the provisions of any agreement, charter document, instrument, by-law, or
operating agreement, as applicable, or other instrument to which such Borrower is a party or by
which it or its property is a party or
by which it may be bound, including under the provisions of the Vessel Loan Documentation or
the Subordinated Loan Documentation.

     5.2 Formation and Qualification.

          (a) Each Borrower and each Guarantor is duly incorporated or formed, as applicable, and in
good standing under the laws of the jurisdictions listed on Schedule 5.2(a) and is
qualified to do business and is in good standing in the jurisdictions listed on Schedule
5.2(a) which constitute all jurisdictions in which qualification and good standing are
necessary for such Borrower or Guarantor to conduct its business and own its property and where the
failure to so qualify could reasonably be expected to have a Material Adverse Effect on such
Borrower. Each

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Borrower has delivered to Agent true and complete copies of its certificate of
incorporation and by-laws or certificate of formation and operating agreement, as applicable, and
will promptly notify Agent of any amendment or changes thereto.

          (b) The only Subsidiaries of Holdings and each Borrower and each Guarantor are listed on
Schedule 5.2(b).

     5.3 Survival of Representations and Warranties. All representations and warranties of
such Borrower contained in this Agreement and the Other Documents shall be true at the time of such
Borrower’s execution of this Agreement and the Other Documents, and shall survive the execution,
delivery and acceptance thereof by the parties thereto and the closing of the transactions
described therein or related thereto.

     5.4 Tax Returns. Each Borrower’s and each Guarantor’s federal tax identification
number, if applicable, is set forth on Schedule 5.4. Each Borrower has filed all federal,
state and local tax returns and other reports each is required by law to file and has paid all
taxes, assessments, fees and other governmental charges that are due and payable. Federal, state
and local income tax returns of each Borrower have been examined and reported upon by the
appropriate taxing authority or closed by applicable statute and satisfied for all fiscal years
prior to and including the fiscal year ending December 31, 2004. The provision for taxes on the
books of each Borrower and each Guarantor is adequate for all years not closed by applicable
statutes, and for its current fiscal year, and no Borrower has any knowledge of any deficiency or
additional assessment in connection therewith not provided for on its books.

     5.5 Financial Statements.

          (a) The balance sheet of Holdings on a Consolidated Basis (the “Balance Sheet”)
furnished to Agent on the Closing Date is accurate, complete and correct and fairly reflects the
financial condition of Holdings on a Consolidated Basis as of January 31, 2006, and has been
prepared in accordance with GAAP, consistently applied. The Balance Sheet has been certified as
accurate, complete and correct in all material respects by the President and Chief Financial
Officer of Borrowing Agent. All financial statements referred to in this subsection 5.5(a),
including the related schedules and notes thereto, have been prepared, in accordance with GAAP,
except as may be disclosed in such financial statements.

          (b) The month-by-month and annual cash flow projections of Holdings on a Consolidated Basis
and their projected balance sheets as of the Closing Date, copies of which are annexed hereto as
Exhibit 5.5(b) (the “Projections”) were prepared by or at the direction of the
Chief Financial Officer of Holdings, are based on underlying assumptions which provide a reasonable
basis for the projections contained therein and reflect Borrowers’ judgment based on present
circumstances of the most likely set of conditions and course of action for the projected period.
The cash flow Projections together with the Pro Forma Balance Sheet, are referred to as the
“Pro Forma Financial Statements”.

          (c) The balance sheet of Holdings on a Consolidated Basis (including the accounts of all
Subsidiaries for the respective periods during which a subsidiary relationship existed) as of
December 31, 2004, and the related statement of income, change in stockholder’s

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equity, and change in cash flow for the period ended on such date, all accompanied by reports thereon containing
opinions without qualification by independent certified public accountants, copies of which have
been delivered to Agent, have been prepared in accordance with GAAP, consistently applied (except
for changes in application in which such accountants concur) and present fairly the financial
position of Borrowers and their Subsidiaries at such date and the results of their operations for
such period. Since December 31, 2004 there has been no change in the condition, financial or
otherwise, of Holdings on a Consolidated Basis as shown on the balance sheet as of such date,
except changes in the Ordinary Course of Business, none of which individually or in the aggregate
has been materially adverse.

     5.6 Entity Names. No Borrower has been known by any other corporate name in the past
five years and does not sell Inventory under any other name except as set forth on Schedule
5.6, nor has any Borrower been the surviving corporation or company, as applicable, of a merger
or consolidation or acquired all or substantially all of the assets of any Person during the
preceding five (5) years.

     5.7 O.S.H.A. and Environmental Compliance.

          (a) To the extent expressly applicable, each Borrower and each Guarantor has duly complied
with, and its facilities, business, assets, property, leaseholds, Real Property and Equipment are
in compliance in all material respects with, the provisions of the Federal Occupational Safety and
Health Act, the Environmental Protection Act, RCRA and all other Environmental Laws; there are no
outstanding violations thereof with respect to any Borrower or any Guarantor or relating to its
business, assets, property, leaseholds or Equipment under any such laws, rules or regulations.

          (b) To the extent expressly applicable, each Borrower and each Guarantor has been issued all
required federal, state and local licenses, certificates or permits relating to all applicable
Environmental Laws.

          (c) (i) There are no visible signs of releases, spills, discharges, leaks or disposal
(collectively referred to as “Releases”) of Hazardous Substances at, upon, under or within
any Real Property or any premises leased by any Borrower or any Guarantor; (ii) there are no
underground storage tanks or polychlorinated biphenyls on the Real Property; (iii) neither the
Real Property nor any premises leased by any Borrower or any Guarantor has ever been used as a
treatment, storage or disposal facility of Hazardous Waste; and (iv) no Hazardous Substances are
present on the Real Property or any premises leased by any Borrower, excepting such quantities as
are handled in accordance with all applicable manufacturer’s instructions and governmental
regulations and in proper storage containers and as are necessary for the operation of the
commercial business of any Borrower or of its tenants.

     5.8 Solvency; No Litigation, Violation, Indebtedness or Default.

          (a) Before and after giving effect to the funding of each Advance made pursuant to this
Agreement, each Borrower and each Guarantor is and will be solvent, able to pay its debts as they
mature, has and will have capital sufficient to carry on its business and all businesses in which
it is about to engage, and (i) as of the Closing Date, the fair present saleable

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value of its assets, calculated on a going concern basis, is in excess of the amount of its liabilities and (ii)
subsequent to the Closing Date, the fair saleable value of its assets (calculated on a going
concern basis) will be in excess of the amount of its liabilities.

          (b) Except as disclosed in Schedule 5.8(b), neither Borrower nor any Guarantor has (i)
any pending or threatened litigation, arbitration, actions or proceedings which could reasonably be
expected to have a Material Adverse Effect, and (ii) any liabilities or indebtedness for borrowed
money other than the Obligations.

          (c) Neither Borrower nor any Guarantor is in violation of any applicable statute, law, rule,
regulation or ordinance in any respect which could reasonably be expected to have a Material
Adverse Effect, nor is Borrower or any Guarantor in violation of any order of any court,
Governmental Body or arbitration board or tribunal.

          (d) No Borrower, Guarantor, nor any member of the Controlled Group maintains or contributes to
any Plan other than those listed on Schedule 5.8(d) hereto. (i) No Plan has incurred any
“accumulated funding deficiency,” as defined in Section 302(a)(2) of ERISA and Section 412(a) of
the Code, whether or not waived, and each Borrower and each member of the Controlled Group has met
all applicable minimum funding requirements under Section 302 of ERISA in respect of each Plan;
(ii) each Plan which is intended to be a qualified plan under Section 401(a) of the Code as
currently in effect has been determined by the Internal Revenue Service to be qualified under
Section 401(a) of the Code and the trust related thereto is exempt from federal income tax under
Section 501(a) of the Code; (iii) neither any Borrower, Guarantor, nor any member of the Controlled
Group has incurred any liability to the PBGC other than for the payment of premiums, and there are
no premium payments which have become due which are unpaid; (iv) no Plan has been terminated by the
plan administrator thereof nor by the PBGC, and there is no occurrence which would cause the PBGC
to institute proceedings under Title IV of ERISA to terminate any Plan; (v) at this time, the
current value of the assets of each Plan exceeds the present value of the accrued benefits and
other liabilities of such Plan and neither any Borrower nor any member of the Controlled Group
knows of any facts or circumstances which would materially change the value of such assets and
accrued benefits and other liabilities; (vi) neither any Borrower, Guarantor nor any member of the
Controlled Group has breached any of the responsibilities, obligations or duties imposed on it by
ERISA with respect to any Plan; (vii) neither any Borrower nor any member of a Controlled Group has
incurred any liability for any excise tax arising under Section 4972 or 4980B of the Code, and
no fact exists which could give rise to any such liability; (viii) neither any Borrower, Guarantor
nor any member of the Controlled Group nor any fiduciary of, nor any trustee to, any Plan, has
engaged in a “prohibited transaction” described in Section 406 of the ERISA or Section 4975 of the
Code nor taken any action which would constitute or result in a Termination Event with respect to
any such Plan which is subject to ERISA; (ix) each Borrower, Guarantor and each member of the
Controlled Group has made all contributions due and payable with respect to each Plan; (x) there
exists no event described in Section 4043(b) of ERISA, for which the thirty (30) day notice period
has not been waived; (xi) neither any Borrower, Guarantor nor any member of the Controlled Group
has any fiduciary responsibility for investments with respect to any plan existing for the benefit
of persons other than employees or former employees of any Borrower and any member of the
Controlled Group; (xii) neither any Borrower, Guarantor nor any member of the Controlled Group
maintains or contributes to any Plan which provides health, accident or

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life insurance benefits to former employees, their spouses or dependents, other than in accordance with Section 4980B of the
Code; (xiii) neither any Borrower, Guarantor nor any member of the Controlled Group has withdrawn,
completely or partially, from any Multiemployer Plan so as to incur liability under the
Multiemployer Pension Plan Amendments Act of 1980 and there exists no fact which would reasonably
be expected to result in any such liability; and (xiv) no Plan fiduciary (as defined in Section
3(21) of ERISA) has any liability for breach of fiduciary duty or for any failure in connection
with the administration or investment of the assets of a Plan.

     5.9 Patents, Trademarks, Copyrights and Licenses. All patents, patent applications,
trademarks, trademark applications, service marks, service mark applications, copyrights, copyright
applications, design rights, tradenames, assumed names, trade secrets and licenses owned or
utilized by any Borrower are set forth on Schedule 5.9, are, to the best of Borrower’s
knowledge, valid and have been duly registered or filed with all appropriate Governmental Bodies
and constitute all of the material intellectual property rights which are necessary for the
operation of its business (other than mass marketed commercially available software); there is no
objection to or pending challenge to the validity of any such patent, trademark, copyright, design
rights, tradename, trade secret or license and neither any Borrower nor any Guarantor is aware of
any grounds for any challenge, except as set forth in Schedule 5.9 hereto. Each patent,
patent application, patent license, trademark, trademark application, trademark license, service
mark, service mark application, service mark license, design rights, copyright, copyright
application and copyright license owned or held by any Borrower or any Guarantor and all trade
secrets used by any Borrower or any Guarantor consist of original material or property developed by
such Borrower or such Guarantor or was lawfully acquired by such Borrower or such Guarantor from
the proper and lawful owner thereof. Each of such items has been maintained so as to preserve the
value thereof from the date of creation or acquisition thereof. With respect to all software used
by any Borrower or any Guarantor, such Borrower or such Guarantor is in possession of all source
and object codes related to each piece of software or is the beneficiary of a source code escrow
agreement, each such source code escrow agreement being listed on Schedule 5.9 hereto.

     5.10 Licenses and Permits. Except as set forth in Schedule 5.10, each Borrower and each Guarantor (a) is in
compliance with and (b) has procured and is now in possession of, all material licenses or permits
required by any Applicable Law, rule or regulation for the operation of its business in each
jurisdiction wherein it is now conducting or proposes to conduct business and where the failure to
procure such licenses or permits could have a Material Adverse Effect.

     5.11 Default of Indebtedness. Neither any Borrower nor any Guarantor is in default in
the payment of the principal of or interest on any Funded Debt or under any instrument or agreement
under or subject to which any Funded Debt has been issued and no event has occurred under the
provisions of any such instrument or agreement which with or without the lapse of time or the
giving of notice, or both, constitutes or would constitute an event of default thereunder.

     5.12 No Default. Neither any Borrower nor any Guarantor is in default in the payment
or performance of any of its contractual obligations and no Default has occurred.

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     5.13 No Burdensome Restrictions. Neither any Borrower nor any Guarantor is party to
any contract or agreement the performance of which could reasonably be expected to have a Material
Adverse Effect. Each Borrower has heretofore delivered to Agent true and complete copies of all
material contracts to which it is a party or to which it or any of its properties is subject, each
as set forth on Schedule 5.13. Neither any Borrower nor any Guarantor has agreed or
consented to cause or permit in the future (upon the happening of a contingency or otherwise) any
of its property, whether now owned or hereafter acquired, to be subject to a Lien which is not a
Permitted Encumbrance.

     5.14 No Labor Disputes. Neither any Borrower nor any Guarantor is involved in any
labor dispute; there are no strikes or walkouts or union organization of any Borrower’s or of any
Guarantor’s employees threatened or in existence and no labor contract is scheduled to expire
during the Term other than as set forth on Schedule 5.14 hereto.

     5.15 Margin Regulations. Neither any Borrower nor any Guarantor is engaged, nor will
it engage, principally or as one of its important activities, in the business of extending credit
for the purpose of “purchasing” or “carrying” any “margin stock” within the respective meanings of
each of the quoted terms under Regulation U of the Board of Governors of the Federal Reserve System
as now and from time to time hereafter in effect. No part of the proceeds of any Advance will be
used for “purchasing” or “carrying” “margin stock” as defined in Regulation U of such Board of
Governors.

     5.16 Investment Company Act. Neither any Borrower nor any Guarantor is an “investment company” registered or required to
be registered under the Investment Company Act of 1940, as amended, nor is it controlled by such a
company.

     5.17 Disclosure. No representation or warranty made by any Borrower in this Agreement
or in any financial statement, report, certificate or any other document furnished in connection
herewith or therewith contains any untrue statement of a material fact or omits to state any
material fact necessary to make the statements herein or therein not misleading. There is no fact
known to any Borrower or which reasonably should be known to such Borrower which such Borrower has
not disclosed in Borrower’s publicly available securities filings with respect to the transactions
contemplated by this Agreement which could reasonably be expected to have a Material Adverse
Effect.

     5.18 Delivery of Vessel Loan Documentation and Subordinated Loan Documentation. Agent
has received complete copies of the material Vessel Loan Documentation and the Subordinated Loan
Documentation (including all exhibits, schedules and disclosure letters referred to therein or
delivered pursuant thereto, if any) and all amendments or supplements thereto, waivers relating
thereto and other side letters or agreements affecting the terms thereof.

     5.19 Swaps. Neither any Borrower nor any Guarantor is a party to, nor will it be a
party to, any swap agreement whereby such Borrower has agreed or will agree to swap interest rates
or currencies unless same provides that damages upon termination following an event of default
thereunder are payable on an unlimited “two-way basis” without regard to fault on the part of
either party.

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     5.20 Conflicting Agreements. No provision of any mortgage, indenture, contract,
agreement, judgment, decree or order binding on any Borrower or affecting the Collateral conflicts
with, or requires any Consent which has not already been obtained to, or would in any way prevent
the execution, delivery or performance of, the terms of this Agreement or the Other Documents.

     5.21 Application of Certain Laws and Regulations. Neither any Borrower, any
Guarantor, nor any Affiliate of any Borrower or any Guarantor is subject to any law, statute, rule
or regulation which regulates the incurrence of any Indebtedness, including laws, statutes, rules
or regulations relative to common or interstate carriers or to the sale of electricity, gas, steam,
water, telephone, telegraph or other public utility services.

     5.22 Business and Property of Borrowers. Upon and after the Closing Date, neither
Borrowers nor Guarantors propose to engage in any business other than providing marine construction
services for the offshore oil and gas and
other energy related industries and activities incidental or reasonably related to the
foregoing. On the Closing Date, each Borrower will own or lease all the property and possess all
of the rights and Consents necessary for the conduct of the business of such Borrower.

     5.23 Section 20 Subsidiaries. Borrowers do not intend to use and shall not use any
portion of the proceeds of the Advances, directly or indirectly, to purchase during the
underwriting period, or for 30 days thereafter, Ineligible Securities being underwritten by a
Section 20 Subsidiary.

     5.24 Anti-Terrorism Laws.

          (a) General. Neither any Borrower, any Guarantor, nor any Affiliate of any Borrower
or any Guarantor is in violation of any Anti-Terrorism Law or engages in or conspires to engage in
any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to
violate, any of the prohibitions set forth in any Anti-Terrorism Law.

