Document:

Exhibit 10.1

 

 

SECOND
AMENDED AND RESTATED CREDIT AGREEMENT

 

 

by
and among

 

 

COMFORT
SYSTEMS USA, INC.,

as
Borrower

 

 

and

 

 

WELLS
FARGO BANK, NATIONAL ASSOCIATION,

as
Administrative Agent

 

 

WELLS
FARGO SECURITIES, LLC,

as
Sole Lead Arranger and Sole Lead Bookrunner

 

Bank
of Texas, N.A., Capital One N.A. and Regions Bank

as Co-Syndication Agent

 

 

and

 

CERTAIN
FINANCIAL INSTITUTIONS

as
Lenders

 

 

$125,000,000

 

 

July 16,
2010

 

 

 

TABLE
OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I DEFINITIONS AND
  REFERENCES

  	
  1

  
	
  Section 1.1

  	
  Defined Terms

  	
  1

  
	
  Section 1.2

  	
  Exhibits and Schedules; Additional
  Definitions

  	
  19

  
	
  Section 1.3

  	
  Amendment of Defined Instruments

  	
  19

  
	
  Section 1.4

  	
  References and Titles

  	
  19

  
	
  Section 1.5

  	
  Calculations and Determinations

  	
  20

  
	
  Section 1.6

  	
  Joint Preparation; Construction of
  Indemnities and Releases

  	
  20

  
	
   

  	
   

  	
   

  
	
  ARTICLE II THE LOANS AND
  LETTERS OF CREDIT

  	
  20

  
	
  Section 2.1

  	
  Commitments to Lend; Notes

  	
  20

  
	
  Section 2.2

  	
  Requests for Revolving Loans

  	
  21

  
	
  Section 2.3

  	
  Continuations and Conversions of
  Existing Loans

  	
  22

  
	
  Section 2.4

  	
  Use of Proceeds

  	
  23

  
	
  Section 2.5

  	
  Interest Rates and Fees; Payment
  Dates

  	
  23

  
	
  Section 2.6

  	
  Optional Prepayments

  	
  24

  
	
  Section 2.7

  	
  Mandatory Prepayments

  	
  24

  
	
  Section 2.8

  	
  Termination and Reduction of
  Revolving Loan Commitments

  	
  25

  
	
  Section 2.9

  	
  Letters of Credit

  	
  25

  
	
  Section 2.10

  	
  Requesting Letters of Credit

  	
  26

  
	
  Section 2.11

  	
  Reimbursement and Participations

  	
  26

  
	
  Section 2.12

  	
  Letter of Credit Fees

  	
  28

  
	
  Section 2.13

  	
  No Duty to Inquire

  	
  28

  
	
  Section 2.14

  	
  LC Collateral

  	
  29

  
	
  Section 2.15

  	
  Existing Letters of Credit

  	
  30

  
	
  Section 2.16

  	
  Swingline Loans

  	
  30

  
	
  Section 2.17

  	
  Increase of Commitments

  	
  31

  
	
  Section 2.18

  	
  Defaulting Lenders

  	
  33

  
	
   

  	
   

  	
   

  
	
  ARTICLE III PAYMENTS TO
  LENDERS

  	
  35

  
	
  Section 3.1

  	
  General Procedures

  	
  35

  
	
  Section 3.2

  	
  Capital Reimbursement

  	
  36

  
	
  Section 3.3

  	
  Increased Cost of Eurodollar Loans or
  Letters of Credit

  	
  36

  
	
  Section 3.4

  	
  Illegality

  	
  37

  
	
  Section 3.5

  	
  Funding Losses

  	
  37

  
	
  Section 3.6

  	
  Reimbursable Taxes

  	
  38

  
	
  Section 3.7

  	
  Alternative Rate of Interest

  	
  39

  
	
  Section 3.8

  	
  Change of Applicable Lending
  Office; Replacement of Lenders

  	
  40

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV CONDITIONS
  PRECEDENT TO LENDING

  	
  40

  
	
  Section 4.1

  	
  Documents to be Delivered

  	
  40

  
	
  Section 4.2

  	
  Additional Conditions Precedent

  	
  42

  

 

i

 

	
  ARTICLE V REPRESENTATIONS AND
  WARRANTIES

  	
  42

  
	
  Section 5.1

  	
  No Default

  	
  42

  
	
  Section 5.2

  	
  Organization and Good Standing

  	
  42

  
	
  Section 5.3

  	
  Authorization

  	
  43

  
	
  Section 5.4

  	
  No Conflicts or Consents

  	
  43

  
	
  Section 5.5

  	
  Enforceable Obligations

  	
  43

  
	
  Section 5.6

  	
  Initial Financial Statements

  	
  43

  
	
  Section 5.7

  	
  Other Obligations and Restrictions

  	
  43

  
	
  Section 5.8

  	
  Full Disclosure

  	
  44

  
	
  Section 5.9

  	
  Litigation

  	
  44

  
	
  Section 5.10

  	
  Labor Disputes and Acts of God

  	
  44

  
	
  Section 5.11

  	
  ERISA Plans and Liabilities

  	
  44

  
	
  Section 5.12

  	
  Environmental and Other Laws

  	
  45

  
	
  Section 5.13

  	
  Names and Places of Business

  	
  45

  
	
  Section 5.14

  	
  Subsidiaries

  	
  46

  
	
  Section 5.15

  	
  Government Regulation

  	
  46

  
	
  Section 5.16

  	
  Insider

  	
  46

  
	
  Section 5.17

  	
  Solvency

  	
  46

  
	
  Section 5.18

  	
  Tax Shelter Regulations

  	
  46

  
	
  Section 5.19

  	
  Title to Properties; Licenses

  	
  46

  
	
  Section 5.20

  	
  Regulation U

  	
  47

  
	
  Section 5.21

  	
  Taxes

  	
  47

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI AFFIRMATIVE
  COVENANTS OF BORROWER

  	
  47

  
	
  Section 6.1

  	
  Payment and Performance

  	
  47

  
	
  Section 6.2

  	
  Books, Financial Statements and
  Reports

  	
  47

  
	
  Section 6.3

  	
  Other Information and Inspections

  	
  48

  
	
  Section 6.4

  	
  Notice of Material Events and
  Change of Address

  	
  49

  
	
  Section 6.5

  	
  Maintenance of Properties

  	
  49

  
	
  Section 6.6

  	
  Maintenance of Existence and
  Qualifications

  	
  50

  
	
  Section 6.7

  	
  Payment of Taxes

  	
  50

  
	
  Section 6.8

  	
  Insurance

  	
  50

  
	
  Section 6.9

  	
  Performance on Borrower’s Behalf

  	
  51

  
	
  Section 6.10

  	
  Default Interest

  	
  51

  
	
  Section 6.11

  	
  Compliance with Law

  	
  51

  
	
  Section 6.12

  	
  Environmental Matters;
  Environmental Reviews

  	
  52

  
	
  Section 6.13

  	
  Further Assurances

  	
  52

  
	
  Section 6.14

  	
  Bank Accounts; Offset

  	
  52

  
	
  Section 6.15

  	
  Guaranties of Borrower’s
  Subsidiaries

  	
  53

  
	
  Section 6.16

  	
  Agreement to Deliver Security Documents

  	
  53

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII NEGATIVE COVENANTS
  OF BORROWER

  	
  53

  
	
  Section 7.1

  	
  Indebtedness

  	
  53

  
	
  Section 7.2

  	
  Limitation on Liens

  	
  54

  
	
  Section 7.3

  	
  Hedging Contracts

  	
  55

  
	
  Section 7.4

  	
  Limitation on
  Mergers, Issuances of Securities

  	
  55

  
	
  Section 7.5

  	
  Limitation on Sales of Property and
  Discounting of Receivables

  	
  55

  

 

ii

 

	
  Section 7.6

  	
  Limitation on Distributions and
  Subordinated Debt

  	
  56

  
	
  Section 7.7

  	
  Limitation on Investments,
  Acquisitions, Capital Expenditures, and Lines of Business

  	
  56

  
	
  Section 7.8

  	
  Intentionally Omitted

  	
  56

  
	
  Section 7.9

  	
  Transactions with Affiliates

  	
  56

  
	
  Section 7.10

  	
  Prohibited Contracts

  	
  56

  
	
  Section 7.11

  	
  Financial Covenants

  	
  57

  
	
  Section 7.12

  	
  Limitation on Further Negative
  Pledges

  	
  57

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII EVENTS OF DEFAULT
  AND REMEDIES

  	
  58

  
	
  Section 8.1

  	
  Events of Default

  	
  58

  
	
  Section 8.2

  	
  Remedies

  	
  60

  
	
  Section 8.3

  	
  Application of Proceeds after
  Acceleration

  	
  61

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX AGENT

  	
  62

  
	
  Section 9.1

  	
  Appointment and Authority

  	
  62

  
	
  Section 9.2

  	
  Exculpation, Agent’s Reliance, Etc.

  	
  62

  
	
  Section 9.3

  	
  Credit Decisions

  	
  63

  
	
  Section 9.4

  	
  Indemnification

  	
  63

  
	
  Section 9.5

  	
  Rights as Lender

  	
  63

  
	
  Section 9.6

  	
  Sharing of Set-Offs and Other
  Payments

  	
  63

  
	
  Section 9.7

  	
  Investments

  	
  64

  
	
  Section 9.8

  	
  Benefit of Article IX

  	
  64

  
	
  Section 9.9

  	
  Resignation

  	
  64

  
	
  Section 9.10

  	
  Notice of Default

  	
  65

  
	
  Section 9.11

  	
  Co-Agents

  	
  65

  
	
   

  	
   

  	
   

  
	
  ARTICLE X MISCELLANEOUS

  	
  65

  
	
  Section 10.1

  	
  Waivers and Amendments;
  Acknowledgments

  	
  65

  
	
  Section 10.2

  	
  Survival of Agreements; Cumulative
  Nature

  	
  67

  
	
  Section 10.3

  	
  Notices

  	
  67

  
	
  Section 10.4

  	
  Payment of Expenses; Indemnity

  	
  68

  
	
  Section 10.5

  	
  Joint and Several Liability;
  Parties in Interest; Assignments

  	
  69

  
	
  Section 10.6

  	
  Confidentiality

  	
  71

  
	
  Section 10.7

  	
  Governing Law; Submission to
  Process

  	
  72

  
	
  Section 10.8

  	
  Limitation on Interest

  	
  72

  
	
  Section 10.9

  	
  Termination; Limited Survival

  	
  73

  
	
  Section 10.10

  	
  Severability

  	
  74

  
	
  Section 10.11

  	
  Counterparts; Fax

  	
  74

  
	
  Section 10.12

  	
  Intentionally Omitted

  	
  74

  
	
  Section 10.13

  	
  Waiver of Jury Trial, Punitive
  Damages, etc.

  	
  74

  
	
  Section 10.14

  	
  USA Patriot Act

  	
  74

  
	
  Section 10.15

  	
  Renewal and Extension

  	
  75

  

 

iii

 

Schedules and
Exhibits:

 

Pricing Schedule

 

	
  Exhibit 2.1

  	
  Revolving Note

  
	
  Exhibit 2.2(b)

  	
  Borrowing Notice

  
	
  Exhibit 2.3(c)

  	
  Continuation/Conversion Notice

  
	
  Exhibit 2.10

  	
  Letter of Credit Application and Agreement

  
	
  Exhibit 2.16

  	
  Swingline Note

  
	
  Exhibit 2.17

  	
  Incremental Commitment Agreement

  
	
  Exhibit 6.2(b)

  	
  Certificate Accompanying Financial Statements

  
	
  Exhibit 10.5

  	
  Assignment and Acceptance Agreement

  
	
   

  	
   

  
	
  Schedule 1.1(a)

  	
  Existing Liens

  
	
  Schedule 1.1(b)

  	
  Existing Letters of Credit

  
	
  Schedule 3.1

  	
  Lenders Schedule

  
	
  Schedule 4.1

  	
  Security Documents

  
	
  Schedule 5

  	
  Disclosure Schedule

  
	
   

  	
  Section 5.7

  	
  Other Obligations and Restrictions

  
	
   

  	
  Section 5.9

  	
  Litigation

  
	
   

  	
  Section 5.10

  	
  Labor Disputes and Acts of God

  
	
   

  	
  Section 5.11

  	
  ERISA Disclosures

  
	
   

  	
  Section 5.12

  	
  Environmental and Other Laws

  
	
   

  	
  Section 5.13

  	
  Names and Places of Business

  
	
   

  	
  Section 5.14

  	
  Subsidiaries

  
	
  Schedule 7.1

  	
  Existing Indebtedness

  

 

iv

 

SECOND
AMENDED AND RESTATED CREDIT AGREEMENT

 

THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT is
made as of July 16, 2010, by and among Comfort
Systems USA, Inc., a Delaware corporation, Wells Fargo
Bank, National Association (successor by merger to Wachovia Bank,
N.A.), a national banking association, as Agent, and the Lenders referred to
below, and amends and restates that certain Amended and Restated Credit
Agreement dated February 20, 2007 entered into by the Borrower, the
Lenders therein and Wachovia Bank, N.A., as administrative agent (the “Existing
Credit Agreement”).

 

W I T
N E S S E T H:

 

In consideration of the mutual covenants and
agreements contained herein, in consideration of the loans which may hereafter
be made by Lenders and the Letters of Credit which may be made available by LC
Issuer to Borrower, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto do hereby
agree as follows:

 

ARTICLE I

DEFINITIONS AND REFERENCES

 

Section 1.1             Defined Terms.  As used in this Agreement, each
of the following terms has the meaning given to such term in this Section 1.1
or in the sections and subsections referred to below:

 

“Account Debtor” means the Person which is
obligated on any Receivable.

 

“Acquisition” means the direct or indirect
purchase or acquisition, whether in one or more related transactions, of all or
substantially all of the capital stock of any Person or group of Persons or all
or substantially all of the assets, liabilities, and business of any Person or
group of Persons.

 

“Adjusted Base Rate” means, on any day, the
Base Rate for such day plus the Base Rate Margin for such day, provided that
the Adjusted Base Rate charged by any Person shall never exceed the Highest
Lawful Rate.

 

“Adjusted Eurodollar Rate” means, for any
Eurodollar Loan for any day during any Interest Period therefor, the rate per
annum equal to the sum of (a) the Eurodollar Margin for such day plus (b) the
rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
determined by Agent to be equal to the quotient obtained by dividing (i) the
Eurodollar Rate for such Eurodollar Loan for such Interest Period by (ii) 1
minus the Reserve Requirement for such Eurodollar Loan for such Interest
Period, provided that no Adjusted Eurodollar Rate charged by any Person shall
ever exceed the Highest Lawful Rate.  The
Adjusted Eurodollar Rate for any Eurodollar Loan shall change whenever the
Eurodollar Margin or the Reserve Requirement changes.

 

 

“Affiliate” means, as to any Person, each other
Person that directly or indirectly (through one or more intermediaries or
otherwise) controls, is controlled by, or is under common control with, such
Person.  A Person shall be deemed to be “controlled
by” any other Person if such other Person possesses, directly or indirectly,
power to vote 20% or more of the securities or other equity interests (on a
fully diluted basis) having ordinary voting power for the election of
directors, the managing general partner or partners or the managing member or
members; or to direct or cause the direction of the management and policies of
such Person whether by contract or otherwise.

 

“Agent” means Wells Fargo Bank, National
Association, as administrative agent hereunder, and its successors in such
capacity.

 

“Aggregate Commitment” means the aggregate of
all Lenders’ Revolving Loan Commitments, as such may be reduced, amortized or
adjusted from time to time in accordance with this Agreement.

 

“Agreement” means this Credit Agreement.

 

“Applicable Lending Office” means, with respect
to each Lender, such Lender’s Domestic Lending Office in the case of Base Rate
Loans and such Lender’s Eurodollar Lending Office in the case of Eurodollar
Loans.

 

“Approved Fund” means (a) a CLO and (b) with
respect to any Lender that is a fund which invests in bank loans and similar
extensions of credit, any other fund that invests in bank loans and similar
extensions of credit and is managed by the same investment advisor as such
Lender or by an affiliate of such investment advisor.  As used herein, “CLO” shall mean any
entity (whether a corporation, partnership, trust or otherwise) that is engaged
in making, purchasing, holding or otherwise investing in bank loans and similar
extensions of credit in the ordinary course of its business and is administered
or managed by a Lender or an affiliate of a Lender.

 

“Assignment and Acceptance” means the agreement
contemplated by Section 10.5.

 

“Assignment of Prior Credit Documents” means
the Assignment of Notes, Liens and Security Agreements of even date with the
Existing Credit Agreement by the Prior Agent and each of the lenders party to
the Prior Credit Agreement in favor of the Agent and the other Lender Parties.

 

“Attributable Indebtedness” means, when used
with respect to any Sale Leaseback Transaction, as at the time of
determination, the capitalized amount of the remaining lease payments under the
relevant lease or other applicable agreement that would appear on a balance
sheet of the Borrower prepared as of such date in accordance with GAAP (as in effect
on the Closing Date) if such lease or other agreement were accounted for as a
Capital Lease.

 

“Base Rate” means, for any day, the rate per
annum equal to the highest of (a) the Federal Funds Rate for such day plus
one-half of one percent (.5%), (b) the Prime Rate for such day, and (c) the
Eurodollar Rate for a one-month Interest Period beginning on that day plus
1.00%. Any change in the Base Rate due to a change in the Prime Rate or the
Federal Funds Rate shall be 

 

2

 

effective on the effective date of such change in the
Prime Rate or Federal Funds Rate.  As
used in this definition, “Prime Rate” means the per annum rate of interest
established from time to time by Wells Fargo Bank, National Association, as its
Prime Rate, which rate may not be the lowest rate of interest charged by Wells
Fargo Bank, National Association to its customers.

 

“Base Rate Loan” means a Loan that bears
interest at the Adjusted Base Rate.

 

“Base Rate Margin” means on any date, with
respect to each Base Rate Loan, the rate per annum set forth as such on the
Pricing Schedule.

 

“Basis Point” or “bps” means one
one-hundredth of one percent (0.01%).

 

“Bonded Receivables” means any Receivable
resulting from goods or services provided to an Account Debtor under a job
which is covered by a surety bond provided by Borrower or its agent, that is
secured by assets of any Restricted Person.

 

“Borrower” means Comfort Systems USA, Inc.,
a Delaware corporation.

 

“Borrowing” means a borrowing of (i) new
Loans of a single Type (and, in the case of Eurodollar Loans, with the same
Interest Period) pursuant to Section 2.2, (ii) a Continuation or
Conversion of existing Loans into a single Type (and, in the case of Eurodollar
Loans, with the same Interest Period) pursuant to Section 2.3, or (iii) a
Swingline Loan pursuant to Section 2.16.

 

“Borrowing Notice” means a written or
telephonic request, or a written confirmation, made by Borrower which meets the
requirements of Section 2.2.

 

“Business Day” means a day, other than a
Saturday or Sunday, on which commercial banks are open for business with the
public in Houston, Harris County, Texas. 
Any Business Day in any way relating to Eurodollar Loans (such as the
day on which an Interest Period begins or ends) must also be a day on which, in
the judgment of Agent, significant transactions in dollars are carried out in
the interbank eurocurrency market.

 

“Capital Asset” means any asset which would be
classified as a fixed or capital asset on a Consolidated balance sheet of any
Person prepared in accordance with GAAP.

 

“Capital Expenditures” means, without
duplication, any expenditures for any purchase or other acquisition of any
Capital Asset, excluding (i) the cost of assets acquired with Capitalized
Lease Obligations, other purchase money financing, or the proceeds of Loans
under this Agreement, (ii) expenditures of insurance proceeds to rebuild
or replace any asset after a casualty loss, and (iii) leasehold
improvement expenditures for which such Person is reimbursed promptly by the
lessor.

 

“Capital Lease” means a lease with respect to
which the lessee would be required concurrently to recognize the acquisition of
an asset and the incurrence of a liability in accordance with GAAP as in effect
on the Closing Date.

 

“Capital Lease Obligation” means, with respect
to any Person and a Capital Lease, the amount of the obligation of such Person
as the lessee under such Capital Lease which would, in 

 

3

 

accordance with GAAP as in effect on the Closing Date,
appear as a liability on a balance sheet of such Person. “Cash Equivalents”
means Investments in:

 

(a)           marketable
obligations, maturing within twelve months after acquisition thereof, issued or
unconditionally guaranteed by the United States of America or an
instrumentality or agency thereof and entitled to the full faith and credit of
the United States of America;

 

(b)           demand
deposits, and time deposits (including certificates of deposit) maturing within
twelve months from the date of deposit thereof, with any office of any Lender
or with a domestic office of any national or state bank or trust company which
is organized under the Laws of the United States of America or any state
therein, which has capital, surplus and undivided profits of at least
$500,000,000, and whose long term certificates of deposit are rated at least
Aa3 by Moody’s or AA- by S & P;

 

(c)           repurchase
obligations with a term of not more than seven days for underlying securities
of the types described in subsection (a) above entered into with any
commercial bank meeting the specifications of subsection (b) above;

 

(d)           open
market commercial paper, maturing within 270 days after acquisition thereof,
which are rated at least P-1 by Moody’s or A-1 by S & P; and

 

(e)           money
market or other mutual funds substantially all of whose assets comprise
securities of the types described in subsections (a) through (d) above.

 

“Change of Control” means the occurrence of any
of the following events: (a) any Person or two or more Persons acting as a
group shall acquire beneficial ownership (within the meaning of Rule 13d-3
of the Securities and Exchange Commission under the Securities Act of 1934, as
amended, and including holding proxies to vote for the election of directors
other than proxies held by Borrower’s management or their designees to be voted
in favor of Persons nominated by Borrower’s Board of Directors) of 35% or more
of the outstanding voting securities of Borrower, measured by voting power
(including both common stock and any preferred stock or other equity securities
entitling the holders thereof to vote with the holders of common stock in
elections for directors of Borrower) or (b) a majority of the directors of
Borrower shall consist of Persons not nominated by Borrower’s Board of
Directors (not including as Board nominees any directors which the Board is
obligated to nominate pursuant to shareholders agreements, voting trust
arrangements or similar arrangements).

 

“Closing Date” means the date on which all of
the conditions precedent set forth in Section 4.1 and Section 4.2
shall have been satisfied or waived.

 

“Collateral” means all property of any
Restricted Person of any kind which, under the terms of any Security Document,
is subject to or is purported to be subject to a Lien in favor of Lenders (or
in favor of Agent for the benefit of Lenders).

 

“Commitment Fee” shall have the meaning set
forth in Section 2.5(c).

 

“Commitment Fee Rate” means, on any date, the
rate per annum designated as such and set forth on the Pricing Schedule.

 

4

 

“Commitment Period” means the period from and
including the Closing Date until the Maturity Date (or, if earlier, the day on
which the obligations of Lenders to make Loans hereunder or the obligations of
LC Issuer to issue Letters of Credit have been terminated or the Notes become
due and payable in full).

 

“Consolidated” refers to the consolidation of
any Person, in accordance with GAAP, with its properly consolidated
subsidiaries.  References herein to a
Person’s Consolidated financial statements, financial position, financial
condition, liabilities, etc. refer to the consolidated financial statements,
financial position, financial condition, liabilities, etc. of such Person and
its properly consolidated subsidiaries.

 

“Consolidated Capital Expenditures” means, for
any Person for any period, the Capital Expenditures of such Person calculated
on a Consolidated basis for such period.

 

“Consolidated EBITDA” means, for any Person for
any period, the sum of (a) such Person’s Consolidated Net Income during such period,
plus (b) all interest expense which was deducted in determining such Person’s
Consolidated Net Income; plus (c) all income taxes which were deducted in
determining such Person’s Consolidated Net Income; plus (d) all depreciation
and amortization which were deducted in determining such Person’s Consolidated
Net Income; plus (e) any expense relating to stock options or other equity
compensation provided to employees of the Borrower or any of its Subsidiaries
during such period that was deducted in determining such Person’s Consolidated
Net Income; plus (f) other non-cash charges, including non-cash amortization of
debt incurrence costs and net mark-to-market losses provided that if such
Person or any of its Subsidiaries has acquired or sold (or otherwise disposed
of) a Subsidiary or assets during such period, Consolidated EBITDA of such
Person shall be adjusted by the amount of the Consolidated EBITDA attributable
to such Subsidiary or assets as if such acquisition or sale (or other
disposition) had occurred on the first day of such period.

 

“Consolidated Interest Expense” means, for any
Person, for any period without duplication, all interest paid or accrued during
such period on Indebtedness (including capital lease obligations) excluding
amortization of debt incurrence expenses, original issue discount, and
mark-to-market interest expense.

 

“Consolidated Net Income” means, for any
Person, for any period, such Person’s Consolidated net income for such period
after eliminating earnings or losses attributable to outstanding minority
interests and excluding the net income of any Person other than a Subsidiary in
which such Person has an ownership interest plus any
Goodwill Impairment Charges.

 

“Consolidated Total Indebtedness” means, for
any Person, as of any date, the sum of all Indebtedness of that Person and its
Consolidated Subsidiaries, minus LC
Exclusions, minus Attributable Indebtedness of such
Person and its Consolidated Subsidiaries in an amount not to exceed $20,000,000
under Sale Leaseback Transactions relating solely to vehicles and real
property.

 

“Continuation” refers to the continuation
pursuant to Section 2.3 hereof of a Eurodollar Loan as a Eurodollar Loan from
one Interest Period to the next Interest Period.

 

5

 

“Continuation/Conversion Notice” means a
written or telephonic request, or a written confirmation, made by Borrower
which meets the requirements of Section 2.3.

 

“Conversion” refers to a conversion pursuant to
Section 2.3 or Article III of one Type of Loan into another Type of Loan.

 

“Default” means any Event of Default and any
default, event or condition which would, with the giving of any requisite
notices and the passage of any requisite periods of time, constitute an Event
of Default.

 

“Defaulting Lender” means any Lender, as
determined by the Agent, that has (a) failed to fund any portion of its Loans
or participations in Letters of Credit or Swingline Loans within three Business
Days of the date required to be funded by it hereunder, (provided that, if such
Lender has failed for at least five Business Days to comply with any such
funding obligation, the Borrower may declare such Lender to be a Defaulting
Lender in a written notice to the Agent), (b) notified the Borrower, the Agent,
the Issuing Bank, the Swingline Lender or any Lender in writing that it does
not intend to comply with any of its funding obligations under this Agreement
or any other agreement in which it commits to extend credit or has made a
public statement to the effect that it does not intend to comply with its
funding obligations under this Agreement or under other agreements in which it
commits to extend credit, (c) failed, within three Business Days after request
by the Agent or the Borrower, to confirm that it will comply with the terms of
this Agreement relating to its obligations to fund prospective Loans and
participations in then outstanding Letters of Credit and Swingline Loans, (d)
otherwise failed to pay over to the Agent or any other Lender any other amount
required to be paid by it hereunder within three Business Days of the date when
due, unless the subject of a good faith dispute (provided that, if such Lender
has failed for at least five Business Days to pay any such other amount, unless
the subject of a good faith dispute, the Borrower may declare such Lender to be
a Defaulting Lender in a written notice to the Agent), or (e) (i) become or is
or has a parent company that has become or is insolvent or generally unable to
pay its debts as they become due, or such Lender or its parent company admits
in writing its inability to pay its debts as they become due or makes a general
assignment for the benefit of its creditors or (ii) become the subject of a
bankruptcy or insolvency proceeding, or has had a receiver, conservator,
trustee or custodian appointed for it, or has taken any action in furtherance
of, or indicating its consent to, approval of or acquiescence in any such
proceeding or appointment or has a parent company that has become the subject
of a bankruptcy or insolvency proceeding, or has had a receiver, conservator,
trustee or custodian appointed for it, or has taken any action in furtherance
of, or indicating its consent to, approval of or acquiescence in any such
proceeding or appointment.

 

“Default Rate” means, at the time in question
(a) with respect to any Base Rate Loan or any other Obligation except as
described in the immediately following clause (b), the rate per annum equal to
two percent (2%) above the Adjusted Base Rate then in effect for such Loan or
other Obligation and (b) with respect to any Eurodollar Loan, the rate per
annum equal to two percent (2%) above the Adjusted Eurodollar Rate then in
effect for such Loan or other Obligation, provided in each case that no Default
Rate charged by any Person shall ever exceed the Highest Lawful Rate.

 

“Disclosure Schedule” means Schedule 5 hereto.

 

6

 

“Distribution” means (a) any dividend or other
distribution made by a Restricted Person on or in respect of any stock,
partnership interest, or other equity interest in such Restricted Person or any
other Restricted Person (including any option or warrant to buy such an equity
interest), or (b) any payment made by a Restricted Person to purchase, redeem,
acquire or retire any stock, partnership interest, or other equity interest in
such Restricted Person or any other Restricted Person (including any such
option or warrant).

 

“Domestic Lending Office” means, with respect
to any Lender, the office of such Lender specified as its “Domestic Lending
Office” below its name on Schedule 3.1 hereto, or such other office as such
Lender may from time to time specify to Borrower and Agent; with respect to LC
Issuer, the office, branch, or agency through which it issues Letters of
Credit; and, with respect to Agent, the office, branch, or agency through which
it administers this Agreement.

 

“Eligible Transferee” means a Person which
either (a) is a Lender or an Affiliate of a Lender, or (b) is consented to as
an Eligible Transferee by Agent and, so long as no Default or Event of Default
is continuing, by Borrower, which consents in each case will not be
unreasonably withheld (provided that (i) no Person organized outside the
United States may be an Eligible Transferee if Borrower would be required to
pay withholding taxes on interest or principal owed to such Person,
(ii) neither the Borrower nor any of its Subsidiaries or Affiliates may be
an Eligible Transferee, and (iii) no Person that is a Defaulting Lender
may be an Eligible Transferee).

 

“Environmental Laws” means any and all Laws
relating to the environment or to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes into the environment including ambient air,
surface water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes.

 

“Equity” means shares of capital stock or a
partnership, profits, capital, member or other equity interest, or options,
warrants or any other rights to substitute for or otherwise acquire the capital
stock or a partnership, profits, capital, member or other equity interest of
any Person.