          (b) Executive Order No. 13224. Neither any Borrower, any Guarantor nor any Affiliate
of any Borrower or any Guarantor or their respective agents acting or benefiting in any capacity in
connection with the Advances or other transactions hereunder, is any of the following (each a
“Blocked Person”):

               (i) a Person that is listed in the annex to, or is otherwise subject to the provisions of, the
Executive Order No. 13224;

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

               (iii) a Person or entity with which any Lender is prohibited from dealing or otherwise
engaging in any transaction by any Anti-Terrorism Law;

               (iv) a Person or entity that commits, threatens or conspires to commit or supports “terrorism”
as defined in the Executive Order No. 13224;

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               (v) a Person or entity that is named as a “specially designated national” on the most current
list published by the U.S. Treasury Department Office of Foreign Asset Control at its official
website or any replacement website or other replacement official publication of such list, or

               (vi) a Person or entity who is affiliated or associated with a Person or entity listed above.

     Neither any Borrower, any Guarantor, nor to the knowledge of any Borrower, any of its agents
acting in any capacity in connection with the Advances or other transactions hereunder (i) conducts
any business or engages in making or receiving any contribution of funds, goods or services to or
for the benefit of any Blocked Person, or (ii) deals in, or otherwise engages in any
transaction relating to, any property or interests in property blocked pursuant to the
Executive Order No. 13224.

     5.25 Trading with the Enemy. Neither any Borrower nor any Guarantor has engaged, nor
does it intend to engage, in any business or activity prohibited by the Trading with the Enemy Act.

VI AFFIRMATIVE COVENANTS.

     Each Borrower shall (and as applicable, shall cause each Guarantor to), until the indefeasible
payment in full of the Obligations and termination of this Agreement:

     6.1 Payment of Fees. Pay to Agent on demand all usual and customary fees and expenses
which Agent incurs in connection with (a) the forwarding of Advance proceeds and (b) the
establishment and maintenance of any Blocked Accounts or Depository Accounts as provided for in
Section 4.15(h). Agent may, without making demand, charge Borrowers’ Account for all such
fees and expenses.

     6.2 Conduct of Business and Maintenance of Existence and Assets. (a) Conduct
continuously and operate actively its business according to good business practices and maintain
all of its material properties useful or necessary in its business in good working order and
condition (reasonable wear and tear excepted and except as may be disposed of in accordance with
the terms of this Agreement), including all licenses, patents, copyrights, design rights,
tradenames, trade secrets and trademarks and take all actions necessary to enforce and protect the
validity of any intellectual property right or other right included in the Collateral; (b) keep in
full force and effect its existence and comply in all material respects with the laws and
regulations governing the conduct of its business where the failure to do so could reasonably be
expected to have a Material Adverse Effect; and (c) make all such reports and pay all such
franchise and other taxes and license fees and do all such other acts and things as may be lawfully
required to maintain its rights, licenses, leases, powers and franchises under the laws of the
United States or any political subdivision thereof.

     6.3 Violations. Promptly notify Agent in writing of any violation of any law,
statute, regulation or ordinance of any Governmental Body, or of any agency thereof, applicable to
any Borrower which could reasonably be expected to have a Material Adverse Effect.

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     6.4 Government Receivables. Take all steps necessary to protect Agent’s interest in
the Collateral under the Federal Assignment of Claims Act, as applicable, the Uniform Commercial
Code and all other applicable state or local statutes or ordinances and deliver to Agent
appropriately endorsed, any instrument
or chattel paper connected with any Receivable arising out of contracts between any Borrower
and the United States, any state or any department, agency or instrumentality of any of them.

     6.5 Financial Covenants.

          (a) Tangible Net Worth. Holdings on a Consolidated Basis shall maintain at all times
a Tangible Net Worth in an amount not less than $135,000,000.

          (b) Fixed Charge Coverage Ratio. Holdings on a Consolidated Basis shall cause to be
maintained as of the end of each fiscal quarter, a Fixed Charge Coverage Ratio of not less than 1.1
to 1.0.

          (c) Minimum EBITDA. Holdings on a Consolidated Basis shall cause to be maintained as
of the end of each fiscal quarter, for the four-quarter period then ending, EBITDA of not less than
$30,000,000.

          (d) Estimated Contract Losses. Holdings on a Consolidated Basis shall not have an
estimated loss of more than twenty-five percent (25%) in the aggregate of the revenue value of all
of Borrowers’ jobs in progress during any month, as reflected on the Revenue Accrual Worksheet for
such month.

     6.6 Execution of Supplemental Instruments. Execute and deliver to Agent from time to
time, upon demand, such supplemental agreements, statements, assignments and transfers, or
instructions or documents relating to the Collateral, and such other instruments as Agent may
request, in order that the full intent of this Agreement may be carried into effect.

     6.7 Payment of Indebtedness. Pay, discharge or otherwise satisfy at or before
maturity (subject, where applicable, to specified grace periods and, in the case of the trade
payables, to normal payment practices) all its obligations and liabilities of whatever nature,
except when the failure to do so could not reasonably be expected to have a Material Adverse Effect
or when the amount or validity thereof is currently being Properly Contested, subject at all times
to any applicable subordination arrangement in favor of Lenders.

     6.8 Standards of Financial Statements. Cause all financial statements referred to in
Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12,
9.13 and 9.14 as to which GAAP is applicable to be complete and correct in all
material respects (subject, in the case of interim financial statements, to normal year-end audit
adjustments) and to be prepared in reasonable detail and in accordance with GAAP applied
consistently throughout the periods reflected therein (except as concurred in by such reporting
accountants or officer, as the case may be, and disclosed therein).

VII NEGATIVE COVENANTS.

     No Borrower shall (and as applicable, shall not permit Guarantors to), until satisfaction in
full of the Obligations and termination of this Agreement:

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     7.1 Acquisition of Assets. Acquire all or a substantial portion of the assets or
Equity Interests of any Person or permit any other Person to consolidate with or merge with it,
except the acquisition of the vessel known as the Sea Wrangler from Louisiana Pipelaying I, L.L.C.
pursuant to the terms of a Purchase and Sale Agreement dated as of February 1, 2006 and consummated
on February 17, 2006.

     7.2 Creation of Liens. Create or suffer to exist any Lien or transfer upon or against
any of its property or assets now owned or hereafter acquired, except Permitted Encumbrances.

     7.3 Guarantees. Become liable upon the obligations or liabilities of any Person by
assumption, endorsement or guaranty thereof or otherwise (other than to Lenders) except (a) as
disclosed on Schedule 7.3, (b) guarantees made in the Ordinary Course of Business and not
otherwise prohibited hereunder up to the aggregate amounts of $1,000,000, (c) the endorsement of
checks in the Ordinary Course of Business and (d) guarantees of Indebtedness or performance made in
the Ordinary Course of Business for the benefit of a wholly-owned Subsidiary, so long as the
Indebtedness guaranteed thereby is otherwise permitted under Section 7.8.

     7.4 Investments. Purchase or acquire obligations or Equity Interests of, or any other
interest in, any Person, except (a) obligations issued or guaranteed by the United States of
America or any agency thereof, (b) commercial paper with maturities of not more than 180 days and a
published rating of not less than A-1 or P-1 (or the equivalent rating), (c) certificates of time
deposit and bankers’ acceptances having maturities of not more than 180 days and repurchase
agreements backed by United States government securities of a commercial bank if (i) such bank has
a combined capital and surplus of at least $500,000,000, or (ii) its debt obligations, or those of
a holding company of which it is a Subsidiary, are rated not less than A (or the equivalent rating)
by a nationally recognized investment rating agency, and (d) U.S. money market funds that invest
solely in obligations issued or guaranteed by the United States of America or an agency thereof.

     7.5 Loans. Make advances, loans or extensions of credit to any Person, including any
Parent, Subsidiary or Affiliate except (a) intercompany loans and advances made by any Borrower to
any other Borrower and (b) intercompany loans and advances made by any Borrower to any Guarantor in
an aggregate amount not to exceed $275,000,000, at any time; provided that in each
case (i) if requested by Agent, each Borrower or each Guarantor, as the case may be, shall
execute and deliver to each other Borrower a demand note (collectively, the “Intercompany
Notes”) to evidence any such intercompany Indebtedness owing at any time by such Borrower or
such Guarantor to such other Borrowers which Intercompany Notes shall be in form and substance
satisfactory to Agent and shall be pledged and delivered to Agent as additional collateral security
for the Obligations; (ii) each Borrower shall record all intercompany transactions on its books and
records in a manner satisfactory to Agent; (iii) the obligations of each Borrower and each
Guarantor under any such Intercompany Notes shall be subordinated to the Obligations of such
Borrower and such Guarantor hereunder or under any other Document in a manner satisfactory to
Agent; (iv) at the time any such intercompany loan or advance is made by any Borrower to any other
Borrower or any Guarantor and after giving effect thereto, each such Borrower or Guarantor shall be
solvent; and (v) no Event of Default would occur and be continuing after giving effect to any such
proposed intercompany loan. The amount of all intercompany loans as of the Closing Date is set
forth on Schedule 7.5.

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     7.6 Capital Expenditures. Following an Undrawn Availability Event, contract for,
purchase or make any expenditure or commitments for unfinanced Capital Expenditures and Capitalized
Dry Dock Cost in the next four fiscal quarters in an aggregate amount for Holdings on a
Consolidated Basis in excess of $15,000,000.

     7.7 Dividends. (a) Declare, pay or make any dividend or distribution on any shares of
the common stock or preferred stock of any Borrower to any Person that is not a Borrower (other
than dividends or distributions payable in its stock, or split-ups or reclassifications of its
stock) or apply any of its funds, property or assets to the purchase, redemption or other
retirement of any common or preferred stock, or of any options to purchase or acquire any such
shares of common or preferred stock of any Borrower or any Guarantor that is a Subsidiary of a
Borrower.

          (b) Pay or make any distribution on any membership interests of any Borrower or apply any of
its funds, property or assets to the purchase, redemption or other retirement of any membership
interests, or of any options to purchase or acquire any such membership interests of any Borrower
to any Person that is not a Borrower.

     7.8 Indebtedness. Create, incur, assume or suffer to exist any Indebtedness
(exclusive of unsecured trade debt) except in respect of (i) Indebtedness to Lenders; (ii) purchase
money Indebtedness incurred for Capital Expenditures permitted under Section 7.6 hereof,
provided that any such Indebtedness incurred for the purpose of purchasing or acquiring a vessel
shall be subject to an intercreditor agreement in form and substance satisfactory to Agent in its
Permitted Discretion; (iii) Indebtedness due under the Vessel Loan Documentation and all
extensions, renewals or refinancings thereof, provided, that the terms and conditions of such
refinancings are no more onerous to Borrowers than the terms of such Indebtedness as in effect on
the date hereof and the aggregate amount thereof shall not exceed $150,000,000 (provided that with
respect to any
refinancing of Vessel Loan 4, such refinancing may be for an amount not to exceed eighty
percent (80%) of the value of the vessel the subject of Vessel Loan 4, for a term that may exceed
the length of the original term thereof and at an interest rate or margin commensurate with such
term and the market conditions at the time of such refinancing); (iv) Indebtedness due under the
Subordinated Loan Documentation; (v) deferred revenues reflected on Holdings’ balance sheet as a
liability with respect to the prepayment of rent by Cal Dive under the lease to Cal Dive; (vi)
letters of credit, performance and bid bonds obtained by Borrowers or Guarantors in the Ordinary
Course of Business in an aggregate amount not to exceed $40,000,000; (vii) supersedeas bonds
obtained by Borrowers or Guarantors in the Ordinary Course of Business; (viii) accrued liabilities
incurred in the Ordinary Course of Business; (ix) deferred taxes; (x) Indebtedness for which
Borrowers or Guarantors are contingently liable by endorsement of instruments in the course of
collection and performance guarantees and similar transactions entered into in the Ordinary Course
of Business, each to the extent permitted in Section 7.3 hereof; and (xi) Indebtedness set
forth on Schedule 7.8 and extensions, renewals and refinancings thereof on terms no less
onerous than those in effect on the Closing Date and in amounts not greater than those in effect on
the Closing Date.

     7.9 Nature of Business. Substantially change the nature of the business in which it
is presently engaged, nor except as specifically permitted hereby purchase or invest, directly or
indirectly, in any assets or property other than in the Ordinary Course of Business for assets or

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property which are useful in, necessary for and are to be used in its business as presently
conducted.

     7.10 Transactions with Affiliates. Directly or indirectly, purchase, acquire or lease
any property from, or sell, transfer or lease any property to, or otherwise enter into any
transaction or deal with, any Affiliate, except transactions which are in the Ordinary Course of
Business, on an arm’s-length basis on terms and conditions no less favorable than terms and
conditions which would have been obtainable from a Person other than an Affiliate and, with respect
to an Affiliate that is not a Borrower or Guarantor, such transaction has been disclosed to the
Agent in writing.

     7.11 Intentionally Omitted.

     7.12 Subsidiaries.

          (a) Form any Subsidiary unless (i) such Subsidiary expressly joins in this Agreement as a
borrower or guarantor and becomes jointly and severally liable for the obligations of Borrowers
hereunder, under the Notes, and under any other agreement between any Borrower and Lenders and (ii)
Agent shall have received all documents, including legal opinions, it may reasonably require to
establish compliance with each of the foregoing conditions.

          (b) Other than as set forth on Schedule 7.12(b), enter into any partnership, joint
venture or similar arrangement except that Borrowers may enter into a partnership, joint
venture or similar arrangement in the Ordinary Course of Business solely for the purpose of
procuring licenses and other administrative items as necessary or appropriate in furtherance of the
conduct of its business in accordance with Section 7.9 so long as no Indebtedness or other
funding obligations are incurred in connection therewith.

     7.13 Fiscal Year and Accounting Changes. Change its fiscal year from the twelve month
period ending December 31 or make any significant change (i) in accounting treatment and reporting
practices except in accordance with GAAP or (ii) in tax reporting treatment except as allowed by
law; provided that Borrowers shall give Agent prior written notice thereof and shall reasonably
agree to such amendments and modifications to this Agreement as are reasonably requested by Agent
in connection therewith.

     7.14 Pledge of Credit. Now or hereafter pledge Agent’s or any Lender’s credit on any
purchases or for any purpose whatsoever or use any portion of any Advance in or for any business
other than such Borrower’s business as conducted on the date of this Agreement.

     7.15 Amendment of Articles of Incorporation, By-Laws or Certificate of Formation,
Operating Agreement, as Applicable. Amend, modify or waive (i) any material term or provision
of its Articles of Incorporation or By-Laws or Certificate of Formation or Operating Agreement, as
applicable, unless required by Applicable Law, or (ii) any immaterial term or provision of its
Articles of Incorporation or By-Laws or Certificate of Formation or Operating Agreement, as
applicable, unless required by Applicable Law or written notice thereof promptly thereafter is
provided to Agent.

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     7.16 Compliance with ERISA. (i) (x) Maintain, or permit any member of the Controlled
Group to maintain, or (y) become obligated to contribute, or permit any member of the Controlled
Group to become obligated to contribute, to any Plan, other than those Plans disclosed on
Schedule 5.8(d), (ii) engage, or permit any member of the Controlled Group to engage, in
any non-exempt “prohibited transaction”, as that term is defined in section 406 of ERISA and
Section 4975 of the Code, (iii) incur, or permit any member of the Controlled Group to incur, any
“accumulated funding deficiency”, as that term is defined in Section 302 of ERISA or Section 412 of
the Code, (iv) terminate, or permit any member of the Controlled Group to terminate, any Plan where
such event could result in any liability of any Borrower or any member of the Controlled Group or
the imposition of a lien on the property of any Borrower or any member of the Controlled Group
pursuant to Section 4068 of ERISA, (v) assume, or permit any member of the Controlled Group to
assume, any obligation to contribute to any Multiemployer Plan not disclosed on Schedule
5.8(d), (vi) incur, or permit any member of the Controlled Group to incur, any withdrawal
liability to any Multiemployer Plan; (vii) fail promptly to notify Agent of the occurrence of any
Termination Event, (viii) fail to comply, or permit a member of the Controlled Group to fail to
comply, with the requirements of ERISA or the Code or other Applicable Laws in respect of any Plan,
(ix) fail to meet, or permit any member of the Controlled Group to fail to
meet, all minimum funding requirements under ERISA or the Code or postpone or delay or allow
any member of the Controlled Group to postpone or delay any funding requirement with respect of any
Plan.

     7.17 Intentionally Omitted.

     7.18 Anti-Terrorism Laws. No Borrower shall, until satisfaction in full of the
Obligations and termination of this Agreement, nor shall it permit any Affiliate or agent to:

          (a) Conduct any business or engage in any transaction or dealing with any Blocked Person,
including the making or receiving any contribution of funds, goods or services to or for the
benefit of any Blocked Person.

          (b) Deal in, or otherwise engage in any transaction relating to, any property or interests in
property blocked pursuant to the Executive Order No. 13224.

          (c) Engage in or conspire to engage in any transaction that evades or avoids, or has the
purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in the
Executive Order No. 13224, the USA PATRIOT Act or any other Anti-Terrorism Law. Borrower shall
deliver to Lenders any certification or other evidence requested from time to time by any Lender in
its Permitted Discretion, confirming Borrower’s compliance with this Section.

     7.19 Membership/Partnership Interests. Elect to treat or permit any of its
Subsidiaries to (x) treat its limited liability company membership interests or partnership
interests, as the case may be, as securities as contemplated by the definition of “security” in
Section 8-102(15) and by Section 8-103 of Article 8 of Uniform Commercial Code or (y) except as set
forth on Schedule 7.19 (so long as the same has been delivered to Agent in accordance with
the Pledge Agreement) certificate its limited liability company membership interests or partnership
interests, as the case may be.

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     7.20 Trading with the Enemy Act. Engage in any business or activity in violation of
the Trading with the Enemy Act.

     7.21 Prepayment of Indebtedness. At any time, directly or indirectly (i) prepay any
Funded Debt of any Borrower except as payable to Lenders; (ii) prepay, repurchase, redeem, retire
or otherwise acquire or make any prepayment on account of any principal of, interest on or premium
payable (a) in connection with the repayment or redemption of the Vessel Note, except as not
otherwise prohibited in the Intercreditor Agreement; or (b) in connection with the repayment or
redemption of the Subordinated Note except as expressly permitted by the terms of the Subordinated
Note as in effect on the Closing Date. Notwithstanding the foregoing, the Borrowers may (i)
exchange all
or part of the Subordinated Note for Permitted Securities, (ii) refinance the Vessel Note or
the Subordinate Note on terms no less onerous than those in effect on the Closing Date and in
amounts not greater than the amount thereof on the Closing Date, and (iii) so long as no Event of
Default would occur after giving effect to such payment, otherwise prepay the Vessel Note prior to
an Undrawn Availability Event.

     7.22 Other Agreements. Enter into any material amendment, waiver or modification of
the Vessel Loan Documentation, the Subordinated Loan Documentation or any related agreements.

VIII CONDITIONS PRECEDENT.

     8.1 Conditions to Initial Advances. The agreement of Lenders to make the initial
Advances requested to be made on the Closing Date is subject to the satisfaction, or waiver by
Agent, immediately prior to or concurrently with the making of such Advances, of the following
conditions precedent:

          (a) Note. Agent shall have received the Note duly executed and delivered by an
authorized officer of each Borrower;

          (b) Filings, Registrations and Recordings. Each document (including any Uniform
Commercial Code financing statement) required by this Agreement, any related agreement or under law
or reasonably requested by the Agent to be filed, registered or recorded in order to create, in
favor of Agent, a perfected security interest in or lien upon the Collateral shall have been
properly filed, registered or recorded in each jurisdiction in which the filing, registration or
recordation thereof is so required or requested, and Agent shall have received an acknowledgment
copy, or other evidence satisfactory to it, of each such filing, registration or recordation and
satisfactory evidence of the payment of any necessary fee, tax or expense relating thereto;

          (c) Corporate or Company Proceedings of Borrowers. Agent shall have received a copy
of the resolutions in form and substance reasonably satisfactory to Agent, of the Board of
Directors, Management Committee, or Managing Member, as applicable, of each Borrower authorizing
(i) the execution, delivery and performance of this Agreement, the Note, and any related agreements
(collectively the “Documents”) and (ii) the granting by each Borrower of the security
interests in and liens upon the Collateral in each case certified by the Secretary or an Assistant
Secretary of each Borrower as of the Closing Date; and, such certificate

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shall state that the
resolutions thereby certified have not been amended, modified, revoked or rescinded as of the date
of such certificate;

          (d) Incumbency Certificates of Borrowers. Agent shall have received a certificate of
the Secretary or an Assistant Secretary of each Borrower, dated the Closing Date, as to the
incumbency and signature of the officers of each Borrower executing this Agreement, the Other
Documents, any certificate or other documents to be delivered by it pursuant hereto, together with
evidence of the incumbency of such Secretary or Assistant Secretary;

          (e) Corporate or Company Proceedings of each Guarantor. Agent shall have received a
copy of the resolutions in form and substance reasonably satisfactory to Agent, of the Board of
Directors, Management Committee or Managing Member, as applicable, of each Guarantor authorizing
the execution, delivery and performance of the Guaranty and each Other Document to which it is a
party certified by the Secretary or an Assistant Secretary of each Guarantor as of the Closing
Date; and, such certificate shall state that the resolutions thereby certified have not been
amended, modified, revoked or rescinded as of the date of such certificate;

          (f) Incumbency Certificates of each Guarantor. Agent shall have received a
certificate of the Secretary or an Assistant Secretary of each Guarantor, dated the Closing Date,
as to the incumbency and signature of the officers of each Guarantor executing this Agreement, any
certificate or other documents to be delivered by it pursuant hereto, together with evidence of the
incumbency of such Secretary or Assistant Secretary;

          (g) Certificates. Agent shall have received a copy of the Articles or Certificate of
Incorporation or Formation, as applicable, of Holdings, each Borrower and each Guarantor, and all
amendments thereto, certified by the Secretary of State or other appropriate official of its
jurisdiction of incorporation or formation, as applicable, together with copies of the By-Laws or
Operating Agreement, as applicable, of Holdings, each Borrower and each Guarantor and all
agreements of Holdings’, each Borrower’s and each Guarantor’s shareholders or members, as
applicable, certified as accurate and complete by the Secretary of Holdings, each Borrower and such
Guarantor;

          (h) Good Standing Certificates. Agent shall have received good standing certificates
(to the extent available from the applicable jurisdiction) for Holdings, each Borrower and each
Guarantor issued by the Secretary of State or other appropriate official of Holdings’, each
Borrower’s and each Guarantor’s jurisdiction of incorporation or formation, as applicable, and each
jurisdiction where the conduct of Holdings, each Borrower’s and each Guarantor’s business
activities or the ownership of its properties necessitates qualification;

          (i) Legal Opinion. Agent shall have received the executed legal opinion of Borrower’s
and Guarantor’s counsel in form and substance satisfactory to Agent which shall cover such matters
incident to the transactions contemplated by this Agreement, the Note, the Other Documents, the
Guaranty and related agreements as Agent may reasonably require and each Borrower hereby authorizes
and directs such counsel to deliver such opinions to Agent and Lenders;

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          (j) No Litigation. (i) No litigation, investigation or proceeding before or by any
arbitrator or Governmental Body shall be continuing or threatened against Holdings or any Borrower
or any Guarantor or against the officers or directors of Holdings or any Guarantor or any Borrower
(A) in connection with this Agreement, the Other Documents, the Vessel Loan Documents, the
Subordinated Loan Documentation or any of the transactions contemplated thereby and which, in the
reasonable opinion of Agent, is deemed material or (B) which could, in the reasonable opinion of
Agent, have a Material Adverse Effect; and (ii) no injunction, writ, restraining order or other
order of any nature materially adverse to Holdings or any Borrower or
any Guarantor or the conduct of their respective business or inconsistent with the due
consummation of the Transactions shall have been issued by any Governmental Body;

          (k) Financial Condition Certificates. Agent shall have received an executed Financial
Condition Certificate in the form of Exhibit 8.1(k).

          (l) Collateral Examination. Agent shall have completed Collateral examinations and
audits and received appraisals, the results of which shall be satisfactory in form and substance to
Lenders, of the Receivables, Inventory, and General Intangibles of each Borrower and all books and
records in connection therewith;

          (m) Fees. Agent shall have received all fees payable to Agent and Lenders on or prior
to the Closing Date hereunder, including pursuant to Article III hereof and received payment of all
expenses reimbursable to Agent pursuant to this Agreement;

          (n) Pro Forma Financial Statements. Agent shall have received a copy of the Pro Forma
Financial Statements which shall be satisfactory in all respects to Lenders;

          (o) Certain Other Loan Documents. Agent shall have received final executed copies of
the Vessel Loan Documentation and the Subordinated Loan Documentation, and all related material
agreements, documents and instruments as in effect on the Closing Date all of which shall be
satisfactory in form and substance to Agent and the transactions contemplated by such documentation
shall be consummated prior to the making of the initial Advance;

          (p) Insurance. Agent shall have received in form and substance satisfactory to Agent,
certified copies of Borrowers’ casualty insurance policies, together with loss payable endorsements
on Agent’s standard form of loss payee endorsement naming Agent as loss payee, and certified copies
of Borrowers’ liability insurance policies, together with endorsements naming Agent as an
additional insured;

          (q) Payment Instructions. Agent shall have received written instructions from
Borrowing Agent directing the application of proceeds of the initial Advances made pursuant to this
Agreement;

          (r) Blocked Accounts. Agent shall have received duly executed agreements establishing
the Blocked Accounts or Depository Accounts with financial institutions acceptable to Agent for the
collection or servicing of the Receivables and proceeds of the Collateral, and Agent shall have
received evidence that all Customers have been directed to make all remittances to the lockbox
associated with such Blocked Account;

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          (s) Consents. Agent shall have received any and all Consents necessary to permit the
effectuation of the transactions contemplated by this Agreement and the Other Documents; and, Agent
shall have received such Consents and waivers of such third parties as might assert claims with
respect to the Collateral, as Agent and its counsel shall deem necessary;

          (t) No Adverse Material Change. (i) Since December 31, 2004, there shall not have
occurred any event, condition or state of facts which could reasonably be expected to
have a Material Adverse Effect and (ii) no representations made or information supplied to
Agent or Lenders shall have been proven to be inaccurate or misleading in any material respect;

          (u) Leasehold Agreements. Agent shall have received landlord, mortgagee or
warehouseman agreements satisfactory to Agent with respect to all premises leased by Borrowers at
which Inventory and books and records are located;

          (v) Guarantees and Other Documents. Agent shall have received (i) the executed
Guarantees, (ii) the executed Guarantor Security Agreement, (iii) the executed Pledge Agreements,
and (iv) the executed Other Documents, all in form and substance satisfactory to Agent;

          (w) Contract Review. Agent shall have reviewed all material contracts of Borrowers
set forth on Schedule 5.13 including leases, union contracts, labor contracts, vendor
supply contracts, license agreements and distributorship agreements and such contracts and
agreements shall be satisfactory in all respects to Agent and its legal counsel;

          (x) Closing Certificate. Agent shall have received a closing certificate signed by
the Chief Financial Officer of Holdings and each Borrower dated as of the date hereof, stating that
(i) all representations and warranties set forth in this Agreement and the Other Documents are true
and correct on and as of such date, (ii) Holdings and Borrowers are on such date in compliance with
all the terms and provisions set forth in this Agreement and the Other Documents and (iii) on such
date no Default or Event of Default has occurred or is continuing;

          (y) Borrowing Base. Agent shall have received an executed Borrowing Base Certificate
dated as of the Closing Date in form and substance satisfaction to Agent.

          (z) Undrawn Availability. After giving effect to the initial Advances hereunder,
Borrowers shall have Undrawn Availability of at least $15,000,000; and

          (aa) Compliance with Laws. Agent shall be reasonably satisfied that each Borrower is
in compliance with all pertinent federal, state, local or territorial regulations, including those
with respect to the Federal Occupational Safety and Health Act, the Environmental Protection Act,
ERISA and the Trading with the Enemy Act.

          (bb) Field Examination. Agent shall have received a satisfactory asset-based field
examination to be completed by examiners selected by Agent.

          (cc) Other. All corporate and other proceedings, all background and reference checks,
examinations and other investigations, and all documents, instruments and other legal matters in
connection with this Agreement and the Other Documents (including, but not limited

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to, those
relating to the corporate and capital structures of Borrowers) shall be satisfactory in form and
substance to Agent and its counsel.

     8.2 Conditions to Each Advance. The agreement of Lenders to make any Advance requested to be made on any date (including
the initial Advance), is subject to the satisfaction of the following conditions precedent as of
the date such Advance is made:

          (a) Representations and Warranties. Each of the representations and warranties made
by Holdings or any Borrower in or pursuant to this Agreement, the Other Documents and any related
agreements to which it is a party, and each of the representations and warranties contained in any
certificate, document or financial or other statement furnished at any time under or in connection
with this Agreement, the Other Documents or any related agreement shall be true and correct in all
material respects on and as of such date as if made on and as of such date;

          (b) No Default. No Event of Default or Default shall have occurred and be continuing
on such date, or would exist after giving effect to the Advances requested to be made, on such
date; provided, however that Agent, in its sole discretion, may continue to make Advances
notwithstanding the existence of an Event of Default or Default and that any Advances so made shall
not be deemed a waiver of any such Event of Default or Default; and

          (c) Maximum Advances. In the case of any type of Advance requested to be made, after
giving effect thereto, the aggregate amount of such type of Advance shall not exceed the maximum
amount of such type of Advance permitted under this Agreement.

     Each request for an Advance by any Borrower hereunder shall constitute a representation and
warranty by each Borrower as of the date of such Advance that the conditions contained in this
subsection shall have been satisfied.

IX INFORMATION AS TO BORROWERS.

     Each Borrower shall, or (except with respect to Section 9.11) shall cause Borrowing
Agent on its behalf to, until satisfaction in full of the Obligations and the termination of this
Agreement:

     9.1 Disclosure of Material Matters. Immediately upon learning thereof, report to
Agent all matters materially affecting the value, enforceability or collectibility of any portion
of the Collateral, including any Borrower’s reclamation or repossession of, or the return to any
Borrower of, a material amount of goods or claims or disputes asserted by any Customer or other
obligor.

     9.2 Schedules. Deliver to Agent on or before the fifteenth (15th) day of each month
as and for the prior month (a) accounts receivable ageings inclusive of reconciliations to the
general ledger, (b) accounts payable schedules inclusive of all sub-contractor balances and
reconciliations to the general ledger, (c) Inventory reports, (d) a Revenue Accrual Worksheet, (e)
the backlog report, (f) the bid activity report, (g) a report summarizing the projects of the
Borrowers then outstanding that are secured by either letters-of-credit or performance bonds, and
(h) a Borrowing Base Certificate in form and substance satisfactory to Agent (which shall be

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calculated as of the last day of the prior month and which shall not be binding upon Agent or
restrictive of Agent’s rights under this Agreement). In addition, Borrowers will deliver to Agent
a project health report as requested by Agent as soon as practical following such request, and each
project health report otherwise prepared by any Borrower promptly after the preparation thereof.
In addition, each Borrower will deliver to Agent at such intervals as Agent may reasonably require:
(i) confirmatory assignment schedules, (ii) copies of Customer’s invoices, (iii) evidence of
shipment or delivery, and (iv) such further schedules, documents and/or information regarding the
Collateral as Agent may require including trial balances and test verifications. Agent shall have
the right to confirm and verify all Receivables by any manner and through any medium it considers
advisable and do whatever it may deem reasonably necessary to protect its interests hereunder. The
items to be provided under this Section are to be in form satisfactory to Agent and executed by
each Borrower and delivered to Agent from time to time solely for Agent’s convenience in
maintaining records of the Collateral, and any Borrower’s failure to deliver any of such items to
Agent shall not affect, terminate, modify or otherwise limit Agent’s Lien with respect to the
Collateral.

     9.3 Environmental Reports. Furnish Agent, concurrently with the delivery of the
financial statements referred to in Sections 9.7 and 9.8, with a certificate signed
by the President of Borrowing Agent stating, to the best of his knowledge, that each Borrower is in
compliance in all material respects with all federal, state and local Environmental Laws. To the
extent any Borrower is not in compliance with the foregoing laws, the certificate shall set forth
with specificity all areas of non-compliance and the proposed action such Borrower will implement
in order to achieve full compliance.

     9.4 Litigation. Promptly notify Agent in writing of any claim, litigation, suit or
administrative proceeding affecting any Borrower, Holdings or any Guarantor, whether or not the
claim is covered by insurance which in any such case affects the Collateral in excess of $1,000,000
or which could reasonably be expected to have a Material Adverse Effect.

     9.5 Material Occurrences. Promptly notify Agent in writing upon the occurrence of (a)
any Event of Default or Default; (b) any event of default under the Vessel Loan Documentation or
the Subordinated Loan Documentation; (c) any event which with the giving of notice or lapse of
time, or both, would constitute an event of default under the Vessel Loan Documentation or the
Subordinated Loan Documentation; (d) any event, development or circumstance whereby any financial
statements or other reports furnished to Agent fail in any material respect to present fairly, in
accordance with GAAP consistently applied, the financial condition or operating results of any
Borrower as of the date of such statements; (e) any accumulated retirement plan funding deficiency
which, if such deficiency continued for two plan years and was not corrected as provided in Section
4971 of the Code, could subject any Borrower to a tax imposed by Section 4971 of the Code; (f) each
and every default by any Borrower which might result in the acceleration of the maturity of any
Funded Debt, including the names and addresses of the holders of such Funded Debt with respect to
which there is a default existing or with respect to which the maturity has been or could be
accelerated, and the amount of such Indebtedness; and (g) any other development in the
business or affairs of any Borrower, Holdings or any Guarantor, which could reasonably be expected
to have a Material Adverse Effect; in each case describing the nature thereof and the action
Borrowers propose to take with respect thereto.