 

“ERISA” means the Employee Retirement Income
Security Act of 1974, as amended from time to time, and any successor statutes
or statute, together with all rules and regulations promulgated with respect
thereto.

 

“ERISA Affiliate” means each Restricted Person
and all members of a controlled group of corporations and all trades or
businesses (whether or not incorporated) under common control that, together
with such Restricted Person, are treated as a single employer under Section 414
of the Internal Revenue Code.

 

“ERISA Plan” means any employee pension benefit
plan subject to Title IV of ERISA with respect to which any Restricted Person
has a fixed or contingent liability.

 

“Eurodollar Lending Office” means, with respect
to any Lender, the office of such Lender specified as its “Eurodollar Lending
Office” below its name on Schedule 3.1 hereto (or, 

 

7

 

if no such office is specified, its Domestic Lending
Office), or such other office of such Lender as such Lender may from time to
time specify to Borrower and Agent.

 

“Eurodollar Loan” means a Loan that bears
interest at the Adjusted Eurodollar Rate.

 

“Eurodollar Margin” means, on any date, with
respect to each Eurodollar Loan, the rate per annum set forth on the Pricing
Schedule.

 

“Eurodollar Rate” means, for any Eurodollar
Loan within a Borrowing and with respect to the related Interest Period
therefor, (a) the interest rate per annum (carried out to the fifth decimal
place) equal to the rate determined by the Agent to be the offered rate that
appears on Reuters screen that displays an average British Bankers Association
Interest Settlement Rate (such screen currently being LIBOR01) for deposits in
U.S. dollars (for delivery on the first day of such Interest Period) with a
term equivalent to such Interest Period, determined as of approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period, or (b) in the event the rate referenced in the preceding subsection
(a) does not appear on such screen or service or such screen or service
shall cease to be available, the rate per annum (carried out to the fifth
decimal place) equal to the rate determined by the Agent to be the offered rate
on such other screen or other service that displays an average British Bankers
Association Interest Settlement Rate for deposits in U.S. dollars (for delivery
on the first day of such Interest Period) with a term equivalent to such
Interest Period, determined as of approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period, or (c) in the
event the rates referenced in the preceding subsections (a) and (b) are not
available, the rate per annum determined by the Agent as the rate of interest
at which deposits in U.S. dollars (for delivery on the first day of such
Interest Period) in same day funds in the approximate amount of the applicable
Eurodollar Loan and with a term equivalent to such Interest Period would be
offered by its London branch to major banks in the offshore U.S. dollar market
at their request at approximately 11:00 a.m. (London time) two Business Days
prior to the first day of such Interest Period.

 

“Event of Default” has the meaning given to
such term in Section 8.1.

 

“Existing Letters of Credit” means the letters
of credit listed on Schedule 1.1(b).

 

“Federal Funds Rate” means, for any day, the
rate per annum (rounded upwards, if necessary, to the nearest 1/100th of one percent) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (a) if the day for which such rate is
to be determined is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Business Day as
so published on the next succeeding Business Day, and (b) if such rate is not
so published for any day, the Federal Funds Rate for such day shall be the
average rate quoted to Agent on such day on such transactions as determined by
Agent.

 

“Fiscal Quarter” means a three-month period
ending on March 31, June 30, September 30 or December 31 of any year.

 

8

 

“Fiscal Year” means a twelve-month period
ending on December 31 of any year.

 

“Foreign Subsidiary” means any Subsidiary that
is a “controlled foreign corporation” under Section 957 of the Internal Revenue
Code of 1986, or any Subsidiary that is held directly or indirectly by such a “controlled
foreign corporation”.

 

“GAAP” means those generally accepted
accounting principles and practices which are recognized as such by the
Financial Accounting Standards Board (or any generally recognized successor)
and which, in the case of Restricted Persons and their Consolidated
Subsidiaries, are applied for all periods after the date hereof in a manner
consistent with the manner in which such principles and practices were applied
to the Initial Financial Statements.  If
any change in any accounting principle or practice is required by the Financial
Accounting Standards Board (or any such successor) in order for such principle
or practice to continue as a generally accepted accounting principle or
practice, all reports and financial statements required hereunder with respect
to any Restricted Person or with respect to any Restricted Person and its
Consolidated Subsidiaries may, at the Borrower’s option, be prepared in
accordance with such change, but all calculations and determinations to be made
hereunder may be made in accordance with such change only after (a) notice of
such change is given to each Lender, and (b) if such change would materially
affect the results of the Borrower and its Consolidated Subsidiaries, taken as
a whole, reflected in such reports and financial statements, Required Lenders
and Agent agree to such change insofar as it affects the accounting of such
Restricted Person and its Consolidated Subsidiaries.

 

“Goodwill Impairment Charges” means accounting
charges resulting from the write-up or write-down of acquired goodwill and
other intangible assets in accordance with FAS 142.

 

“Governmental Authority” means any nation,
state, county, city or other political subdivision and any other governmental
department, court, commission, board, bureau, agency, regulatory authority,
instrumentality, judicial or administrative body, domestic or foreign.

 

“Guarantors” means, collectively, (a) each
Subsidiary of the Borrower existing on the Closing Date, other than an
Immaterial Subsidiary and (b) any Subsidiary of Borrower which executes and
delivers a Guaranty to Agent after the date hereof, pursuant to Section 6.15.

 

“Guaranty” means (a) that certain Second
Amended and Restated Subsidiary Guaranty dated as of the date hereof, executed
by each Guarantor existing on the Closing Date, in favor of the Agent for the
ratable benefit of the Lenders, and (b) any Guaranty or joinder to a Guaranty
executed by a Guarantor after the Closing Date, in favor of the Agent for the
ratable benefit of the Lenders, in each case as such Guaranties may be amended,
supplemented, or modified and in effect from time to time.

 

“Hazardous Materials” means any substances
regulated under any Environmental Law, whether as pollutants, contaminants, or
chemicals, or as industrial, toxic or hazardous substances or wastes, or
otherwise.

 

“Hedging Contract” means (a) any agreement
providing for options, swaps, floors, caps, collars, forward sales or forward
purchases involving interest rates, commodities or commodity prices, equities,
currencies, bonds, or indexes based on any of the foregoing, (b) any option, 

 

9

 

futures or forward contract traded on an exchange, and
(c) any other derivative agreement or other similar agreement or arrangement.

 

“Highest Lawful Rate” means, with respect to
each Lender Party to whom Obligations are owed, the maximum nonusurious rate of
interest that such Lender Party is permitted under applicable Law to contract
for, take, charge, or receive with respect to such Obligations.  All determinations herein of the Highest
Lawful Rate, or of any interest rate determined by reference to the Highest
Lawful Rate, shall be made separately for each Lender Party as appropriate to
assure that the Loan Documents are not construed to obligate any Person to pay
interest to any Lender Party at a rate in excess of the Highest Lawful Rate
applicable to such Lender Party.

 

“Immaterial Subsidiary” means one or more
Subsidiaries with aggregate gross assets of less than $500,000.

 

“Incremental Commitment Agreement” means an
agreement in substantially the form attached as Exhibit 2.17 or such
other form as Agent approves in its reasonable discretion.

 

“Incremental Lender” has the meaning assigned
to that term in Section 2.17.

 

“Indebtedness” of any Person means, without
duplication, obligations in any of the following categories:

 

(a)           debt
for borrowed money;

 

(b)           an
obligation to pay the deferred purchase price of property or services;

 

(c)           obligations
evidenced by a bond, debenture, note or similar instrument;

 

(d)           Off-Balance
Sheet Liabilities;

 

(e)           obligations
arising under Hedging Contracts (on a net basis to the extent netting is
provided for in the applicable Hedging Contract);

 

(f)            Capital
Lease Obligations;

 

(g)           obligations
to pay money arising under conditional sales or other title retention
agreements;

 

(h)           obligations
owing under direct or indirect guaranties of Indebtedness of any other Person
or otherwise constituting obligations to purchase or acquire or to otherwise
protect or insure a creditor against loss in respect of Indebtedness of any
other Person (such as obligations under working capital maintenance agreements,
agreements to keep-well, or agreements to purchase Indebtedness, assets, goods,
securities or services), but excluding endorsements in the ordinary course of
business of negotiable instruments in the course of collection;

 

(i)            obligations
to purchase or redeem securities or other property, if such obligations arise
out of or in connection with the sale or issuance of the same or similar
securities or property 

 

10

 

(for example, repurchase agreements, mandatorily
redeemable preferred stock and sale/leaseback agreements);

 

(j)            obligations
with respect to letters of credit or applications or reimbursement agreements
therefore; or

 

(k)           obligations
with respect to banker’s acceptances.

 

provided, however, that the “Indebtedness” of any
Person shall not include (i) obligations that were incurred by such Person
to vendors, suppliers, or other Persons providing goods and services for use by
such Person in the ordinary course of its business and (ii) obligations
under operating leases as defined under GAAP on the date of this Agreement
entered into in the ordinary course of business.

 

“Initial Financial Statements” means (a) the
audited annual Consolidated financial statements of Borrower dated as of
December 31, 2009, and (b) the unaudited quarterly Consolidated financial
statements of Borrower dated as of March 31, 2010.

 

“Intercreditor Agreement” means (i) that
certain Intercreditor Agreement dated as of June 24, 2009 among Zurich American
Insurance Company, a New York corporation, and Wachovia Bank, N.A., a national
banking association, as predecessor to Lender Agent (as therein defined), as
amended by the First Amendment to Intercreditor Agreement dated as of May 6,
2010, and (ii) any other agreement to which Borrower, the Agent, and any surety
are parties that establishes the priorities of the parties with respect to
Bonded Receivables.

 

“Interest Payment Date” means (a) with respect
to each Base Rate Loan, the first Business Day of each Fiscal Quarter; and (b)
with respect to each Eurodollar Loan, the last day of the Interest Period that
is applicable thereto, provided that, and, if such Interest Period is greater
than three months in length, then respective dates that fall every three months
after the beginning of such Interest Period shall also be Interest Payment
Dates for such Eurodollar Loan.

 

“Interest Period” means, with respect to each
Eurodollar Loan, the period specified in the Borrowing Notice or Continuation/Conversion
Notice applicable to such Eurodollar Loan, beginning on and including the date
specified in such Borrowing Notice or Continuation/Conversion Notice (which
must be a Business Day), and ending one, two, three, or six months thereafter, as
Borrower may elect in such notice; provided that:  (a) any Interest Period which would otherwise
end on a day which is not a Business Day shall be extended to the next
succeeding Business Day unless such Business Day falls in another calendar
month, in which case such Interest Period shall end on the next preceding
Business Day; (b) any Interest Period which begins on the last Business Day in
a calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on the
last Business Day in a calendar month; and (c) notwithstanding the foregoing,
any Interest Period which would otherwise end after the last day of the
Commitment Period shall end on the last day of the Commitment Period (or, if
the last day of the Commitment Period is not a Business Day, on the next
preceding Business Day).

 

11

 

“Internal Revenue Code” means the United States
Internal Revenue Code of 1986, as amended from time to time and any successor
statute or statutes, together with all rules and regulations promulgated with
respect thereto.

 

“Investment” means any investment, made
directly or indirectly, in any Person, whether by purchase, acquisition of
equity interests, indebtedness or other obligations or securities or by
extension of credit, loan, advance, capital contribution or otherwise and
whether made in cash, by the transfer of property, or by any other means.

 

“Law” means any statute, law, regulation, ordinance,
rule, treaty, judgment, order, decree, permit, concession, franchise, license,
agreement or other governmental restriction of the United States or any state
or political subdivision thereof or of any foreign country or any department,
province or other political subdivision thereof.  Any reference to a Law includes any amendment
or modification to such Law, and all regulations, rulings, and other Laws
promulgated under such Law.

 

“LC Application” means any application for a
Letter of Credit hereafter made by Borrower to LC Issuer.

 

“LC Collateral” has the meaning given to such
term in Section 2.14(b).

 

“LC Conditions” means the conditions for
issuance of a Letter of Credit set forth in Sections 2.9 and 2.10.

 

“LC Exclusions” means the sum of (a) LC Obligations
for Letters of Credit issued in the ordinary course of Borrower’s business for
insurance, state qualification and routine licensing purposes and (b) LC
Obligations, up to $2,000,000, for Letters of Credit issued for purposes other
than those set forth in subsection (a) above.

 

“LC Issuer” means Wells Fargo Bank, National
Association in its capacity as the issuer of Letters of Credit hereunder, and
its successors in such capacity, and any issuer of an Existing Letter of
Credit.  Agent may, with the consent of
Borrower and the Lender in question, appoint any Lender hereunder as an LC
Issuer in place of or in addition to Wells Fargo Bank, National Association.

 

“LC Obligations” means, at the time in
question, the sum of all Matured LC Obligations plus the maximum amounts which
LC Issuer might then or thereafter be called upon to advance under all Letters
of Credit then outstanding.

 

“Lead Arranger” means Wells Fargo Securities,
LLC.

 

“Lender Hedging Obligations” means Indebtedness
to a Lender or an Affiliate of a Lender arising out of any Hedging Contract
permitted under Section 7.3.

 

“Lender Parties” means Agent, LC Issuer,
Swingline Lender, all Lenders, and any Affiliate of a Lender that holds Lender
Hedging Obligations.

 

12

 

“Lenders” means each signatory hereto (other
than Borrower and any Restricted Person that is a party hereto), and the
successors of each such party as Lender hereunder pursuant to Section 10.5.

 

“Lenders Schedule” means Schedule 3.1 hereto.

 

“Letter of Credit” means any letter of credit
issued by LC Issuer hereunder at the application of Borrower, and shall include
the Existing Letters of Credit, in each case as extended or otherwise modified
by the LC Issuer from time to time.

 

“Liabilities” means, as to any Person, all
liabilities that would appear as such on a balance sheet of such Person under
GAAP.

 

“Lien” means, with respect to any property or
assets, any right or interest therein of a creditor to secure Liabilities owed
to it or any other arrangement with such creditor which provides for the
payment of such Liabilities out of such property or assets or which allows such
creditor to have such Liabilities satisfied out of such property or assets
prior to the general creditors of any owner thereof, including any lien,
mortgage, security interest, pledge, rights of a vendor under any title
retention or conditional sale agreement or lease substantially equivalent
thereto, tax lien, mechanic’s or materialman’s lien, or any other charge or
encumbrance for security purposes, whether arising by Law or agreement or
otherwise, but excluding any right of offset which arises without agreement in
the ordinary course of business.

 

“Loan Documents” means this Agreement, the
Notes, the Security Documents, the Letters of Credit, the LC Applications, any
and all Hedging Contracts and the Intercreditor Agreements to which Borrower
and any Lender are a party, and all other agreements, certificates, documents,
instruments and writings at any time delivered in connection herewith or
therewith (exclusive of term sheets and commitment letters).

 

“Loans” means the (i) Revolving Loans as
otherwise described in Section 2.1 and (ii) the Swingline Loans as
otherwise described in Section 2.16.

 

“Margin Stock” means margin stock, as such term
is defined in Regulation U promulgated by the Board of Governors of the Federal
Reserve System.

 

“Material Adverse Change” means a material and
adverse change, from the state of affairs presented in the Initial Financial
Statements or as represented or warranted in any Loan Document, to (a) Borrower’s
Consolidated financial condition, (b) Borrower’s Consolidated business, assets,
operations or properties, considered as a whole, (c) Borrower’s ability to
timely pay the Obligations, or (d) the enforceability of the material terms of
any Loan Documents.

 

“Matured LC Obligations” means all amounts paid
by LC Issuer on drafts or demands for payment drawn or made under or purported
to be made under any Letter of Credit and all other amounts due and owing to LC
Issuer under any LC Application for any Letter of Credit, to the extent the
same have not been repaid to LC Issuer (with the proceeds of Loans or
otherwise).

 

“Maturity Date” means July 16, 2014.

 

13

 

“Maximum Drawing Amount” means at the time in
question the sum of the maximum amounts which LC Issuer might then or
thereafter be called upon to advance under all Letters of Credit which are then
outstanding.

 

“Moody’s” means Moody’s Investors Service, Inc.,
or its successor.

 

“Net Casualty Proceeds” means (a) cash
insurance proceeds (other than proceeds of business interruption insurance)
received by Borrower or any of its Subsidiaries in connection with a loss,
damage, destruction, or casualty of any or all of the assets of Borrower or any
of its Subsidiaries (the “Casualty Assets”), minus
(b) the amount of such cash insurance proceeds reinvested by the Borrower or
any of its Subsidiaries, so long as such reinvestment is (i) consummated
or irrevocably committed to be consummated within 365 days after the receipt of
such proceeds and (ii) to restore, repair, or replace the Casualty Assets, or
purchase other assets with substantially the same utility and in the same line
of business as the Casualty Assets.

 

“Net Leverage Ratio” means the ratio,
determined as of the end of each of Borrower’s Fiscal Quarters for the then
most-recently ended four consecutive Fiscal Quarters, of (a) its Consolidated
Total Indebtedness on such day minus the amount, if any, by which (i) its
and its Subsidiaries’ cash and Cash Equivalents exceed (ii) $30,000,000 to
(b) its Consolidated EBITDA for such period.

 

“Note(s)” means the Revolving Notes and the
Swingline Note.

 

“Obligations” means all indebtedness,
liabilities and obligations, whether matured or unmatured, liquidated or
unliquidated, primary or secondary, direct or indirect, absolute, fixed or
contingent, from time to time owing by any Restricted Person to any Lender
Party under or pursuant to any of the Loan Documents, including all LC
Obligations and any Lender Hedging Obligations. 
“Obligation” means any part of the Obligations.

 

“Off-Balance Sheet Liability” of a Person means
(a) any repurchase obligation or liability of such Person with respect to
accounts or notes receivable sold by such Person, (b) Synthetic Lease
Obligations, or (c) any obligation arising with respect to any other
transaction which is the functional equivalent of or takes the place of
borrowing but which does not constitute a liability on the balance sheets of
such Person (but, for the avoidance of doubt, excluding any operating leases
(as determined consistent with GAAP as in effect on the Closing Date) other
than a Synthetic Lease).

 

“Percentage Share” means, with respect to any
Lender (a) when used in Section 2.1, 2.2 or 2.5, in any Borrowing Notice or
when no Loans are outstanding hereunder, the percentage set forth opposite such
Lender’s name on Schedule 3.1 hereto or in the most recent Assignment and
Acceptance, or Incremental Commitment Agreement, if any, executed by such
Lender, as such amount may be adjusted, if at all, from time to time in
accordance with this Agreement (including in connection with the reduction or
termination of a Defaulting Lender’s Revolving Loan Commitment pursuant to
Section 2.18), and (b) when used otherwise, the percentage obtained by dividing
(i) the sum of the unpaid principal balance of such Lender’s Loans at the time
in question plus the Matured LC Obligations which such Lender has funded
pursuant to Section 2.11(c) plus the portion of the Maximum Drawing Amount
which such Lender might be 

 

14

 

obligated to fund under Section 2.11(c), by (ii) the
sum of the aggregate unpaid principal balance of all Loans at such time plus
the aggregate amount of LC Obligations outstanding at such time.

 

“Permitted Acquisition” means an Acquisition
that is permitted by Section 7.7(c).

 

“Permitted Investments” means:

 

(a)           Cash
Equivalents;

 

(b)           existing
Investments described in the Disclosure Schedule;

 

(c)           extensions
of credit by Restricted Persons to their customers for buying goods and
services in the ordinary course of business or to another Restricted Person in
the ordinary course of business;

 

(d)           extensions
of credit among Restricted Persons which are subordinated to the Obligations
upon terms and conditions reasonably satisfactory to the Agent;

 

(e)           Investments
by Restricted Persons in the Equity of Subsidiaries of the Borrower;

 

(f)            Investments
by Restricted Persons in the Equity of another Person made in connection with a
Permitted Acquisition;

 

(g)           repurchases
by Restricted Persons of their Equity that are permitted pursuant to Section
7.6; and

 

(h)           any
Investment made as a result of the receipt of non-cash consideration from a sale,
transfer, lease, exchange, alienation, or disposition of assets that is
permitted pursuant to Section 7.5.

 

“Permitted Liens” means:

 

(a)           statutory
Liens for taxes, assessments or other governmental charges or levies which are
not yet delinquent or which are being contested in good faith by appropriate
action and for which adequate reserves have been maintained in accordance with
GAAP;

 

(b)           landlords’,
operators’, carriers’, warehousemen’s, repairmen’s, mechanics’, materialmen’s,
worker’s, suppliers or other like Liens, in each case only to the extent
arising in the ordinary course of business and only to the extent securing
obligations (i) which are not delinquent or which are being contested in good
faith by appropriate proceedings; and (ii) for which adequate reserves have
been maintained in accordance with GAAP;

 

(c)           zoning
restrictions, easements, licenses, and minor defects and irregularities in
title to any real property, so long as such defects and irregularities do not
materially impair the value of such property or the use of such property for
the purposes for which such property is held;

 

15

 

(d)           pledges
or deposits of cash or securities to secure (i) the performance of bids, trade
contracts, leases, statutory obligations and other obligations of a like nature
(excluding appeal bonds) incurred in the ordinary course of business; or (ii)
obligations under worker’s compensation, unemployment insurance, social
security, or public Laws or similar legislation (excluding Liens arising under
ERISA);

 

(e)           Liens
under the Security Documents;

 

(f)            with
respect only to property subject to any particular Security Document, Liens
burdening such property which are expressly allowed by such Security Document;

 

(g)           any
Lien in favor of a surety that is subject to the provisions of an Intercreditor
Agreement;

 

(h)           deposits
securing, or in lieu of, surety, appeal or customs bonds in proceedings to
which Borrower or any of its Subsidiaries is a party;

 

(i)            any
attachment or judgment Lien not constituting an Event of Default under Section
8.1;

 

(j)            Liens
existing on the date hereof and renewals and extensions thereof, which Liens
are set forth on Schedule 1.1(a);

 

(k)           Liens
securing Indebtedness permitted by Section 7.1(c), provided that such Liens
attach only to the assets financed by such Indebtedness and any proceeds
thereof;

 

(l)            common
law security interests of a surety in the actual proceeds of a project subject
to the underlying surety bond provided by such surety; and

 

(m)          inchoate
Liens arising under ERISA to secure contingent Liabilities of Borrower or any
of its Subsidiaries.

 

“Person” means an individual, corporation,
general partnership, limited partnership, limited liability company,
association, joint stock company, trust or trustee thereof, estate or executor
thereof, Tribunal, or any other legally recognizable entity.

 

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

 

“Prior Agent” means Capital One, N.A., a
national banking association formerly known as Hibernia National Bank, in its
capacity as agent under the Prior Credit Documents.

 

“Prior Credit Agreement” means that certain
Credit Agreement dated as of June 30, 2005, as amended from time to time
heretofore, among Borrower, the Prior Agent, as agent and a lender thereunder,
and the other financial institutions party thereto, as lenders.

 

“Prior Credit Documents” means the Prior Credit
Agreement, together with the promissory notes made by Borrower thereunder and
any and all other documents and instruments executed in connection therewith.

 

16

 

“Receivables” means all present and future
rights of Borrower or any Subsidiary of Borrower to payment for goods sold or
leased or for services rendered (except those evidenced by instruments or
chattel paper), whether now existing or hereafter arising and wherever arising
and whether or not earned by performance.

 

“Regulation D” means Regulation D of the Board
of Governors of the Federal Reserve System as from time to time in effect.

 

“Required Lenders” means Lenders having
aggregate Revolving Loan Commitments representing at least sixty-six and
two-thirds percent (662/3%) of the Aggregate Commitment or, if the Revolving Loan Commitments
have been terminated, Lenders holding Loans representing at least sixty-six and
two-thirds percent (66-2/3%) of the aggregate principal amount of the Loans then outstanding.

 

“Reserve Requirement” means, at any time, the
maximum rate at which reserves (including any marginal, special, supplemental,
or emergency reserves) are required to be maintained under regulations issued
from time to time by the Board of Governors of the Federal Reserve System (or
any successor) by member banks of the Federal Reserve System against “Eurocurrency
liabilities” (as such term is used in Regulation D).  Without limiting the effect of the foregoing,
the Reserve Requirement shall reflect any other reserves required to be
maintained by such member banks with respect to (a) any category of liabilities
which includes deposits by reference to which the Adjusted Eurodollar Rate is
to be determined, or (b) any category of extensions of credit or other assets
which include Eurodollar Loans.

 

“Restricted Person” means any of Borrower, each
Subsidiary of Borrower, and each Guarantor.

 

“Revolving Facility Usage” means, at the time
in question, without duplication, the aggregate principal amount of outstanding
Revolving Loans, Swingline Loans, and LC Obligations at such time.

 

“Revolving Lenders” means those Lenders having
a Revolving Loan Commitment.

 

“Revolving Loan(s)” means a loan made to
Borrower pursuant to Section 2.1.

 

“Revolving Loan Commitment” means as to any
Lender, the commitment of such Lender to make its Percentage Share of Revolving
Loans or incur its Percentage Share of Swingline Loans or LC Obligations
as set forth on Schedule 3.1 hereto or in the most recent Assignment and
Acceptance or Incremental Commitment Agreement, if any, executed by such
Lender, as such amount may be adjusted, if at all, from time to time in
accordance with this Agreement.

 

“Revolving Notes” has the meaning ascribed to
it in Section 2.1.

 

“S & P” means Standard & Poor’s Ratings
Services (a division of The McGraw Hill Companies), or its successor.

 

“Sale Leaseback Transaction” means any
transaction or series of related transactions under which the Borrower or any
of its Subsidiaries (a) sells, transfers or otherwise disposes of 

 

17

 

any property, real or personal, whether now owned or
hereafter acquired, and (b) as part of that transaction, thereafter rents or
leases that property or other property that it intends to use for substantially
the same purpose or purposes as the property being sold, transferred or disposed
of.

 

“Secured Obligations” means all Obligations.

 

“Security Documents” means the instruments
listed on Schedule 4.1 and all other security agreements, deeds of
trust, mortgages, chattel mortgages, pledges, financing statements,
continuation statements, extension agreements and other agreements or
instruments now, heretofore, or hereafter delivered by any Restricted Person to
Agent in connection with this Agreement or any transaction contemplated hereby
to secure the payment of any part of the Obligations or the performance of any
Restricted Person’s other duties and obligations under the Loan Documents.

 

“Solvent” means, with respect to any Person on
a particular date, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including subordinated
and contingent liabilities, of such Person; (b) the present fair saleable value
of the assets of such Person is not less than the amount that will be required
to pay the probable liability of such Person on its debts and liabilities,
including subordinated and contingent liabilities as they become absolute and
matured; (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person’s ability to pay as such debts
and liabilities mature; and (d) such Person is not engaged in a business or
transaction, and is not about to engage in a business or transaction, for which
such Person’s property would constitute an unreasonably small capital.  The amount of contingent liabilities (such as
litigation, guaranties and pension plan liabilities) at any time shall be
computed as the amount that, in light of all the facts and circumstances
existing at the time, represents the amount that can be reasonably be expected to
become an actual or matured liability.

 

“Subordinated Debt” means unsecured
Indebtedness that is subordinated to the Obligations in a manner and form
reasonably satisfactory to Agent, as to the right and time of payment and as to
any and all other rights and remedies thereunder.

 

“Subsidiary” means, with respect to any Person,
any corporation, association, partnership, limited liability company, joint
venture, or other business or corporate entity, enterprise or organization
which is directly or indirectly (through one or more intermediaries) controlled
by or owned fifty percent or more by such Person.

 

“Swingline Lender” means Wells Fargo Bank,
National Association, in its capacity as lender of Swingline Loans hereunder.

 

“Swingline Loan” means a loan made pursuant to Section
2.16.

 

“Swingline Note” has the meaning specified in Section
2.16(d).

 

“Synthetic Lease Obligations” means an
arrangement treated as an operating lease for financial accounting purposes and
a financing lease for tax purposes.

 

18

 

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

 

“Termination Event” means (a) the occurrence
with respect to any ERISA Plan of (i) an event described in Section 4041A of
ERISA, or (ii) the withdrawal of any ERISA Affiliate from an ERISA Plan if such
withdrawal is described in Section 4201(a) of ERISA, or (iii) a reportable
event described in Section 4043(c)(5) or (6) of ERISA or (iv) any other
reportable event described in Section 4043(c) of ERISA other than a reportable
event not subject to the provision for 30-day notice to the Pension Benefit
Guaranty Corporation pursuant to a waiver by such corporation (determined under
final regulations promulgated by the Pension Benefit Guaranty Corporation
regarding such waivers as in effect on the date of this Credit Agreement) under
Section 4043(a) or 4043(b)(4) of ERISA, or (b) the withdrawal of any ERISA
Affiliate from an ERISA Plan during a plan year in which it was a “substantial
employer” as defined in Section 4001(a)(2) of ERISA, or (c) the filing of a
notice of intent to terminate any ERISA Plan or the treatment of any ERISA Plan
amendment as a termination under Section 4041(c) of ERISA, or (d) the
institution of proceedings to terminate any ERISA Plan by the Pension Benefit
Guaranty Corporation under Section 4042 of ERISA, or (e) any other event or
condition which might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any ERISA Plan.

 

“Total Leverage Ratio” means the ratio,
determined as of the end of each of Borrower’s Fiscal Quarters for the then
most-recently ended four consecutive Fiscal Quarters, of (a) its Consolidated
Total Indebtedness on such day to (b) its Consolidated EBITDA for such period.

 

“Tribunal” means any government, any
arbitration panel, any court or any governmental department, commission, board,
bureau, agency or instrumentality of the United States of America or any state,
province, commonwealth, nation, territory, possession, county, parish, town,
township, village or municipality, whether now or hereafter constituted or
existing.

 

“Type” means, with respect to any Loans, the
characterization of such Loans as either Base Rate Loans or Eurodollar Loans.

 

Section 1.2             Exhibits and Schedules;
Additional Definitions.  All Exhibits and Schedules attached to this
Agreement are a part hereof for all purposes. 
Reference is hereby made to Schedule 4.1 for the meaning of
certain terms defined therein and used but not defined herein, which
definitions are incorporated herein by reference.