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     9.6 Government Receivables. Notify Agent immediately if any of its Receivables arise
out of contracts between any Borrower and the United States, any state, or any department, agency
or instrumentality of any of them.

     9.7 Annual Financial Statements. Furnish Agent no later than as required to be
delivered by a public company under the Securities Act, but in no event later than one hundred and
five (105) days after the end of each fiscal year of Holdings, financial statements of Holdings on
a Consolidated Basis including, but not limited to, statements of income and stockholders’ equity
and cash flow from the beginning of the current fiscal year to the end of such fiscal year and the
balance sheet as at the end of such fiscal year, all prepared in accordance with GAAP applied on a
basis consistent with prior practices, and in reasonable detail and reported upon without
qualification by Grant Thornton, L.L.P., or such other independent certified public accounting firm
selected by Borrowers and satisfactory to Agent (the “Accountants”). The reports shall be
accompanied by a Compliance Certificate.

     9.8 Quarterly Financial Statements. Furnish Agent no later than as required to be
delivered by a public company under the Securities Act, but in no event later than fifty (50) days
after the end of each fiscal quarter, an unaudited balance sheet of Holdings on a Consolidated
Basis and unaudited statements of income and stockholders’ equity and cash flow of Holdings on a
Consolidated Basis reflecting results of operations from the beginning of the fiscal year to the
end of such quarter and for such quarter, prepared on a basis consistent with prior practices and
complete and correct in all material respects, subject to normal and recurring year end adjustments
that individually and in the aggregate are not material to Borrowers’ business. The reports shall
be accompanied by a Compliance Certificate.

     9.9 Monthly Financial Statements. Furnish Agent within thirty (30) days after the end
of each month, an unaudited balance sheet of Holdings on a Consolidated Basis and unaudited
statements of income and stockholders’ equity and cash flow of Holdings on a Consolidated Basis
reflecting results of operations from the beginning of the fiscal year to the end of such month and
for such month, prepared on a basis consistent with prior practices and complete and correct in all
material respects, subject to normal and recurring year end adjustments that individually and in
the aggregate are not material to Borrowers’ business. The reports shall be accompanied by a
Compliance Certificate.

     9.10 Other Reports. To the extent not already provided pursuant to the foregoing, furnish Agent as soon as
available, but in any event within ten (10) days after the issuance thereof, (i) with copies of
such financial statements, reports and returns as each Borrower shall send to its stockholders and
members, and (ii) copies of all material notices sent pursuant to the Vessel Loan Documentation or
the Subordinated Loan Documentation.

     9.11 Additional Information. Furnish Agent with such additional information as Agent
shall reasonably request in order to enable Agent to determine whether the terms, covenants,
provisions and conditions of this Agreement and the Note have been complied with by Borrowers
including, without the necessity of any request by Agent, (a) copies of all environmental audits
and reviews, (b) at least thirty (30) days prior thereto, notice of any Borrower’s opening of any
new office or place of business or any Borrower’s closing of any existing office or place of
business, and (c) promptly upon any Borrower’s learning thereof,

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notice of any labor dispute to
which any Borrower may become a party, any strikes or walkouts relating to any of its plants or
other facilities, and the expiration of any labor contract to which any Borrower is a party or by
which any Borrower is bound.

     9.12 Projected Operating Budget. Furnish Agent, no later than one (1) day prior to
the beginning of each Borrower’s fiscal years commencing with fiscal year 2007, a month by month
projected operating budget and cash flow of Holdings on a Consolidated Basis for such fiscal year
(including an income statement for each month and a balance sheet as at the end of the last month
in each fiscal quarter), such projections to be accompanied by a certificate signed by the
President or Chief Financial Officer of each Borrower to the effect that such projections have been
prepared on the basis of sound financial planning practice consistent with past budgets and
financial statements and that such officer has no reason to question the reasonableness of any
material assumptions on which such projections were prepared.

     9.13 Variances From Operating Budget. Furnish Agent, concurrently with the delivery
of the financial statements referred to in Section 9.7 and each quarterly report, a written
report summarizing all material variances from budgets submitted by Borrowers pursuant to
Section 9.12 and a discussion and analysis by management with respect to such variances.

     9.14 Notice of Communications with Governmental Bodies. To the extent not already
provided pursuant to the foregoing, furnish Agent with prompt written notice of (i) any lapse or
other termination of any Consent issued to any Borrower by any Governmental Body or any other
Person that is material to the operation of any Borrower’s business, (ii) any refusal by any
Governmental Body or any other Person to renew or extend any such Consent; and (iii) copies of any
periodic or special reports filed by any Borrower or any Guarantor with any Governmental Body or
Person, if such reports indicate any material change in the business, operations, affairs or
condition of any Borrower or any Guarantor, or if copies thereof are requested by Lender, and (iv)
copies of any material notices
and other communications from any Governmental Body or Person which specifically relate to any
Borrower or any Guarantor.

     9.15 ERISA Notices and Requests. To the extent not already provided pursuant to the
foregoing, furnish Agent with immediate written notice in the event that (i) any Borrower or any
member of the Controlled Group knows or has reason to know that a Termination Event has occurred,
together with a written statement describing such Termination Event and the action, if any, which
such Borrower or any member of the Controlled Group has taken, is taking, or proposes to take with
respect thereto and, when known, any action taken or threatened by the Internal Revenue Service,
Department of Labor or PBGC with respect thereto, (ii) any Borrower or any member of the
Controlled Group knows or has reason to know that a prohibited transaction (as defined in Sections
406 of ERISA and 4975 of the Code) has occurred together with a written statement describing such
transaction and the action which such Borrower or any member of the Controlled Group has taken, is
taking or proposes to take with respect thereto, (iii) a funding waiver request has been filed with
respect to any Plan together with all communications received by any Borrower or any member of the
Controlled Group with respect to such request, (iv) any increase in the benefits of any existing
Plan or the establishment of any new Plan or the commencement of contributions to any Plan to which
any Borrower or any member of the Controlled Group was not previously contributing shall occur, (v)
any Borrower or any member of the Controlled Group shall receive from the PBGC a notice of
intention to

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terminate a Plan or to have a trustee appointed to administer a Plan, together with
copies of each such notice, (vi) any Borrower or any member of the Controlled Group shall receive
any favorable or unfavorable determination letter from the Internal Revenue Service regarding the
qualification of a Plan under Section 401(a) of the Code, together with copies of each such letter;
(vii) any Borrower or any member of the Controlled Group shall receive a notice regarding the
imposition of withdrawal liability, together with copies of each such notice; (viii) any Borrower
or any member of the Controlled Group shall fail to make a required installment or any other
required payment under Section 412 of the Code on or before the due date for such installment or
payment; (ix) any Borrower or any member of the Controlled Group knows that (a) a Multiemployer
Plan has been terminated, (b) the administrator or plan sponsor of a Multiemployer Plan intends to
terminate a Multiemployer Plan, or (c) the PBGC has instituted or will institute proceedings under
Section 4042 of ERISA to terminate a Multiemployer Plan.

     9.16 Additional Documents. Execute and deliver to Agent, upon request, such documents
and agreements as Agent may, from time to time, reasonably request to carry out the purposes, terms
or conditions of this Agreement. Agent may, in its Permitted Discretion, request that any of the
reports, documents or other information required to be delivered in this Article IX be
delivered to Agent on a more timely basis.

X EVENTS OF DEFAULT.

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

     10.1 Nonpayment. Failure by any Borrower to pay any principal or interest on the
Obligations when due, whether at maturity or by reason of acceleration pursuant to the terms of
this Agreement or by notice of intention to prepay, or by required prepayment or failure to pay any
other liabilities or make any other payment, fee or charge provided for herein when due or in any
Other Document;

     10.2 Breach of Representation. Any representation or warranty made by any Borrower or
any Guarantor in, or deemed to have been made pursuant to the express provisions of, this
Agreement, any Other Document or any related agreement or in any certificate, document or financial
or other statement furnished at any time in connection herewith or therewith shall prove to have
been misleading in any material respect on the date when made or deemed to have been made;

     10.3 Intentionally Omitted.

     10.4 Judicial Actions. Issuance of a notice of levy, assessment, injunction or
attachment against any Borrower’s Receivables or against a material portion of any Borrower’s other
property;

     10.5 Noncompliance. Except as otherwise provided for in Sections 10.1 and
10.5(ii), (i) failure or neglect of any Borrower or any Guarantor to perform, keep or
observe any term, provision, condition, covenant herein contained, or contained in any Other
Document or any other agreement or arrangement, now or hereafter entered into between any Borrower
or any Guarantor, and Agent or any Lender, or (ii) failure or neglect of any Borrower to perform,
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or observe any term, provision, condition or covenant, contained in Sections 4.6,
4.7, 4.9, 6.1, 6.3, 6.4, 9.4 or 9.6 hereof
which is not cured within ten (10) days from the occurrence of such failure or neglect;

     10.6 Judgments . Any judgment or judgments are rendered or judgment liens are filed
against any Borrower or any Guarantor, in each case, for an aggregate amount in excess of $250,000
(unless such judgment, judgments, or judgment lien is (a) Properly Contested, or (b) covered by
insurance policies), and enforcement proceedings shall have been commenced by a creditor upon such
judgment, and there shall be any period of thirty (30) consecutive days during which a stay of
enforcement of such judgment, by reason of a pending appeal or otherwise, shall not be in effect;

     10.7 Bankruptcy. Any Borrower or any Guarantor shall (i) apply for, consent to or
suffer the appointment of, or the taking of possession by, a receiver, custodian, trustee,
liquidator or similar fiduciary of itself or of all or a substantial part of its property, (ii)
make a general assignment for the benefit of creditors, (iii) commence a voluntary case under any
state or federal bankruptcy laws (as now or hereafter in effect), (iv) be adjudicated a bankrupt or
insolvent, (v) file a petition seeking to take advantage of any other law providing for the relief
of debtors, (vi) acquiesce to, or fail to have dismissed, within thirty (30) days, any petition
filed against it in any involuntary case under such bankruptcy laws, or (vii) take any action for
the purpose of effecting any of the foregoing;

     10.8 Inability to Pay. Any Borrower or any Guarantor shall admit in writing its
inability, or be generally unable, to pay its debts as they become due or cease operations of its
present business;

     10.9 Affiliate Bankruptcy. Any Subsidiary of Holdings, or any Guarantor, shall (i)
apply for, consent to or suffer the appointment of, or the taking of possession by, a receiver,
custodian, trustee, liquidator or similar fiduciary of itself or of all or a substantial part of
its property, (ii) admit in writing its inability, or be generally unable, to pay its debts as they
become due or cease operations of its present business, (iii) make a general assignment for the
benefit of creditors, (iv) commence a voluntary case under any state or federal bankruptcy laws (as
now or hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition
seeking to take advantage of any other law providing for the relief of debtors, (vii) acquiesce to,
or fail to have dismissed, within thirty (30) days, any petition filed against it in any
involuntary case under such bankruptcy laws, or (viii) take any action for the purpose of effecting
any of the foregoing;

     10.10 Material Adverse Effect. Any change in any Borrower’s or any Guarantor’s
results of operations or condition (financial or otherwise) which has a Material Adverse Effect;

     10.11 Lien Priority. Any Lien created hereunder or provided for hereby or under any
related agreement for any reason ceases to be or is not a valid and perfected Lien having a first
priority interest;

     10.12 Vessel Loan Default or Subordinated Loan Default. An event of default has
occurred under the Vessel Loan Documentation, the Subordinated Loan Documentation or any

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Intercreditor Agreement, which default shall not have been cured or waived within any
applicable grace period;

     10.13 Cross Default. A default of the Funded Debt of any Borrower in excess of
$1,000,000 which default is not cured within any applicable grace period;

     10.14 Breach of Guaranty. Termination or breach of any Guaranty or Guarantor Security
Agreement or similar agreement executed and delivered to Agent in connection with the Obligations
of any Borrower, or if any Guarantor attempts to terminate, challenges the validity of, or its
liability under, any such Guaranty or Guarantor Security Agreement or similar agreement;

     10.15 Change of Ownership. Any Change of Ownership or Change of Control shall occur;

     10.16 Invalidity. Any material provision of this Agreement or any Other Document
shall, for any reason, cease to be valid and binding on Borrower or any Guarantor, or any Borrower
or any Guarantor shall so claim in writing to Agent or any Lender;

     10.17 Licenses. (i) Any Governmental Body shall (A) revoke, terminate, suspend or
adversely modify any license, permit, patent trademark or tradename of any Borrower or any
Guarantor, or (B) commence proceedings to suspend, revoke, terminate or adversely modify any such
license, permit, trademark, tradename or patent and such proceedings shall not be dismissed or
discharged within sixty (60) days, or (c) schedule or conduct a hearing on the renewal of any
license, permit, trademark, tradename or patent necessary for the continuation of any Borrower’s or
any Guarantor’s business and the staff of such Governmental Body issues a report recommending the
termination, revocation, suspension or material, adverse modification of such license, permit,
trademark, tradename or patent; (ii) any agreement which is necessary or material to the operation
of any Borrower’s or any Guarantor’s business shall be revoked or terminated and not replaced by a
substitute acceptable to Agent within thirty (30) days after the date of such revocation or
termination, and such revocation or termination and non-replacement would reasonably be expected to
have a Material Adverse Effect;

     10.18 Seizures. Any portion of the Collateral in excess of $500,000 shall be seized
or taken by a Governmental Body, or any Borrower or any Guarantor or the title and rights of any
Borrower or any Guarantor in the Collateral or in any vessel shall have become the subject matter
of claim, litigation, suit or other proceeding which might, in the reasonable opinion of Agent,
upon final determination, result in impairment or loss of the security provided by this Agreement
or the Other Documents;

     10.19 Operations. Work on contracts representing fifty percent (50%) or more of the
value of all pending contracts of any Borrower or any Guarantor are interrupted (other than in
accordance with the applicable contract) at any time for more than sixty (60) consecutive days; or

     10.20 Pension Plans. An event or condition specified in Sections 7.16 or
9.15 hereof shall occur or exist with respect to any Plan and, as a result of such event or
condition, together with all other such events or conditions, any Borrower or any member of the
Controlled Group

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shall incur, or in the opinion of Agent be reasonably likely to incur, a liability to a Plan
or the PBGC (or both) which, in the reasonable judgment of Agent, would have a Material Adverse
Effect.

XI LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT.

     11.1 Rights and Remedies.

          (a) Upon the occurrence of (i) an Event of Default pursuant to Section 10.7 all
Obligations shall be immediately due and payable and this Agreement and the obligation of Lenders
to make Advances shall be deemed terminated (ii) any of the other Events of Default and at any time
thereafter (such default not having previously been cured), at the option of Required Lenders all
Obligations shall be immediately due and payable and Lenders shall have the right to terminate this
Agreement and to terminate the obligation of Lenders to make Advances and (iii) a filing of a
petition against any Borrower in any involuntary case under any state or federal bankruptcy laws,
all Obligations shall be immediately due and payable and the obligation of Lenders to make Advances
hereunder shall be terminated other than as may be required by an appropriate order of the
bankruptcy court having jurisdiction over such Borrower. Upon the occurrence of any Event of
Default, Agent shall have the right to exercise any and all rights and remedies provided for
herein, under the Other Documents, under the Uniform Commercial Code and at law or equity
generally, including the right to foreclose the security interests granted herein and to realize
upon any Collateral by any available judicial procedure and/or to take possession of and sell any
or all of the Collateral with or without judicial process. Agent may enter any of any Borrower’s
premises or other premises without legal process and without incurring liability to any Borrower
therefor, and Agent may thereupon, or at any time thereafter, in its sole discretion without notice
or demand, take the Collateral and remove the same to such place as Agent may deem advisable and
Agent may require Borrowers to make the Collateral available to Agent at a convenient place. With
or without having the Collateral at the time or place of sale, Agent may sell the Collateral, or
any part thereof, at public or private sale, at any time or place, in one or more sales, at such
price or prices, and upon such terms, either for cash, credit or future delivery, as Agent may
elect. Except as to that part of the Collateral which is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized market, Agent shall give
Borrowers reasonable notification of such sale or sales, it being agreed that in all events written
notice mailed to Borrowing Agent at least ten (10) days prior to such sale or sales is reasonable
notification. At any public sale Agent or any Lender may bid for and become the purchaser, and
Agent, any Lender or any other purchaser at any such sale thereafter shall hold the Collateral sold
absolutely free from any claim or right of whatsoever kind, including any equity of redemption and
all such claims, rights and equities are hereby expressly waived and released by each Borrower. In
connection with the exercise of the foregoing remedies, including the sale of Inventory, Agent is
granted a perpetual nonrevocable, royalty free, nonexclusive license and Agent is granted
permission to use all of each Borrower’s (a) trademarks, trade styles, trade names, patents, patent
applications, copyrights, service marks, licenses, franchises and other proprietary rights which
are used or useful in connection with Inventory for the purpose of marketing, advertising for sale
and selling or otherwise disposing of such Inventory and (b) Equipment for the purpose of
completing any unfinished job, contract, project or assignment as deemed necessary by Agent,
subject to the Intercreditor Agreement. The cash proceeds realized from the sale of any Collateral
shall be applied to the Obligations in the

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order set forth in Section 11.5 hereof. Noncash proceeds will only be applied to the
Obligations as they are converted into cash. If any deficiency shall arise, Borrowers shall remain
liable to Agent and Lenders therefor.

          (b) To the extent that Applicable Law imposes duties on the Agent to exercise remedies in a
commercially reasonable manner, each Borrower acknowledges and agrees that it is not commercially
unreasonable for the Agent (i) to fail to incur expenses reasonably deemed significant by the Agent
to prepare Collateral for disposition or otherwise to complete raw material or work in process into
finished goods or other finished products for disposition, (ii) to fail to obtain third party
consents for access to Collateral to be disposed of, or to obtain or, if not required by other law,
to fail to obtain governmental or third party consents for the collection or disposition of
Collateral to be collected or disposed of, (iii) to fail to exercise collection remedies against
Customers or other Persons obligated on Collateral or to remove Liens on or any adverse claims
against Collateral, (iv) to exercise collection remedies against Customers and other Persons
obligated on Collateral directly or through the use of collection agencies and other collection
specialists, (v) to advertise dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature, (vi) to contact other
Persons, whether or not in the same business as any Borrower, for expressions of interest in
acquiring all or any portion of such Collateral, (vii) to hire one or more professional auctioneers
to assist in the disposition of Collateral, whether or not the Collateral is of a specialized
nature, (viii) to dispose of Collateral by utilizing internet sites that provide for the auction of
assets of the types included in the Collateral or that have the reasonable capacity of doing so, or
that match buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retail
markets, (x) to disclaim disposition warranties, such as title, possession or quiet enjoyment, (xi)
to purchase insurance or credit enhancements to insure the Agent against risks of loss, collection
or disposition of Collateral or to provide to the Agent a guaranteed return from the collection or
disposition of Collateral, or (xii) to the extent deemed appropriate by the Agent, to obtain the
services of other brokers, investment bankers, consultants and other professionals to assist the
Agent in the collection or disposition of any of the Collateral. Each Borrower acknowledges that
the purpose of this Section 11.1(b) is to provide non-exhaustive indications of what
actions or omissions by the Agent would not be commercially unreasonable in the Agent’s exercise of
remedies against the Collateral and that other actions or omissions by the Agent shall not be
deemed commercially unreasonable solely on account of not being indicated in this Section
11.1(b). Without limitation upon the foregoing, nothing contained in this Section
11.1(b) shall be construed to grant any rights to any Borrower or to impose any duties on Agent
that would not have been granted or imposed by this Agreement or by Applicable Law in the absence
of this Section 11.1(b).

     11.2 Agent’s Discretion. Agent shall have the right in its sole discretion to
determine which rights, Liens, security interests or remedies Agent may at any time pursue,
relinquish, subordinate, or modify or to take any other action with respect thereto and such
determination will not in any way modify or affect any of Agent’s or Lenders’ rights hereunder.

     11.3 Setoff. Subject to Section 14.12, in addition to any other rights which
Agent or any Lender may have under Applicable Law, upon the occurrence of an Event of Default
hereunder, Agent and such Lender shall have a right, immediately and without notice of any

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kind, to apply any Borrower’s property held by Agent and such Lender to reduce the
Obligations.

     11.4 Rights and Remedies not Exclusive. The enumeration of the foregoing rights and
remedies is not intended to be exhaustive and the exercise of any rights or remedy shall not
preclude the exercise of any other right or remedies provided for herein or otherwise provided by
law, all of which shall be cumulative and not alternative.

     11.5 Allocation of Payments After Event of Default. Notwithstanding any other
provisions of this Agreement to the contrary, after the occurrence and during the continuance of an
Event of Default, all amounts collected or received by the Agent on account of the Obligations or
any other amounts outstanding under any of the Other Documents or in respect of the Collateral may,
at Agent’s sole discretion, be paid over or delivered as follows:

     FIRST, to the payment of all reasonable out-of-pocket costs and expenses (including reasonable
attorneys’ fees) of the Agent in connection with enforcing its rights and the rights of the Lenders
under this Agreement and the Other Documents and any protective advances made by the Agent with
respect to the Collateral under or pursuant to the terms of this Document;

     SECOND, to payment of any fees owed to the Agent;

     THIRD, to the payment of all reasonable out-of-pocket costs and expenses (including reasonable
attorneys’ fees) of each of the Lenders in connection with enforcing its rights under this
Agreement and the Other Documents or otherwise with respect to the Obligations owing to such
Lender;

     FOURTH, to the payment of all of the Obligations consisting of accrued fees and interest;

     FIFTH, to the payment of the outstanding principal amount of the Obligations (including the
payment or cash collateralization of any outstanding Letters of Credit and the payment of the Hedge
Liabilities);

     SIXTH, to all other Obligations and other obligations which shall have become due and payable
under the Other Documents or otherwise and not repaid pursuant to clauses “FIRST” through “FIFTH”
above; and

     SEVENTH, to the payment of the surplus, if any, to whoever may be lawfully entitled to receive
such surplus.

     In carrying out the foregoing, (i) amounts received shall be applied in the numerical order
provided until exhausted prior to application to the next succeeding category; (ii) each of the
Lenders shall receive (so long as it is not a Defaulting Lender) an amount equal to its pro rata
share (based on the proportion that the then outstanding Advances held by such Lender bears to the
aggregate then outstanding Advances) of amounts available to be applied pursuant to clauses
“FOURTH”, “FIFTH” and “SIXTH” above; and (iii) to the extent that any amounts available for
distribution pursuant to clause “FIFTH” above are attributable to the issued but undrawn amount of
outstanding Letters of Credit, such amounts shall be held by the Agent in a cash collateral

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account and applied (A) first, to reimburse the Issuer from time to time for any drawings
under such Letters of Credit and (B) then, following the expiration of all Letters of Credit, to
all other obligations of the types described in clauses “FIFTH” and “SIXTH” above in the manner
provided in this Section 11.5.

XII WAIVERS AND JUDICIAL PROCEEDINGS.

     12.1 Waiver of Notice. Each Borrower hereby waives notice of non-payment of any of
the Receivables, demand, presentment, protest and notice thereof with respect to any and all
instruments, notice of acceptance hereof, notice of intent to accelerate, notice of acceleration,
notice of loans or advances made, credit extended, Collateral received or delivered, or any other
action taken in reliance hereon, and all other demands and notices of any description, except such
as are expressly provided for herein.

     12.2 Delay. No delay or omission on Agent’s or any Lender’s part in exercising any
right, remedy or option shall operate as a waiver of such or any other right, remedy or option or
of any Default or Event of Default.

     12.3 Jury Waiver. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR
ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF
THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE
AND EACH PARTY HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

     12.4 Waiver of Rights Under Texas Deceptive Trade Practices Act. EACH BORROWER HEREBY
WAIVES ITS RIGHTS UNDER THE DECEPTIVE TRADE PRACTICES—CONSUMER PROTECTION ACT, SECTION § 17.41 ET
SEQ. TEXAS BUSINESS & COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS.
AFTER CONSULTATION WITH AN ATTORNEY OF EACH BORROWER’S OWN SELECTION, EACH BORROWER VOLUNTARILY
CONSENTS TO THIS WAIVER. EACH BORROWER EXPRESSLY WARRANTS AND REPRESENTS THAT SUCH BORROWER (A) IS
NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION RELATIVE TO AGENT AND/OR ANY LENDER, AND (B)
HAS BEEN REPRESENTED BY LEGAL COUNSEL IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT.

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XIII EFFECTIVE DATE AND TERMINATION.

     13.1 Term. This Agreement, which shall inure to the benefit of and shall be binding
upon the respective successors and permitted assigns of each Borrower, Agent and each Lender, shall
become effective on the date hereof and shall continue in full force and effect until April 28,
2011 (the “Term”) unless sooner terminated as herein provided. Borrowers may terminate
this Agreement at any time upon at least ninety (90) days’ prior written notice to Agent; provided
that Borrowers shall pay in full the Obligations on or prior to the termination date set forth in
such notice. In the event this Agreement is terminated prior to the last day of the Term (the date
of such prepayment hereinafter referred to as the “Early Termination Date”), Borrowers
shall pay to Agent for the benefit of Lenders an early termination fee in an amount equal to (x)
$450,000 if the Early Termination Date occurs on or after the Closing Date to and including the
date immediately preceding the first anniversary of the Closing Date, (y) $300,000 if the Early
Termination Date occurs on or after the first anniversary of the Closing Date to and including the
date immediately preceding the second anniversary of the Closing Date, and (z) $150,000 if the
Early Termination Date occurs on or after the second anniversary of the Closing Date to and
including the date immediately preceding the third anniversary of the Closing Date.

     13.2 Termination. The termination of this Agreement shall not affect any Borrower’s,
Agent’s or any Lender’s rights, or any of the Obligations having their inception prior to the
effective date of such termination, and the provisions hereof shall continue to be fully operative
until all transactions entered into, rights or interests created or Obligations have been fully and
indefeasibly paid, disposed of, concluded or liquidated. The security interests, Liens and rights
granted to Agent and Lenders hereunder and the financing statements filed hereunder shall continue
in full force and effect, notwithstanding the termination of this Agreement or the fact that
Borrowers’ Account may from time to time be temporarily in a zero or credit position, until all of
the Obligations of each Borrower have been indefeasibly paid and performed in full after the
termination of this Agreement (other than Obligations (such as indemnity and other contingent
Obligations) that are not then due and payable and for which any event or claim that would five
rise thereto have not occurred and are not then pending or threatened) or each Borrower has
furnished Agent and Lenders with an indemnification satisfactory to Agent and Lenders with respect
thereto. Accordingly, each Borrower waives any rights which it may have under the Uniform
Commercial Code to demand the filing of termination statements with respect to the Collateral, and
Agent shall not be required to send such termination statements to each Borrower, or to file them
with any filing office, unless and until this Agreement shall have been terminated in accordance
with its terms and all Obligations have been indefeasibly paid in full in immediately available
funds. All representations, warranties, covenants, waivers and agreements contained herein shall
survive termination hereof until all Obligations are indefeasibly paid and performed in full.

XIV REGARDING AGENT.

     14.1 Appointment. Each Lender hereby designates PNC to act as Agent for such Lender
under this Agreement and the Other Documents. Each Lender hereby irrevocably authorizes Agent to
take such action on its behalf under the provisions of this Agreement and the Other Documents and
to exercise such powers and to perform such duties hereunder and

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thereunder as are specifically delegated to or required of Agent by the terms hereof and
thereof and such other powers as are reasonably incidental thereto and Agent shall hold all
Collateral, payments of principal and interest, fees (except the fees set forth in Sections
3.3(a) and 3.4), charges and collections (without giving effect to any collection days)
received pursuant to this Agreement, for the ratable benefit of Lenders. Agent may perform any of
its duties hereunder by or through its agents or employees. As to any matters not expressly
provided for by this Agreement (including collection of the Note) Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to refrain from acting
(and shall be fully protected in so acting or refraining from acting) upon the instructions of the
Required Lenders, and such instructions shall be binding; provided, however, that Agent shall not
be required to take any action which exposes Agent to liability or which is contrary to this
Agreement or the Other Documents or Applicable Law unless Agent is furnished with an
indemnification reasonably satisfactory to Agent with respect thereto.

     14.2 Nature of Duties. Agent shall have no duties or responsibilities except those
expressly set forth in this Agreement and the Other Documents. Neither Agent nor any of its
officers, directors, employees or agents shall be (i) liable for any action taken or omitted by
them as such hereunder or in connection herewith, unless caused by their gross (not mere)
negligence or willful misconduct (as determined by a court of competent jurisdiction in a final
non-appealable judgment), or (ii) responsible in any manner for any recitals, statements,
representations or warranties made by any Borrower or any officer thereof contained in this
Agreement, or in any of the Other Documents or in any certificate, report, statement or other
document referred to or provided for in, or received by Agent under or in connection with, this
Agreement or any of the Other Documents or for the value, validity, effectiveness, genuineness, due
execution, enforceability or sufficiency of this Agreement, or any of the Other Documents or for
any failure of any Borrower to perform its obligations hereunder. Agent 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 of the Other Documents, or to
inspect the properties, books or records of any Borrower. The duties of Agent as respects the
Advances to Borrowers shall be mechanical and administrative in nature; Agent shall not have by
reason of this Agreement a fiduciary relationship in respect of any Lender; and nothing in this
Agreement, expressed or implied, is intended to or shall be so construed as to impose upon Agent
any obligations in respect of this Agreement except as expressly set forth herein.

     14.3 Lack of Reliance on Agent and Resignation. Independently and without reliance
upon Agent or any other Lender, each Lender has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of each Borrower and each
Guarantor in connection with the making and the continuance of the Advances hereunder and the
taking or not taking of any action in connection herewith, and (ii) its own appraisal of the
creditworthiness of each Borrower and each Guarantor. Agent shall have no duty or responsibility,
either initially or on a continuing basis, to provide any Lender with any credit or other
information with respect thereto, whether coming into its possession before making of the Advances
or at any time or times thereafter except as shall be provided by any Borrower pursuant to the
terms hereof. Agent shall not be responsible to any Lender for any recitals, statements,
information, representations or warranties herein or in any agreement, document, certificate or a
statement delivered in connection with or for the execution, effectiveness,

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genuineness, validity, enforceability, collectibility or sufficiency of this Agreement or any
Other Document, or of the financial condition of any Borrower or any Guarantor, or be required to
make any inquiry concerning either the performance or observance of any of the terms, provisions or
conditions of this Agreement, the Note, the Other Documents or the financial condition of any
Borrower, or the existence of any Event of Default or any Default.

     Agent may resign on sixty (60) days’ written notice to each of Lenders and Borrowing Agent and
upon such resignation, the Required Lenders will promptly designate a successor Agent reasonably
satisfactory to Borrowers.

     Any such successor Agent shall succeed to the rights, powers and duties of Agent, and the term
“Agent” shall mean such successor agent effective upon its appointment, and the former Agent’s
rights, powers and duties as Agent shall be terminated, without any other or further act or deed on
the part of such former Agent. After any Agent’s resignation as Agent, the provisions of this
Article XIV shall inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement.

     14.4 Certain Rights of Agent. If Agent shall request instructions from Lenders with
respect to any act or action (including failure to act) in connection with this Agreement or any
Other Document, Agent shall be entitled to refrain from such act or taking such action unless and
until Agent shall have received instructions from the Required Lenders; and Agent shall not incur
liability to any Person by reason of so refraining. Without limiting the foregoing, Lenders shall
not have any right of action whatsoever against Agent as a result of its acting or refraining from
acting hereunder in accordance with the instructions of the Required Lenders.

     14.5 Reliance. Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, statement, certificate, telex, teletype or
telecopier message, cablegram, order or other document or telephone message believed by it to be
genuine and correct and to have been signed, sent or made by the proper person or entity, and, with
respect to all legal matters pertaining to this Agreement and the Other Documents and its duties
hereunder, upon advice of counsel selected by it. Agent may employ agents and attorneys-in-fact
and shall not be liable for the default or misconduct of any such agents or attorneys-in-fact
selected by Agent with reasonable care.

     14.6 Notice of Default. Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder or under the Other Documents, unless Agent
has received notice from a Lender or Borrowing Agent referring to this Agreement or the Other
Documents, describing such Default or Event of Default and stating that such notice is a “notice of
default”. In the event that Agent receives such a notice, Agent shall give notice thereof to
Lenders. Agent shall take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders; provided, that, unless and until Agent shall have
received such directions, 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 Lenders.

     14.7 Indemnification. To the extent Agent is not reimbursed and indemnified by
Borrowers, each Lender will reimburse and indemnify Agent in proportion to its respective

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portion of the Advances (or, if no Advances are outstanding, according to its Commitment
Percentage), from and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against Agent in performing its duties hereunder, or in
any way relating to or arising out of this Agreement or any Other Document (INCLUDING, WITHOUT
LIMITATION, WITH RESPECT TO ANY OTHERWISE INDEMNIFIED MATTER ARISING FROM AGENT’S NEGLIGENCE OR
STRICT LIABILITY); provided that, Lenders shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from Agent’s gross (not mere) negligence or willful misconduct (as
determined by a court of competent jurisdiction in a final non-appealable judgment).