 

Section 1.3             Amendment of Defined Instruments.  Unless the context otherwise
requires or unless otherwise provided herein the terms defined in this
Agreement which refer to a particular agreement, instrument or document also
refer to and include all renewals, extensions, modifications, amendments and
restatements of such agreement, instrument or document, provided that nothing
contained in this section shall be construed to authorize any such renewal,
extension, modification, amendment or restatement.

 

Section 1.4             References and Titles.  All references in this
Agreement to Exhibits, Schedules, articles, sections, subsections and other
subdivisions refer to the Exhibits, Schedules, articles, sections, subsections
and other subdivisions of this Agreement unless expressly

 

19

 

provided otherwise.  Exhibits and Schedules to any Loan Document
shall be deemed incorporated by reference in such Loan Document.  References to any document, instrument, or
agreement (a) shall include all exhibits, schedules, and other attachments thereto,
and (b) shall include all documents, instruments, or agreements issued or
executed in replacement thereof.  Titles
appearing at the beginning of any subdivisions are for convenience only and do
not constitute any part of such subdivisions and shall be disregarded in
construing the language contained in such subdivisions.  The words “this Agreement”, “this instrument”,
“herein”, “hereof”, “hereby”, “hereunder” and words of similar import refer to
this Agreement as a whole and not to any particular subdivision unless
expressly so limited.  The phrases “this
section” and “this subsection” and similar phrases refer only to the sections
or subsections hereof in which such phrases occur.  The word “or” is not exclusive, and the word “including”
(in its various forms) means “including without limitation”.  Pronouns in masculine, feminine and neuter
genders shall be construed to include any other gender, and words in the
singular form shall be construed to include the plural and vice versa, unless
the context otherwise requires. 
Accounting terms have the meanings assigned to them by GAAP, as applied
by the accounting entity to which they refer. 
References to “days” shall mean calendar days, unless the term “Business
Day” is used.  Unless otherwise
specified, references herein to any particular Person also refer to its
successors and permitted assigns.

 

Section 1.5             Calculations and Determinations.  All calculations under the Loan
Documents of interest chargeable with respect to Eurodollar Loans and of fees
shall be made on the basis of actual days elapsed (including the first day but
excluding the last) and a year of 360 days. 
All other calculations of interest made under the Loan Documents shall
be made on the basis of actual days elapsed (including the first day but
excluding the last) and a year of 365 or 366 days, as appropriate.  Each determination by a Lender Party of
amounts to be paid under Article III or any other matters which are to be
determined hereunder by a Lender Party (such as any Eurodollar Rate, Adjusted
Eurodollar Rate, Business Day, Interest Period, or Reserve Requirement) shall,
in the absence of manifest error, be conclusive and binding.  Unless otherwise expressly provided herein or
unless Required Lenders otherwise consent all financial statements and reports
furnished to any Lender Party hereunder shall be prepared and all financial
computations and determinations pursuant hereto shall be made in accordance
with GAAP.

 

Section 1.6             Joint Preparation; Construction
of Indemnities and Releases.  This Agreement and the other Loan Documents
have been reviewed and negotiated by sophisticated parties with access to legal
counsel and no rule of construction shall apply hereto or thereto which would
require or allow any Loan Document to be construed against any party because of
its role in drafting such Loan Document. 
All indemnification and release provisions of this Agreement shall be
construed broadly (and not narrowly) in favor of the Persons receiving
indemnification or being released.

 

ARTICLE II

THE LOANS AND LETTERS OF CREDIT

 

Section 2.1             Commitments to Lend; Notes.  Subject to the terms and
conditions hereof, each Revolving Lender agrees, severally and not jointly, to
make Revolving Loans to Borrower

 

20

 

upon the request of Borrower
from time to time during the Commitment Period, provided that (a) subject to
Sections 3.3, 3.4 and 3.6, Revolving Loans of the same Type made on the same
day shall be made by Revolving Lenders in accordance with their respective
Percentage Shares and as part of the same Borrowing; and (b) after giving
effect to such Revolving Loans, the Revolving Facility Usage does not exceed
the Aggregate Commitment then in effect. 
The amount of all Revolving Loans in any Borrowing must be greater than
or equal to $100,000, or must equal the remaining availability under the
Aggregate Commitment.  The obligation of
Borrower to repay to each Revolving Lender the aggregate amount of all
Revolving Loans made by such Revolving Lender, together with interest accruing
in connection therewith, shall be evidenced by one or more promissory notes
made by Borrower payable to the order of such Revolving Lender in the principal
amount of the Revolving Loan Commitment of the applicable Revolving Lender,
substantially in the form of Exhibit 2.1 (each a “Revolving Note” and,
collectively, the “Revolving Notes”). 
The amount of principal owing on any Revolving Note at any given time
shall be the aggregate amount of all Revolving Loans theretofore made by such
Revolving Lender minus all payments of principal theretofore received by such
Revolving Lender on such Revolving Note. 
Interest on each Revolving Note shall accrue and be due and payable as
provided herein.  Each Revolving Note
shall be due and payable as provided herein, and shall be due and payable in
full on the Maturity Date.  Subject to
the terms and conditions hereof, Borrower may borrow, repay, and reborrow
hereunder.

 

Section 2.2             Requests for Revolving Loans.  Borrower must give to Agent
written or electronic notice (or telephonic notice promptly confirmed in
writing) of any requested Borrowing of new Revolving Loans to be advanced by
Revolving Lenders.  Each such notice
constitutes a “Borrowing Notice” hereunder and must:

 

(a)           specify
(i) the aggregate amount of any such Borrowing of new Base Rate Loans and the
date on which such Base Rate Loans are to be advanced, or (ii) the aggregate
amount of any such Borrowing of new Eurodollar Loans, the date on which such
Eurodollar Loans are to be advanced (which shall be the first day of the
Interest Period which is to apply thereto), and the length of the applicable
Interest Period; and

 

(b)           be
received by Agent not later than 11:00 a.m., Houston, Texas time, on (i) the
day on which any such Base Rate Loans are to be made, or (ii) the third
Business Day preceding the day on which any such Eurodollar Loans are to be
made.

 

Each such written request or confirmation must be made
in the form and substance of the “Borrowing Notice” attached hereto as Exhibit
2.2(b), duly completed.  Each such telephonic
request shall be deemed a representation, warranty, acknowledgment and
agreement by Borrower as to the matters which are required to be set out in
such written confirmation.  Upon receipt
of any such Borrowing Notice, Agent shall give each Lender prompt notice of the
terms thereof.  If all conditions
precedent to such new Revolving Loans have been met, each Revolving Lender will
on the date requested promptly remit to Agent at Agent’s office in Houston,
Texas the amount of such Revolving Lender’s new Revolving Loan in immediately
available funds, and upon receipt of such funds, unless to its actual knowledge
any conditions precedent to such Revolving Loans have been neither met nor
waived as provided herein, Agent shall promptly make such Revolving Loans
available to Borrower.  Unless Agent
shall have received prompt notice from a Revolving Lender that such Revolving
Lender will not make available to Agent

 

21

 

such Revolving Lender’s new Revolving Loan, Agent may
in its discretion assume that such Revolving Lender has made such Revolving
Loan available to Agent in accordance with this section and Agent may if it
chooses, in reliance upon such assumption, make such Revolving Loan available
to Borrower.  If and to the extent such
Revolving Lender shall not so make its new Revolving Loan available to Agent,
such Revolving Lender and Borrower severally agree to pay or repay to Agent
within three days after demand the amount of such Revolving Loan together with
interest thereon, for each day from the date such amount was made available to
Borrower until the date such amount is paid or repaid to Agent, with interest
at (i) the Federal Funds Rate, if such Revolving Lender is making such payment
and (ii) the interest rate applicable at the time to the other new Revolving
Loans made on such date, if Borrower is making such repayment.  If neither such Revolving Lender nor Borrower
pays or repays to Agent such amount within such three-day period, Agent shall
in addition to such amount be entitled to recover from such Revolving Lender
and from Borrower, on demand, interest thereon at the Default Rate, calculated
from the date such amount was made available to Borrower.  The failure of any Revolving Lender to make
any new Revolving Loan to be made by it hereunder shall not relieve any other
Revolving Lender of its obligation hereunder, if any, to make its new Revolving
Loan, but no Revolving Lender shall be responsible for the failure of any other
Revolving Lender to make any new Revolving Loan to be made by such other
Revolving Lender.

 

Section 2.3             Continuations and Conversions of
Existing Loans.  Borrower may make the following elections
with respect to Loans already outstanding: to convert Base Rate Loans to
Eurodollar Loans, to convert Eurodollar Loans to Base Rate Loans on the last
day of the Interest Period applicable thereto, and to continue Eurodollar Loans
beyond the expiration of such Interest Period by designating a new Interest
Period to take effect at the time of such expiration.  In making such elections, Borrower may
combine existing Loans made pursuant to separate Borrowings into one new
Borrowing or divide existing Loans made pursuant to one Borrowing into separate
new Borrowings, provided that Borrower may have no more than five Borrowings of
Eurodollar Loans outstanding at any time. 
To make any such election, Borrower must give to Agent written notice
(or telephonic notice promptly confirmed in writing) of any such Conversion or
Continuation of existing Loans, with a separate notice given for each new
Borrowing.  Each such notice constitutes
a “Continuation/Conversion Notice” hereunder and must:

 

(a)           specify
the existing Loans which are to be Continued or Converted;

 

(b)           specify
(i) the aggregate amount of any Borrowing of Base Rate Loans into which such
existing Loans are to be converted and the date on which such Continuation or
Conversion is to occur, or (ii) the aggregate amount of any Borrowing of
Eurodollar Loans into which such existing Loans are to be continued or
converted, the date on which such Continuation or Conversion is to occur (which
shall be the first day of the Interest Period which is to apply to such
Eurodollar Loans), and the length of the applicable Interest Period; and

 

(c)           be
received by Agent not later than  11:00
a.m., Houston, Texas time, on (i) the day on which any such conversion to Base
Rate Loans is to occur, or (ii) the third Business Day preceding the day on
which any such Continuation or Conversion to Eurodollar Loans is to occur.

 

22

 

Each such written request or confirmation must be made
in the form and substance of the “Continuation/Conversion Notice” attached
hereto as Exhibit 2.3(c), duly completed.  Each such telephonic request shall be deemed
a representation, warranty, acknowledgment and agreement by Borrower as to the
matters which are required to be set out in such written confirmation.  Upon receipt of any such Continuation/Conversion
Notice, Agent shall give each Lender prompt notice of the terms thereof.  Each Continuation/Conversion Notice shall be
irrevocable and binding on Borrower. 
During the continuance of any Default, Borrower may not make any
election to convert existing Loans into Eurodollar Loans or continue existing
Loans as Eurodollar Loans.  If (due to
the existence of a Default or for any other reason) Borrower fails to timely
and properly give any Continuation/Conversion Notice with respect to a
Borrowing of existing Eurodollar Loans at least three days prior to the end of
the Interest Period applicable thereto, such Eurodollar Loans shall
automatically be converted into Base Rate Loans at the end of such Interest
Period.  No new funds shall be repaid by
Borrower or advanced by any Lender in connection with any Continuation or
Conversion of existing Loans pursuant to this section, and no such Continuation
or Conversion shall be deemed to be a new advance of funds for any purpose;
such Continuations and Conversions merely constitute a change in the interest
rate applicable to already outstanding Loans.

 

Section 2.4             Use of Proceeds.  Borrower shall use the Loans to
provide working capital for its operations and for other general corporate
purposes.  Borrower shall use all Letters
of Credit for its general corporate purposes. 
In no event shall the funds from any Loan or any Letter of Credit be
used directly or indirectly by any Person for personal, family, household or
agricultural purposes or for the purpose, whether immediate, incidental or
ultimate, of purchasing, acquiring or carrying any Margin Stock (except in
connection with an acquisition or Investment permitted under Section 7.7 which
doesn’t violate Regulation U of the Board of Governors of the Federal Reserve
System.) or to extend credit to others directly or indirectly for the purpose
of purchasing or carrying any such Margin Stock.  Borrower represents and warrants that
Borrower is not engaged principally, or as one of Borrower’s important
activities, in the business of extending credit to others for the purpose of
purchasing or carrying such Margin Stock.

 

Section 2.5             Interest Rates and Fees; Payment
Dates. 
(a)  Interest.  Subject to subsection (b) below, (i) each
Base Rate Loan shall bear interest on each day it is outstanding at the
Adjusted Base Rate in effect on such day, and (ii) each Eurodollar Loan shall
bear interest on each day during the related Interest Period at the related
Adjusted Eurodollar Rate in effect on such day, and (iii) if an Event of
Default has occurred and is continuing, the Loans shall bear interest as set
forth in Section 2.5(b) below. 
Notwithstanding the foregoing, Borrower may request from time to time
that Borrower and the Lender enter into a Hedging Contract providing for interest
rate protection (1) for a term expiring no earlier than one year after the
Closing Date; and (2) with other terms and conditions reasonably satisfactory
to Agent.

 

(b)           Default
Rate.  If an Event of Default shall
have occurred and be continuing under Section 8.1(a), (b), (j)(i), (j)(ii), and
(j)(iii) all outstanding Loans shall bear interest at the applicable Default
Rate.  In addition, if an Event of
Default shall have occurred and be continuing (other than under Section 8.1(a),
(b), (j)(i), (j)(ii) or (j)(iii)), Required Lenders may, by notice to Borrower,
elect to have the outstanding Loans bear interest at the applicable Default
Rate, whereupon such Loans shall bear interest at the applicable Default Rate
until the earlier of

 

23

 

(i) the
first date thereafter upon which there shall be no Event of Default continuing
and (ii) the date upon which Required Lenders shall have rescinded such
notice.

 

(c)           Commitment Fees.  In
consideration of each Revolving Loan Commitment of each Revolving Lender to
make Revolving Loans, Borrower will pay to Agent for the account of each
Revolving Lender a fee (the “Commitment Fee”) determined on a daily basis by
multiplying the applicable Commitment Fee Rate by the Percentage Share of such
Revolving Lender of the unused portion of the aggregate Revolving Loan
Commitments on each day during the Commitment Period, determined for each such
day by deducting from the amount of the aggregate Revolving Loan Commitments at
the end of such day the Revolving Facility Usage at the end of such day
(calculated as if no Swingline Loans were outstanding).  This Commitment Fee shall be due and payable
in arrears on the first day of each Fiscal Quarter and at the end of the
Commitment Period.

 

(d)           Additional Fees.  In addition
to all other amounts due to Agent under the Loan Documents, Borrower will pay
fees to the Lead Arranger as described in a letter agreement of even date
herewith between Lead Arranger and Borrower.

 

(e)           Payment Dates.  On each
Interest Payment Date relating to Base Rate Loans, Borrower shall pay to the
Lenders all unpaid interest which has accrued on the Base Rate Loans to but not
including such Interest Payment Date.  On
each Interest Payment Date relating to a Eurodollar Loan, Borrower shall pay to
Lenders all unpaid interest which has accrued on such Eurodollar Loan to but
not including such Interest Payment Date.

 

Section 2.6             Optional Prepayments.  Borrower may, without penalty, (a) upon
notice to Agent to be received no later than 11:00 a.m., Houston, Texas
time, with respect to any Base Rate Loan and (b) upon three Business Days’
notice to each Lender with respect to any Eurodollar Loan, from time to time
and without premium or penalty prepay the Loans, in whole or in part, provided (i) that
the aggregate amounts of all partial prepayments of principal on the Notes
equals $100,000 or any higher integral multiple of $100,000; and (ii) that
if Borrower prepays any Eurodollar Loan on any day other than the last day of
the Interest Period applicable thereto, it shall pay to Lenders any amounts due
under Section 3.5. Each prepayment of principal of any Eurodollar Loan
under this section shall be accompanied by all interest then accrued and unpaid
on the principal so prepaid.  Any
principal or interest prepaid pursuant to this section shall be in addition to,
and not in lieu of, all payments otherwise required to be paid under the Loan
Documents at the time of such prepayment.

 

Section 2.7             Mandatory Prepayments.  (a)  If at any time the
Revolving Facility Usage exceeds the Aggregate Commitment (whether due to a
reduction in the Revolving Loan Commitments in accordance with this Agreement,
or otherwise), Borrower shall immediately upon demand prepay the principal of
the Loans (and after the Loans are repaid in full, provide LC Collateral in
accordance with Section 2.14(b)) in an amount at least equal to such
excess.

 

(b)           Intentionally Left Blank.

 

(c)           No later than the 366th day
after the receipt of any Net Casualty Proceeds aggregating in excess of
$2,000,000 for any single transaction or related series of transactions,

 

24

 

Borrower
shall apply such Net Casualty Proceeds to repay the Revolving Loans, and the
Revolving Loan Commitment shall be permanently reduced in an aggregate amount
equal to such Net Casualty Proceeds.

 

(d)           Each prepayment of principal under this section
shall be accompanied by all interest then accrued and unpaid on the principal
so prepaid.  Any principal or interest
prepaid pursuant to this section shall be in addition to, and not in lieu of,
all payments otherwise required to be paid under the Loan Documents at the time
of such prepayment.

 

Section 2.8             Termination and Reduction of Revolving Loan
Commitments.  (a) Unless previously terminated, the
Revolving Loan Commitments will terminate on the Maturity Date.

 

(b)           The Borrower may at any time terminate, or from time
to time reduce, without premium or penalty, the Revolving Loan Commitments, but
(i) each reduction of the Commitments must be in an amount that is an
integral multiple of $100,000 (unless such reduction would reduce the unused
Revolving Loan Commitments to zero) and (ii) the Borrower shall not
terminate or reduce the Revolving Loan Commitments if, after giving effect to any
concurrent prepayment of the Loans in accordance with Section 2.6 and Section 2.7,
the sum of the aggregate Revolving Facility Usage would exceed the Aggregate
Commitment then in effect.

 

(c)           The Borrower shall notify the Agent of any election
to terminate or reduce the Commitments under Section 2.8(b) at least
three Business Days prior to the effective date of that termination or
reduction, specifying that election and the effective date thereof.  Promptly following receipt of any notice, the
Agent shall advise the Lenders of the contents thereof.  Each notice delivered by the Borrower
pursuant to this Section will be irrevocable, except that a notice of
termination of the Revolving Loan Commitments delivered by the Borrower may
state that such notice is conditioned upon the effectiveness of other credit
facilities, in which case such notice may be revoked by the Borrower (by notice
to the Agent on or prior to the specified effective date) if such condition is
not satisfied.  Except as provided in the
immediately preceding sentence, any termination or reduction of the Revolving
Loan Commitments will be permanent and such Revolving Loan Commitments will not
be reinstated except pursuant to, and in accordance with, Section 2.17.  Except as provided in Section 2.18 each
reduction of the Revolving Loan Commitments must be made ratably among the
Lenders in accordance with their respective Revolving Loan Commitments.

 

Section 2.9             Letters of Credit.  Subject to the terms and
conditions hereof, Borrower may during the Commitment Period request LC Issuer
to, and LC Issuer shall, issue one or more Letters of Credit, provided that,
after taking such Letter of Credit into account:

 

(a)           the Revolving Facility Usage does not exceed the
Aggregate Commitment (whether due to a reduction in the Aggregate Commitment in
accordance with this Agreement, or otherwise) at such time; and

 

(b)           the expiration date of such Letter of Credit is
prior to the end of the Commitment Period.

 

All Existing Letters of Credit shall be deemed to have
been issued pursuant hereto, and from and after the Closing Date shall be
subject to and governed by the terms and conditions hereof.

 

25

 

Section 2.10           Requesting Letters of Credit.  Borrower must make written application
for any Letter of Credit at least two (2) Business Days (or such shorter
period as LC Issuer may in its discretion from time to time agree) before the
date on which Borrower desires for LC Issuer to issue such Letter of
Credit.  By making any such written
application Borrower shall be deemed to have represented and warranted that the
LC Conditions described in Section 2.11 will be met as of the date of
issuance of such Letter of Credit.  Each
such written application for a Letter of Credit must be made in writing in the
form and substance of Exhibit 2.10, the terms and provisions of
which are hereby incorporated herein by reference (or in such other form as may
mutually be agreed upon by LC Issuer and Borrower).  Two (2) Business Days after the LC
Conditions for a Letter of Credit have been met (or if LC Issuer otherwise
desires to issue such Letter of Credit), LC Issuer will issue such Letter of
Credit at LC Issuer’s office in Houston, Texas. 
If any provisions of any LC Application conflict with any provisions of
this Agreement, the provisions of this Agreement shall govern and control.  Borrower shall promptly examine a copy of
each Letter of Credit and each amendment thereto that is delivered to it and, in
the event of any claim of noncompliance with Borrower’s instructions or other
irregularity, Borrower will promptly notify LC Issuer.

 

Section 2.11           Reimbursement and Participations.  (a)  Reimbursement by
Borrower.  Each Matured LC Obligation
shall constitute a Revolving Loan by LC Issuer to Borrower if not paid by the
Borrower in accordance with the following sentence.  Borrower promises to pay to LC Issuer, or to
LC Issuer’s order, on the Business Day immediately following the day on which a
demand is made, the full amount of each Matured LC Obligation, together with
interest thereon at the Default Rate applicable to Base Rate Loans.  The obligation of Borrower to reimburse LC
Issuer for each Matured LC Obligation shall be absolute, unconditional and irrevocable,
and shall be paid strictly in accordance with the terms of this Agreement
(including any LC Application) under all circumstances, including the
following: (i) any lack of validity or enforceability of such Letter of
Credit or any other agreement or instrument relating thereto; (ii) the existence
of any claim, counterclaim, set-off, defense or other right that Borrower may
have at any time against any beneficiary or any transferee of such Letter of
Credit (or any Person for whom any such beneficiary or any such transferee may
be acting), LC Issuer or any other Person, whether in connection with this
Agreement, the transactions contemplated hereby or by such Letter of Credit or
any agreement or instrument relating thereto, or any unrelated transaction; (iii) any
draft, demand, certificate or other document presented under such Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect; or any loss
or delay in the transmission or otherwise of any document required in order to
make a drawing under such Letter of Credit; (iv) any payment by LC Issuer
under such Letter of Credit against presentation of a draft or certificate that
does not strictly comply with the terms of such Letter of Credit; or (v) any
other circumstance or happening whatsoever, whether or not similar to any of
the foregoing.  Without limiting the
generality of the foregoing, it is expressly agreed that the absolute and
unconditional nature of Borrower’s obligations under this section to reimburse
LC Issuer for each drawing under a Letter of Credit will not be excused by the
gross negligence or willful misconduct of LC Issuer.  However, the foregoing shall not be construed
to excuse LC Issuer from liability to Borrower to the extent of any direct
damages (as opposed to consequential damages, claims in respect of which are
hereby waived by Borrower to the extent permitted by applicable Law) suffered
by Borrower that are caused by LC Issuer’s gross negligence or willful
misconduct in determining

 

26

 

whether drafts and other
documents presented under a Letter of Credit comply with the terms thereof.

 

(b)           Letter of Credit Advances.  If
the beneficiary of any Letter of Credit makes a draft or other demand for
payment thereunder then Borrower may, during the interval between the making
thereof and the honoring thereof by LC Issuer, request Lenders to make Loans to
Borrower in the amount of such draft or demand, which Loans shall be made concurrently
with LC Issuer’s payment of such draft or demand and shall be immediately used
by LC Issuer to repay the amount of the resulting Matured LC Obligation.  Such a request by Borrower shall be made in
compliance with all of the provisions hereof, provided that for the purposes of
the first sentence of Section 2.1(b), the amount of such Loans shall be
considered, but the amount of the Matured LC Obligation to be concurrently paid
by such Loans shall not be considered.

 

(c)           Participation by Lenders.  LC Issuer
irrevocably agrees to grant and hereby grants to each Lender, and to induce LC
Issuer to issue Letters of Credit hereunder each Lender irrevocably agrees to
accept and purchase and hereby accepts and purchases from LC Issuer, on the
terms and conditions hereinafter stated and for such Lender’s own account and
risk, an undivided interest equal to such Lender’s Percentage Share of LC
Issuer’s obligations and rights under each Letter of Credit issued hereunder
and the amount of each Matured LC Obligation paid by LC Issuer thereunder.  Each Lender unconditionally and irrevocably
agrees with LC Issuer that, if a Matured LC Obligation is paid under any Letter
of Credit for which LC Issuer is not reimbursed in full by Borrower in
accordance with the terms of this Agreement and the related LC Application
(including any reimbursement by means of concurrent Loans or by the application
of LC Collateral), such Lender shall (in all circumstances and without set-off
or counterclaim) pay to LC Issuer on demand, in immediately available funds at
LC Issuer’s address for notices hereunder, such Lender’s Percentage Share of
such Matured LC Obligation (or any portion thereof which has not been
reimbursed by Borrower).  Each Lender’s
obligation to pay LC Issuer pursuant to the terms of this subsection is
irrevocable and unconditional.  If any
amount required to be paid by any Lender to LC Issuer pursuant to this
subsection is paid by such Lender to LC Issuer within three Business Days after
the date such payment is due, LC Issuer shall in addition to such amount be
entitled to recover from such Lender, on demand, interest thereon calculated
from such due date at the Federal Funds Rate. 
If any amount required to be paid by any Lender to LC Issuer pursuant to
this subsection is not paid by such Lender to LC Issuer within three Business
Days after the date such payment is due, LC Issuer shall in addition to such
amount be entitled to recover from such Lender, on demand, interest thereon
calculated from such due date at the Default Rate.

 

(d)           Distributions to Participants. 
Whenever LC Issuer has in accordance with this section received from any
Lender payment of such Lender’s Percentage Share of any Matured LC Obligation,
if LC Issuer thereafter receives any payment of such Matured LC Obligation or
any payment of interest thereon (whether directly from Borrower or by
application of LC Collateral or otherwise, and excluding only interest for any
period prior to LC Issuer’s demand that such Lender make such payment of its
Percentage Share), LC Issuer will distribute to such Lender its Percentage
Share of the amounts so received by LC Issuer; provided, however, that if any
such payment received by LC Issuer must thereafter be returned by LC Issuer,
such Lender shall return to LC Issuer the portion thereof which LC Issuer has
previously distributed to it.

 

27

 

(e)           Calculations.  A written
advice setting forth in reasonable detail the amounts owing under this section,
submitted by LC Issuer to Borrower or any Lender from time to time, shall be
conclusive, absent manifest error, as to the amounts thereof.

 

Section 2.12           Letter of Credit Fees.  In consideration of LC Issuer’s
issuance of any Letter of Credit, Borrower agrees to pay (a) to Agent, for
the account of all Lenders in accordance with their respective Percentage
Shares, a per annum letter of credit fee on the undrawn face amount of each
outstanding Letter of Credit at a rate equal to the rate specified as the LC
Fee on the Pricing Schedule, and (b) to such LC Issuer for its own
account, a letter of credit fronting fee at a rate equal to 0.125% per
annum.  The letter of credit fee and the
letter of credit fronting fee will be calculated on the undrawn face amount of
each Letter of Credit outstanding on each day at the above-applicable rates and
will be due and payable in arrears on the first day of each Fiscal Quarter and
at the end of the Commitment Period.

 

Section 2.13           No Duty to Inquire.  (a) Drafts and Demands.  LC Issuer is authorized and instructed to
accept and pay drafts and demands for payment under any Letter of Credit
without requiring, and without responsibility for, any determination as to the
existence of any event giving rise to said draft, either at the time of
acceptance or payment or thereafter.  LC
Issuer is under no duty to determine the proper identity of anyone presenting
such a draft or making such a demand (whether by tested telex or otherwise) as
the officer, representative or Agent of any beneficiary under any Letter of
Credit, and payment by LC Issuer to any such beneficiary when requested by any
such purported officer, representative or Agent is hereby authorized and
approved.  Borrower releases each Lender
Party from, and agrees to hold each Lender Party harmless and indemnified
against, any liability or claim in connection with or arising out of the
subject matter of this section, which indemnity shall apply whether or not any
such liability or claim is in any way or to any extent caused, in whole or in
part, by any negligent act or omission of any kind by any Lender Party,
provided only that no Lender Party shall be entitled to indemnification for
that portion, if any, of any liability or claim which is proximately caused by
its own individual gross negligence or willful misconduct, as determined in a
final judgment.

 

(b)           Extension of Maturity.  If the
maturity of any Letter of Credit is extended by its terms or by Law or
governmental action, if any extension of the maturity or time for presentation
of drafts or any other modification of the terms of any Letter of Credit is
made at the request of any Restricted Person, or if the amount of any Letter of
Credit is increased at the request of any Restricted Person, this Agreement
shall be binding upon all Restricted Persons with respect to such Letter of
Credit as so extended, increased or otherwise modified, with respect to drafts
and property covered thereby, and with respect to any action taken by LC
Issuer, LC Issuer’s correspondents, or any Lender Party in accordance with such
extension, increase or other modification.

 

(c)           Transferees of Letters of Credit.  If
any Letter of Credit provides that it is transferable, LC Issuer shall have no
duty to determine the proper identity of anyone appearing as transferee of such
Letter of Credit, nor shall LC Issuer be charged with responsibility of any
nature or character for the validity or correctness of any transfer or
successive transfers, and payment by LC Issuer to any purported transferee or
transferees as determined by LC Issuer is hereby authorized and approved, and
Borrower releases each Lender Party from, and agrees to hold each Lender Party
harmless and indemnified against, any liability or claim in connection

 

28

 

with
or arising out of the foregoing, which indemnity shall apply whether or not any
such liability or claim is in any way or to any extent caused, in whole or in
part, by any negligent act or omission of any kind by any Lender Party,
provided only that no Lender Party shall be entitled to indemnification for
that portion, if any, of any liability or claim which is proximately caused by
its own individual gross negligence or willful misconduct, as determined in a
final judgment.

 

Section 2.14           LC Collateral.  (a) Intentionally Left Blank.