     14.8 Agent in its Individual Capacity. With respect to the obligation of Agent to
lend under this Agreement, the Advances made by it shall have the same rights and powers hereunder
as any other Lender and as if it were not performing the duties as Agent specified herein; and the
term “Lender” or any similar term shall, unless the context clearly otherwise indicates, include
Agent in its individual capacity as a Lender. Agent may engage in business with any Borrower as if
it were not performing the duties specified herein, and may accept fees and other consideration
from any Borrower for services in connection with this Agreement or otherwise without having to
account for the same to Lenders.

     14.9 Delivery of Documents. To the extent Agent receives financial statements
required under Sections 9.7, 9.8, 9.9, 9.12 and 9.13 or
Borrowing Base Certificates from any Borrower pursuant to the terms of this Agreement which any
Borrower is not obligated to deliver to each Lender, Agent will promptly furnish such documents and
information to Lenders.

     14.10 Borrowers’ Undertaking to Agent. Without prejudice to their respective
obligations to Lenders under the other provisions of this Agreement, each Borrower hereby
undertakes with Agent to pay to Agent from time to time on demand all amounts from time to time due
and payable by it for the account of Agent or Lenders or any of them pursuant to this Agreement to
the extent not already paid. Any payment made pursuant to any such demand shall pro tanto satisfy
the relevant Borrower’s obligations to make payments for the account of Lenders or the relevant one
or more of them pursuant to this Agreement.

     14.11 No Reliance on Agent’s Customer Identification Program. Each Lender
acknowledges and agrees that neither such Lender, nor any of its Affiliates, participants or
assignees, may rely on the Agent to carry out such Lender’s, Affiliate’s, participant’s or
assignee’s customer identification program, or other obligations required or imposed under or
pursuant to the USA PATRIOT Act or the regulations thereunder, including the regulations contained
in 31 CFR 103.121 (as hereafter amended or replaced, the “CIP Regulations”), or any other
Anti-Terrorism Law, including any programs involving any of the following items relating to or in
connection with any Borrower, its Affiliates or its agents, this Agreement, the Other Documents or
the transactions hereunder or contemplated hereby: (1) any identity verification procedures, (2)
any record-keeping, (3) comparisons with government lists, (4) customer notices or (5) other
procedures required under the CIP Regulations or such other laws.

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     14.12 Other Agreements. Each of the Lenders agrees that it shall not, without the
express consent of Agent, and that it shall, to the extent it is lawfully entitled to do so, upon
the request of Agent, set off against the Obligations, any amounts owing by such Lender to any
Borrower or any deposit accounts of any Borrower now or hereafter maintained with such Lender.
Anything in this Agreement to the contrary notwithstanding, each of the Lenders further agrees that
it shall not, unless specifically requested to do so by Agent, take any action to protect or
enforce its rights arising out of this Agreement or the Other Documents, it being the intent of
Lenders that any such action to protect or enforce rights under this Agreement and the Other
Documents shall be taken in concert and at the direction or with the consent of Agent or Required
Lenders.

XV BORROWING AGENCY.

     15.1 Borrowing Agency Provisions.

          (a) Each Borrower hereby irrevocably designates Borrowing Agent to be its attorney and agent
and in such capacity to borrow, sign and endorse notes, and execute and deliver all instruments,
documents, writings and further assurances now or hereafter required hereunder, on behalf of such
Borrower or Borrowers, and hereby authorizes Agent to pay over or credit all loan proceeds
hereunder in accordance with the request of Borrowing Agent.

          (b) The handling of this credit facility as a co-borrowing facility with a borrowing agent in
the manner set forth in this Agreement is solely as an accommodation to Borrowers and at their
request. Neither Agent nor any Lender shall incur liability to Borrowers as a result thereof. To
induce Agent and Lenders to do so and in consideration thereof, each Borrower hereby indemnifies
Agent and each Lender and holds Agent and each Lender harmless from and against any and all
liabilities, expenses, losses, damages and claims of damage or injury asserted against Agent or any
Lender by any Person arising from or incurred by reason of the handling of the financing
arrangements of Borrowers as provided herein, reliance by Agent or any Lender on any request or
instruction from Borrowing Agent or any other action taken by Agent or any Lender with respect to
this Section 15.1 except due to willful misconduct or gross (not mere) negligence by the
indemnified party (as determined by a court of competent jurisdiction in a final and non-appealable
judgment).

          (c) All Obligations shall be joint and several, and each Borrower shall make payment upon the
maturity of the Obligations by acceleration or otherwise, and such obligation and liability on the
part of each Borrower shall in no way be affected by any extensions, renewals and forbearance
granted to Agent or any Lender to any Borrower, failure of Agent or any Lender to give any Borrower
notice of borrowing or any other notice, any failure of Agent or any Lender to pursue or preserve
its rights against any Borrower, the release by Agent or any Lender of any Collateral now or
thereafter acquired from any Borrower, and such agreement by each Borrower to pay upon any notice
issued pursuant thereto is unconditional and unaffected by prior recourse by Agent or any Lender to
the other Borrowers or any Collateral for such Borrower’s Obligations or the lack thereof. Each
Borrower waives all suretyship defenses.

     15.2 Waiver of Subrogation. Each Borrower expressly waives any and all rights of
subrogation, reimbursement, indemnity, exoneration, contribution of any other claim which such

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Borrower may now or hereafter have against the other Borrowers or other Person directly or
contingently liable for the Obligations hereunder, or against or with respect to the other
Borrowers’ property (including, without limitation, any property which is Collateral for the
Obligations), arising from the existence or performance of this Agreement, until termination of
this Agreement and repayment in full of the Obligations.

XVI MISCELLANEOUS.

     16.1 Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas applied to contracts to be performed wholly within the State of
Texas. Any judicial proceeding brought by or against any Borrower with respect to any of the
Obligations, this Agreement, the Other Documents or any related agreement may be brought in any
court of competent jurisdiction in the State of Texas, United States of America, and, by execution
and delivery of this Agreement, each Borrower accepts for itself and in connection with its
properties, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts,
and irrevocably agrees to be bound by any judgment rendered thereby in connection with this
Agreement. Each Borrower hereby waives personal service of any and all process upon it and
consents that all such service of process may be made by registered mail (return receipt requested)
directed to Borrowing Agent at its address set forth in Section 16.6 and service so made
shall be deemed completed five (5) days after the same shall have been so deposited in the mails of
the United States of America, or, at the Agent’s option, by service upon Borrowing Agent which each
Borrower irrevocably appoints as such Borrower’s Agent for the purpose of accepting service within
the State of Texas. Nothing herein shall affect the right to serve process in any manner permitted
by law or shall limit the right of Agent or any Lender to bring proceedings against any Borrower in
the courts of any other jurisdiction. Each Borrower waives any objection to jurisdiction and venue
of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction
or venue or based upon forum non conveniens. Each Borrower waives the right to remove any judicial
proceeding brought against such Borrower in any state court to any federal court. Any judicial
proceeding by any Borrower against Agent or any Lender involving, directly or indirectly, any
matter or claim in any way arising out of, related to or connected with this Agreement or any
related agreement, shall be brought only in a federal or state court located in the County of
Dallas, State of Texas.

     16.2 Entire Understanding.

          (a) THIS AGREEMENT AND THE DOCUMENTS EXECUTED CONCURRENTLY HEREWITH CONTAIN THE ENTIRE
UNDERSTANDING AMONG EACH BORROWER, AGENT AND EACH LENDER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES AND SUPERSEDES ALL PRIOR
AGREEMENTS AND UNDERSTANDINGS, IF ANY, RELATING TO THE SUBJECT MATTER HEREOF. THERE ARE NO
UNWRITTEN AGREEMENTS AMONG THE PARTIES. Any promises, representations, warranties or guarantees
not herein contained and hereinafter made shall have no force and effect unless in writing, signed
by each Borrower’s, Agent’s and each Lender’s respective officers. Neither this Agreement nor any
portion or provisions hereof may be changed, modified, amended, waived, supplemented, discharged,
cancelled or terminated orally or by any course of dealing, or in any manner other

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than by an agreement in writing, signed by the party to be charged. Each Borrower
acknowledges that it has been advised by counsel in connection with the execution of this Agreement
and Other Documents and is not relying upon oral representations or statements inconsistent with
the terms and provisions of this Agreement.

          (b) The Required Lenders, Agent with the consent in writing of the Required Lenders, and
Borrowers may, subject to the provisions of this Section 16.2 (b), from time to time enter
into written supplemental agreements to this Agreement or the Other Documents executed by
Borrowers, for the purpose of adding or deleting any provisions or otherwise changing, varying or
waiving in any manner the rights of Lenders, Agent or Borrowers thereunder or the conditions,
provisions or terms thereof of waiving any Event of Default thereunder, but only to the extent
specified in such written agreements; provided, however, that no such supplemental agreement shall,
without the consent of all Lenders:

               (i) increase the Commitment Percentage, the maximum dollar commitment of any Lender or the
Maximum Amount.

               (ii) extend the maturity of any Note or the due date for any amount payable hereunder, or
decrease the rate of interest or reduce any fee payable by Borrowers to Lenders pursuant to this
Agreement.

               (iii) alter the definition of the term Required Lenders or alter, amend or modify this
Section 16.2(b).

               (iv) release any Collateral during any calendar year (other than in accordance with the
provisions of this Agreement) having an aggregate value in excess of $1,500,000.

               (v) change the rights and duties of Agent.

               (vi) permit any Revolving Advance to be made if after giving effect thereto the total of
Revolving Advances outstanding hereunder would exceed the Formula Amount for more than sixty (30)
consecutive Business Days or exceed one hundred and five percent (105%) of the Formula Amount.

               (vii) increase the Advance Rate above the Advance Rate in effect on the Closing Date.

               (viii) release any Guarantor.

     Any such supplemental agreement shall apply equally to each Lender and shall be binding upon
Borrowers, Lenders and Agent and all future holders of the Obligations. In the case of any waiver,
Borrowers, Agent and Lenders shall be restored to their former positions and rights, and any Event
of Default waived shall be deemed to be cured and not continuing, but no waiver of a specific Event
of Default shall extend to any subsequent Event of Default (whether or not the subsequent Event of
Default is the same as the Event of Default which was waived), or impair any right consequent
thereon.

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     In the event that Agent requests the consent of a Lender pursuant to this Section 16.2
and such Lender shall not respond or reply to Agent in writing within five (5) days of delivery of
such request, such Lender shall be deemed to have consented to the matter that was the subject of
the request. In the event that Agent requests the consent of a Lender pursuant to this Section
16.2 and such consent is denied, then PNC may, at its option, require such Lender to assign its
interest in the Advances to PNC or to another Lender or to any other Person designated by the Agent
(the “Designated Lender”), for a price equal to (i) the then outstanding principal amount
thereof plus (ii) accrued and unpaid interest and fees (but not including any fees payable with
respect to the termination of this Agreement before the expiration of the Term) then due such
Lender, which interest and fees shall be paid when collected from Borrowers. In the event PNC
elects to require any Lender to assign its interest to PNC or to the Designated Lender, PNC will so
notify such Lender in writing within forty five (45) days following such Lender’s denial, and such
Lender will assign its interest to PNC or the Designated Lender no later than five (5) days
following receipt of such notice pursuant to a Commitment Transfer Supplement executed by such
Lender, PNC or the Designated Lender, as appropriate, and Agent.

     Notwithstanding (a) the existence of a Default or an Event of Default, (b) that any of the
other applicable conditions precedent set forth in Section 8.2 hereof have not been
satisfied or (c) any other provision of this Agreement, Agent may at its sole discretion and
without the consent of the Required Lenders, voluntarily permit the outstanding Revolving Advances
at any time to exceed an amount equal to the Formula Amount by up to ten percent (10%) for up to
thirty (30) consecutive Business Days (the “Out-of-Formula Loans”). If Agent is willing in
its sole discretion to make such Out-of-Formula Loans, such Out-of-Formula Loans shall be payable
on demand and shall bear interest at the Default Rate for Revolving Advances consisting of Domestic
Rate Loans; provided that, if Lenders do make Out-of-Formula Loans, neither Agent nor Lenders shall
be deemed thereby to have changed the limits of Section 2.1(a). For purposes of this
paragraph, the discretion granted to Agent hereunder shall not preclude involuntary overadvances
that may result from time to time due to the fact that the Formula Amount was unintentionally
exceeded for any reason, including, but not limited to, Collateral previously deemed to be
“Eligible Receivables” becomes ineligible, collections of Receivables applied to reduce outstanding
Revolving Advances are thereafter returned for insufficient funds or overadvances are made to
protect or preserve the Collateral. In the event Agent involuntarily permits the outstanding
Revolving Advances to exceed the Formula Amount by more than ten percent (10%), Agent shall use its
efforts to have Borrowers decrease such excess in as expeditious a manner as is practicable under
the circumstances and not inconsistent with the reason for such excess. Revolving Advances made
after Agent has determined the existence of involuntary overadvances shall be deemed to be
involuntary overadvances and shall be decreased in accordance with the preceding sentence.

     In addition to (and not in substitution of) the discretionary Revolving Advances permitted
above in this Section 16.2, the Agent is hereby authorized by Borrowers and the Lenders,
from time to time in the Agent’s sole discretion, (A) after the occurrence and during the
continuation of a Default or an Event of Default, or (B) at any time that any of the other
applicable conditions precedent set forth in Section 8.2 hereof have not been satisfied, to
make Revolving Advances to Borrowers on behalf of the Lenders which the Agent, in its reasonable
business judgment, deems necessary or desirable (a) to preserve or protect the Collateral, or any
portion thereof, (b) to enhance the likelihood of, or maximize the amount of, repayment of the
Advances and other

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Obligations, or (c) to pay any other amount chargeable to Borrowers pursuant to the terms of
this Agreement; provided, that at any time after giving effect to any such Revolving Advances the
outstanding Revolving Advances do not exceed one hundred and ten percent (110%) of the Formula
Amount.

     16.3 Successors and Assigns; Participations; New Lenders.

          (a) This Agreement shall be binding upon and inure to the benefit of Borrowers, Agent, each
Lender, all future holders of the Obligations and their respective successors and assigns, except
that no Borrower may assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of Agent and each Lender.

          (b) Each Borrower acknowledges that in the regular course of commercial banking business one
or more Lenders may at any time and from time to time sell participating interests in the Advances
to other financial institutions (each such transferee or purchaser of a participating interest, a
“Participant”). Each Participant may exercise all rights of payment (including rights of
set-off) with respect to the portion of such Advances held by it or other Obligations payable
hereunder as fully as if such Participant were the direct holder thereof provided that Borrowers
shall not be required to pay to any Participant more than the amount which it would have been
required to pay to Lender which granted an interest in its Advances or other Obligations payable
hereunder to such Participant had such Lender retained such interest in the Advances hereunder or
other Obligations payable hereunder and in no event shall Borrowers be required to pay any such
amount arising from the same circumstances and with respect to the same Advances or other
Obligations payable hereunder to both such Lender and such Participant. Each Borrower hereby
grants to any Participant a continuing security interest in any deposits, moneys or other property
actually or constructively held by such Participant as security for the Participant’s interest in
the Advances.

          (c) Any Lender may with the consent of Agent which shall not be unreasonably withheld or
delayed sell, assign or transfer all or any part of its rights under this Agreement and the Other
Documents to one or more additional banks or financial institutions and one or more additional
banks or financial institutions may commit to make Advances hereunder (each a “Purchasing
Lender”, and together with each Participant, each a “Transferee” and collectively the
“Transferees”), in minimum amounts of not less than $5,000,000, pursuant to a Commitment
Transfer Supplement, executed by a Purchasing Lender, the transferor Lender, and Agent and
delivered to Agent for recording. Upon such execution, delivery, acceptance and recording, from
and after the transfer effective date determined pursuant to such Commitment Transfer Supplement,
(i) Purchasing Lender thereunder shall be a party hereto and, to the extent provided in such
Commitment Transfer Supplement, have the rights and obligations of a Lender thereunder with a
Commitment Percentage as set forth therein, and (ii) the transferor Lender thereunder shall, to the
extent provided in such Commitment Transfer Supplement, be released from its obligations under this
Agreement, the Commitment Transfer Supplement creating a novation for that purpose. Such
Commitment Transfer Supplement shall be deemed to amend this Agreement to the extent, and only to
the extent, necessary to reflect the addition of such Purchasing Lender and the resulting
adjustment of the Commitment Percentages arising from the purchase by such Purchasing Lender of all
or a portion of the rights and obligations of such transferor Lender under this Agreement and the
Other Documents. Each Borrower hereby

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consents to the addition of such Purchasing Lender and the resulting adjustment of the
Commitment Percentages arising from the purchase by such Purchasing Lender of all or a portion of
the rights and obligations of such transferor Lender under this Agreement and the Other Documents.
Borrowers shall execute and deliver such further documents and do such further acts and things in
order to effectuate the foregoing.