 

(b)           Acceleration of LC Obligations.  If
the Obligations or any part thereof become immediately due and payable pursuant
to Section 8.1 then, unless Required Lenders otherwise specifically elect
to the contrary (which election may thereafter be retracted by Required Lenders
at any time), all LC Obligations shall be deemed to become immediately due and
payable without regard to whether or not actual drawings or payments on the
Letters of Credit have occurred, and Borrower shall be obligated to pay to LC
Issuer immediately an amount equal to the aggregate LC Obligations which are
then outstanding, which amount shall be held by LC Issuer as security for LC
Obligations (the “LC Collateral”) and the other Obligations, and such LC Collateral
may be applied from time to time to any Matured LC Obligations or any other
Obligations which are due and payable.

 

(c)           Investment of LC Collateral. 
Pending application thereof, all LC Collateral shall be invested by the
Agent in such Investments as the Agent may choose in its sole discretion.  All interest on (and other proceeds of) such
Investments shall be reinvested or applied to Matured LC Obligations or other
Obligations which are due and payable. 
When all Obligations have been satisfied in full, including all LC
Obligations, all Letters of Credit have expired or been terminated, and all of
Borrower’s reimbursement obligations in connection therewith have been
satisfied in full or when the condition pursuant to which the LC Collateral was
required no longer exists, the Agent shall release any remaining LC
Collateral.  Borrower hereby assigns and
grants to the Agent a continuing security interest in all LC Collateral paid by
it to the Agent, all Investments purchased with such LC Collateral, and all
proceeds thereof to secure its Matured LC Obligations and its Obligations under
this Agreement, each Note, and the other Loan Documents, and Borrower agrees
that such LC Collateral, Investments and proceeds shall be subject to all
of the terms and conditions of the Security Documents.  Borrower further agrees that the Agent shall
have all of the rights and remedies of a secured party under the Uniform
Commercial Code as adopted in the State of Texas with respect to such security
interest and that an Event of Default under this Agreement shall constitute a
default for purposes of such security interest.

 

(d)           Payment of LC Collateral.  When
Borrower is required to provide LC Collateral for any reason and fails to do so
on the day when required, the Agent or LC Issuer may without notice to Borrower
or any other Restricted Person provide such LC Collateral (whether by
application of proceeds of other Collateral, by transfers from other accounts
maintained with the Agent or LC Issuer, or otherwise) using any available funds
of Borrower or any other Person also liable to make such payments.  Any such amounts which are required to be
provided as LC Collateral and which are not provided on the date required
shall, for purposes of each Security Document, be considered past due
Obligations owing hereunder, and LC Issuer is hereby authorized to exercise its
respective rights under each Security Document to obtain such amounts.

 

29

 

Section 2.15           Existing Letters of Credit.  On the effective date of this
Agreement, without further action by any party hereto, (x) the LC Issuer
shall be deemed to have granted to each Lender, and each Lender shall be deemed
to have acquired from the LC Issuer, a participation in each of the Existing
Letters of Credit equal to such Lender’s Percentage Share of (A) the
aggregate amount available to be drawn under such Existing Letters of Credit
and (B) the aggregate amount of any outstanding reimbursement obligations
in respect thereof.  With respect to each
of the Existing Letters of Credit (i) if the LC Issuer has heretofore sold
a participation therein to a Lender, the LC Issuer and such Lender agree that
such participation shall be automatically canceled on the effective date of
this Agreement and (ii) if the LC Issuer has heretofore sold a
participation therein to any bank or financial institution that is not a
Lender, then the LC Issuer shall procure the termination of such participation
on or prior to the effective date of this Agreement.  On and after the effective date of this
Agreement, each of the Existing Letters of Credit shall be a Letter of Credit
issued hereunder.

 

Section 2.16           Swingline Loans.           (a) Subject to the terms and conditions
hereof, upon the request of Borrower from time to time during the Commitment
Period, the Swingline Lender may, but will not be obligated to, make swingline
loans (the “Swingline Loans”) to Borrower; notwithstanding the fact that
such Swingline Loans, when aggregated with the Percentage Share of the
Revolving Loans and LC Obligations of the Lender acting as Swingline Lender,
may exceed such Lender’s Revolving Loan Commitment; provided,
however that the (y) aggregate principal amount of outstanding Swingline
Loans at any time outstanding shall not exceed $10,000,000, and (z) Swingline
Lender shall not be required to make a Swingline Loan to refinance an
outstanding Swingline Loan. 
Notwithstanding the foregoing, the aggregate outstanding combined
principal balance of the Revolving Loans and Swingline Loans outstanding at any
time together with all LC Obligations shall not exceed the Aggregate
Commitment.  Each Swingline Loan (i) shall
be a Base Rate Loan, (ii) shall be made in the minimum amount of
$100,000.00 and integral multiples thereof or in the amount of any unused
portion of the Aggregate Commitment, and (iii) may be repaid and, so long
as no Default or Event of Default exists hereunder, reborrowed, at the option
of the Borrower in accordance with the provisions hereof.  There shall be no further Borrowings under
Swingline Loans after the Maturity Date.

 

(b)           The Swingline Lender may by written notice given to
the Agent not later than 9:00 a.m. Houston, Texas time on any Business Day
require the Lenders to acquire participations on such Business Day in all or a
portion of the Swingline Loans outstanding. 
Such notice shall specify the aggregate amount of Swingline Loans in
which Lenders will participate.  Promptly
upon receipt of such notice, the Agent will give notice thereof to each Lender,
specifying in such notice such Lender’s Percentage Share of such Swingline Loan
or Loans.  Each Lender hereby absolutely
and unconditionally agrees, upon receipt of notice as provided above, to pay to
the Agent, for the account of the Swingline Lender, such Lender’s Percentage
Share of such Swingline Loan or Loans. 
Each Lender acknowledges and agrees that its obligation to acquire
participations in Swingline Loans pursuant to this paragraph is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including the occurrence and continuance of a Default, Event of Default or
reduction or termination of the Commitments, and that each such payment shall
be made without any offset, abatement, withholding or reduction whatsoever.  Each Lender shall comply with its obligation
under this paragraph by wire transfer of immediately available funds, in the
same manner as provided in Section 2.2 with respect to

 

30

 

Loans
made by such Lender (and Section 2.2 shall apply, mutatis mutandis, to the payment obligations of the
Lenders), and the Agent shall promptly pay to the Swingline Lender the amounts
so received by it from the Lenders.  The
Agent shall notify the Borrower of any participations in any Swingline Loan
acquired pursuant to this paragraph, and thereafter payments in respect of such
Swingline Loan shall be made to the Agent and not to the Swingline Lender.  Any amounts received by the Swingline Lender
from the Borrower (or other party on behalf of the Borrower) in respect of a
Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale
of participations therein shall be promptly remitted to the Agent; any such
amounts received by the Agent shall be promptly remitted by the Agent to the
Lenders that shall have made their payments pursuant to this paragraph and to
the Swingline Lender, as their interests may appear; provided
that any such payment so remitted shall be repaid to the Swingline Lender or to
the Agent, as applicable, if and to the extent such payment is required to be
refunded to the Borrower for any reason. 
The purchase of participations in a Swingline Loan pursuant to this
paragraph shall not relieve the Borrower of any default in the payment thereof.

 

(c)           Whenever the Borrower requests a Swingline Loan it
must deliver to Agent a Borrowing Notice as described in Section 2.2.

 

(d)           The Borrower’s obligation to repay the Swingline
Loans made by the Swingline Lender shall be evidenced by a revolving credit
promissory note duly executed and delivered by the Borrower to the Swingline
Lender substantially in the form of Exhibit 2.16 hereto (the “Swingline
Note”), and the Swingline Note shall (i) be payable to the order of the
Swingline Lender and be dated as of the Closing Date, (ii) be in a stated
principal amount equal to $10,000,000, (iii) prior to the Maturity Date,
be payable as provided herein and mature on the Maturity Date, (iv) bear
interest as provided in this Section 2.16 and (v) be entitled to the
benefits of this Agreement and the other Loan Documents.

 

(e)           All outstanding principal (and any accrued, unpaid
interest) of any Swingline Loan will be due and payable on the earliest of (i) the
Maturity Date, (ii) the first date after such Swingline Loan is made that is
the last day of a calendar month and is at least two Business Days after such
Swingline Loan is made, and (iii) the first date that a Revolving Loan is
made after the date of such Swingline Loan.

 

(f)            The unpaid principal amount of each Swingline Loan shall
bear interest at an annual rate equal to the Adjusted Base Rate in effect from
time to time.

 

(g)           The obligation of the Swingline Lender to make
Swingline Loans to the Borrower is subject to the same conditions precedent for
the making of Loans under Section 4.2.

 

Section 2.17           Increase of Commitments.  (a)  Subject to Section 2.17(b),
the Borrower may increase the Aggregate Commitment then in effect by entering
into an Incremental Commitment Agreement with one or more banks or financial
institutions (each an “Incremental Lender”), pursuant to which each such
Incremental Lender’s Revolving Loan Commitment shall be increased or, if such
Incremental Lender was not a Lender prior to entering such Incremental
Commitment Agreement, pursuant to which such Incremental Lender makes and is
allocated a Revolving Loan Commitment.

 

31

 

(b)           Any increase in the Aggregate Commitment pursuant to
this Section 2.17 will be subject to the satisfaction of the following
conditions:

 

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

 

(ii)           the Borrower and each Incremental Lender shall
have executed and delivered an Incremental Commitment Agreement and each
Incremental Lender, if not already a Lender, shall have delivered to the Agent
a completed administrative questionnaire;

 

(iii)                             the Agent shall have delivered its prior
written consent, which consent shall not be unreasonably withheld, to each such
Incremental Lender, unless such Incremental Lender is already a Lender or an
Affiliate of a Lender;

 

(iv)                            each such increase shall be at least
$5,000,000;

 

(v)                               the cumulative increase in Revolving Loan
Commitments pursuant to this Section 2.19 shall not exceed $50,000,000;

 

(vi)                            no event shall have occurred since December 31,
2009, with respect to Borrower and its Subsidiaries, taken as a whole, that has
resulted, or could reasonably be expected to result, in a Material Adverse
Change;

 

(vii)                         on the effective date of such increase, no
Eurodollar Loan shall be outstanding or if any Eurodollar Loans are
outstanding, then the effective date of such increase will be the last day of
the Interest Period in respect of such Eurodollar Loans unless the Borrower
pays compensation pursuant to Section 3.5;

 

(viii)                      the aggregate amount of the Lenders’ Revolving
Loan Commitments shall not exceed $175,000,000 without the approval of all
Lenders; and

 

(ix)                              the Agent shall have received such corporate
resolutions of the Borrower and legal opinions of counsel to the Borrower as
the Agent may reasonably request with respect thereto, in each case in form and
substance reasonably satisfactory to the Agent.

 

(c)           Upon the effectiveness of each Incremental
Commitment Agreement executed by an Incremental Lender, (i) such
Incremental Lender will become a Lender for all purposes and to the same extent
as if originally a party hereto and will be bound by and entitled to the
benefits of this Agreement, (ii) the Revolving Loan Commitments and
Aggregate Commitment will be deemed to include the new or increased Revolving
Loan Commitment of such Incremental Lender, and (iii) such Incremental
Lender shall purchase a pro rata portion of the outstanding Loans (and
participation interests in Letters of Credit) from each of the other Lenders
(and such Lenders hereby agree to sell and to take all such further action to
effectuate such sale) so that each Lender (including each Incremental Lender)
holds its Percentage Share of the Revolving Facility Usage.

 

(d)           Upon its receipt of a duly completed Incremental
Commitment Agreement, executed by the Borrower and each Incremental Lender
party thereto, and the administrative

 

32

 

questionnaire
referred to in Section 2.17(b)(ii), and subject to the satisfaction of the
other conditions of Section 2.17, the Agent shall accept such Incremental
Commitment Agreement and record the information contained therein in the
Register.  No increase in the aggregate
Revolving Loan Commitments will be effective for purposes of this Agreement
unless the relevant Incremental Commitment Agreement shall have been delivered
to the Agent.

 

Section 2.18           Defaulting Lenders.  Notwithstanding any provision of this
Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the
following provisions will apply for so long as that Lender is a Defaulting
Lender:

 

(a)           Such Defaulting Lender shall not be entitled
to fees that would otherwise have accrued during such period under Section 2.5(c),
and such fees shall cease to accrue during such period with respect to such
Defaulting Lender’s unused Revolving Loan Commitment;

 

(b)           the Revolving Loan Commitment and Percentage
Share of Revolving Facility Usage of the Defaulting Lender will not be included
in determining whether all Lenders or the Required Lenders have taken or may
take any action hereunder (including any consent to any amendment or waiver
pursuant to Section 10.1), and the definition of “Required Lenders” will
automatically be deemed modified accordingly for the duration of such period;
provided, that any such amendment, waiver, determination, consent, or
notification that would increase or extend the term of the Revolving Loan
Commitment of such Defaulting Lender, extend the date fixed for the payment of
principal or interest owing to such Defaulting Lender hereunder, reduce the
principal amount of any Obligation owing to such Defaulting Lender, reduce the
amount of or the rate or amount of interest on any amount owing to such
Defaulting Lender or of any fee payable to such Defaulting Lender hereunder, or
alter the terms of this proviso, will require the consent of the Defaulting
Lender.  If a Defaulting Lender’s consent
to an amendment, waiver, determination, consent, or notification is required
pursuant to this Section 2.18 or any other provision in the Loan
Documents, and such Defaulting Lender has failed to respond to a written
request from the Agent to approve such waiver, amendment, determination,
consent, or notification for 10 Business Days after such Defaulting Lender’s
receipt of such request, such Defaulting Lender will be deemed to have approved
such amendment, waiver, determination, consent, or notification;

 

(c)           if any Swingline Loan or LC Obligation exists
at the time a Lender becomes a Defaulting Lender then:

 

(i)            all or any part of such Swingline Loan or LC
Obligation will be reallocated among the non-Defaulting Lenders in accordance
with their respective Percentage Shares but only to the extent (x) the sum
of all non-Defaulting Lenders’ Percentage Shares of the Revolving Facility
Usage plus the portion of such Defaulting Lender’s Percentage Share of such
Swingline Loan or LC Obligation to be reallocated does not exceed the total of
all non-Defaulting Lenders’ Revolving Loan Commitments and (y) the
conditions set forth in Section 4.2 are satisfied at that time; and

 

(ii)           if the reallocation described in clause (i) above
cannot, or can only partially, be effected, the Borrower shall within one
Business Day following notice by the Agent (x) first, prepay such
Swingline Loans and (y) second, cash collateralize such

 

33

 

Defaulting Lender’s Percentage Share of the LC Obligations (after giving
effect to any partial reallocation pursuant to clause (i) above) in
accordance with the procedures set forth in Section 2.14 for so long as
such LC Obligation is outstanding ;

 

(iii)          if the Borrower cash collateralizes any
portion of such Defaulting Lender’s Percentage Share of the LC Obligations
pursuant to this Section 2.17(c), the Borrower shall not be required to
pay any fees to such Defaulting Lender or any other Person pursuant to Section 2.12
with respect to such cash collateralized portion of such Defaulting Lender’s
Percentage Share of the LC Obligations during the period those LC Obligations
are cash collateralized;

 

(iv)          if LC Obligations are allocated to
non-Defaulting Lenders pursuant to Section 2.18(c)(i), then the fees
payable to the Lenders pursuant to Section 2.12 will be adjusted to
reflect the non-Defaulting Lenders’ post-allocation Percentage Shares; or

 

(v)           if any portion of any Defaulting Lender’s
Percentage Share of the LC Obligations is neither cash collateralized pursuant
to Section 2.18(c)(ii) nor reallocated pursuant to Section 2.18(c)(i),
then, without prejudice to any rights or remedies of the LC Issuer or any
Lender hereunder, any letter of credit fees payable under Section 2.12(a) with
respect to such non-cash collateralized, unreallocated portion of such
Defaulting Lender’s Percentage Share of the LC Obligations will be payable to
the LC Issuer until such portion of such Defaulting Lender’s Percentage Share
of the LC Obligations is cash collateralized and/or reallocated or such
Defaulting Lender ceases to be a Defaulting Lender;

 

(d)           so long as any Lender is a Defaulting Lender, the
Swingline Lender will not be required to fund any Swingline Loan and the LC Issuer
will not be required to issue, amend or increase any Letter of Credit, unless
it is satisfied that the related exposure will be 100% covered by the Revolving
Loan Commitments of the non-Defaulting Lenders and/or cash collateral will be
provided by the Borrower in accordance with Section 2.18(c)(ii), and
participating interests in any such newly issued or increased Letter of Credit
or newly made Swingline Loan will be allocated among non-Defaulting Lenders in
a manner consistent with Section 2.18(c)(i) (and Defaulting Lenders
will not participate therein);

 

(e)           any amount payable to such Defaulting Lender
hereunder (whether on account of principal, interest, fees or otherwise and
including any amount that would otherwise be payable to such Defaulting Lender
pursuant to Section 9.6 but excluding Section 3.8) shall, in lieu of
being distributed to such Defaulting Lender, be retained by the Agent in a
segregated account and, subject to any applicable requirements of law, be
applied at such time or times as may be determined by the Agent (i) first,
to the payment of any amounts owing by such Defaulting Lender to the Agent
hereunder, (ii) second, pro rata, to
the payment of any amounts owing by such Defaulting Lender to the LC Issuer or
Swingline Lender hereunder, (iii) third, to the funding of any Loan or the
funding or cash collateralization of any participating interest in any
Swingline Loan or Letter of Credit in respect of which such Defaulting Lender
has failed to fund its portion as required by this Agreement, as determined by
the Agent, (iv) fourth, if so determined by the Agent and the Borrower,
held in such account as cash collateral for future funding obligations of the
Defaulting Lender under this Agreement, (v) fifth, pro rata,
to the

 

34

 

payment
of any amounts owing to the Borrower or the Lenders as a result of any judgment
of a court of competent jurisdiction obtained by the Borrower or any Lender
against such Defaulting Lender as a result of such Defaulting Lender’s breach
of its obligations under this Agreement and (vi) sixth, to such Defaulting
Lender or as otherwise directed by a court of competent jurisdiction; and

 

(f)            If there is not in existence a Default or Event of
Default the Borrower may terminate the unused amount of the Revolving Loan
Commitment of a Defaulting Lender upon not less than three Business Days’ prior
notice to the Agent (which will promptly notify the Lenders thereof); provided
that such termination shall not be deemed to be a waiver or release of any
claim the Borrower, the Agent, the LC Issuer, the Swingline Lender, or any
Lender may have against such Defaulting Lender.

 

ARTICLE III

PAYMENTS TO LENDERS

 

Section 3.1             General Procedures.  Borrower will make each payment
which it owes under the Loan Documents to Agent for the account of the Lender
Party to whom such payment is owed, in lawful money of the United States of
America, without set-off, deduction or counterclaim, and in immediately
available funds.  Each such payment must
be received by Agent not later than 11:00 a.m., Houston, Texas time, on
the date such payment becomes due and payable. 
Any payment received by Agent after such time will be deemed to have
been made on the next following Business Day. 
Should any such payment become due and payable on a day other than a
Business Day, the maturity of such payment shall be extended to the next
succeeding Business Day, and, in the case of a payment of principal or past due
interest, interest shall accrue and be payable thereon for the period of such
extension as provided in the Loan Document under which such payment is
due.  Each payment under a Loan Document
shall be due and payable at the place set forth for Agent on Schedule 3.1
hereto. When Agent collects or receives money on account of the Obligations,
Agent shall distribute all money so collected or received, and each Lender
Party shall apply all such money so distributed, as follows (except as
otherwise provided in Section 2.18(e) and Section 8.3):

 

(a)           first, for the payment of all Obligations which are
then due (and if such money is insufficient to pay all such Obligations, first
to any reimbursements due Agent under Section 6.9 or 10.4 and then to the
partial payment of all other Obligations then due in proportion to the amounts
thereof, or as Lender Parties shall otherwise agree);

 

(b)           then for the prepayment of amounts owing under the
Loan Documents (other than principal of the Loans) if so specified by Borrower;

 

(c)           then for the prepayment of principal of the Loans,
together with accrued and unpaid interest on the principal so prepaid; and

 

(d)           last, for the payment or prepayment of any other
Obligations.

 

All payments applied to principal or interest on any
Note shall be applied first to any interest then due and payable, then to
principal then due and payable, and last to any prepayment of

 

35

 

principal and interest in compliance with Sections 2.6
and 2.7.  Subject to Section 2.18(e),
all distributions of amounts described in any of subsections (b), (c) or (d) above
shall be made by Agent pro rata to each Lender Party then owed Obligations
described in such subsection in proportion to all amounts owed to all Lender
Parties which are described in such subsection; provided that if any Lender
then owes payments to LC Issuer for the purchase of a participation under Section 2.11(c) or
to Agent under Section 9.4, any amounts otherwise distributable under this
section to such Lender shall be deemed to belong to LC Issuer, or Agent,
respectively, to the extent of such unpaid payments, and Agent shall apply such
amounts to make such unpaid payments rather than distribute such amounts to
such Lender.

 

Section 3.2             Capital Reimbursement.  If either (a) the
introduction or implementation after the date hereof of or the compliance with
or any change after the date hereof in or in the interpretation of any Law
regarding capital adequacy, or (b) the introduction or implementation
after the date hereof of or the compliance with any request, directive or
guideline issued after the date hereof from any central bank or other
governmental authority (whether or not having the force of Law) regarding
capital requirements has or would have the effect of reducing the rate of
return on any Lender Party’s capital, or on the capital of any corporation
controlling such Lender Party, as a consequence of the Loans made, or Letters
of Credit issued, by such Lender Party, to a level below that which such Lender
Party or such corporation could have achieved but for such change (taking into
consideration such Lender Party’s policies and the policies of any such
corporation with respect to capital adequacy), then from time to time Borrower
will pay to Agent for the benefit of such Lender Party, within five (5) Business
Days of demand therefore by such Lender Party, such additional amount or
amounts which such Lender Party shall determine to be appropriate to compensate
such Lender Party for such reduction.

 

Section 3.3             Increased Cost of Eurodollar Loans or Letters
of Credit.  (a) If any change after the date hereof
in any applicable Law (whether now in effect or hereinafter enacted or
promulgated, including Regulation D) or any interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof (whether or not having the force of Law):

 

(i)            shall change the basis of taxation of payments
to any Lender Party of any principal, interest, or other amounts attributable
to any Eurodollar Loan or Letter of Credit or otherwise due under this
Agreement in respect of any Eurodollar Loan or Letter of Credit (other than
Reimbursable Taxes governed by Section 3.6 and taxes imposed on or
measured by its overall net income, and franchise taxes imposed on it (in lieu
of net income taxes), by the jurisdiction (or any political subdivision
thereof) under the Laws of which it is organized or otherwise resides for tax
purposes or maintains any Applicable Lending Office); or

 

(ii)           shall change, impose, modify, apply or deem
applicable any reserve, special deposit or similar requirements in respect of
any Eurodollar Loan made by any Lender Party or any Letter of Credit (excluding
any reserve requirement included in the computation of the Adjusted Eurodollar
Rate) or against assets of, deposits with or for the account of, or credit
extended by, such Lender Party; or

 

36

 

(iii)          shall impose on any Lender Party or the
interbank eurocurrency deposit market any condition affecting any Eurodollar
Loan or Letter of Credit,

 

the result of which is to increase the cost to any
Lender Party of agreeing to make or making, funding or maintaining Eurodollar
Loans or (as the case may be) issuing or participating in Letters of Credit, or
a reduction in the amount received or receivable by such Lender in connection
with any of the foregoing, then such Lender Party shall promptly notify Agent
and Borrower in writing of the happening of such event and of the amount
required to compensate such Lender Party for such additional costs or reduced
return (on an after-tax basis, taking into account any taxes on and deductions,
credits or other tax benefits in respect of such compensation), whereupon (i) Borrower
shall pay such amount to Agent for the account of such Lender Party and (ii) Borrower
may elect, by giving to Agent and such Lender Party not less than three
Business Days’ notice, to convert all (but not less than all) of any such
Eurodollar Loans of such Lender Party into Base Rate Loans.

 

(b)           A certificate of a Lender Party setting forth the
amount or amounts necessary to compensate such Lender Party or the corporation
controlling such Lender Party, as the case may be, as specified in Section 3.2
or this Section 3.3 shall be delivered to Borrower and shall be conclusive
absent manifest error.  Borrower shall
pay the applicable Lender Party the amount shown as due on any such certificate
within 3 Business Days after receipt thereof.

 

(c)           Failure or delay on the part of any Lender Party to
demand compensation pursuant to Section 3.2 or this Section 3.3 shall
not constitute a waiver of such Lender Party’s right to demand such
compensation.

 

Section 3.4             Illegality.  If any change after the date hereof in
applicable Laws, or in the interpretation or administration thereof of or in
any jurisdiction whatsoever, domestic or foreign, shall make it unlawful for
any Lender Party to fund or maintain Eurodollar Loans, then, upon notice by
such Lender Party to Borrower and Agent, (a) Borrower’s right to elect Eurodollar
Loans from such Lender Party shall be suspended to the extent and for the
duration of such illegality, (b) all Eurodollar Loans of such Lender Party
which are then the subject of any Borrowing Notice and which cannot be lawfully
funded shall be funded as Base Rate Loans of such Lender Party, and (c) all
Eurodollar Loans of such Lender Party shall be converted automatically to Base
Rate Loans on the respective last days of the then current Interest Periods
with respect to such Loans or within such earlier period as required by
Law.  If any such conversion of a
Eurodollar Loan occurs on a day which is not the last day of the then current
Interest Period with respect thereto, Borrower shall pay to such Lender Party
such amounts, if any, as may be required pursuant to Section 3.5.

 

Section 3.5             Funding Losses.  In addition to its other obligations
hereunder, Borrower will indemnify each Lender Party against, and reimburse
each Lender Party on demand for, any loss or expense incurred or sustained by
such Lender Party (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by a Lender
Party to fund or maintain Eurodollar Loans but excluding any loss of Base Rate
Margin or Eurodollar Margin), as a result of (a) any payment or prepayment
(whether authorized or required hereunder or otherwise) of all or a portion of
a Eurodollar Loan on a day other than the day on which the applicable Interest
Period ends, (b) any payment or prepayment, whether

 

37

 

required hereunder or
otherwise, of a Loan made after the delivery, but before the effective date, of
a Continuation/Conversion Notice requesting the continuation of outstanding
Eurodollar Loans as, or the conversion of outstanding Base Rate Loans to,
Eurodollar Loans, if such payment or prepayment prevents such
Continuation/Conversion Notice from becoming fully effective, (c) the
failure of any Loan to be made or of any Continuation/Conversion Notice requesting
the continuation of outstanding Eurodollar Loans as, or the conversion of
outstanding Base Rate Loans to, Eurodollar Loans to become effective due to any
condition precedent not being satisfied or due to any other action or inaction
of any Restricted Person, (d) any Conversion (whether authorized or
required hereunder or otherwise) of all or any portion of any Eurodollar Loan
into a Base Rate Loan or into a different Eurodollar Loan on a day other than
the day on which the applicable Interest Period ends, or (e) any
assignment of a Eurodollar Loan on a day other than the last day of the
Interest Period therefor as a result of a request by Borrower pursuant to Section 3.8(b).

 

Section 3.6             Reimbursable Taxes.  Borrower covenants and agrees
that:

 

(a)           Borrower will indemnify each Lender Party against
and reimburse each Lender Party for all present and future income, stamp and
other taxes, levies, costs and charges whatsoever imposed, assessed, levied or
collected on or in respect of this Agreement or any Eurodollar Loans or Letters
of Credit (whether or not legally or correctly imposed, assessed, levied or
collected), excluding, however, (i) taxes imposed on or measured by its
overall net income, and franchise taxes imposed on it (in lieu of net income
taxes), by the jurisdiction (or any political subdivision thereof) under the
Laws of which it is organized or otherwise resides for tax purposes or
maintains any Applicable Lending Office, (ii) with respect to each Lender
Party, taxes imposed by reason of any present or former connection between such
Lender Party and the jurisdiction imposing such taxes, other than solely as a
result of this Agreement or any Note or any transaction contemplated hereby,
and (iii) any United States withholding tax imposed on any payment by
Borrower pursuant to this Agreement or under any Eurodollar Loans or Letters of
Credit, but not excluding any portion of such tax that exceeds the United
States withholding tax which would have been imposed on such a payment to such
Lender Party under the laws and treaties in effect when such Lender Party first
becomes a party to this Agreement (all such non-excluded taxes, levies, costs
and charges being collectively called “Reimbursable Taxes”).  Such indemnification shall be on an after-tax
basis and, except as otherwise provided in Section 3.6(b), paid within 3
Business Days after a Lender Party makes demand therefor.

 

(b)           All payments on account of the principal of, and
interest on, each Lender Party’s Loans and Note, and all other amounts payable
by Borrower to any Lender Party hereunder, shall be made in full without
set-off or counterclaim and shall be made free and clear of and without
deductions or withholdings of any nature by reason of any Reimbursable Taxes,
all of which will be for the account of Borrower.  In the event of Borrower being compelled by
Law to make any such deduction or withholding from any payment to any Lender
Party, Borrower shall pay on the due date of such payment, by way of additional
interest, such additional amounts as are needed to cause the amount receivable
by such Lender Party after such deduction or withholding to equal the amount
which would have been receivable in the absence of such deduction or
withholding.  If Borrower should make any
deduction or withholding as aforesaid, Borrower shall within 60 days thereafter
forward to such Lender Party an official receipt or other official document
evidencing payment of such deduction or withholding.

 

38

 

(c)           If Borrower is ever required to pay any Reimbursable
Tax with respect to any Eurodollar Loan, Borrower may elect, by giving to Agent
and such Lender Party not less than three Business Days’ notice, to convert all
(but not less than all) of any such Eurodollar Loan into a Base Rate Loan, but
such election shall not diminish Borrower’s obligation to pay all Reimbursable
Taxes.

 

(d)           Notwithstanding the foregoing provisions of this
section, Borrower shall be entitled, to the extent it is required to do so by
Law, to deduct or withhold (and not to make any indemnification or
reimbursement for) income or other similar taxes imposed by the United States
of America from interest, fees or other amounts payable hereunder for the
account of any Lender Party, other than a Lender Party (i) who is a U.S.
person for Federal income tax purposes or (ii) who has the Prescribed
Forms on file with Agent (with copies provided to Borrower) for the applicable
year to the extent deduction or withholding of such taxes is not required as a
result of the filing of such Prescribed Forms, provided that if Borrower shall
so deduct or withhold any such taxes, it shall provide a statement to Agent and
such Lender Party, setting forth the amount of such taxes so deducted or
withheld, the applicable rate and any other information or documentation which
such Lender Party may reasonably request for assisting such Lender Party to
obtain any allowable credits or deductions for the taxes so deducted or
withheld in the jurisdiction or jurisdictions in which such Lender Party is
subject to tax.  As used in this section,
“Prescribed Forms” means such duly executed forms or statements, and in such
number of copies, which may, from time to time, be prescribed by Law and which,
pursuant to applicable provisions of (x) an income tax treaty between the
United States and the country of residence of the Lender Party providing the
forms or statements, (y) the Internal Revenue Code, or (z) any
applicable rules or regulations thereunder, permit Borrower to make
payments hereunder for the account of such Lender Party free of such deduction
or withholding of income or similar taxes.

 

Section 3.7             Alternative Rate of Interest.  If prior to the commencement of
any Interest Period for a Borrowing of Eurodollar Loans:

 

(a)           Agent determines that adequate and reasonable means
do not exist for ascertaining the Eurodollar Rate for such Interest Period (any
such determination shall be conclusive absent manifest error); or

 

(b)           Agent is advised by Required Lenders that the
Eurodollar Rate for such Interest Period will not adequately and fairly reflect
the cost to such Lenders of making or maintaining their Loans included in such
Borrowing for such Interest Period;

 

then Agent shall give notice thereof to Borrower and
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until Agent notifies Borrower and Lenders that the circumstances giving rise to
such notice no longer exist, (i) any Continuation/Conversion Notice that
requests the conversion of any Borrowing to, or continuation of any Borrowing
as, a Borrowing of Eurodollar Loans shall be ineffective and shall be deemed a
request to continue such Borrowing as a Borrowing of Base Rate Loans and (ii) if
any Borrowing Notice requests a Borrowing of Eurodollar Loans, such Borrowing
shall be made as a Borrowing of Base Rate Loans.  Upon receipt of such notice, Borrower may
revoke any pending request for a Borrowing of, conversion to or continuation of
Eurodollar Loans.

 

39

 

Section 3.8             Change of Applicable Lending Office;
Replacement of Lenders.

 

(a)           Each Lender Party agrees that, upon the occurrence
of any event giving rise to the operation of Sections 3.2, 3.3, 3.4 or 3.6 with
respect to such Lender Party, it will, if requested by Borrower, use reasonable
efforts (subject to overall policy considerations of such Lender Party) to
designate another Applicable Lending Office, provided that such designation is
made on such terms that such Lender Party and its Applicable Lending Office
suffer no economic, legal or regulatory disadvantage, with the object of
avoiding the consequence of the event giving rise to the operation of any such
section.  Nothing in this section shall
affect or postpone any of the obligations of Borrower or the rights of any
Lender Party provided in Sections 3.2, 3.3, 3.4, or 3.6.

 

(b)           If any Lender requests compensation under Section 3.2
or 3.3, or if Borrower is required to pay any additional amount to any Lender
Party or any governmental authority for the account of any Lender Party
pursuant to Section 3.6, or if the obligation of any Lender Party to make
or maintain Loans as, or convert Loans to, Eurodollar Loans is suspended
pursuant to Section 3.4, or if any Lender Party is a Defaulting Lender,
then Borrower may, at its sole expense and effort (such expense to include any
transfer fee payable to Agent under Section 10.5(c) and any expense
pursuant to Article III), upon notice to such Lender Party and Agent,
require such Lender Party to assign and delegate in whole (but not in part),
without recourse (in accordance with and subject to the restrictions contained
in Section 10.5), all its interests, rights and obligations under this
Agreement to an Eligible Transferee that shall assume such obligations (which Eligible
Transferee may be another Lender Party, if a Lender Party accepts such
assignment); provided that (i) Borrower shall have received the prior
written consent of Agent, which consent shall not unreasonably be withheld, (ii) such
Lender Party shall have received payment of an amount equal to the outstanding
principal of its Loans, accrued interest thereon, accrued fees and all other
amounts payable to it hereunder from Borrower or such Eligible Transferee
(including any amounts payable pursuant to Section 3.5), (iii) in the
case of any such assignment resulting from a claim for compensation under Section 3.2
or 3.3 or payments required to be made pursuant to Section 3.6, such
assignment will result in a reduction in such compensation or payments, and (iv) if
the Borrower elects to exercise such right with respect to any Lender Party,
that has made such a request under Section 3.2, 3.3, 3.4, or 3.6, it shall
be obligated to replace all Lender Parties that have made similar
requests.  A Lender Party shall not be
required to make any such assignment and delegation if, prior thereto, as a
result of a waiver by such Lender Party or otherwise, the circumstances
entitling Borrower to require such assignment and delegation cease to apply.  Any Lender Party being replaced shall execute
and deliver an Assignment and Acceptance with respect to such Lender Party’s
outstanding Loans and participations in LC Obligations.

 

ARTICLE IV

CONDITIONS PRECEDENT TO LENDING

 

Section 4.1             Documents to be Delivered.  No Lender has any obligation to
make its first Loan, and LC Issuer has no obligation to issue the first Letter
of Credit, unless Agent shall have received all of the following, at Agent’s
office in Houston, Texas, duly executed and

 

40

 

delivered and in form,
substance and date reasonably satisfactory to the Agent, the Lenders and their
counsel:

 

(a)           This Agreement.

 

(b)           Each Revolving Note and the Swingline Note.

 

(c)           A Guaranty executed by each Guarantor existing on
the date hereof.

 

(d)           Each Security Document listed on Schedule 4.1.

 

(e)           The following certificates of Borrower and, as
appropriate, the Subsidiaries:

 

(i)            An “Omnibus Certificate” of the Secretary or
Assistant Secretary of the Borrower and each Guarantor, which shall contain the
names and signatures of the officers of Borrower and each Guarantor authorized
to execute Loan Documents and which shall certify to the truth, correctness and
completeness of the following exhibits attached thereto:  (1) a copy of resolutions duly adopted
by the Board of Directors of Borrower and each Guarantor and in full force and
effect at the time this Agreement is entered into, authorizing the execution of
this Agreement and the other Loan Documents delivered or to be delivered in connection
herewith and the consummation of the transactions contemplated herein and
therein, (2) a copy of the charter documents of Borrower and each
Guarantor and all amendments thereto, certified by the appropriate official of
such party’s state of organization, and (3) a copy of the bylaws of
Borrower and each Guarantor; and

 

(ii)           A “Closing Certificate” of the chief financial
officer of Borrower, as of the Closing Date, certifying that (A) the
conditions set out in subsections (a), (b), (c), and (d) of Section 4.2
have been satisfied and (B) the Initial Financial Statements of Borrower
delivered to the Agent fairly present the Consolidated financial position for
the periods covered thereby, as of the date of such Initial Financial
Statements.

 

(f)            A certificate of existence and good standing for
Borrower issued by the Secretary of State of Delaware, a certificate of due
qualification to do business for the Borrower issued by the Secretary of State
of Texas, and a certificate of account status for the Borrower issued by the
Texas Comptroller of Public Accounts.

 

(g)           A favorable opinion of (i) Bracewell &
Giuliani LLP, counsel for Restricted Persons, in form and substance reasonably
satisfactory to the Agent; and (ii) Trent McKenna, in-house counsel for
Restricted Persons, in form and substance reasonably satisfactory to the Agent.

 

(h)           The Initial Financial Statements.

 

(i)            The certificate or certificates of insurance
required by Section 6.8.

 

(j)            Payment of all fees including all Commitment Fees,
upfront, Agent, and Lead Arranger fees required to be paid to any Lender or any
other Party pursuant to any Loan Documents.

 

41

 

(k)           Such other documents and instruments as the Agent
and its counsel may reasonably require.

 

Section 4.2             Additional Conditions Precedent.  No Lender has any obligation to
make any Loan (including its first), and LC Issuer has no obligation to issue
any Letter of Credit (including its first), unless the following conditions
precedent have been satisfied:

 

(a)           All representations and warranties made by any
Restricted Person in any Loan Document shall be true in all material respects
(or in all respects to the extent any such representation is qualified by a
materiality standard) on and as of the date of such Loan or the date of
issuance of such Letter of Credit as if such representations and warranties had
been made as of the date of such Loan or the date of issuance of such Letter of
Credit, except to the extent that such representation or warranty was made as
of a specific date or updated, modified or supplemented as of a subsequent date
with the consent of Required Lenders in which case that representation and
warranty will have been true and correct in all material respects (or in all
respects to the extent any such representation or warranty is qualified by a
materiality standard) as of that earlier date.

 

(b)           No Default shall exist at the date of such Loan or
the date of issuance of such Letter of Credit.

 

(c)           The making of such Loan or the issuance of such
Letter of Credit shall not be prohibited by any Law and shall not subject any
Lender or any LC Issuer to any penalty or other onerous condition under or
pursuant to any such Law.

 

(d)           No Material Adverse Change shall have occurred since
December 31, 2009.

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES

 

To confirm each Lender’s understanding concerning
Restricted Persons and Restricted Persons’ businesses, properties and
obligations and to induce each Lender to enter into this Agreement and to extend
credit hereunder, Borrower represents and warrants to each Lender that:

 

Section 5.1             No Default.  No event has occurred and is continuing which
constitutes a Default or an Event of Default.

 

Section 5.2             Organization and Good Standing.  Each Restricted Person is duly
organized, validly existing and in good standing under the Laws of its
jurisdiction of organization, having all powers required to carry on its
business and enter into and carry out the transactions contemplated hereby.  Each Restricted Person is duly qualified, in
good standing, and authorized to do business in all other jurisdictions within
the United States wherein the character of the properties owned or held by it
or the nature of the business transacted by it makes such qualification necessary,
except where the failure to so qualify or be authorized could not reasonably be
expected to result in a Material Adverse Change.  Each Restricted Person has taken all actions
and procedures customarily taken in order to enter, for the purpose of

 

42

 

conducting business or
owning property, each jurisdiction outside the United States wherein the
character of the properties owned or held by it or the nature of the business
transacted by it makes such actions and procedures desirable except where the
failure to take such actions and procedures could not reasonably be expected to
result in a Material Adverse Change.

 

Section 5.3             Authorization.  Each Restricted Person has the power and
authority to execute, deliver, and perform its respective obligations under
this Agreement and the other Loan Documents. Each Restricted Person has taken
all action necessary to authorize the execution and delivery by it of the Loan
Documents to which it is a party and to authorize the consummation of the
transactions contemplated thereby and the performance of its obligations
thereunder.  This Agreement and the other
Loan Documents have been duly executed and delivered by Borrower and each other
Restricted Person a party thereto. 
Borrower is duly authorized to borrow funds hereunder.

 

Section 5.4             No Conflicts or Consents.  The execution and delivery by
the various Restricted Persons of the Loan Documents to which each is a party,
the performance by each of its obligations under such Loan Documents, and the
consummation of the transactions contemplated by the various Loan Documents, do
not and will not (a) conflict with any provision of (i) any Law, (ii) the
organizational documents of any Restricted Person, or (iii) any material
agreement, judgment, license, order or permit applicable to or binding upon any
Restricted Person; (b) result in the acceleration of any Indebtedness owed
by any Restricted Person; or (c) result in or require the creation of any
Lien upon any assets or properties of any Restricted Person except as expressly
contemplated or permitted in the Loan Documents.  Except as expressly contemplated in the Loan
Documents, no permit, consent, approval, authorization or order of, and no
notice to or filing with, any Tribunal or third party is required in connection
with the execution, delivery or performance by any Restricted Person of any
Loan Document or to consummate any transactions contemplated by the Loan
Documents.

 

Section 5.5             Enforceable Obligations.  This Agreement is, and the
other Loan Documents when duly executed and delivered will be, legal, valid and
binding obligations of each Restricted Person which is a party hereto or
thereto, enforceable in accordance with their respective terms except as such
enforcement may be limited by bankruptcy, insolvency or similar Laws of general
application relating to the enforcement of creditors’ rights.

 

Section 5.6             Initial Financial Statements.  Restricted Persons have
heretofore delivered to each Lender true, correct and complete copies of the
Initial Financial Statements.  The
Initial Financial Statements fairly present Borrower’s Consolidated financial
position at the respective dates thereof and the Consolidated results of
Borrower’s operations and Borrower’s Consolidated cash flows for the respective
periods thereof.  Since December 31,
2009, no Material Adverse Change has occurred.

 

Section 5.7             Other Obligations and Restrictions.  As of the Closing Date, no
Restricted Person has any outstanding Liabilities of any kind which are, in the
aggregate, material to Borrower or material with respect to Borrower’s
Consolidated financial condition and not shown in the Initial Financial
Statements or disclosed in Section 5.7 of the Disclosure Schedule or
otherwise permitted under Section 7.1. 
Except as shown in the Initial Financial Statements or disclosed in Section 5.7
of the Disclosure Schedule, no Restricted Person is subject to or

 

43

 

restricted by any franchise,
contract, deed, charter restriction, or other instrument or restriction which
could reasonably be expected to cause a Material Adverse Change.

 

Section 5.8             Full Disclosure.  No certificate, written statement or other
written information delivered herewith or heretofore by any Restricted Person
to any Lender in connection with the negotiation of this Agreement or in
connection with any transaction contemplated hereby contains any untrue
statement of a material fact or omits to state any material fact known to any
Restricted Person (other than industry-wide risks normally associated with the
types of businesses conducted by Restricted Persons) necessary to make the
statements contained herein or therein, taken as a whole, not misleading as of
the date made or deemed made.  There is
no fact known to any Restricted Person that has not been disclosed to each
Lender in writing (including by delivery of the Initial Financial Statements
and the financial statements required under Section 6.2) which could
reasonably be expected to cause a Material Adverse Change.  There are no statements or conclusions in any
report delivered by any Restricted Person to the Lenders which are based upon
or include material misleading information or fail to take into account
material information regarding the matters reported therein.

 

Section 5.9             Litigation.  Except as disclosed in the Initial Financial
Statements or in Section 5.9 of the Disclosure Schedule:  (a) there are no actions, suits or
legal, equitable, arbitrative or administrative proceedings pending, or to the
knowledge of any Restricted Person threatened, against any Restricted Person or
affecting any Collateral (including any which challenge or otherwise pertain to
any Restricted Person’s title to any Collateral) before any Tribunal which
could reasonably be expected to cause a Material Adverse Change, and (b) there
are no outstanding judgments, injunctions, writs, rulings or orders by any such
Tribunal against any Restricted Person or, to the knowledge of Borrower, any
Restricted Person’s stockholders, partners, directors or officers, or affecting
any Collateral or any of its material assets or property which could reasonably
be expected to cause a Material Adverse Change.

 

Section 5.10           Labor Disputes and Acts of God.  Except as disclosed in Section 5.10
of the Disclosure Schedule, neither the business nor the properties of any
Restricted Person has been affected by any fire, explosion, accident, strike,
lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act
of God or of the public enemy or other casualty (whether or not covered by
insurance), which could reasonably be expected to cause a Material Adverse
Change.

 

Section 5.11           ERISA Plans and Liabilities.  All ERISA Plans in effect on
the Closing Date are listed in Section 5.11 of the Disclosure
Schedule.  Except as disclosed in the
Initial Financial Statements or in Section 5.11 of the Disclosure
Schedule, no Termination Event has occurred with respect to any ERISA Plan and all
ERISA Plans are in compliance with ERISA unless the aggregate effect of all
Termination Events and failures to comply with ERISA could not reasonably be
expected to cause a Material Adverse Change. 
Except as permitted under Section 7.10 hereof, no ERISA Affiliate
is required to contribute to, or has any other absolute or contingent liability
in respect of, any “multiemployer plan” as defined in Section 4001 of
ERISA.  Except as set forth in Section 5.11
of the Disclosure Schedule as of the Closing Date, the “minimum funding
standard” (as defined in Section 412(a) of the Internal Revenue Code)
with respect to every ERISA Plan, without taking into account any waiver by the
Secretary of the

 

44

 

Treasury or his delegate,
has been satisfied except as could not, individually or in the aggregate,
reasonably be expected to cause a Material Adverse Change.  The payment by a Restricted Person of the sum
of the contributions to each ERISA Plan that would be necessary for the “adjusted
funding target attainment percentage” (within the meaning of Section 436
of the Code) of each such ERISA Plan to equal 100 percent could not reasonably
be expected to cause a Material Adverse Change. 
Each representation with respect to a “multiemployer plan” is made to
the Borrower’s knowledge.

 

Section 5.12           Environmental and Other Laws.  Except as disclosed in Section 5.12
of the Disclosure Schedule: (a) Restricted Persons are conducting their
businesses in compliance with all applicable Laws, including Environmental
Laws, where the failure to so comply could reasonably be expected to cause a
Material Adverse Change, and have and are in compliance with all licenses and
permits required under any such Laws where the failure to so comply could
reasonably be expected to cause a Material Adverse Change; (b) none of the
operations or properties of any Restricted Person is the subject of federal,
state or local investigation evaluating whether any material remedial action is
needed to respond to a release of any Hazardous Materials into the environment
or to the improper storage or disposal (including storage or disposal at
offsite locations) of any Hazardous Materials which could reasonably be
expected to cause a Material Adverse Change; (c) no Restricted Person (and
to the best knowledge of Borrower, no other Person) has filed any notice under
any Law indicating that any Restricted Person is responsible for the improper
release into the environment, or the improper storage or disposal, of any
material amount of any Hazardous Materials or that any Hazardous Materials have
been improperly released, or are improperly stored or disposed of, upon any
property of any Restricted Person which could reasonably be expected to cause a
Material Adverse Change; (d) to the knowledge of Borrower, no Restricted
Person has transported or arranged for the transportation of any Hazardous
Material to any location which is (i) listed on the National Priorities
List under the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, listed for possible inclusion on such National
Priorities List by the Environmental Protection Agency in its Comprehensive
Environmental Response, Compensation and Liability Information System List, or listed
on any similar state list or (ii) the subject of federal, state or local
enforcement actions or other investigations, in the case of either of the
forgoing clauses (i) and (ii), which may lead to claims against any
Restricted Person for clean-up costs, remedial work, damages to natural
resources or for personal injury claims (whether under Environmental Laws or
otherwise) which could reasonably be expected to cause a Material Adverse
Change; and (e) no Restricted Person otherwise has any known material
contingent liability under any Environmental Laws or in connection with the
release into the environment, or the storage or disposal, of any Hazardous
Materials which could reasonably be expected to cause a Material Adverse
Change.  Each Restricted Person
undertook, at the time of its acquisition of each of its material properties,
all appropriate inquiry into the previous ownership and uses of the Property
and any potential environmental liabilities associated therewith.

 

Section 5.13           Names and Places of Business.  As of the Closing Date, no
Restricted Person has, during the preceding two (2) years, been known by,
or used any other trade or fictitious name, except as disclosed in Section 5.13
of the Disclosure Schedule.  Except as
otherwise indicated in Section 5.13 of the Disclosure Schedule, as of the
Closing Date, the chief executive office and principal place of business of
each Restricted Person are (and for the

 

45

 

preceding two (2) years
have been) located at the address of Borrower set out on Schedule 5.13.  Except as indicated in Section 5.13 of
the Disclosure Schedule otherwise disclosed in writing to Agent, no Restricted
Person has any other office or place of business.

 

Section 5.14           Subsidiaries.  Borrower does not presently have any
Subsidiary except those listed in Section 5.14 of the Disclosure Schedule
or disclosed to Agent in writing.  No
Restricted Person has any equity investments in any other Person except those
listed in Section 5.14 of the Disclosure Schedule or otherwise permitted
under this Agreement.  Borrower owns,
directly or indirectly, the equity interests in each of its Subsidiaries
indicated in Section 5.14 of the Disclosure Schedule or as disclosed to
Agent in writing.

 

Section 5.15           Government Regulation.  Neither Borrower nor any other
Restricted Person owing Obligations is an “investment company” or a company “controlled”
by an “investment company” within the meaning of the Investment Company Act of
1940, as amended.  The pledge of the
Equity of each Subsidiary of Borrower does not violate Regulation T, U, or X of
the Board of Governors of the Federal Reserve System.

 

Section 5.16           Insider.  No Restricted Person, nor, to the knowledge
of Borrower as of the Closing Date, any Person having “control” (as that term
is defined in 12 U.S.C. § 375b(9) or in regulations promulgated pursuant
thereto) of any Restricted Person, is a “director” or an “executive officer” or
“principal shareholder” (as those terms are defined in 12 U.S.C. § 375b(8) or
(9) or in regulations promulgated pursuant thereto) of any Lender, of a
bank holding company of which any Lender is a Subsidiary or of any Subsidiary
of a bank holding company of which any Lender is a Subsidiary.

 

Section 5.17           Solvency.  Upon giving effect to the issuance of the
Notes, the execution of the Loan Documents by Borrower and each Guarantor and
the consummation of the transactions contemplated hereby, Borrower and the
Guarantors, on a Consolidated basis, will be Solvent.  Neither Borrower nor any Restricted Person
has incurred (whether under the Loan Documents or otherwise), nor does any
Restricted Person intend to incur or believe that it will incur Liabilities
which will be beyond its ability to pay as such debts mature.

 

Section 5.18           Tax Shelter Regulations.  Borrower does not intend to
treat the Loans and/or Letters of Credit and related transactions as being a “reportable
transaction” (within the meaning of Treasury Regulation Section 1.6011-4).  In the event Borrower determines to take any
action inconsistent with such intention, it will promptly notify Agent
thereof.  If Borrower so notifies Agent,
Borrower acknowledges that one or more of the Lenders may treat its Loans
and/or Letters of Credit as part of a transaction that is subject to Treasury
Regulation Section 301.6112-1, and such Lender or Lenders, as applicable,
will maintain the lists and other records required by such Treasury Regulation.

 

Section 5.19           Title to Properties; Licenses.  Each Restricted Person has good
and defensible title to all of the Collateral and to all of its material
properties and assets, free and clear of all Liens, encumbrances, or adverse
claims other than Permitted Liens and free and clear of all impediments to the
use of such properties and assets in such Restricted Person’s business.  Each Restricted Person possesses all
licenses, permits, franchises, patents, copyrights, trademarks and trade names,
and other intellectual property (or otherwise possesses the right to

 

46

 

use such intellectual
property without violation of the rights of any other Person) which are
necessary to carry out its business as presently conducted and as presently
proposed to be conducted hereafter, except to the extent failure to possess
such licenses, permits, franchises, patents, copyrights, trademarks and trade
names, and other intellectual property could reasonably be expected to cause a
Material Adverse Change and no Restricted Person is in violation of the terms
under which it possesses such intellectual property or the right to use such
intellectual property, the violation of which could reasonably be expected to
cause a Material Adverse Change.

 

Section 5.20           Regulation U.
None of the Borrower and its Subsidiaries are engaged in the business of
extending credit for the purpose of purchasing or carrying Margin Stock, and no
proceeds of any Loans will be used for a purpose which violates Regulation U.

 

Section 5.21           Taxes.  Each Restricted Person has timely filed or
caused to be filed all material Tax returns and reports required to have been
filed and has paid or caused to be paid all Taxes required to have been paid by
it, except (i) Taxes that are being contested in good faith by appropriate
proceedings and for which such Restricted Person, as applicable, has set aside
on its books adequate reserves in accordance with GAAP and (ii) Taxes
which individually or in the aggregate do not exceed $3,000,000.

 

ARTICLE VI

AFFIRMATIVE COVENANTS OF BORROWER.

 

Borrower covenants and agrees that until the full and
final payment of the Obligations and the termination of this Agreement, unless
Required Lenders have previously agreed otherwise:

 

Section 6.1             Payment and Performance.  Borrower will cause each other
Restricted Person to observe, perform and comply with every term, covenant and
condition in any Loan Document.

 

Section 6.2             Books, Financial Statements and Reports.  Each Restricted Person will at
all times maintain full and accurate books of account and records.  Borrower will maintain and will cause its
Subsidiaries to maintain a standard system of accounting, will maintain its
Fiscal Year, and will furnish the following statements and reports to each
Lender Party at Borrower’s expense:

 

(a)           As soon as available, and in any event within one
hundred twenty (120) days after the end of each Fiscal Year, complete
Consolidated financial statements of Borrower together with all notes thereto,
prepared in reasonable detail in accordance with GAAP, together with an
unqualified opinion on the Consolidated Statements, based on an audit using
GAAP, by independent certified public accountants selected by Borrower of
nationally recognized standing, stating that such Consolidated financial
statements have been so prepared.  These
financial statements shall contain a Consolidated and consolidating balance
sheet as of the end of such Fiscal Year and Consolidated and consolidating
statements of income for such Fiscal Year and Consolidated statements of cash
flows and stockholders’ equity for such Fiscal Year, each setting forth in
comparative form the corresponding figures for the preceding Fiscal Year.

 

47

 

(b)           As soon as available, and in any event within
forty-five (45) days after the end of the first three Fiscal Quarters in each
Fiscal Year, Borrower’s unaudited Consolidated and consolidating balance sheet
and income statements as of the end of such Fiscal Quarter and Consolidated
statements of Borrower’s cash flows and stockholders’ equity for the period from
the beginning of the then current Fiscal Year to the end of such Fiscal
Quarter, all in reasonable detail and prepared in accordance with GAAP, subject
to changes resulting from normal year-end adjustments.  In addition Borrower will, together with each
such set of financial statements and each set of financial statements furnished
under subsection (a) of this section, furnish a certificate in the form of
Exhibit 6.2(b) signed by the chief financial officer of Borrower
stating that such financial statements are fair and complete in all material
respects and fairly present the Consolidated financial position of Borrower for
the periods covered thereby (subject to normal year-end adjustments), stating
that he has reviewed the Loan Documents, containing calculations showing
compliance (or non-compliance) at the end of such Fiscal Quarter with the
requirements of Section 7.11 and stating that no Default exists at the end
of such Fiscal Quarter or at the time of such certificate or specifying the
nature and period of existence of any such Default.

 

(c)           Promptly upon their becoming available, copies of
all financial statements, reports, notices and proxy statements sent by any
Restricted Person to its stockholders and all registration statements, periodic
reports and other statements and schedules filed by any Restricted Person with
any securities exchange, the Securities and Exchange Commission or any similar
governmental authority.

 

(d)           Each Restricted Person will cooperate with the Agent
in connection with the publication of certain materials and/or information
provided by or on behalf of each such Restricted Person to Agent and Lenders
(collectively, the “Information Materials”) pursuant to this Article 6 and
will, at the reasonable request of the Agent, designate Information Materials (i) that
are either available to the public or not material with respect to any
Restricted Person or any of their respective securities for purposes of United
States federal and state securities laws, as “Public Information” and (ii) that
are not Public Information as “Private Information.”  If any Information Materials are not labeled “Public
Information,” they shall be deemed to be labeled “Private Information”.

 

Section 6.3             Other Information and Inspections.  Each Restricted Person will
furnish to each Lender any information which Agent may from time to time
reasonably request concerning any provision of the Loan Documents, any
Collateral, or any matter in connection with Restricted Persons’ businesses,
properties, prospects, financial condition and operations, including all
evidence which Agent from time to time reasonably requests in writing as to the
accuracy and validity of or compliance with all representations, warranties and
covenants made by any Restricted Person in the Loan Documents, the satisfaction
of all conditions contained therein, and all other matters pertaining
thereto.  Each Restricted Person will
permit representatives appointed by Agent (including independent accountants,
auditors, Agents, attorneys, appraisers and any other Persons) to visit and
inspect during normal business hours any of such Restricted Person’s property,
including its books of account, other books and records, and any facilities or
other business assets, and to make extra copies therefrom and photocopies and
photographs thereof, and to write down and record any information such
representatives obtain, and each Restricted Person shall permit Agent or its
representatives to investigate and verify the accuracy of the information
furnished to Agent or any Lender in

 

48

 

connection with the Loan
Documents and to discuss all such matters with its officers, employees and
representatives.

 

Section 6.4             Notice of Material Events and Change of
Address.  Borrower
will, after it has knowledge thereof, promptly notify each Lender in writing,
stating that such notice is being given pursuant to this Agreement, of:

 

(a)           the occurrence of any Material Adverse Change,

 

(b)           the occurrence of any Default or Event of Default,

 

(c)           the acceleration of the maturity of any Indebtedness
owed by any Restricted Person or of any default by any Restricted Person under
any indenture, mortgage, agreement, contract or other instrument to which any
of them is a party or by which any of them or any of their properties is bound,
if such acceleration or default could reasonably be expected to cause a
Material Adverse Change,

 

(d)           the occurrence of any Termination Event,

 

(e)           any claim that is reasonably likely to result in
liability to the Borrower and its Subsidiaries of $5,000,000 or more, any
notice of potential liability under any Environmental Laws that is reasonably
likely to result in liability to the Borrower and its Subsidiaries of
$5,000,000 or more, or any other material adverse claim asserted against any
Restricted Person or with respect to any Restricted Person’s properties,

 

(f)            the filing of any suit or proceeding against any
Restricted Person in which an adverse decision could reasonably be expected to
cause a Material Adverse Change, and

 

(g)           the filing of any material financing statement,
registration of a pledge (such as with an issuer of uncertificated securities),
or other arrangement or action which would serve to perfect a Lien, in each
case other than in connection with a Permitted Lien, regardless of whether such
financing statement is filed, such registration is made, or such arrangement or
action is undertaken before or after such Lien exists.

 

Upon the occurrence of any of the foregoing Restricted
Persons will take all necessary or appropriate steps to promptly remedy any
such Material Adverse Change, Default, Event of Default, acceleration, default
or Termination Event, to protect against any such adverse claim, to defend any
such suit or proceeding, and to resolve all controversies on account of any of
the foregoing.  Borrower will also notify
Agent and Agent’s counsel in writing at least ten (10) Business Days prior
to the date that any Restricted Person changes its name or the location of its
chief executive office or its location under the Uniform Commercial Code.