          (d) Agent shall maintain at its address a copy of each Commitment Transfer Supplement
delivered to it and a register (the “Register”) for the recordation of the names and
addresses of each Lender and the outstanding principal, accrued and unpaid interest and other fees
due hereunder. The entries in the Register shall be conclusive, in the absence of manifest error,
and Borrowers, Agent and Lenders may treat each Person whose name is recorded in the Register as
the owner of the Advance recorded therein for the purposes of this Agreement. The Register shall
be available for inspection by Borrowers or any Lender at any reasonable time and from time to time
upon reasonable prior notice. Agent shall receive a fee in the amount of $3,500 payable by the
applicable Purchasing Lender upon the effective date of each transfer or assignment to such
Purchasing Lender.

          (e) Each Borrower authorizes each Lender to disclose to any Transferee and any prospective
Transferee any and all financial information in such Lender’s possession concerning such Borrower
which has been delivered to such Lender by or on behalf of such Borrower pursuant to this Agreement
or in connection with such Lender’s credit evaluation of such Borrower.

     16.4 Application of Payments. Agent shall have the continuing and exclusive right to
apply or reverse and re-apply any payment and any and all proceeds of Collateral to any portion of
the Obligations. To the extent that any Borrower makes a payment or Agent or any Lender receives
any payment or proceeds of the Collateral for any Borrower’s benefit, which are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a
trustee, debtor in possession, receiver, custodian or any other party under any bankruptcy law,
common law or equitable cause, then, to such extent, the Obligations or part thereof intended to be
satisfied shall be revived and continue as if such payment or proceeds had not been received by
Agent or such Lender.

     16.5 Indemnity. Each Borrower shall indemnify and defend Agent, each Lender and each
of their respective officers, directors, Affiliates, attorneys, employees and agents from and
against any and all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses and disbursements of any kind or nature whatsoever (including fees and
disbursements of counsel) which may be imposed on, incurred by, or asserted against Agent or any
Lender in any claim, litigation, proceeding or investigation instituted or conducted by any
Governmental Body or instrumentality or any other Person with respect to any aspect of, or any
transaction contemplated by, or referred to in, or any matter related to, this Agreement or the
Other Documents, whether or not Agent or any Lender is a party thereto, except to the extent that
any of the foregoing arises out of the willful misconduct of the party being indemnified (as
determined by a court of competent jurisdiction in a final and non-appealable judgment). WITHOUT
LIMITING THE FOREGOING, (I) IT IS THE INTENTION OF EACH BORROWER, AND EACH BORROWER AGREES, THAT
THE INDEMNITY PROVISIONS AND EXCULPATORY PROVISIONS CONTAINED IN THIS

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AGREEMENT SHALL APPLY WITH RESPECT TO LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, SETTLEMENTS, SUITS, COSTS, EXPENSES AND DISBURSEMENTS OF ANY KIND WHATSOEVER
(INCLUDING, WITHOUT LIMITATION, FEES AND DISBURSEMENTS OF COUNSEL) WHICH IN WHOLE OR IN PART ARE
CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OF ANY PARTY TO BE INDEMNIFIED, and (ii) this indemnity
shall extend to any liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses and disbursements of any kind or nature whatsoever (including fees and
disbursements of counsel) asserted against or incurred by any of the indemnitees described above in
this Section 16.5 by any Person under any Environmental Laws or similar laws by reason of
any Borrower’s or any other Person’s failure to comply with laws applicable to solid or hazardous
waste materials, including Hazardous Substances and Hazardous Waste, or other Toxic Substances.
Additionally, if any taxes (excluding taxes imposed upon or measured solely by the net income of
Agent and Lenders, but including any intangibles taxes, stamp tax, recording tax or franchise tax)
shall be payable by Agent, Lenders or Borrowers on account of the execution or delivery of this
Agreement, or the execution, delivery, issuance or recording of any of the Other Documents, or the
creation or repayment of any of the Obligations hereunder, by reason of any Applicable Law now or
hereafter in effect, Borrowers will pay (or will promptly reimburse Agent and Lenders for payment
of) all such taxes, including interest and penalties thereon, and will indemnify and hold the
indemnitees described above in this Section 16.5 harmless from and against all liability in
connection therewith.

     16.6 Notice. Any notice or request hereunder may be given to Borrowing Agent or any
Borrower or to Agent or any Lender at their respective addresses set forth below or at such other
address as may hereafter be specified in a notice designated as a notice of change of address under
this Section. Any notice, request, demand, direction or other communication (for purposes of this
Section 16.6 only, a “Notice”) to be given to or made upon any party hereto under
any provision of this Loan Agreement shall be given or made by telephone or in writing (which
includes by means of electronic transmission (i.e., “e-mail”) or facsimile transmission or
by setting forth such Notice on a site on the World Wide Web (a “Website Posting”) if
Notice of such Website Posting (including the information necessary to access such site) has
previously been delivered to the applicable parties hereto by another means set forth in this
Section 16.6) in accordance with this Section 16.6. Any such Notice must be
delivered to the applicable parties hereto at the addresses and numbers set forth under their
respective names on Section 16.6 hereof or in accordance with any subsequent unrevoked
Notice from any such party that is given in accordance with this Section 16.6. Any Notice
shall be effective:

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

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

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

Revolving Credit and Security Agreement

94

 

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

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

          (f) In the case of a Website Posting, upon delivery of a Notice of such posting (including the
information necessary to access such site) by another means set forth in this Section 16.6;
and

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

     Any Lender giving a Notice to Borrowing Agent or any Borrower shall concurrently send a copy
thereof to the Agent, and the Agent shall promptly notify the other Lenders of its receipt of such
Notice.

	 	 	 	 	 
	 
	 	(A)	 	If to Agent or PNC at:

	 
	 	 	 	PNC Bank, National Association
	 
	 	 	 	2100 Ross Avenue, Suite 1850
	 
	 	 	 	Dallas, Texas 75201
	 
	 	 	 	Attention:             Robert Reaser
	 
	 	 	 	Telephone:             (214) 871-1265
	 
	 	 	 	Facsimile:               (214) 871-1043

	 
	 	 	 	with a copy to:

	 
	 	 	 	PNC Bank, National Association
	 
	 	 	 	PNC Agency Services
	 
	 	 	 	PNC Firstside Center
	 
	 	 	 	500 First Avenue, 4th Floor
	 
	 	 	 	Pittsburgh, Pennsylvania 15219
	 
	 	 	 	Attention:             Lisa Pierce
	 
	 	 	 	Telephone:             (412) 762-6442
	 
	 	 	 	Facsimile:
             (412) 762-8672

	 
	 	 	 	with an additional copy to:

	 
	 	 	 	Patton Boggs LLP
	 
	 	 	 	2001 Ross Avenue, Suite 3000
	 
	 	 	 	Dallas, Texas  75201
	 
	 	 	 	Attention:            Michelle W. Suarez, Esq.
	 
	 	 	 	Telephone:            (214) 758-1500
	 
	 	 	 	Facsimile:       (214) 758-1550

			
	 	 	 
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	 	(B)	 	If to a Lender other than Agent, as
specified on the signature pages hereof
	 
	 	 	 	 
	 
	 	(C)	 	If to Borrowing Agent or any Borrower:
	 
	 	 	 	 
	 
	 	 	 	2500 City West Boulevard, Suite 2200
	 
	 	 	 	Houston, Texas  77042
	 
	 	 	 	Attention:                Chief Financial Officer, and
	 
	 	 	 	                   General Counsel
	 
	 	 	 	Telephone:                (713) 361-2600
	 
	 	 	 	Facsimile:                 (713) 361-2677

     16.7 Survival. The obligations of Borrowers under Sections 2.2(f),
3.7, 3.8, 3.9, 4.19(h), and 16.5 and the obligations of
Lenders under Section 14.7, shall survive termination of this Agreement and the Other
Documents and payment in full of the Obligations.

     16.8 Severability. If any part of this Agreement is contrary to, prohibited by, or
deemed invalid under Applicable Laws or regulations, such provision shall be inapplicable and
deemed omitted to the extent so contrary, prohibited or invalid, but the remainder hereof shall not
be invalidated thereby and shall be given effect so far as possible.

     16.9 Expenses. All costs and expenses including, without limitation, all search,
audit, appraisal, recording, accounting, professional and filing fees and expenses and all other
out-of-pocket charges and expenses and reasonable attorneys’ fees (including the allocated costs of
in house counsel) and all other expenses and disbursements incurred by Agent on its behalf or on
behalf of Lenders and Lenders (a) in all efforts made to enforce payment of any Obligation or
effect collection of any Collateral, or (b) in connection with the entering into, documenting,
negotiating, structuring, reviewing and closing this Agreement and the modification, amendment,
administration, monitoring and enforcement of this Agreement, the Intercreditor Agreement or any
consents or waivers hereunder or thereunder and all related agreements, documents and instruments,
or (c) in instituting, monitoring, maintaining, preserving, enforcing and foreclosing on Agent’s
security interest in or Lien on any of the Collateral, or monitoring, maintaining, preserving or
enforcing any of Agent’s or any Lender’s rights hereunder, under the Intercreditor Agreement and
all related agreements, documents and instruments, whether through judicial proceedings or
otherwise, or (d) in defending or prosecuting any actions or proceedings arising out of or relating
to Agent’s or any Lender’s transactions with any Borrower, Holdings, any Guarantor, any
Subordinated Lender or any Vessel Lender or (e) in connection with any advice given to Agent or any
Lender with respect to its rights and obligations under this Agreement, the Intercreditor Agreement
and all related agreements, documents and instruments, may be charged to Borrowers’ Account and
shall be part of the Obligations.

     16.10 Injunctive Relief. Each Borrower recognizes that, in the event any Borrower fails to perform, observe or
discharge any of its obligations or liabilities under this Agreement, or threatens to fail to
perform, observe or discharge such obligations or liabilities, any remedy at law may prove to be
inadequate relief to Lenders; therefore, Agent, if Agent so requests, shall be entitled to
temporary and permanent injunctive relief in any such case without the necessity of proving that
actual damages are not an adequate remedy.

			
	 	 	 
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     16.11 Consequential Damages. Neither Agent nor any Lender, nor any agent or attorney
for any of them, shall be liable to any Borrower, Holdings or any Guarantor (or any Affiliate of
any such Person) for indirect, punitive, exemplary or consequential damages arising from any breach
of contract, tort or other wrong relating to the establishment, administration or collection of the
Obligations or as a result of any transaction contemplated under this Agreement or any Other
Document.

     16.12 Captions. The captions at various places in this Agreement are intended for
convenience only and do not constitute and shall not be interpreted as part of this Agreement.

     16.13 Counterparts; Facsimile Signatures. This Agreement may be executed in any number
of and by different parties hereto on separate counterparts, all of which, when so executed, shall
be deemed an original, but all such counterparts shall constitute one and the same agreement. Any
signature delivered by a party by facsimile transmission shall be deemed to be an original
signature hereto.

     16.14 Construction. The parties acknowledge that each party and its counsel have
reviewed this Agreement and that the normal rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be employed in the interpretation of this
Agreement or any amendments, schedules or exhibits thereto.

     16.15 Confidentiality; Sharing Information. Agent, each Lender and each Transferee
shall hold all non-public information obtained by Agent, such Lender or such Transferee pursuant to
the requirements of this Agreement in accordance with Agent’s, such Lender’s and such Transferee’s
customary procedures for handling confidential information of this nature; provided, however,
Agent, each Lender and each Transferee may disclose such confidential information (a) to its
examiners, Affiliates, outside auditors, counsel and other professional advisors, (b) to Agent, any
Lender or to any prospective Transferees, and (c) as required or requested by any Governmental Body
or representative thereof or pursuant to legal process; provided, further that (i) unless
specifically prohibited by Applicable Law or court order, Agent, each Lender and each Transferee
shall use its reasonable best efforts prior to disclosure thereof, to notify the applicable
Borrower of the applicable request for disclosure of such non-public information (A) by a
Governmental Body or representative thereof (other than any such request in connection with an
examination of the
financial condition of a Lender or a Transferee by such Governmental Body) or (B) pursuant to
legal process and (ii) in no event shall Agent, any Lender or any Transferee be obligated to return
any materials furnished by any Borrower other than those documents and instruments in possession of
Agent or any Lender in order to perfect its Lien on the Collateral once the Obligations have been
paid in full and this Agreement has been terminated. Each Borrower acknowledges that from time to
time financial advisory, investment banking and other services may be offered or provided to such
Borrower or one or more of its Affiliates (in connection with this Agreement or otherwise) by any
Lender or by one or more Subsidiaries or Affiliates of such Lender and each Borrower hereby
authorizes each Lender to share any information delivered to such Lender by such Borrower and its
Subsidiaries pursuant to this Agreement, or in connection with the decision of such Lender to enter
into this Agreement, to any such Subsidiary or Affiliate of such Lender, it being understood that
any such Subsidiary or Affiliate of any Lender receiving such information shall be bound by the

			
	 	 	 
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97

 

provisions of this Section 16.15 as if it were a Lender hereunder. Such authorization
shall survive the repayment of the other Obligations and the termination of this Agreement.

     16.16 Publicity. Each Borrower and each Lender hereby authorizes Agent to make
appropriate announcements of the financial arrangement entered into among Borrowers, Agent and
Lenders, including announcements which are commonly known as tombstones, in such publications and
to such selected parties as Agent shall in its sole discretion deem appropriate.

     16.17 Non-applicability of Chapter 346. Each Borrower, Agent and each Lender hereby
agree that, except for the opt-out provisions of Section 346.004 thereof, the provisions of Chapter
346 of the Texas Finance Code (regulating certain revolving credit loans and revolving tri-party
accounts) shall not apply to this Agreement or any of the Other Documents.

     16.18 Certifications From Banks and Participants; US PATRIOT Act. Each Lender or
assignee or participant of a Lender that is not incorporated under the Laws of the United States of
America or a state thereof (and is not excepted from the certification requirement contained in
Section 313 of the USA PATRIOT Act and the applicable regulations because it is both (i) an
affiliate of a depository institution or foreign bank that maintains a physical presence in the
United States or foreign country, and (ii) subject to supervision by a banking authority regulating
such affiliated depository institution or foreign bank) shall deliver to the Agent the
certification, or, if applicable, recertification, certifying that such Lender is not a “shell” and
certifying to other matters as required by Section 313 of the USA PATRIOT Act and the applicable
regulations: (1) within 10 days after the Closing Date, and (2) as such other times as are required
under the USA PATRIOT Act.

[Remainder of Page Intentionally Blank; Signature Pages Follow]

			
	 	 	 
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Agreement
	 	 

98

 

     Each of the parties has signed this Agreement as of the day and year first above written.

	 	 	 	 	 
	 	 	HORIZON OFFSHORE, INC.
	 
	 	 	 	 
	 

	 	By:	 	 /s/ RONALD D. MOGEL
	 

	 	 	 	 
	 

	 	Name:	 	 RONALD D. MOGEL
	 

	 	 	 	 
	 

	 	Title:	 	 VICE PRESIDENT, TREASURER AND
CFO
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	HORIZON OFFSHORE CONTRACTORS, INC.
	 
	 	 	 	 
	 

	 	By:	 	 /s/ RONALD D. MOGEL
	 

	 	 	 	 
	 

	 	Name:	 	 RONALD D. MOGEL
	 

	 	 	 	 
	 

	 	Title:	 	 VICE PRESIDENT, TREASURER AND
CFO
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	HOC OFFSHORE, S. DE R.L. DE C.V.
	 
	 	 	 	 
	 

	 	By:	 	 /s/ RONALD D. MOGEL
	 

	 	 	 	 
	 

	 	Name:	 	 RONALD D. MOGEL
	 

	 	 	 	 
	 

	 	Title:	 	 TREASURER
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	HORIZON MARINE CONSTRUCTION LTD.
	 
	 	 	 	 
	 

	 	By:	 	 /s/ RONALD D. MOGEL
	 

	 	 	 	 
	 

	 	Name:	 	 RONALD D. MOGEL
	 

	 	 	 	 
	 

	 	Title:	 	 VICE PRESIDENT AND TREASURER
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	HORIZON MARINE CONTRACTORS 
(MALAYSIA) SDN BHD
	 
	 	 	 	 
	 

	 	By:	 	 /s/ RONALD D. MOGEL
	 

	 	 	 	 
	 

	 	Name:	 	 RONALD D. MOGEL
	 

	 	 	 	 
	 

	 	Title:	 	 DIRECTOR
	 

	 	 	 	 

			
	 	 	 
	Revolving Credit and Security
Agreement
	 	 

 

 

	 	 	 	 	 
	 	 	PT HORIZON OFFSHORE INDONESIA
	 
	 	 	 	 
	 

	 	By:	 	 /s/ RONALD D. MOGEL
	 

	 	 	 	 
	 

	 	Name:	 	 RONALD D. MOGEL
	 

	 	 	 	 
	 

	 	Title:	 	 COMMISSIONER
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	HORIZON MARINE CONSTRUCTION 
(MAURITIUS) LTD.
	 