 

Section 6.5             Maintenance of Properties.  Each Restricted Person will
maintain, preserve, protect, and keep all Collateral and all other material
property used or useful in the conduct of its business in good condition
(ordinary wear and tear excepted) in accordance with reasonably prudent
industry standards, and in compliance with all applicable Laws which could
reasonably be expected to cause a

 

49

 

Material Adverse Change, in
conformity with all applicable contracts, servitudes, leases and agreements
which could reasonably be expected to cause a Material Adverse Change, and will
from time to time make all commercially reasonable repairs, renewals and replacements
needed to enable the business and operations carried on in connection therewith
to be promptly and advantageously conducted at all times.

 

Section 6.6             Maintenance of Existence and Qualifications.  Except as permitted under Section 7.4,
each Restricted Person will maintain and preserve its existence and its rights
and franchises in full force and effect and will qualify to do business in all
states or jurisdictions where required by applicable Law, except where the
failure to maintain, preserve and qualify could reasonably be expected to cause
a Material Adverse Change.

 

Section 6.7             Payment of Taxes.  Each Restricted Person will (a) timely
file all material required tax returns including any material extensions; (b) timely
pay all taxes, assessments, and other governmental charges or levies imposed
upon it or upon its income, profits or property before the same become
delinquent; and (c) maintain appropriate accruals and reserves for all of
the foregoing in accordance with GAAP; except in the case of (b) such
taxes that individually or in the aggregate do not exceed $3,000,000.  Each Restricted Person may, however, delay
paying or discharging any of the foregoing so long as it is in good faith
contesting the validity thereof by appropriate proceedings, if necessary, and
has set aside on its books adequate reserves therefore which are required by
GAAP.

 

Section 6.8             Insurance.

 

(a)           Each Restricted Person shall at all times maintain
(at its own expense) insurance for its property and insurance with respect to
all Collateral and liability insurance, with financially sound and reputable
insurance companies, in such amounts and against such risks as is customary in
the industry for similarly situated businesses and properties.  All insurance policies covering Collateral
shall be endorsed (i) to provide for payment of losses to Agent as its
interests may appear and Borrower shall deliver a certificate to that effect, (ii) to
provide that such policies may not be canceled or reduced or affected in any
material manner for any reason without ten (10) days prior notice to Agent
from the insurer, (iii) to provide for any other matters specified in any
applicable Security Document or which Agent may reasonably require; and (iv) to
provide for insurance against fire, casualty and any other hazards normally
insured against, (less a reasonable deductible not to exceed amounts customary
in the industry for similarly situated businesses and properties) of the
property insured.

 

(b)           Each such policy shall (A) if such policy is
for liability insurance, name the appropriate Restricted Person and Agent, as
agent for the Lenders, as insured parties thereunder (without any
representation or warranty by or obligation upon Agent or Lenders) as their
interests may appear, (B) if such policy is for property insurance,
contain the agreement by the insurer that any loss thereunder shall be payable
to Agent notwithstanding any action, inaction or breach of representation or
warranty by any Restricted Person, and (C) provide that there shall be no
recourse against Agent or Lenders for payment of premiums or other amounts with
respect thereto.  Each Restricted Person
will, if so requested by Agent, deliver to Agent original or duplicate policies
of such insurance.  Agent is hereby
authorized to enforce payment under all such insurance policies and to
compromise and settle any claims thereunder, in its own name or in the name of
the Restricted Persons.

 

50

 

(c)           Any proceeds paid under any liability insurance
policy maintained by Restricted Persons pursuant to this Section 6.8 may
be paid directly to the Person who has incurred the liability covered by such
insurance.

 

(d)           Any proceeds paid under a property or casualty
insurance policy maintained by a Restricted Person pursuant to this Section 6.8
will be paid as follows:

 

(i)            If an Event of Default exists, then such
proceeds shall be paid to Agent;  and

 

(ii)           If an Event of Default does not exist and such
proceeds are less than $2,000,000, then such proceeds shall be paid to the
Borrower; and

 

(iii)          If an Event of Default does not exist and such
proceeds exceed $2,000,000, then the first $2,000,000 shall be paid to the
Borrower and the remainder of such proceeds shall be paid to Agent.

 

Agent shall release to
Borrower any funds delivered to it under clause (i) or (iii) above if
(i) Borrower delivers to Agent a request for such release within 365 days
of Agent’s receipt of such funds accompanied by a certificate of Borrower’s
chief financial officer stating (A) the purposes for which such funds will
be applied and that such purposes comply with clauses (b)(i) and (b)(ii) of
the definition of “Net Casualty Proceeds” or (B) that such funds are cash
insurance proceeds not in excess of $2,000,000 per incident (or series of
related incidents), and (ii) no Event of Default then exists.   If no such request is received by Agent
within 365 days of its receipt of such funds, then Agent shall apply such funds
to the prepayment of the Loans under Section 2.7(c).

 

(e)           If Agent receives proceeds of property or casualty
insurance required to be paid to Borrower under clause (d)(ii) or (d)(iii) above,
Agent shall promptly deliver to the Borrower such proceeds.  If Borrower receives proceeds of property or
casualty insurance required to be paid to Agent under clause (d)(i) or (d) (iii) above,
Borrower shall promptly deliver to Agent such proceeds.

 

Section 6.9             Performance on Borrower’s Behalf.  If any Restricted Person fails
to pay any taxes, insurance premiums, expenses, attorneys’ fees or other
amounts it is required to pay under any Loan Document, Agent may pay the
same.  Borrower shall immediately
reimburse Agent for any such payments and each amount paid by Agent shall
constitute an Obligation owed hereunder which is due and payable on the date
such amount is paid by Agent.

 

Section 6.10           Default Interest.  Borrower hereby promises to each Lender Party
to pay interest at the Default Rate on all Obligations (including Obligations
to pay fees or to reimburse or indemnify any Lender) which Borrower has in this
Agreement promised to pay to such Lender Party and which are not paid when due,
after the expiration of any grace period for such payment set forth in Section 8.1.  Such interest shall accrue from the
expiration of any such grace period until such Obligations are paid.

 

Section 6.11           Compliance with Law.  Each Restricted Person will conduct its
business and affairs in compliance with all Laws applicable thereto. Each
Restricted Person will cause all

 

51

 

licenses and permits
necessary or appropriate for the conduct of its business and the ownership and
operation of its property used and useful in the conduct of its business to be
at all times maintained in good standing and in full force and effect, except
as could not reasonably be expected to cause a Material Adverse Change.

 

Section 6.12           Environmental Matters; Environmental Reviews.

 

(a)           Each Restricted Person will comply with all
Environmental Laws now or hereafter applicable to such Restricted Person, as
well as all contractual obligations and agreements with respect to
environmental remediation or other environmental matters (except as could not
reasonably be expected to result in a Material Adverse Change), and shall
obtain, at or prior to the time required by applicable Environmental Laws, all
environmental, health and safety permits, licenses and other authorizations
necessary for its operations (except as could not reasonably be expected to
result in a Material Adverse Change) and will maintain such authorizations in
full force and effect (except as could not reasonably be expected to result in
a Material Adverse Change).  No
Restricted Person will do anything or permit anything to be done which will
subject any of its properties to any remedial obligations under, or result in
noncompliance with applicable permits and licenses issued under, any applicable
Environmental Laws, assuming disclosure to the applicable governmental
authorities of all relevant facts, conditions and circumstances (except as
could not reasonably be expected to result in a Material Adverse Change).

 

(b)           Borrower will promptly furnish to Agent copies of
all written notices of violation, orders, claims, citations, complaints,
penalty assessments, suits or other proceedings received by any Restricted
Person, or of which Borrower otherwise has notice, pending or threatened
against any Restricted Person by any governmental authority with respect to any
alleged violation of or non-compliance with any Environmental Laws or with
respect to any permits, licenses or authorizations in connection with any
Restricted Person’s ownership or use of its properties or the operation of its
business, in each case, that could reasonably be expected to result in a Material
Adverse Change.

 

(c)           Borrower will promptly furnish to Agent all written
requests for information, notices of claim, demand letters, and other written
notifications, received by Borrower in connection with any Restricted Person’s
ownership or use of its properties or the conduct of its business, relating to
potential responsibility with respect to any investigation or clean-up of
Hazardous Material at any location that could reasonably be expected to have a
Material Adverse Change.

 

Section 6.13           Further Assurances.  The Borrower shall, and shall cause each
other Restricted Person to, (i) promptly upon the reasonable request by
the Agent, correct any material defect or error that may be discovered in any
Loan Document or in the execution, acknowledgment, filing or recordation
thereof, and (ii) promptly upon request by the Agent, take such action as
the Agent may reasonably require from time to time in order to carry out more
effectively the purposes of the Loan Documents.

 

Section 6.14           Bank Accounts; Offset.  To secure the repayment of the
Obligations Borrower hereby grants to each Lender a security interest, a lien,
and a right of offset, each of

 

52

 

which shall be in addition
to all other interests, liens, and rights of any Lender at common law, under
the Loan Documents, or otherwise, and each of which shall be upon and against (a) any
and all moneys, securities or other property (and the proceeds therefrom) of
Borrower now or hereafter held or received by or in transit to any Lender from
or for the account of Borrower, whether for safekeeping, custody, pledge,
transmission, collection or otherwise, (b) any and all deposits (general
or special, time or demand, provisional or final) of Borrower with any Lender,
and (c) any other credits and claims of Borrower at any time existing
against any Lender, including claims under certificates of deposit.  At any time and from time to time after the
occurrence of any Event of Default, each Lender is hereby authorized to
foreclose upon, or to offset against the Obligations then due and payable (in
either case without notice to Borrower), any and all items hereinabove referred
to.  The remedies of foreclosure and
offset are separate and cumulative, and either may be exercised independently
of the other without regard to procedures or restrictions applicable to the
other.

 

Section 6.15           Guaranties of Borrower’s Subsidiaries.  Each Subsidiary created,
acquired or coming into existence after the date hereof, other than an Immaterial
Subsidiary, shall, promptly upon request by Agent, execute and deliver to Agent
an absolute and unconditional guaranty of the timely repayment of the
Obligations and the due and punctual performance of the obligations of Borrower
hereunder, which guaranty shall be reasonably satisfactory to Agent in form and
substance, except that a Foreign Subsidiary will not be required to provide
such a guaranty if the provision of such a guaranty would have a material
adverse tax consequence to the Borrower and its Subsidiaries taken as a
whole.  Borrower will cause each such
Subsidiary to deliver to Agent, simultaneously with its delivery of such a
guaranty, written evidence satisfactory to Agent and its counsel that such Subsidiary
has taken all corporate or partnership action necessary to duly approve and
authorize its execution, delivery and performance of such guaranty and any
other documents which it is required to execute.

 

Section 6.16           Agreement to Deliver Security Documents.  Borrower agrees to deliver and
to cause each Guarantor to deliver, to further secure the Obligations whenever
requested by Agent in its sole and absolute discretion, deeds of trust,
mortgages, chattel mortgages, security agreements, financing statements
continuation statements, extension agreements, acknowledgments, and other
Security Documents in form and substance satisfactory to Agent for the purpose
of granting, confirming, protecting and perfecting Liens or security interests
in any personal property now owned or hereafter acquired by Borrower or any
Guarantor.

 

ARTICLE VII

NEGATIVE COVENANTS OF BORROWER

 

To conform with the terms and conditions under which
each Lender is willing to have credit outstanding to Borrower, and to induce
each Lender to enter into this Agreement and make the Loans, Borrower warrants,
covenants and agrees that until the full and final payment of the Obligations
and the termination of this Agreement, unless Required Lenders have previously
agreed otherwise:

 

Section 7.1             Indebtedness.  No Restricted Person will in any manner owe
or be liable for Indebtedness except:

 

53

 

(a)           the Obligations;

 

(b)           unsecured Indebtedness
among Borrower and the Guarantors arising in the ordinary course of business;

 

(c)           purchase money
Indebtedness and Capital Lease Obligations in an aggregate principal amount not
to exceed $10,000,000 at any time, provided that the original principal amount
of any such Indebtedness shall not be in excess of the purchase price of the
assets acquired thereby and such Indebtedness shall be secured only by the
acquired assets;

 

(d)           Indebtedness existing
on the date hereof and listed on Schedule 7.1, and renewals and
extensions thereof;

 

(e)           Subordinated Debt
incurred in connection with Permitted Acquisitions having a maturity date
beyond the term of this Agreement;

 

(f)            Indebtedness in
respect of deferred software licensing fees in connection with Borrower or any
of its Subsidiaries licensing software in the ordinary course of business
consistent with past practices in a total amount not to exceed $2,000,000 in
the aggregate at any time outstanding;

 

(g)           unsecured Indebtedness
consisting of industrial revenue bonds in a total amount not to exceed $600,000
in the aggregate at any time outstanding;

 

(h)           unsecured Indebtedness
incurred in connection with Permitted Acquisitions in an aggregate amount not
to exceed $40,000,000 at any time outstanding;

 

(i)            Indebtedness of a
Person that becomes a Subsidiary of the Borrower (or is a Subsidiary of the
Borrower that survives a merger with that Person or any of its Subsidiaries)
and Indebtedness secured by assets that are acquired by the Borrower or any of
its Subsidiaries, in each case after the Closing Date as the result of a
Permitted Acquisition if (x) that Indebtedness existed at the time such
Person became a Subsidiary of the Borrower or at the time such assets were
acquired, as the case may be, and was not created in anticipation thereof, (y) that
Indebtedness is not guaranteed in any respect by the Borrower or any other
Subsidiary of the Borrower (other than a Subsidiary acquired as part of such
Permitted Acquisition that had guaranteed such Indebtedness prior to such
Permitted Acquisition, and (z) the aggregate principal amount of
Indebtedness outstanding under this Section 7.1(i) does not exceed
$15,000,000 at any time;

 

(j)            Attributable
Indebtedness in connection with Sale Leaseback Transactions solely related to
vehicles and real property, in an aggregate amount not to exceed $20,000,000;
and

 

(k)           any other unsecured
Indebtedness not to exceed $5,000,000 in the aggregate at any time outstanding.

 

Section 7.2             Limitation on Liens.  Except for Permitted Liens, no Restricted
Person will create, assume or permit to exist any Lien upon any of the
properties or assets which it now owns or hereafter acquires.

 

54

 

Section 7.3             Hedging Contracts.  No Restricted Person will be a party to or in
any manner be liable on any Hedging Contract except Hedging Contracts entered
into by a Restricted Person and the Agent or any other Lender with the purpose
and effect of fixing interest rates on a principal amount of indebtedness of
such Restricted Person that is accruing interest at a variable rate, provided
that (a) the aggregate notional amount of such contracts never exceeds
seventy-five percent (75%) of the anticipated outstanding principal balance of
the indebtedness to be hedged by such contracts or an average of such principal
balances calculated using a generally accepted method of matching interest swap
contracts to declining principal balances, and (b) the floating rate index
of each such contract generally matches the index used to determine the
floating rates of interest on the corresponding indebtedness to be hedged by
such contract.

 

Section 7.4             Limitation on Mergers, Issuances of Securities.  No Restricted Person will merge
or consolidate with or into any other Person, except that any Subsidiary of
Borrower may be merged into or consolidated with (a) another Subsidiary of
Borrower so long as, if a Guarantor is one of the merged entities, a Guarantor
is the surviving business entity, (b) Borrower, so long as Borrower is the
surviving business entity, and (c) any other Person in connection with a
sale of such Restricted Person’s Equity that is permitted by Section 7.5.  Borrower will not issue any equity securities
other than shares of its common or preferred stock and any options or warrants
giving the holders thereof only the right to acquire such shares.  No Subsidiary of Borrower will issue any
additional shares of its capital stock or other equity securities or any
options, warrants or other rights to acquire such additional shares or other
equity securities except to Borrower or another Subsidiary of Borrower and only
to the extent not otherwise forbidden under the terms hereof.  No Subsidiary of Borrower which is a
partnership will allow any diminution of Borrower’s interest (direct or
indirect) therein.

 

Section 7.5             Limitation on Sales of Property and Discounting of
Receivables.  No Restricted Person will sell, transfer,
lease, exchange, alienate or dispose of any of its material assets or
properties or any material interest therein, or discount, adjust, settle,
compromise, release, allow any credit against, sell, pledge or assign any notes
payable to it, accounts receivable or future income, except:

 

(a)           equipment which is worthless,
obsolete, no longer used by or useful to a Restricted Person or which is
replaced by equipment of equal suitability and value;

 

(b)           inventory which is
sold in the ordinary course of business;

 

(c)           customary credits and
discounts of accounts receivable (not including factoring or securitizations)
in the ordinary course of business;

 

(d)           other property which
is sold for fair consideration not in the aggregate in excess of $30,000,000 in
any Fiscal Year, the sale of which will not materially impair or diminish the
value of the Collateral or the Consolidated financial condition, business or
operations of Borrower; and

 

(e)           Sale Leaseback
Transactions relating to solely to vehicles or real property if the
Attributable Indebtedness of all Sale Leaseback Transactions then in effect is
less than $20,000,000.

 

55

 

Section 7.6             Limitation on Distributions and Subordinated Debt.

 

(a)           No Restricted Person
will declare or make any Distribution unless no Default or Event of Default
exists at the time of any such Distribution or would occur as a result thereof.

 

(b)           No Restricted Person
will make any payments on Subordinated Debt, unless no Default or Event of
Default exists at such time or would occur as a result thereof.

 

Section 7.7             Limitation on Investments, Acquisitions, Capital
Expenditures, and Lines of Business.  No Restricted Person will

 

(a)           make any Investments
other than Permitted Investments;

 

(b)           make any Capital
Expenditures in excess of the sum of (i) $40,000,000 in the aggregate in
any Fiscal Year plus (ii) the cash proceeds from the sale of Capital
Assets received in such Fiscal Year;

 

(c)           make any Acquisition
unless the following conditions are satisfied:

 

(i)            the
Acquisition is not hostile in nature;

 

(ii)           each
line of business to be acquired in the Acquisition is similar to a line of
business engaged in by the Borrower at the time of the Acquisition; and

 

(iii)          either
(A) the Borrower’s Total Leverage Ratio is less than or equal to 1.5 to
1.0 after giving pro forma effect to the
Acquisition or (B) the purchase price for the Acquisition is less than or
equal to $5,000,000 and the aggregate purchase price for the Acquisition and
all prior Acquisitions made during the 12 month period ending on the date of the
consummation of such Acquisition is less than or equal to $10,000,000; or

 

(d)           engage directly or
indirectly in any business or conduct any operations except in connection with
or incidental to its present businesses and operations.

 

Section 7.8             Intentionally Omitted.

 

Section 7.9             Transactions with Affiliates.  Neither Borrower nor any of its
Subsidiaries will engage in any material transaction with any of its Affiliates
on terms which are less favorable to it than those which would have been
obtainable at the time in arm’s-length dealing with Persons other than such
Affiliates, provided that such restriction shall not apply to transactions
among Borrower and its Subsidiaries.

 

Section 7.10           Prohibited Contracts.  Except as expressly provided for in the Loan
Documents, no Restricted Person will, directly or indirectly, enter into,
create, or otherwise allow to exist any contract that restricts, or other
consensual restriction on, the ability of any Subsidiary of Borrower to: (a) pay
dividends or make other Distributions to Borrower, (b) to redeem Equity
held in it by Borrower, (c) to repay loans and other Indebtedness owing by
it to Borrower, (d) to transfer any of its assets to Borrower, or (e) make
loans or advances to Borrower or any of its Subsidiaries.  No Restricted Person will enter, or permit the
entry by any Restricted Person into,

 

56

 

any contract, lease, or
amendment that releases, qualifies, limits, makes contingent or otherwise
materially detrimentally affects the rights and benefits of Agent or any Lender
under or acquired pursuant to any Security Documents.  No ERISA Affiliate will incur any obligation
with respect to any “multiemployer plan” as defined in Section 4001 of
ERISA, except an obligation pursuant to collective bargaining agreements to
make contributions in the ordinary course of business for employees subject to
such collective bargaining agreements.

 

Section 7.11           Financial Covenants.

 

(a)           Minimum Fixed
Charge Coverage Ratio.  The Borrower
will not permit the ratio, determined as of the end of each of its Fiscal
Quarters, for the then most-recently ended four Fiscal Quarters, of (i) its
Consolidated EBITDA, minus (A) Consolidated Capital Expenditures, (B) the
provision for income taxes (excluding one-time tax charges arising solely from
changes to GAAP), and (C) if Borrower’s Net Leverage Ratio is greater than
1.0 to 1.0, Distributions, all calculated on a Consolidated basis, to
(ii) its Consolidated Interest Expense, plus
scheduled principal payments of Indebtedness, to be less than 2.0 to 1.0.

 

(b)           Intentionally Left
Blank.

 

(c)           Consolidated Total
Indebtedness Ratio.  The Borrower
will not permit its Total Leverage Ratio, determined as of the end of each of
its Fiscal Quarters, for the then most-recently ended four Fiscal Quarters, to
be greater than 2.5 to 1.0.

 

Section 7.12           Limitation on Further Negative Pledges.  The Borrower shall not, and
shall cause each other Restricted Person not to, enter into any agreement
limiting its ability to create, incur, assume or suffer to exist any Lien upon
any of its property, assets or revenues, whether now owned or hereafter
acquired, except

 

(a)           pursuant to the Loan
Documents;

 

(b)           pursuant to any
agreement with any counterparty that has entered into an Intercreditor
Agreement;

 

(c)           pursuant to any other
agreement that does not restrict in any manner (directly or indirectly) Liens
created pursuant to the Loan Documents on property or assets of the Borrower or
any other Restricted Person (whether now owned or hereafter acquired) securing
the Loans or any Hedging Contract and does not require the direct or indirect
granting of any Lien securing any Indebtedness or other obligation by virtue of
the granting of Liens on or pledge of property of the Borrower of any other
Restricted Person to secure the Loans, any Hedging Contract or any other
Obligations;

 

(d)           prohibitions or
limitations contained in any industrial revenue or development bonds,
acquisition agreements, licenses, and leases of real property and equipment
entered into in the ordinary course of business that apply only to the property
that is the subject of those bonds, agreements, licenses or leases;

 

(e)           prohibitions or
limitations against other encumbrances on specific property encumbered to secure
payment of particular Indebtedness permitted under this Agreement; and

 

57

 

(f)            prohibitions or
limitations against encumbrances on specific property subject to a proposed
asset sale permitted hereunder contained in any document relating to that asset
sale.

 

(g)           prohibitions or
limitations in favor of any holder of Indebtedness permitted under 7.1(i),
solely to the extent any such negative pledge relates to property acquired as
part of the Permitted Acquisition pursuant to which the Borrower acquired the
obligor of such Indebtedness; and

 

(h)           prohibitions or
limitations against encumbrances on property (including equipment, but
excluding real property) (i) to be delivered by a Restricted Person to a
job site in the ordinary course of business, (ii) transferred in the
ordinary course of business to a Restricted Person as part of a transaction
pursuant to which such property will be transferred to the owner of such
project at or prior to the end of such job, or (iii) that otherwise
temporarily enters a Restricted Person’s custody in the ordinary course of
business.

 

ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES

 

Section 8.1             Events of Default.  Each of the following events constitutes an
Event of Default under this Agreement:

 

(a)           Any Restricted Person
fails to pay any principal component of any Obligation when due and payable;

 

(b)           Any Restricted Person
fails to pay any payment of interest or fees on the date which such payment is
due and such failure continues for a period of three (3) days;

 

(c)           Any Restricted Person
fails to pay any Obligation (other than the Obligations in subsections (a) and
(b) above) within three Business Days after the same becomes due and
payable, whether at a date for the payment of a fixed installment or as a
contingent or other payment becomes due and payable or as a result of
acceleration or otherwise;

 

(d)           Any “default” or “event
of default” occurs under any Loan Document which defines either such term, and
the same is not remedied within the applicable period of grace (if any)
provided in such Loan Document;

 

(e)           Any Restricted Person
fails to duly observe, perform or comply with any covenant, agreement or
provision of Article VII;

 

(f)            Any Restricted Person
fails (other than as referred to in subsections (a), (b), (c), (d) or (e) above)
to duly observe, perform or comply with any covenant, agreement, condition or
provision of any Loan Document, and such failure remains unremedied for a
period of thirty (30) days after notice of such failure is given by Agent to
Borrower;

 

(g)           Any representation or
warranty previously, presently or hereafter made in writing by or on behalf of
any Restricted Person in connection with any Loan Document shall prove to have
been false or incorrect in any material respect on any date on or as of which
made, or any

 

58

 

Loan
Document at any time ceases to be valid, binding and enforceable as warranted
in Section 5.5 for any reason other than its release or subordination by
Agent;

 

(h)           Any Restricted Person (i) fails
to pay any portion, when such portion is due, of any of its Indebtedness in
excess of $10,000,000, or (ii) breaches or defaults in the performance of
any agreement or instrument by which any such Indebtedness is issued,
evidenced, governed, or secured, and any such failure, breach or default
continues beyond any applicable period of grace provided therefor;

 

(i)            Either (i) any
ERISA Affiliate fails to satisfy the “minimum funding standard” (as defined in Section 412(a) of
the Internal Revenue Code), without taking into account any waiver by the
Secretary of the Treasury or his delegate, with respect to any ERISA Plan, and
the aggregate amount necessary to cure all such failures exceeds $10,000,000,
or (ii) the occurrence of a Termination Event with respect to any ERISA
Plan, that, when taken together with all other Termination Events that have
occurred and are continuing, could reasonably be expected to subject to any
Restricted Person to liability individually or in the aggregate in excess of
$10,000,000, or (iii) the payment by a Restricted Person of the sum of the
contributions to each ERISA Plan that would be necessary for the “adjusted
funding target attainment percentage” (within the meaning of Section 436
of the Code) of each such ERISA Plan to equal 100 percent could reasonably be
expected to cause a Material Adverse Change.

 

(j)            Any Restricted
Person:

 

(i)            suffers
the entry against it of a judgment, decree or order for relief by a Tribunal of
competent jurisdiction in an involuntary proceeding commenced under any
applicable bankruptcy, insolvency or other similar Law of any jurisdiction now
or hereafter in effect, including the federal Bankruptcy Code, as from time to
time amended, or has any such proceeding commenced against it which remains
undismissed for a period of sixty (60) days; or

 

(ii)           commences
a voluntary case under any applicable bankruptcy, insolvency or similar Law now
or hereafter in effect, including the federal Bankruptcy Code, as from time to
time amended; or applies for or consents to the entry of an order for relief in
an involuntary case under any such Law; or makes a general assignment for the
benefit of creditors; or fails generally to pay (or admits in writing its
inability to pay) its debts as such debts become due; or takes corporate or
other action to authorize any of the foregoing; or

 

(iii)          suffers
the appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of all or a substantial
part of its assets or of any part of the Collateral in a proceeding brought
against or initiated by it, and such appointment or taking possession is
neither made ineffective nor discharged within sixty (60) days after the making
thereof, or such appointment or taking possession is at any time consented to,
requested by, or acquiesced to by it; or

 

(iv)          suffers
the entry against it of a final judgment for the payment of money in excess of
$10,000,000 (not covered by insurance satisfactory to Agent in its reasonable

 

59

 

discretion), unless the same is discharged within forty-five (45) days
after the date of entry thereof or an appeal or appropriate proceeding for
review thereof is taken within such period and a stay of execution pending such
appeal is obtained; or

 

(v)           suffers
a writ or warrant of attachment or any similar process to be issued by any
Tribunal against all or any substantial part of its assets or any part of the
Collateral, and such writ or warrant of attachment or any similar process is
not stayed or released within forty-five (45) days after the entry or levy
thereof or after any stay is vacated or set aside;

 

(k)           Any Change of Control
occurs;

 

(l)            The occurrence of an
event of default under any document to which any Restricted Person and any
surety are both parties that, with the passage of time, would permit
foreclosure by such surety on a material portion of the Collateral.

 

Upon the occurrence of an Event of Default described
in subsection (j)(i), (j)(ii) or (j)(iii) of this section with
respect to Borrower, all of the Obligations shall thereupon be immediately due
and payable, without demand, presentment, notice of demand or of dishonor and
nonpayment, protest, notice of protest, notice of intention to accelerate,
declaration or notice of acceleration, or any other notice or declaration of
any kind, all of which are hereby expressly waived by Borrower and each
Restricted Person who at any time ratifies or approves this Agreement.  Upon any such acceleration, any obligation of
any Lender and any obligation of LC Issuer to issue Letters of Credit hereunder
to make any further Loans shall be permanently terminated.  During the continuance of any other Event of
Default, Agent at any time and from time to time may (and upon written
instructions from Required Lenders, Agent shall), without notice to Borrower or
any other Restricted Person, do either or both of the following:  (1) terminate any obligation of Lenders
to make Loans hereunder, and any obligation of LC Issuer to issue Letters of
Credit hereunder, and (2) declare any or all of the Obligations
immediately due and payable, and all such Obligations shall thereupon be
immediately due and payable, without demand, presentment, notice of demand or
of dishonor and nonpayment, protest, notice of protest, notice of intention to
accelerate, declaration or notice of acceleration, or any other notice or
declaration of any kind, all of which are hereby expressly waived by Borrower
and each Restricted Person who at any time ratifies or approves this Agreement.

 

Section 8.2             Remedies.  If any Event of Default shall occur and be
continuing, each Lender Party may terminate its Revolving Loan Commitment and
protect and enforce its rights under the Loan Documents by any appropriate
proceedings, including proceedings for specific performance of any covenant or
agreement contained in any Loan Document, and each Lender Party may enforce the
payment of any Obligations due it or enforce any other legal or equitable right
which it may have.  All rights, remedies
and powers conferred upon Lender Parties under the Loan Documents shall be
deemed cumulative and not exclusive of any other rights, remedies or powers
available under the Loan Documents or at Law or in equity.  Notwithstanding the foregoing, the right to
credit bid the Obligations in connection with any foreclosure sale or sale in a
bankruptcy proceeding may only be exercised by the Administrative Agent acting
at the direction of the Required Lenders unless the Required Lenders agree that
a Lender may credit bid its Obligations in connection with such a sale.

 

60

 

Section 8.3             Application of Proceeds after Acceleration.  Except as otherwise provided in
the Security Documents with respect to application of proceeds to any
reimbursements due Agent thereunder and to the Lender Hedging Obligations, if
Agent collects or receives money on account of the Obligations after the
acceleration of the Obligations as provided in Section 8.1, Agent shall
distribute all money so collected or received:

 

(a)           First, to any
reimbursements due Agent hereunder;

 

(b)           Second, ratably to
payment of that portion of Obligations constituting accrued and unpaid interest
and Lender Hedging Obligations; provided that Agent shall have no independent
responsibility to determine the existence or amount of Lender Hedging
Obligations and may reserve from the application of amounts under this Section amounts
distributable in respect of Lender Hedging Obligations until it has received
evidence satisfactory to it of the existence and amount of such Lender Hedging
Obligations; provided further, however, that Agent may rely on statements of
the Lender Parties as to the existence and amounts of Lender Hedging
Obligations owing to them;

 

(c)           Third, ratably to the
payment or cash-collateralization of all other Obligations of the Borrower or
any Guarantor owing under or in respect of the Loan Documents that are due and
payable on such date (and among such Obligations in the manner provided in Section 3.1);
and

 

(d)           The balance, if any,
after all of the Obligations have been indefeasibly paid in full, to the
Borrower or as otherwise required by Law.

 

61

 

ARTICLE IX

AGENT

 

Section 9.1             Appointment and Authority.  Each Lender Party hereby
irrevocably authorizes Agent, and Agent hereby undertakes, to receive payments
of principal, interest and other amounts due hereunder as specified herein and
to take all other actions and to exercise such powers under the Loan Documents
as are specifically delegated to Agent by the terms hereof or thereof, together
with all other powers reasonably incidental thereto.  The relationship of Agent to the other Lender
Parties is only that of one commercial lender acting as Agent for others, and
nothing in the Loan Documents shall be construed to constitute Agent a trustee
or other fiduciary for any Lender Party or any holder of any participation in a
Note nor to impose on Agent duties and obligations other than those expressly
provided for in the Loan Documents.  With
respect to any matters not expressly provided for in the Loan Documents and any
matters which the Loan Documents place within the discretion of Agent, Agent shall
not be required to exercise any discretion or take any action, and it may
request instructions from Lenders with respect to any such matter, in which
case it shall be required to act or to refrain from acting (and shall be fully
protected and free from liability to all Lender Parties in so acting or
refraining from acting) upon the instructions of Required Lenders (including
itself), provided, however, that Agent shall not be required to take any action
which exposes it to a risk of personal liability that it considers unreasonable
or which is contrary to the Loan Documents or to applicable Law.

 

Section 9.2             Exculpation, Agent’s Reliance, Etc.  Neither Agent nor any of its
directors, officers, Agents, attorneys, or employees shall be liable for any
action taken or omitted to be taken by any of them under or in connection with
the Loan Documents, including their negligence of any kind, except that each
shall be liable for its own gross negligence or willful misconduct.  Without limiting the generality of the
foregoing, Agent (a) may treat the Person whose name is set forth on the
Register as the holder of any Obligation as the holder thereof until Agent
receives written notice of the assignment or transfer thereof in accordance
with this Agreement, signed by such Person and in the form required under Section 10.5(c) and
in form satisfactory to Agent; (b) may consult with legal counsel
(including counsel for Borrower), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any
other Lender and shall not be responsible to any other Lender Party for any statements,
warranties or representations made in or in connection with the Loan Documents;
(d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of the
Loan Documents on the part of any Restricted Person or to inspect the property
(including the books and records) of any Restricted Person; (e) shall not
be responsible to any other Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of any Loan Document or any
instrument or document furnished in connection therewith; (f) may rely
upon the representations and warranties of each Restricted Person or Lender
Party in exercising its powers hereunder; and (g) shall incur no liability
under or in respect of the Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (including any facsimile, telegram,
cable or telex) believed by it to be genuine and signed or sent by the proper
Person or Persons.

 

62

 

Section 9.3             Credit Decisions.  Each Lender Party acknowledges that it has,
independently and without reliance upon any other Lender Party, made its own
analysis of Borrower and the transactions contemplated hereby and its own
independent decision to enter into this Agreement and the other Loan
Documents.  Each Lender Party also
acknowledges that it will, independently and without reliance upon any other
Lender Party and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents.

 

Section 9.4             Indemnification.  Each Lender agrees to indemnify Agent (to the
extent not reimbursed by Borrower within ten (10) days after demand) from
and against such Lender’s Percentage Share of any and all liabilities,
obligations, claims, losses, damages, penalties, fines, actions, judgments,
suits, settlements, costs, expenses or disbursements (including reasonable fees
of attorneys, accountants, experts and advisors) of any kind or nature
whatsoever (in this section collectively called “liabilities and costs”) which
to any extent (in whole or in part) may be imposed on, incurred by, or asserted
against Agent growing out of, resulting from or in any other way associated
with any of the Collateral, the Loan Documents and the transactions and events
(including the enforcement thereof) at any time associated therewith or
contemplated therein (whether arising in contract or in tort and otherwise and
including any violation or noncompliance with any Environmental Laws by any
Person or any liabilities or duties of any Person with respect to Hazardous
Materials found in or released into the environment).

 

THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH
LIABILITIES AND COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN
PART, UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY, OR ARE CAUSED, IN
WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY AGENT,

 

provided only that no Lender shall be obligated under
this section to indemnify Agent for that portion, if any, of any liabilities
and costs which is proximately caused by Agent’s own individual gross
negligence or willful misconduct, as determined by a court of competent
jurisdiction in a final and nonappealable judgment.  Cumulative of the foregoing, each Lender
agrees to reimburse Agent promptly upon demand for such Lender’s Percentage
Share of any costs and expenses to be paid to Agent by Borrower under Section 10.4(a) to
the extent that Agent is not timely reimbursed for such expenses by Borrower as
provided in such section.  As used in
this section the term “Agent” shall refer not only to the Person designated as
such in Section 1.1 but also to each director, officer, Agent, attorney,
employee, representative and Affiliate of such Person.

 

Section 9.5             Rights as Lender.  In its capacity as a Lender, Agent shall have
the same rights and obligations as any Lender and may exercise such rights as
though it were not Agent.  Agent may
accept deposits from, lend money to, act as trustee under indentures of, and
generally engage in any kind of business with any Restricted Person or their
Affiliates, all as if it were not Agent hereunder and without any duty to
account therefor to any other Lender.

 

Section 9.6             Sharing of Set-Offs and Other Payments.  Each Lender Party agrees that
if it shall, whether through the exercise of rights under Security Documents or
rights of banker’s lien, set off, or counterclaim against Borrower or
otherwise, obtain payment of a portion of the

 

63

 

aggregate Obligations owed
to it which, taking into account all distributions made by Agent under Section 3.1,
causes such Lender Party to have received more than it would have received had
such payment been received by Agent and distributed pursuant to Section 3.1,
then (a) it shall be deemed to have simultaneously purchased and shall be
obligated to purchase interests in the Obligations as necessary to cause all
Lender Parties to share all payments as provided for in Section 3.1, and (b) such
other adjustments shall be made from time to time as shall be equitable to
ensure that Agent and all Lender Parties share all payments of Obligations as
provided in Section 3.1; provided, however, that nothing herein contained
shall in any way affect the right of any Lender Party to obtain payment
(whether by exercise of rights of banker’s lien, set-off or counterclaim or
otherwise) of indebtedness other than the Obligations.  Borrower expressly consents to the foregoing
arrangements and agrees that any holder of any such interest or other
participation in the Obligations, whether or not acquired pursuant to the
foregoing arrangements, may to the fullest extent permitted by Law exercise any
and all rights of banker’s lien, set-off, or counterclaim as fully as if such holder
were a holder of the Obligations in the amount of such interest or other
participation.  If all or any part of any
funds transferred pursuant to this section is thereafter recovered from the
seller under this section which received the same, the purchase provided for in
this section shall be deemed to have been rescinded to the extent of such
recovery, together with interest, if any, if interest is required pursuant to
the order of a Tribunal order to be paid on account of the possession of such
funds prior to such recovery.

 

Section 9.7             Investments.  Whenever Agent in good faith determines that
it is uncertain about how to distribute to Lender Parties any funds which it
has received, or whenever Agent in good faith determines that there is any
dispute among Lender Parties about how such funds should be distributed, Agent
may choose to defer distribution of the funds which are the subject of such
uncertainty or dispute.  If Agent in good
faith believes that the uncertainty or dispute will not be promptly resolved,
or if Agent is otherwise required to invest funds pending distribution to
Lender Parties, Agent shall invest such funds pending distribution; all
interest on any such Investment shall be distributed upon the distribution of
such Investment and in the same proportion and to the same Persons as such
Investment.  All monies received by Agent
for distribution to Lender Parties (other than to the Person who is Agent in
its separate capacity as a Lender Party) shall be held by Agent pending such
distribution solely as Agent for such Lender Parties, and Agent shall have no
equitable title to any portion thereof.

 

Section 9.8             Benefit of Article IX.  The provisions of this Article (other
than the following Section 9.9) are intended solely for the benefit of
Lender Parties, and no Restricted Person shall be entitled to rely on any such
provision or assert any such provision in a claim or defense against any
Lender.  Lender Parties may waive or
amend such provisions as they desire without any notice to or consent of
Borrower or any Restricted Person.

 

Section 9.9             Resignation.  Agent may resign at any time by giving
written notice thereof to Lenders and Borrower. 
Each such notice shall set forth the date of such resignation.  Upon any such resignation, Required Lenders
shall have the right to appoint (with, unless an Event of Default shall have
occurred and be continuing, the consent of Borrower, such consent not to be
unreasonably withheld or delayed) a successor Agent.  A successor must be appointed for any retiring
Agent, and such Agent’s resignation shall become effective when such successor
accepts such appointment.  If, within
thirty days after the date of the retiring Agent’s resignation, no successor
Agent has been appointed and has accepted such appointment, then the retiring

 

64

 

Agent may appoint (with,
unless an Event of Default shall have occurred and be continuing, the consent
of Borrower, such consent not to be unreasonably withheld or delayed) a
successor Agent, which shall be a commercial bank organized or licensed to
conduct a banking or trust business under the Laws of the United States of
America or of any state thereof.  Upon
the acceptance of any appointment as Agent hereunder by a successor Agent, the
retiring Agent shall be discharged from its duties and obligations under this
Agreement and the other Loan Documents. 
After any retiring Agent’s resignation hereunder the provisions of this Article IX
shall continue to inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under the Loan Documents.

 

Section 9.10           Notice of Default.  Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default, except with respect to defaults in
the payment of principal, interest and fees required to be paid to Agent for
the account of Lenders, unless Agent shall have received written notice from a
Lender or Borrower referring to this Agreement, describing such Default and
stating that such notice is a “notice of default.”  Agent will notify Lenders of its receipt of
any such notice.  Agent shall take such
action with respect to such Default as may be directed by Required Lenders in
accordance with Article VIII; provided, however, that unless and until
Agent has received any such direction, Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to such
Default as it shall deem advisable or in the best interest of Lenders.

 

Section 9.11           Co-Agents.  The Parties identified on the facing page of
this Agreement as “Lead Arranger,” “Syndication Agent” or “Documentation Agent”
have no right, power, obligation, liability, responsibility, or duty under the
Loan Documents in such capacity.  Without
limiting the foregoing, each Party so identified as “Lead Arranger,” “Syndication
Agent” or “Documentation Agent” shall not have and shall not be deemed to have
any fiduciary relationship with any other Lender.  Each Lender acknowledges that it has not
relied, and will not rely, on taking or not taking action hereunder.

 

ARTICLE X

MISCELLANEOUS

 

Section 10.1           Waivers and Amendments; Acknowledgments.

 

(a)           Waivers and
Amendments.  No failure or delay
(whether by course of conduct or otherwise) by any Lender in exercising any
right, power or remedy which such Lender Party may have under any of the Loan
Documents shall operate as a waiver thereof or of any other right, power or
remedy, nor shall any single or partial exercise by any Lender Party of any
such right, power or remedy preclude any other or further exercise thereof or
of any other right, power or remedy.  No
waiver of any provision of any Loan Document and no consent to any departure
therefrom shall ever be effective unless it is in writing and signed as
provided below in this section, and then such waiver or consent shall be
effective only in the specific instances and for the purposes for which given
and to the extent specified in such writing. 
No notice to or demand on any Restricted Person shall in any case of
itself entitle any Restricted Person to any other or further notice or demand
in similar or other circumstances.  No
waiver, consent, release, modification or amendment of or supplement to this
Agreement or the other Loan Documents

 

65

 

shall
be valid or effective against any party hereto unless the same is in writing
and signed by (i) if such party is Borrower, by Borrower, (ii) if
such party is Agent or LC Issuer, by such party, and (iii) if such party
is a Lender, subject to Section 2.18, by such Lender or by Agent on behalf
of Lenders with the written consent of Required Lenders (which consent has
already been given as to the termination of the Loan Documents as provided in Section 10.9).  Notwithstanding the foregoing or anything to
the contrary herein (except Section 2.18, to the extent applicable), Agent
shall not, without the prior consent of each individual Lender, execute and
deliver on behalf of such Lender any waiver or amendment which would:  (1) waive any of the conditions
specified in Article IV (provided that Agent may in its discretion
withdraw any request it has made under Section 4.2), (2) increase the
maximum amount which such Lender is committed hereunder to lend, (3) reduce
any fees payable to such Lender hereunder, or the principal of, or interest on,
such Lender’s Notes, (4) extend the Maturity Date, or postpone any date
fixed for any payment of any such fees, principal or interest, (5) amend
the definition herein of “Required Lenders” or otherwise change the aggregate
amount of Percentage Shares which is required for Agent, Lenders or any of them
to take any particular action under the Loan Documents, (6) release
Borrower from its obligation to pay such Lender’s Obligations or any Guarantor
(other than a Guarantor which ceases to be a Subsidiary pursuant to a sale or
other disposition permitted by the Loan Documents) from its guaranty of such
payment or (7) release all or substantially all of the Collateral, except
for such releases relating to sales or dispositions of property permitted by
the Loan Documents, or (8) amend this Section 10.1(a).  Notwithstanding the foregoing or anything to
the contrary herein except Section 2.18, to the extent applicable), Agent
shall not, without the prior consent of each individual Lender affected thereby
(or, as applicable, an Affiliate of such Lender), execute and deliver any
waiver or amendment to any Loan Document which would (i) cause an
obligation under any outstanding Hedging Contract owing to such Lender (or its
Affiliate) that, prior to such waiver or amendment, constituted a “Lender
Hedging Obligation” to cease to be a “Lender Hedging Obligation” or (ii) cause
the priority of the Lien securing such obligation or the priority of payment
with respect to such obligation in connection with the exercise of remedies
under such Loan Document to be subordinate in any manner to the other
Obligations (other than expense reimbursements, expenses of enforcement, and
other similar obligations owing under the Loan Documents).

 

(b)           Acknowledgments and
Admissions.  Borrower hereby
represents, warrants, acknowledges and admits that (i) it has been advised
by counsel in the negotiation, execution and delivery of the Loan Documents to
which it is a party, (ii) it has made an independent decision to enter
into this Agreement and the other Loan Documents to which it is a party,
without reliance on any representation, warranty, covenant or undertaking by
Agent or any Lender, whether written, oral or implicit, other than as expressly
set out in this Agreement or in another Loan Document delivered on or after the
date hereof, (iii) there are no representations, warranties, covenants,
undertakings or agreements by any Lender as to the Loan Documents except as
expressly set out in this Agreement or in another Loan Document delivered on or
after the date hereof, (iv) no Lender has any fiduciary obligation toward
Borrower with respect to any Loan Document or the transactions contemplated
thereby, (v) the relationship pursuant to the Loan Documents between
Borrower and the other Restricted Persons, on one hand, and each Lender, on the
other hand, is and shall be solely that of debtor and creditor, respectively,
provided that, solely for purposes of Section 10.5(f), Agent shall act as
Agent of Borrower in maintaining the Register as set forth therein, (vi) no
partnership or joint venture exists with respect to the Loan Documents between
any Restricted Person and any Lender, (vii) Agent is not Borrower’s Agent,

 

66

 

but
Agent for Lenders, provided that, solely for purposes of Section 10.5(f),
Agent shall act as Agent of Borrower in maintaining the Register as set forth
therein, (viii) should an Event of Default or Default occur or exist, each
Lender will determine in its sole discretion and for its own reasons what
remedies and actions it will or will not exercise or take at that time subject
to the terms of this Agreement, (ix) without limiting any of the
foregoing, Borrower is not relying upon any representation or covenant by any
Lender, or any representative thereof, and no such representation or covenant
has been made, that any Lender will, at the time of an Event of Default or
Default, or at any other time, waive, negotiate, discuss, or take or refrain
from taking any action permitted under the Loan Documents with respect to any
such Event of Default or Default or any other provision of the Loan Documents,
and (x) all Lender Parties have relied upon the truthfulness of the
acknowledgments in this section in deciding to execute and deliver this
Agreement and to become obligated hereunder.

 

(c)           Joint
Acknowledgment.  THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.

 

THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

 

Section 10.2           Survival of Agreements; Cumulative Nature.  Except for representations and
warranties given as of a specified date, all of Restricted Persons’ various
representations, warranties, covenants and agreements in the Loan Documents
shall survive the execution and delivery of this Agreement and the other Loan
Documents and the performance hereof and thereof, including the making or
granting of the Loans and the delivery of the Notes and the other Loan
Documents, and shall further survive until all of the Obligations are paid in
full to each Lender Party and all of Lender Parties’ obligations to Borrower
are terminated.  All statements and
agreements contained in any certificate or other instrument delivered by any
Restricted Person to any Lender Party under any Loan Document shall be deemed
representations and warranties by Borrower or agreements and covenants of
Borrower under this Agreement.  The
representations, warranties, indemnities, and covenants made by Restricted
Persons in the Loan Documents, and the rights, powers, and privileges granted
to Lender Parties in the Loan Documents, are cumulative, and, except for
expressly specified waivers and consents, no Loan Document shall be construed
in the context of another to diminish, nullify, or otherwise reduce the benefit
to any Lender Party of any such representation, warranty, indemnity, covenant,
right, power or privilege.  In particular
and without limitation, no exception set out in this Agreement to any
representation, warranty, indemnity, or covenant herein contained shall apply
to any similar representation, warranty, indemnity, or covenant contained in
any other Loan Document, unless the Loan Documents shall expressly provide that
such exception shall apply to such similar representation, warranty, indemnity,
or covenant.

 

Section 10.3           Notices.  All notices, requests, consents, demands and
other communications required or permitted under any Loan Document shall be in
writing, unless otherwise specifically provided in such Loan Document (provided
that Agent may give telephonic notices to the other Lender Parties), and shall
be deemed sufficiently given or furnished if delivered by personal delivery, by
facsimile or other electronic transmission, by delivery service with proof of
delivery, or by registered or certified United States mail, postage

 

67

 

prepaid, to Borrower and
Restricted Persons at the address of Borrower specified on the signature pages hereto
and to each Lender Party at its address specified on Schedule 3.1 hereto
(unless changed by similar notice in writing given by the particular Person
whose address is to be changed).  Any
such notice or communication shall be deemed to have been given (a) in the
case of personal delivery or delivery service, as of the date of first
attempted delivery during normal business hours at the address provided herein,
(b) in the case of facsimile or other electronic transmission, upon
receipt, or (c) in the case of registered or certified United States mail,
three days after deposit in the mail; provided, however, that no Borrowing
Notice shall become effective until actually received by Agent.

 

Section 10.4           Payment of Expenses; Indemnity.

 

(a)           Payment of Expenses.  Whether or not the transactions contemplated
by this Agreement are consummated, Borrower will promptly (and in any event,
within thirty (30) days after any invoice or other statement or notice) pay: (i) all
transfer, stamp, mortgage, documentary or other similar taxes, assessments or
charges levied by any governmental or revenue authority in respect of this
Agreement or any of the other Loan Documents or any other document or
transaction referred to herein or therein, (ii) all reasonable costs and
expenses incurred by or on behalf of Agent (including without limitation
reasonable attorneys’ fees, travel costs and miscellaneous expenses), but
excluding consultants fees other than in connection with  an annual field audit permitted below, in
connection with (1) the negotiation, preparation, execution and delivery
of the Loan Documents, and any and all consents, waivers or other documents or
instruments relating thereto, (2) the filing, recording, refiling and
re-recording of any Loan Documents and any other documents or instruments or
further assurances required to be filed or recorded or refiled or re-recorded
by the terms of any Loan Document, (3) the borrowings hereunder and other
action reasonably required in the course of administration hereof, (4) monitoring
or confirming (or preparation or negotiation of any document related to) any
Restricted Person’s compliance with any covenants or conditions contained in
this Agreement or in any Loan Document, and (iii) all reasonable costs and
expenses incurred by the Agent on behalf of any Lender Party (including without
limitation reasonable attorneys’ fees, reasonable consultants’ fees and
reasonable accounting fees) in connection with the conduct of an annual field
audit, the preservation of any rights under the Loan Documents or the defense
or enforcement of any of the Loan Documents (including this section), any
attempt to cure any breach thereunder by any Restricted Person, or the defense
of any Lender Party’s exercise of its rights thereunder.  In addition to the foregoing, until all
Obligations have been paid in full, Borrower will also pay or reimburse Agent
for all reasonable out-of-pocket costs and expenses of Agent or its agents or
employees in connection with the continuing administration of the Loans and the
related due diligence of Agent, including travel and miscellaneous expenses and
reasonable fees and expenses of Agent’s outside counsel and consultants engaged
in connection with the Loan Documents.

 

(b)           Indemnity.
Borrower agrees to indemnify each Lender Party, upon demand, from and against
any and all liabilities, obligations, broker’s fees, claims, losses, damages,
penalties, fines, actions, judgments, suits, settlements, costs, expenses or
disbursements (including reasonable fees of attorneys, accountants, experts and
advisors) of any kind or nature whatsoever (in this section collectively called
“liabilities and costs”) which to any extent (in whole or in part) may be
imposed on, incurred by, or asserted against such Lender Party growing out of,
resulting

 

68

 

from
or in any other way associated with any of the Collateral, the Loan Documents
and the transactions and events (including the enforcement or defense thereof)
at any time associated therewith or contemplated therein (whether arising in
contract or in tort or otherwise).  Among
other things, the foregoing indemnification covers all liabilities and costs
incurred by any Lender Party related to any breach of a Loan Document by a
Restricted Person, any bodily injury to any Person or damage to any Person’s
property, or any violation or noncompliance with any Environmental Laws by any
Lender Party or any other Person or any liabilities or duties of any Lender
Party or any other Person with respect to Hazardous Materials found in or
released into the environment.

 

THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH
LIABILITIES AND COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN
PART, UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY OR CAUSED, IN WHOLE OR
IN PART BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY LENDER PARTY,

 

provided only that no Lender Party shall be entitled
under this section to receive indemnification for that portion, if any, of any
liabilities and costs which is proximately caused by its own individual gross
negligence or willful misconduct, as determined by a court of competent
jurisdiction in a final and nonappealable judgment.  If any Person (including Borrower or any of
its Affiliates) ever alleges such gross negligence or willful misconduct by any
Lender Party, the indemnification provided for in this section shall
nonetheless be paid upon demand, subject to later adjustment or reimbursement,
until such time as a court of competent jurisdiction enters a final and
nonappealable judgment as to the extent and effect of the alleged gross
negligence or willful misconduct.  As
used in this section the term “Lender Party” shall refer not only to each
Person designated as such in Section 1.1 but also to each director,
officer, Agent, trustee, attorney, employee, representative and Affiliate of or
for such Person.

 

Section 10.5           Joint and Several Liability; Parties in Interest;
Assignments.

 

(a)           All Obligations which
are incurred by two or more Restricted Persons shall be their joint and several
obligations and liabilities.  All grants,
covenants and agreements contained in the Loan Documents shall bind and inure
to the benefit of the parties thereto and their respective successors and
assigns; provided, however, that no Restricted Person may assign or transfer
any of its rights or delegate any of its duties or obligations under any Loan
Document without the prior consent of the Required Lenders.  Neither Borrower nor any Affiliates of
Borrower shall directly or indirectly purchase or otherwise retire any
Obligations owed to any Lender nor will any Lender accept any offer to do so,
unless each Lender shall have received substantially the same offer with
respect to the same Percentage Share of the Obligations owed to it.  If Borrower or any Affiliate of Borrower at
any time purchases some but less than all of the Obligations owed to all Lender
Parties, such purchaser shall not be entitled to any rights of any Lender under
the Loan Documents unless and until Borrower or its Affiliates have purchased
all of the Obligations.

 

(b)           No Lender shall sell
any participation interest in its commitment hereunder or any of its rights
under its Loans or under the Loan Documents to any Person unless the agreement
between such Lender and such participant at all times provides: (i) that
such participation exists only as a result of the agreement between such
participant and such Lender and that such transfer

 

69

 

does
not give such participant any right to vote as a Lender or any other direct
claims or rights against any Person other than such Lender, (ii) that such
participant is not entitled to payment from any Restricted Person under
Sections 3.2 through 3.8 of amounts in excess of those payable to such Lender
under such sections (determined without regard to the sale of such
participation), and (iii) unless such participant is an Affiliate of such
Lender, that such participant shall not be entitled to require such Lender to
take any action under any Loan Document or to obtain the consent of such
participant prior to taking any action under any Loan Document, except for
actions which would require the consent of all Lenders under subsection (a) of
Section 10.1.  No Lender selling
such a participation shall, as between the other parties hereto and such
Lender, be relieved of any of its obligations hereunder as a result of the sale
of such participation.  Each Lender which
sells any such participation to any Person (other than an Affiliate of such
Lender) shall give prompt notice thereof to Agent and Borrower.

 

(c)           Except for sales of
participations under the immediately preceding subsection, no Lender shall make
any assignment or transfer of any kind of its commitments or any of its rights
under its Loans or under the Loan Documents, except for assignments to an
Eligible Transferee, and then only if such assignment is made in accordance with
the following requirements:

 

(i)            Each
such assignment shall apply to all Obligations owing to the assignor Lender
hereunder and to the unused portion of the assignor Lender’s Revolving Loan
Commitment, so that after such assignment is made the assignor Lender shall
have a fixed (and not a varying) Percentage Share in its Loans and Notes and be
committed to make that Percentage Share of all future Loans, the assignee shall
have a fixed Percentage Share in the aggregate Loans and Notes and be committed
to make that Percentage Share of all future Loans, and, except in the case of
an assignment of the entire remaining amount of the assignor’s Percentage Share
of the Revolving Loan Commitment, the Revolving Loan Commitment to be assigned
shall equal or exceed $5,000,000.

 

(ii)           The
parties to each such assignment shall execute and deliver to Agent, for its
acceptance and recording in the “Register” (as defined below in this section),
an Assignment and Acceptance in the form of Exhibit 10.5,
appropriately completed, together with the Note subject to such assignment and
a processing fee payable to Agent of $3,500. 
Upon such execution, delivery, and payment and upon the satisfaction of
the conditions set out in such Assignment and Acceptance, then (1) Borrower
shall issue new Notes to such assignor and assignee upon return of the old
Notes to Borrower, and (2) as of the “Settlement Date” specified in such
Assignment and Acceptance the assignee thereunder shall be a party hereto and a
Lender hereunder and Agent shall thereupon deliver to Borrower and each Lender
a schedule showing the revised Percentage Shares of such assignor Lender and
such assignee Lender and the Percentage Shares of all other Lenders.

 

(iii)          Each
assignee Lender which is not a United States person (as such term is defined in
Section 7701(a)(30) of the Internal Revenue Code) for Federal income tax
purposes, shall (to the extent it has not already done so) provide Agent and
Borrower with the “Prescribed Forms” referred to in Section 3.6(d).

 

70

 

(iv)          Unless
the assignee is a Lender, an Affiliate of a Lender or an Approved Fund, such
assignment shall not be effective unless consented to in writing by Agent, the
LC Issuer, and the Swingline Lender and, unless an Event of Default shall have
occurred and be continuing, Borrower (such consent not to be unreasonably
withheld or delayed).

 

(d)           Nothing contained in
this section shall prevent or prohibit any Lender from assigning or pledging
all or any portion of its Loans and Notes to any Federal Reserve Bank as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal
Reserve Bank; provided that no such assignment or pledge shall relieve such
Lender from its obligations hereunder.

 

(e)           By executing and
delivering an Assignment and Acceptance, each assignee Lender thereunder will
be confirming to and agreeing with Borrower, Agent and each other Lender Party
that such assignee understands and agrees to the terms hereof, including Article IX
hereof.

 

(f)            Agent shall maintain
a copy of each Assignment and Acceptance and a register for the recordation of
the names and addresses of Lenders and the Percentage Shares of, and principal
amount of the Loans owing to, each Lender from time to time (in this section
called the “Register”).  The entries in
the Register shall be conclusive, in the absence of manifest error, and
Borrower and each Lender Party may treat each Person whose name is recorded in
the Register as a Lender hereunder for all purposes.  The Register shall be available for
inspection by Borrower or any Lender Party at any reasonable time and from time
to time upon reasonable prior notice. 
Agent shall act as Agent of Borrower solely for purposes of maintaining
the Register as set forth in this Section 10.5(f).

 

(g)           The Borrower shall not
assign or otherwise transfer any of its rights or obligations under this
Agreement without the prior written consent of each Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and
void).