	 	 	 	 
	 

	 	By:	 	 /s/ RONALD D. MOGEL
	 

	 	 	 	 
	 

	 	Name:	 	 RONALD D. MOGEL
	 

	 	 	 	 
	 

	 	Title:	 	 DIRECTOR
	 

	 	 	 	 

			
	 	 	 
	Revolving Credit and Security
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	 	 	PNC BANK, NATIONAL ASSOCIATION,
as Lender and as Agent
	 
	 	 	 	 
	 

	 	By:	 	 /s/ ROB REASER
	 

	 	 	 	 
	 

	 	Name:	 	 ROB REASER
	 

	 	 	 	 
	 

	 	Title:	 	 VICE PRESIDENT
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	Commitment Percentage: 100%

	 	 	 	 	 	 	 
	STATE OF                     

	 	 	)	 	 	 
	 

	 	 	)	 	ss.
	COUNTY OF                     

	 	 	)	 	 	 

     On this ___day of                     _, 2006, before me personally came
                                        , to me known, who, being by me duly sworn, did depose and say that
s/he is the                      of PNC BANK, NATIONAL ASSOCIATION, and that s/he was authorized to
sign her/his name thereto.

	 	 	 
	 

	 	 
	 

	 	Notary Public

			
	 	 	 
	Revolving Credit and Security
Agreement
	 	 

 

 

	 	 	 	 	 	 	 
	STATE OF TEXAS

	 	 	)	 	 	 
	 

	 	 	)	 	ss.	 
	COUNTY OF DALLAS

	 	 	)	 	 	 

     On this 28th day of April, 2006, before me personally came Ronald D. Mogel, to me known, who,
being by me duly sworn, did depose and say that he is the                      of HORIZON OFFSHORE,
INC., a Delaware corporation, described in and which executed the foregoing instrument; and that
s/he signed her/his name thereto by order of the board of directors of said corporation.

	 	 	 
	 

	 	 
	 

	 	Notary Public

	 	 	 	 	 	 	 
	STATE OF TEXAS

	 	 	)	 	 	 
	 

	 	 	)	 	ss.	 
	COUNTY OF DALLAS

	 	 	)	 	 	 

     On this 28th day of April, 2006, before me personally came Ronald D. Mogel, to me known, who,
being by me duly sworn, did depose and say that he is the                      of HORIZON OFFSHORE
CONTRACTORS, INC., a Delaware corporation, described in and which executed the foregoing instrument
and that s/he signed her/his name thereto by order of the board of directors of said corporation.

	 	 	 
	 

	 	 
	 

	 	Notary Public

	 	 	 	 	 	 	 
	STATE OF TEXAS

	 	 	)	 	 	 
	 

	 	 	)	 	ss.	 
	COUNTY OF DALLAS

	 	 	)	 	 	 

     On this 28th day of April, 2006, before me personally came Ronald D. Mogel, to me known, who,
being by me duly sworn, did depose and say that he is the ___of HOC OFFSHORE, S. DE
R.L. DE C.V., a Mexican limited liability company, described in and which executed the foregoing
instrument and that s/he signed her/his name thereto by order of the management committee of said
limited liability company.

	 
	 

	 	 
	 

	 	Notary Public

			
	 	 	 
	Revolving Credit and Security
Agreement
	 	 

 

 

	 	 	 	 	 	 	 
	STATE OF TEXAS

	 	 	)	 	 	 
	 

	 	 	)	 	ss.	 
	COUNTY OF DALLAS

	 	 	)	 	 	 

     On this 28th day of April, 2006, before me personally came Ronald D. Mogel, to me known, who,
being by me duly sworn, did depose and say that he is the ___of HORIZON MARINE
CONTRACTORS (MALAYSIA) SDN BHD, a Mexican limited liability company, described in and which
executed the foregoing instrument and that s/he signed her/his name thereto by order of the by
order of the management committee of said limited liability company.

	 	 	 
	 

	 	 
	 

	 	Notary Public

	 	 	 	 	 	 	 
	STATE OF TEXAS

	 	 	)	 	 	 
	 

	 	 	)	 	ss.	 
	COUNTY OF DALLAS

	 	 	)	 	 	 

     On this 28th day of April, 2006, before me personally came Ronald D. Mogel, to me known, who,
being by me duly sworn, did depose and say that he is the                      of PT HORIZON OFFSHORE
INDONESIA, an Indonesia PMA, described in and which executed the foregoing instrument and that s/he
signed her/his name thereto by order of the board of directors of said corporation.

	 	 	 
	 

	 	 
	 

	 	Notary Public

	 	 	 	 	 	 	 
	STATE OF TEXAS

	 	 	)	 	 	 
	 

	 	 	)	 	ss.	 
	COUNTY OF DALLAS

	 	 	)	 	 	 

     On this 28th day of April, 2006, before me personally came Ronald D. Mogel, to me known, who,
being by me duly sworn, did depose and say that he is the ___of HORIZON MARINE
CONSTRUCTION (MAURITIUS) LTD., a Mauritius limited liability company, described in and which
executed the foregoing instrument and that s/he signed her/his name thereto by order of the
management committee of said limited liability company.

	 	 	 
	 

	 	 
	 

	 	Notary Public

			
	 	 	 
	Revolving Credit and Security
Agreement
	 	 

 

 

	 	 	 	 	 	 	 
	STATE OF TEXAS

	 	 	)	 	 	 
	 

	 	 	)	 	ss.	 
	COUNTY OF DALLAS

	 	 	)	 	 	 

     On this 28th day of April, 2006, before me personally came Ronald D. Mogel, to me known, who,
being by me duly sworn, did depose and say that he is the ___of HORIZON MARINE
CONSTRUCTION, LTD., a Cayman Islands limited liability company, described in and which executed the
foregoing instrument and that s/he signed her/his name thereto by order of the management committee
of said limited liability company.

	 	 	 
	 

	 	 
	 

	 	Notary Public

			
	 	 	 
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Agreement
	 	 

 

LIST OF EXHIBITS AND SCHEDULES

Exhibits

	 	 	 
	Exhibit 1.2

	 	Borrowing Base Certificate
	Exhibit 2.1(a)

	 	Revolving Credit Note
	Exhibit 5.5(b)

	 	Financial Projections
	Exhibit 8.1(k)

	 	Financial Condition Certificate
	Exhibit 16.3

	 	Commitment Transfer Supplement
	 
	Schedules
	 	 
	 
	Schedule 1.2

	 	Permitted Encumbrances
	Schedule 4.5

	 	Equipment and Inventory Locations
	Schedule 4.15(h)

	 	Deposit and Investment Accounts
	Schedule 4.19

	 	Real Property
	Schedule 5.1

	 	Consents
	Schedule 5.2(a)

	 	States of Qualification and Good Standing
	Schedule 5.2(b)

	 	Subsidiaries
	Schedule 5.4

	 	Federal Tax Identification Number
	Schedule 5.6

	 	Prior Names
	Schedule 5.8(b)

	 	Litigation
	Schedule 5.8(d)

	 	Plans
	Schedule 5.9

	 	Intellectual Property, Source Code Escrow Agreements
	Schedule 5.10

	 	Licenses and Permits
	Schedule 5.14

	 	Labor Disputes
	Schedule 7.3

	 	Guarantees
	Schedule 7.5

	 	Amount of Intercompany Loans

Schedules and Exhibits have been intentionally omitted, and will be made available to the
Securities and Exchange Commission upon request.

			
	 	 	 
	Revolving Credit and Security
Agreementexv10w2

 

Exhibit 10.2

FIRST AMENDMENT TO

AMENDED AND RESTATED PURCHASE AGREEMENT

     This FIRST AMENDMENT TO AMENDED AND RESTATED PURCHASE AGREEMENT (the “First
Amendment”), dated as of the 28th day of April, 2006, is made by and among Horizon
Offshore, Inc., a Delaware corporation (the “Issuer”), each subsidiary of the Parent listed
as a “Guarantor” on the signature pages hereto (each a “Guarantor” and
collectively, the “Guarantors”), and the holders listed on the signature pages hereto (each
a “Noteholder” and collectively, the “Noteholders”).

W I T N E S S E T H:

     WHEREAS, the Issuer and the holders signatory thereto (the “Original Noteholders”)
entered into that certain Purchase Agreement, dated as of March 11, 2004 (the “Original
Purchase Agreement”), pursuant to which the Issuer issued to the Original Noteholders
$80,619,480.43 aggregate principal amount of its 16% Subordinated Senior Notes due March 31, 2007
(the “Notes”);

     WHEREAS, on March 31, 2005, the Issuer and the Original Noteholders entered into that certain
recapitalization letter agreement pursuant to which the Original Noteholders agreed to, among
other things, (i) exchange $62,292,137.04 aggregate principal amount of the Original Notes for
shares of Common Stock and Series B Preferred Stock (the “Exchange Transaction”) such that
only $18,327,137.04 aggregate principal amount of Notes was to remain outstanding after the
consummation of the Exchange Transaction, (ii) amend the terms of the Notes, and (iii) enter into
an amendment and restatement of the Original Purchase Agreement;

     WHEREAS, the Issuer, the Guarantors and the Noteholders entered into that certain Amended and
Restated Purchase Agreement, dated as of April 30, 2005 (the “Purchase Agreement”),
pursuant to which the terms of the Notes were amended; and

     WHEREAS, the Issuer, the Guarantors and the Noteholders signatory hereto desire to amend
Schedule 1 to the Purchase Agreement in order to reflect more accurately the Senior Debt.

     NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants and
premises contained herein, together with other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto have agreed and do hereby agree as
follows:

     1. Capitalized terms used in this First Amendment, and not otherwise defined herein, shall
have the meanings assigned to them in the Purchase Agreement.

     2. Schedule 1 to the Purchase Agreement is hereby deleted in its entirety and Schedule 1
attached hereto is inserted in lieu thereof.

1

 

     3. The Issuer and the Guarantors hereby represent and warrant to the Noteholders that (i) each
of the representations and warranties of the Issuer and the Guarantors contained in the Purchase
Agreement are true, correct and complete as of the date hereof and apply to the execution of this
First Amendment and any other documents executed in connection herewith; (ii) the Issuer and the
Guarantors have complied with all covenants, terms and other conditions set forth in the Purchase
Agreement as of the date hereof; and (iii) there exists no Event of Default as of the date hereof.

     4. It is further understood and agreed by and among the parties hereto that all terms and
conditions of the Purchase Agreement, except as herein modified, shall remain in full force and
effect.

     5. The parties hereto confirm, severally and not jointly, that to the best of their
knowledge the Noteholders signatory hereto constitute the Required Holders as that term is defined
and used in the Purchase Agreement.

     6. This First Amendment may be executed in multiple counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same instrument. This
First Amendment will be effective when a counterpart hereof has been executed on behalf of the
Issuer, each Guarantor and the Required Holders.

[Signatures on following pages.]

2

 

     IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to Amended and
Restated Purchase Agreement to be duly executed as of the day and year first above written.

	 	 	 	 	 
	 	 	ISSUER:
	 
	 	 	 	 
	 	 	HORIZON OFFSHORE, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	GUARANTORS:
	 
	 	 	 	 
	 	 	HORIZON VESSELS, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	HORIZON OFFSHORE CONTRACTORS, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	HORIZON SUBSEA SERVICES, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	HORIZON VESSELS INTERNATIONAL, LTD.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	HORIZEN, LLC
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

3

 

	 	 	 	 	 
	 	 	ECH OFFSHORE, S. DE R.L. DE C.V.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	HOC OFFSHORE, S. DE R.L. DE C.V.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

	 	 	 	 	 	 	 
	 	 	NOTEHOLDERS:
	 
	 	 	 	 	 	 
	 	 	ELLIOTT ASSOCIATES, L.P.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	 	 	Elliott Capital Advisors, L.P.,
as General Partner
	 
	 	 	 	 	 	 
	 

	 	By:
	 	 	 	Braxton Associates, Inc.,
as General Partner
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	FALCON MEZZANINE PARTNERS, LP
	 
	 	 	 	 	 	 
	 

	 	By:
	 	 	 	Falcon Mezzanine Investments, LLC, its

General Partner
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:	 	 	 	 

	 	 	 	 	 	 	 
	 	 	LLOYD I. MILLER
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Lloyd I. Miller
	 

	 	 	 	 	 	in his individual capacity
	 
	 	 	 	 	 	 
	 	 	MILFAM I, L.P.
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Lloyd I. Miller
	 

	 	 	 	Title:
	 	Limited Partner

4

 

	 	 	 	 	 	 	 
	 	 	LLOYD I. MILLER TRUST A-4
	 
	 	 	 	 	 	 
	 

	 	By:
	 	PNC Bank
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Alan Goldman
	 

	 	 	 	Title:
	 	Trustee
	 
	 	 	 	 	 	 
	 	 	MILFAM II, L.P.
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Lloyd I. Miller
	 

	 	 	 	Title:
	 	Limited Partner
	 
	 	 	 	 	 	 
	 	 	L. MILLER III GST dtd 12/31/91
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Lloyd I. Miller
	 

	 	 	 	Title:
	 	Trustee
	 
	 	 	 	 	 	 
	 	 	MILFAM, LLC
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Lloyd I. Miller
	 

	 	 	 	Title:
	 	General Partner
	 
	 	 	 	 	 	 
	 	 	CATHERINE C. MILLER IRREV TR
	 	 	DTD 3/26/91
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Lloyd I. Miller
	 

	 	 	 	Title:
	 	Trustee
	 
	 	 	 	 	 	 
	 	 	ALEXANDRA B. MILLER
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Lloyd I. Miller
	 

	 	 	 	Title:
	 	Custodian FL/UTMA

5

 

SCHEDULE 1

SENIOR DEBT DOCUMENTS

	(1)	 	Loan Agreement, dated March 9, 2006, among Horizon Vessels, Inc., as borrower, The CIT
Group/Equipment Financing, Inc., Merrill Lynch Capital, a Division of Merrill Lynch Business
Financial Services, Inc., Ableco Finance, LLC, A3 Funding LP, AIG Commercial Equipment
Finance, Inc. and GATX Financial Corporation, as lenders, and The CIT Group/Equipment
Financing, Inc., as agent for the lenders, as amended through the date hereof, and any notes,
guarantees, security agreements and mortgages executed with respect thereto.

	(2)	 	Loan Agreement, dated June 29, 2001, between Horizon Vessels, Inc. and General Electric
Capital Corporation, as amended through the date hereof, and any notes, guarantees, security
agreements and mortgages executed with respect thereto.

	(3)	 	Amended and Restated Loan Agreement, executed March 11, 2004 but dated June 29, 2001, between
Horizon Vessels, Inc., Horizon Offshore, Inc. and Horizon Offshore Contractors, Inc. and
General Electric Capital Corporation (successor in interest to Wachovia Bank, National
Association, which was successor by merger to SouthTrust Bank), as amended through the date
hereof, and any notes, guarantees, security agreements and mortgages executed with respect
thereto.

	(4)	 	Loan Agreement, dated June 30, 2003, between Horizon Vessels International Ltd. and General
Electric Credit Corporation of Tennessee, as amended through the date hereof, and any notes,
guarantees, security agreements and mortgages executed with respect thereto.

	(5)	 	Term Loan, Guaranty and Security Agreement, dated as of February 17, 2006, among Horizon
Vessels, Inc., as borrower, Horizon Offshore, Inc., as guarantor, and General Electric Capital
Corporation, as lender, as amended through the date hereof, and any notes, guarantees,
security agreements and mortgages executed with respect thereto.

	(6)	 	Revolving Credit and Security Agreement, to be dated on or about April 28, 2006, among PNC
Bank, National Association (as agent and lender), and Horizon Offshore, Inc., Horizon Offshore
Contractors, Inc., HOC Offshore, S. de R.L. de C.V., Horizon Marine Contractors (Malaysia) Sdn
Bhd, PT Horizon Offshore Indonesia, Horizon Marine Construction (Mauritius) Ltd. and Horizon
Marine Construction Ltd. (Borrowers), and any notes, guarantees, security agreements and
mortgages executed with respect thereto.

	(7)	 	Loan Agreement, dated November 1, 2001, by and between Amegy Bank of Texas, N.A. (successor
by merger to Southwest Bank of Texas, N.A.), as lender, and Horizon Vessels, Inc., as
borrower, as amended through the date hereof, and any notes, guarantees, security agreements
and mortgages executed with respect thereto.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00102-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00102-of-00352.parquet"}]]