 

Section 10.6           Confidentiality.  Each Lender Party agrees to keep confidential
any information furnished or made available to it by any Restricted Person
pursuant to this Agreement that is financial information, information in
connection with a proposed transaction, or information marked confidential;
provided that nothing herein shall prevent any Lender Party from disclosing
such information (a) to any other Lender Party or any Affiliate of any
Lender Party, or any officer, director, employee, agent, attorney, auditor, or
advisor of any Lender Party or Affiliate of any Lender Party, (b) to any
other Person if reasonably incidental to the administration of the credit
facility provided herein, (c) as required by any Law, (d) upon the
order of any court or administrative agency, (e) upon the request or
demand of any Tribunal, (f) that is or becomes available to the public or
that is or becomes available to any Lender Party other than as a result of a
disclosure by any Lender Party prohibited by this Agreement, (g) to the
extent necessary in connection with the exercise of any right or remedy under
this Agreement or any other Loan Document, (h) subject to provisions substantially
similar to those contained in this section, to any actual or proposed
participant or assignee or any actual or proposed contractual counterparty (or
its advisors) to any securitization, hedge, or other derivative transaction
relating to the parties’ obligations hereunder, and (i) if it is otherwise
available in the public domain. 
Notwithstanding anything set forth herein to the contrary, each party to
this

 

71

 

Agreement and each of its
employees, representatives, and other Agents is hereby expressly authorized to
disclose the “tax treatment” and “tax structure” (as those terms are defined in
Treas. Reg. §§ 1.6011-4(c)(8) and (9), respectively) of the transactions
contemplated hereby and all materials of any kind, including opinions or other
tax analyses, that have been provided to it by any other party relating to such
tax treatment or tax structure.  Any
Person required to maintain the confidentiality of information described in
this section shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such information as such Person would accord to its own
confidential information.

 

Section 10.7           Governing Law; Submission to Process.  Except to the extent that the
Law of another jurisdiction is expressly elected in a Loan Document, the Loan
Documents shall be deemed contracts and instruments made under the Laws of the
State of Texas and shall be construed and enforced in accordance with and
governed by the Laws of the State of Texas and the Laws of the United States of
America, without regard to principles of conflicts of law.  Chapter 346 of the Texas Finance Code (which
regulates certain revolving credit loan accounts and revolving tri-party
accounts) does not apply to this Agreement or to the Notes.  Borrower hereby irrevocably submits itself
and each other Restricted Person to the exclusive jurisdiction of the state and
federal courts sitting in the State of Texas and agrees and consents that
service of process may be made upon it or any Restricted Person in any legal
proceeding relating to the Loan Documents or the Obligations by any means
allowed under Texas or federal law.  Any
legal proceeding arising out of or in any way related to any of the Loan
Documents shall be brought and litigated exclusively in the United States
District Court for the Southern District of Texas, Houston Division, to the
extent it has subject matter jurisdiction, and otherwise in the Texas District
Courts sitting in Harris County, Texas. 
The parties hereto hereby waive and agree not to assert, by way of
motion, as a defense or otherwise, that any such proceeding is brought in an
inconvenient forum or that the venue thereof is improper, and further agree to
a transfer of any such proceeding to a federal court sitting in the State of
Texas to the extent that it has subject matter jurisdiction, and otherwise to a
state court in Houston, Texas.  In
furtherance thereof, Borrower and Lender Parties each hereby acknowledge and
agree that it was not inconvenient for them to negotiate and receive funding of
the transactions contemplated by this Agreement in such county and that it will
be neither inconvenient nor unfair to litigate or otherwise resolve any
disputes or claims in a court sitting in such county.

 

Section 10.8           Limitation on Interest.  Lender Parties, Restricted Persons and any
other parties to the Loan Documents intend to contract in strict compliance
with applicable usury Law from time to time in effect.  In furtherance thereof such Persons stipulate
and agree that none of the terms and provisions contained in the Loan Documents
shall ever be construed to create a contract to pay, for the use, forbearance
or detention of money, interest in excess of the maximum amount of interest
permitted to be charged by applicable Law from time to time in effect.  Neither any Restricted Person nor any present
or future guarantors, endorsers, or other Persons hereafter becoming liable for
payment of any Obligation shall ever be liable for unearned interest thereon or
shall ever be required to pay interest thereon in excess of the maximum amount
that may be lawfully contracted for, charged, or received under applicable Law
from time to time in effect, and the provisions of this section shall control
over all other provisions of the Loan Documents which may be in conflict or
apparent conflict herewith.  Lender
Parties expressly disavow any intention to contract for, charge, or collect
excessive

 

72

 

unearned interest or finance
charges in the event the maturity of any Obligation is accelerated.  If (a) the maturity of any Obligation is
accelerated for any reason, (b) any Obligation is prepaid and as a result
any amounts held to constitute interest are determined to be in excess of the
legal maximum, or (c) any Lender or any other holder of any or all of the
Obligations shall otherwise collect moneys which are determined to constitute
interest which would otherwise increase the interest on any or all of the
Obligations to an amount in excess of that permitted to be charged by
applicable Law then in effect, then all sums determined to constitute interest
in excess of such legal limit shall, without penalty, be promptly applied to
reduce the then outstanding principal of the related Obligations or, at such
Lender’s or holder’s option, promptly returned to Borrower or the other payor
thereof upon such determination.  In
determining whether or not the interest paid or payable, under any specific
circumstance, exceeds the maximum amount permitted under applicable Law, Lender
Parties and Restricted Persons (and any other payors thereof) shall to the
greatest extent permitted under applicable Law, (i) characterize any
non-principal payment as an expense, fee or premium rather than as interest, (ii) exclude
voluntary prepayments and the effects thereof, and (iii) amortize,
prorate, allocate, and spread the total amount of interest throughout the
entire contemplated term of the instruments evidencing the Obligations in
accordance with the amounts outstanding from time to time thereunder and the
maximum legal rate of interest from time to time in effect under applicable Law
in order to lawfully contract for, charge, or receive the maximum amount of
interest permitted under applicable Law. 
In the event applicable Law provides for an interest ceiling under
Chapter 303 of the Texas Finance Code (the “Texas Finance Code”) as amended,
for that day, the ceiling shall be the “weekly ceiling” as defined in the Texas
Finance Code, provided that if any applicable Law permits greater interest, the
Law permitting the greatest interest shall apply. As used in this section the
term “applicable Law” means the Laws of the State of Texas or the Laws of the
United States of America, whichever Laws allow the greater interest, as such
Laws now exist or may be changed or amended or come into effect in the future.

 

Section 10.9           Termination; Limited Survival.

 

(a)           In its sole and
absolute discretion Borrower may at any time that no Obligations are owing
(other than indemnity obligations and similar obligations that survive the
termination of this Agreement for which no notice of a claim has been received
by Borrower) elect in a written notice delivered to Agent to terminate this
Agreement.  Upon receipt by Agent of such
a notice, if no Obligations are then owing, this Agreement and all other Loan
Documents shall thereupon be terminated and the parties thereto released from
all prospective obligations thereunder. 
Notwithstanding the foregoing or anything herein to the contrary, any
waivers or admissions made by any Restricted Person in any Loan Document, any
Obligations under Sections 3.2 through Section 3.6, and any obligations
which any Person may have to indemnify or reimburse any Lender Party shall
survive any termination of this Agreement or any other Loan Document.  The foregoing consent shall constitute the
written consent of Required Lenders required under Section 10.1(a)(iii).  At the request and expense of Borrower, Agent
shall prepare and execute all necessary instruments to reflect and effect such
termination of the Loan Documents.  Agent
is hereby authorized to execute all such instruments on behalf of all Lenders,
without the joinder of or further action by any Lender.

 

(b)           The Agent and the
Lenders hereby consent to (i) the automatic release of any Liens securing
the Obligations in Collateral that is sold or otherwise disposed of by a
Restricted

 

73

 

Person
in compliance with this Agreement and (ii) the automatic release from the
relevant Guaranty of any Guarantor that ceases to be a Subsidiary pursuant to a
sale or disposal of property that is permitted by this Agreement, in each case
without need for further approval of the Agent or any Lender.  The foregoing consent shall constitute the
written consent of Required Lenders required under clause (iii) of the
fourth sentence of Section 10.1(a), with respect to such releases of Liens
and Guarantors.  At the request and
expense of Borrower, Agent shall prepare and execute all necessary or
reasonably requested instruments and documents to reflect and effect such
releases of Liens and Guarantors.  Agent
is hereby authorized to execute all such instruments and documents on behalf of
all Lenders, without the joinder of or further action by any Lender.

 

Section 10.10         Severability.  If any term or provision of any Loan Document
shall be determined to be illegal or unenforceable all other terms and
provisions of the Loan Documents shall nevertheless remain effective and shall
be enforced to the fullest extent permitted by applicable Law.

 

Section 10.11         Counterparts; Fax.  This Agreement may be separately executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to constitute one
and the same Agreement.  This Agreement
and the Loan Documents may be validly executed and delivered by facsimile or
other electronic transmission.

 

Section 10.12         Intentionally Omitted.

 

Section 10.13         Waiver of Jury Trial, Punitive Damages, etc.  Each of the Borrower and each
Lender Party hereby knowingly, voluntarily, intentionally, and irrevocably (a) waives,
to the maximum extent not prohibited by Law, any right it may have to a trial
by jury in respect of any litigation based hereon, or directly or indirectly at
any time arising out of, under or in connection with the Loan Documents or any
transaction contemplated thereby or associated therewith, before or after
maturity; (b) waives, to the maximum extent not prohibited by Law, any
right they may have to claim or recover in any such litigation any “Special
Damages”, as defined below, (c) certifies that no party hereto nor any
representative or Agent or counsel for any party hereto has represented,
expressly or otherwise, or implied that such party would not, in the event of
litigation, seek to enforce the foregoing waivers, and (d) acknowledges
that it has been induced to enter into this Agreement, the other Loan Documents
and the transactions contemplated hereby and thereby by, among other things,
the mutual waivers and certifications contained in this section.  As used in this section, “Special Damages”
includes all special, consequential, exemplary, or punitive damages (regardless
of how named), but does not include any payments or funds which any party
hereto has expressly promised to pay or deliver to any other party hereto.

 

Section 10.14         USA Patriot Act.  Agent hereby notifies Borrower that pursuant
to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56, signed
into law October 26, 2001) (the “Act”), and Agent’s policies and
practices, each Lender is required to obtain, verify and record certain
information and documentation that identifies each Restricted Person, which
information includes the name and address of each Restricted Person and such
other information that will allow each Lender to identify each Restricted
Person in accordance with the Act.

 

74

 

Section 10.15         Renewal and Extension.  The Indebtedness arising under
this Agreement is a renewal, extension and restatement on revised terms of (but
not an extinguishment or novation of) the Existing Credit Agreement and, from
and after the date hereof, the terms and provisions of the Existing Credit
Agreement shall be superseded by the terms and provisions of this
Agreement.  Borrower hereby agrees that (i) the
Indebtedness evidenced by the Existing Credit Agreement, all accrued and unpaid
interest thereon, and all accrued and unpaid fees under the Existing Credit
Agreement shall be deemed to be Indebtedness of Borrower outstanding under and
governed by this Agreement and (ii) all Liens securing the Indebtedness
evidenced by the Existing Credit Agreement shall continue in full force and
effect to secure the Secured Obligations.

 

[SIGNATURE PAGES FOLLOW]

 

75

 

IN WITNESS WHEREOF, this Agreement is executed as of
the date first written above.

 

	
   

  	
  Comfort Systems USA, Inc.,

  
	
   

  	
  Borrower

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William George III

  
	
   

  	
   

  	
  William George III

  
	
   

  	
   

  	
  Executive Vice President and

  
	
   

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  675 Bering, Suite 400

  
	
   

  	
  Houston, Texas 77057

  
	
   

  	
  Attention: William George III

  
	
   

  	
   

  
	
   

  	
  Telephone: (713) 830-9650

  
	
   

  	
  Fax: (713) 830-9659

  

 

Signature
Page to Second Amended and Restated Credit Agreement

 

 

	
   

  	
  Wells Fargo Bank, National Association,

  
	
   

  	
  Agent, LC Issuer, Swingline Lender and Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Melanie Ottens

  
	
   

  	
   

  	
  Melanie Ottens, Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  Wells Fargo Bank, National Association

  
	
   

  	
  1000 Louisiana, 3rd Floor

  
	
   

  	
  Houston, Texas 77002

  
	
   

  	
  Attention: Melanie Ottens

  
	
   

  	
  Telephone: (713) 319-1630

  
	
   

  	
  Fax: (713) 739-1086

  

 

Signature Page to Second Amended and Restated
Credit Agreement

 

 

	
   

  	
  Capital One, N.A.,

  
	
   

  	
  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Debra Halling

  
	
   

  	
   

  	
  Debra Halling

  
	
   

  	
   

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
  Capital One, N.A.

  
	
   

  	
  5718 Westheimer, Suite 600

  
	
   

  	
  Houston, Texas 77057

  
	
   

  	
  Attention: Debra Halling

  
	
   

  	
  Telephone: (713) 435-5024

  
	
   

  	
  Fax: (713) 706-5499

  

 

Signature
Page to Second Amended and Restated Credit Agreement

 

 

	
   

  	
  Bank of Texas, N.A.,

  
	
   

  	
  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Edward H. Braddock

  
	
   

  	
  Name:

  	
  Edward H. Braddock

  
	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
  Bank of Texas, N.A.

  
	
   

  	
  5 Houston Center

  
	
   

  	
  1401 McKinney, Suite 1650

  
	
   

  	
  Houston, Texas 77010

  
	
   

  	
  Attention: Edward H. Braddock

  
	
   

  	
  Telephone: (713) 289-5855

  
	
   

  	
  Fax: (713) 289-5825

  

 

Signature
Page to Second Amended and Restated Credit Agreement

 

 

	
   

  	
  Regions Bank,

  
	
   

  	
  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ H. Gale Smith, Jr.

  
	
   

  	
  Name:

  	
  H. Gale Smith, Jr.

  
	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
  Regions Bank

  
	
   

  	
  5005 Woodway Drive, Suite 110

  
	
   

  	
  Houston, Texas 77479

  
	
   

  	
  Attention: H. Gale Smith, Jr.

  
	
   

  	
  Telephone: 713-426-7157

  
	
   

  	
  Fax: 713-426-7180

  

 

Signature
Page to Second Amended and Restated Credit Agreement

 

 

	
   

  	
  Branch Bank & Trust Company,

  
	
   

  	
  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ H. Gale Smith

  
	
   

  	
  Name:

  	
  H. Gale Smith

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
  Branch Bank & Trust Company

  
	
   

  	
  200 West Second Street, 16th Floor

  
	
   

  	
  Winston-Salem, North Carolina 27101

  
	
   

  	
  Attention: Eric Searls

  
	
   

  	
  Telephone: 336-733-2741

  
	
   

  	
  Fax: 336-733-2740

  

 

Signature
Page to Second Amended and Restated Credit Agreement

 

 

EXHIBIT 2.1

 

SECOND AMENDED AND RESTATED REVOLVING NOTE

 

	
  Houston, Texas

  	
  July 16, 2010

  

 

FOR VALUE RECEIVED, the undersigned, Comfort Systems
USA, Inc., a Delaware corporation (herein called “Borrower”), hereby
promises to pay to the order of
                                                                            
(herein called “Lender”), the principal sum equal to its Revolving Loan
Commitment as set forth in the Credit Agreement (as hereinafter defined), or,
if greater or less, the aggregate unpaid principal amount of the Revolving
Loans made by Lender to Borrower pursuant to the terms of the Credit Agreement
(as hereinafter defined), together with interest on the unpaid principal
balance thereof as set forth in the Credit Agreement, both principal and
interest payable as herein provided in lawful money of the United States of
America at the offices of Agent under the Credit Agreement, or at such other
place within Houston, Harris County, Texas, as from time to time may be
designated by the holder of this Note.

 

This Note (a) is issued and delivered under that
certain Second Amended and Restated Credit Agreement dated as of July 16,
2010 among Borrower, Wells Fargo Bank, National Association, as Agent, and the
lenders (including Lender) referred to therein (herein, as from time to time
supplemented, amended or restated, called the “Credit Agreement”), and is a “Note”
as defined therein, (b) is subject to the terms and provisions of the
Credit Agreement, which contains provisions for payments and prepayments
hereunder and acceleration of the maturity hereof upon the happening of certain
stated events, and (c) is secured by and entitled to the benefits of
certain Security Documents (as identified and defined in the Credit
Agreement).  Payments on this Note shall
be made and applied as provided in the Credit Agreement.  Reference is hereby made to the Credit
Agreement for a description of certain rights, limitations of rights,
obligations and duties of the parties hereto and for the meanings assigned to
terms used and not defined herein and to the Security Documents for a
description of the nature and extent of the security thereby provided and the
rights of the parties thereto.

 

Notwithstanding the foregoing paragraph and all other
provisions of this Note, in no event shall the interest payable hereon, whether
before or after maturity, exceed the maximum amount of interest which, under
applicable Law, may be contracted for, charged, or received on this Note, and
this Note is expressly made subject to the provisions of the Credit Agreement
which more fully set out the limitations on how interest accrues hereon.  In the event applicable Law provides for an
interest ceiling under Chapter 303 of the Texas Finance Code (the “Texas
Finance Code”) as amended, for that day, the ceiling shall be the “weekly
ceiling” as defined in the Texas Finance Code and shall be used in this Note
for calculating the Highest Lawful Rate and for all other purposes.  The term “applicable law” as used in this
Note shall mean the laws of the State of Texas or the laws of the United
States, whichever laws allow the greater interest, as such laws now exist or
may be changed or amended or come into effect in the future.

 

If this Note is placed in the hands of an attorney for
collection after default, or if all or any part of the indebtedness represented
hereby is proved, established or collected in any court or in any bankruptcy,
receivership, debtor relief, probate or other court proceedings, 

 

1

 

Borrower and all endorsers, sureties and guarantors of
this Note jointly and severally agree to pay reasonable attorneys’ fees and
collection costs to the holder hereof in addition to the principal and interest
payable hereunder.

 

Borrower and all endorsers, sureties and guarantors of
this Note hereby severally waive demand, presentment, notice of demand and of
dishonor and nonpayment of this Note, protest, notice of protest, notice of
intention to accelerate the maturity of this Note, declaration or notice of
acceleration of the maturity of this Note, diligence in collecting, the
bringing of any suit against any party and any notice of or defense on account
of any extensions, renewals, partial payments or changes in any manner of or in
this Note or in any of its terms, provisions and covenants, or any releases or
substitutions of any security, or any delay, indulgence or other act of any
trustee or any holder hereof, whether before or after maturity.

 

This Note and the rights and duties of the parties hereto
shall be governed by the Laws of the State of Texas (without regard to
principles of conflicts of law), except to the extent the same are governed by
applicable federal Law.

 

This indebtedness evidenced by this Note is given in
partial renewal, extension and restatement of (but not in extinguishment or
novation of) the Amended and Restated Note dated February 20, 2007,
delivered by Borrower to Lender under the Existing Credit Agreement.

 

	
   

  	
  COMFORT SYSTEMS USA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

2

 

EXHIBIT 2.2(b)

 

BORROWING NOTICE

 

Reference is made to that certain Second Amended and
Restated Credit Agreement dated as of July 16, 2010 (as from time to time
amended, the “Agreement”), by and among Comfort Systems USA, Inc. (“Borrower”),
Wells Fargo Bank, National Association, as Agent, and certain financial
institutions (“Lenders”).  Terms which
are defined in the Agreement are used herein with the meanings given them in
the Agreement.  Borrower hereby requests
a Borrowing of [new Revolving Loans] [a new Swingline Loan]
to be advanced pursuant to Section [2.2(a)]  [2.16] of the Agreement as follows:

 

	
  Aggregate amount of Borrowing:

  	
  $

  	
   

  	
   

  
	
  Type of Loans in Borrowing:

  	
   

  	
   

  
	
  Date on which [Revolving Loans are]

  	
   

  	
   

  
	
  [the Swingline Loan is] to be advanced:

  	
   

  	
   

  
	
  Length of Interest Period for

  	
   

  	
   

  
	
  Eurodollar Loans (1, 2, 3, or 6 months):

  	
   

  	
   months

  
	
  If combined with existing Revolving Loans

  	
   

  	
   

  
	
  see attached Continuation/Conversion Notice.

  	
   

  	
   

  

 

To induce Lenders to make such [Revolving
Loans] [Swingline Loan], Borrower hereby represents, warrants,
acknowledges, and agrees to and with Agent and each Lender that:

 

(a)           The
officer of Borrower signing this instrument is the duly elected, qualified and
acting officer of Borrower as indicated below such officer’s signature hereto
having all necessary authority to act for Borrower in making the request herein
contained.

 

(b)           The
representations and warranties of Borrower set forth in the Agreement and the
other Loan Documents are true in all material respects (or in all respects to
the extent any such representation is qualified by a materiality standard) on
and as of the date hereof (except to the extent that the facts on which such
representations and warranties are based have been changed by the extension of
credit under the Agreement), with the same effect as though such
representations and warranties had been made on and as of the date hereof,
except for any such representation or warranty that expressly applies to a
specified earlier date or updated, modified or supplemented as of a subsequent
date with the consent of the Required Lenders, in which case such
representation or warranty shall have been true in all material respects (or in
all respects to the extent any such representation is qualified by a
materiality standard) on and as of such earlier date.

 

(c)           There
does not exist on the date hereof any condition or event which constitutes a
Default which has not been waived in writing as provided in Section 10.1(a) of
the Agreement; nor will any such Default exist upon Borrower’s receipt and
application of the Loans requested hereby. 
Borrower will use the Loans hereby requested in compliance with Section 2.4
of the Agreement.

 

1

 

(d)           Except
to the extent waived in writing as provided in Section 10.1(a) of the
Agreement, each Restricted Person has performed and complied with all
agreements and conditions in the Agreement required to be performed or complied
with by such Restricted Person on or prior to the date hereof, and each of the
conditions precedent to Loans contained in the Agreement remains satisfied.

 

(e)           The
Loan Documents have not been modified, amended or supplemented by any unwritten
representations or promises, by any course of dealing, or by any other means
not provided for in Section 10.1(a) of the Agreement.  The Agreement and the other Loan Documents
are hereby ratified, approved, and confirmed in all respects.

 

The officer of Borrower signing this instrument,
acting for the Borrower and not in his individual capacity, hereby certifies
that, to the best of the Borrower’s knowledge after due inquiry, the above
representations, warranties, acknowledgments, and agreements of Borrower are
true, correct and complete.

 

IN WITNESS WHEREOF, this instrument is executed as of
                        ,
20    .

 

	
   

  	
  COMFORT SYSTEMS USA, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

2

 

EXHIBIT 2.3(c)

 

CONTINUATION/CONVERSION NOTICE

 

Reference is made to that certain Second Amended and
Restated Credit Agreement dated as of July 16, 2010 (as from time to time
amended, the “Agreement”), by and among Comfort Systems USA, Inc. (“Borrower”),
Wells Fargo Bank, National Association, as Agent, and the lenders referred to
therein (“Lenders”).  Terms which are
defined in the Agreement are used herein with the meanings given them in the
Agreement.

 

Borrower hereby requests a Conversion or Continuation
of existing Loans into a new Borrowing pursuant to Section 2.3 of the
Agreement as follows:

 

Existing Borrowing(s) to be continued or
converted:

 

$                        
of Eurodollar Loans with Interest Period ending                          

$                        
of Base Rate Loans

 

If being combined with new Loans, $                        
of new Loans to be advanced on                              

 

Aggregate amount of Borrowing:              $                 

 

Type of Loans in new Borrowing:                    

 

Date of Continuation or Conversion:                    

 

Length of Interest Period for Eurodollar Loans

(1, 2, 3, or 6 months):                                           months

 

IN WITNESS WHEREOF this instrument is executed as of                              .

 

	
   

  	
  COMFORT SYSTEMS USA, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

1

 

EXHIBIT 2.10

 

LETTER OF CREDIT APPLICATION AND AGREEMENT

 

1

 

EXHIBIT 2.16

 

SWINGLINE NOTE

 

	
  Houston, Texas

  	
  July           ,
  2010

  

 

FOR VALUE RECEIVED, the undersigned, Comfort Systems
USA, Inc., a Delaware corporation (herein called “Borrower”), hereby
promises to pay to the order of
                                                                            
(herein called “Lender”), the principal sum of $[                  ]
as set forth in the Credit Agreement (as hereinafter defined), or, if greater
or less, the aggregate unpaid principal amount of the Swingline Loans made by
Lender to Borrower pursuant to the terms of the Credit Agreement, together with
interest on the unpaid principal balance thereof as set forth in the Credit
Agreement, both principal and interest payable as herein provided in lawful
money of the United States of America at the offices of Agent under the Credit
Agreement, or at such other place within Houston, Harris County, Texas, as from
time to time may be designated by the holder of this Note.

 

This Note (a) is issued and delivered under that
certain Second Amended and Restated Credit Agreement dated as of July 16,
2010 among Borrower, Wells Fargo Bank, National Association, as Agent, and the
lenders (including Lender) referred to therein (herein, as from time to time
supplemented, amended or restated, called the “Credit Agreement”), and is a “Swingline
Note” as defined therein, (b) is subject to the terms and provisions of
the Credit Agreement, which contains provisions for payments and prepayments
hereunder and acceleration of the maturity hereof upon the happening of certain
stated events, and (c) is secured by and entitled to the benefits of
certain Security Documents (as identified and defined in the Credit
Agreement).  Payments on this Note shall
be made and applied as provided in the Credit Agreement.  Reference is hereby made to the Credit
Agreement for a description of certain rights, limitations of rights,
obligations and duties of the parties hereto and for the meanings assigned to
terms used and not defined herein and to the Security Documents for a
description of the nature and extent of the security thereby provided and the
rights of the parties thereto.

 

Notwithstanding the foregoing paragraph and all other
provisions of this Note, in no event shall the interest payable hereon, whether
before or after maturity, exceed the maximum amount of interest which, under
applicable Law, may be contracted for, charged, or received on this Note, and
this Note is expressly made subject to the provisions of the Credit Agreement
which more fully set out the limitations on how interest accrues hereon.  In the event applicable Law provides for an
interest ceiling under Chapter 303 of the Texas Finance Code (the “Texas
Finance Code”) as amended, for that day, the ceiling shall be the “weekly
ceiling” as defined in the Texas Finance Code and shall be used in this Note
for calculating the Highest Lawful Rate and for all other purposes.  The term “applicable law” as used in this
Note shall mean the laws of the State of Texas or the laws of the United States,
whichever laws allow the greater interest, as such laws now exist or may be
changed or amended or come into effect in the future.

 

If this Note is placed in the hands of an attorney for
collection after default, or if all or any part of the indebtedness represented
hereby is proved, established or collected in any court or in any bankruptcy,
receivership, debtor relief, probate or other court proceedings, Borrower and
all endorsers, sureties and guarantors of this Note jointly and severally agree
to 

 

1

 

pay reasonable attorneys’ fees and collection costs to
the holder hereof in addition to the principal and interest payable hereunder.

 

Borrower and all endorsers, sureties and guarantors of
this Note hereby severally waive demand, presentment, notice of demand and of
dishonor and nonpayment of this Note, protest, notice of protest, notice of
intention to accelerate the maturity of this Note, declaration or notice of
acceleration of the maturity of this Note, diligence in collecting, the
bringing of any suit against any party and any notice of or defense on account
of any extensions, renewals, partial payments or changes in any manner of or in
this Note or in any of its terms, provisions and covenants, or any releases or
substitutions of any security, or any delay, indulgence or other act of any
trustee or any holder hereof, whether before or after maturity.

 

This Note and the rights and duties of the parties
hereto shall be governed by the Laws of the State of Texas (without regard to
principles of conflicts of law), except to the extent the same are governed by
applicable federal Law.

 

	
   

  	
  COMFORT SYSTEMS USA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

2

 

EXHIBIT 2.17

 

INCREMENTAL COMMITMENT AGREEMENT

 

[Names(s) of Lenders(s)]

 

[Date]

 

Comfort Systems USA, Inc.

675 Bering Drive, Suite 400

Houston, Texas 77057

Attention: 
William George, III

 

Re:          Incremental
Term Loan Commitments

 

Ladies and Gentlemen:

 

Reference is hereby made to the Second Amended
and Restated Credit Agreement, dated as of July 16, 2010, (as amended,
modified, restated or supplemented from time to time, the “Credit Agreement”),
among Comfort Systems USA, Inc. (the “Borrower or “you”),
the lenders from time to time party thereto (the “Lenders”), and Wells
Fargo Bank, National Association, as Agent (in such capacity, together with any
successor administrative agent, the “Agent”).  Capitalized terms used but not defined in
this letter agreement (this “Agreement”) have the meanings assigned to
those terms in the Credit Agreement.

 

Each Person listed in Section 1 of Annex I
attached hereto (each an “Incremental Lender”) hereby severally agrees
to provide the Incremental Commitment set forth opposite its name on Annex I
(for each Incremental Lender, its “Incremental Commitment”) and agrees
that, upon the effectiveness of this Agreement, its total Revolving Loan
Commitment shall be as set forth on such Annex I.  Each Incremental Commitment provided under
this Agreement is subject to the terms and conditions set forth in the Credit
Agreement, including Section 2.17.

 

Each Incremental Lender acknowledges and agrees
that the Incremental Commitments provided under this Agreement, in the
aggregate amount set forth on Annex I, constitute Revolving Loan Commitments
under, and as defined in, the Credit Agreement.

 

The Borrower shall pay to each Incremental
Lender the upfront fee, if any, specified in Annex I, which upfront fee will be
due and payable to the Incremental Lenders on the Agreement Effective Date (as
defined below) or as otherwise specified in Annex I.

 

Each Incremental Lender party to this Agreement (i) confirms
that it has received a copy of the Credit Agreement and the other Loan
Documents, together with copies of the financial statements referred to in the
Credit Agreement and any such other documents and information that it has
deemed appropriate to make its own credit analysis and decision to enter into
this Agreement and, to the extent applicable, to become a Lender under the
Credit Agreement, (ii) agrees that it will, independently and without
reliance upon the Agent or any other Lender and based on such documents and
information as it deems appropriate at the time, 

 

 

continue to make its own credit decisions in taking or
not taking action under the Credit Agreement, (iii) appoints and
authorizes the Agent to take any action as agent on its behalf and to exercise
any powers under the Loan Documents that are delegated to the Agent by the
terms of the Loan Documents, together with all powers that are reasonably
incidental thereto, (iv) agrees that it shall perform in accordance with
their terms all of the obligations which by the terms of the Credit Agreement
are required to be performed by it as a Lender, and (v) in the case of
each lending institution organized under the laws of a jurisdiction outside the
United States, attaches the applicable forms described in Section 3.6(d) of
the Credit Agreement certifying as to its entitlement to a complete exemption
from United States withholding taxes with respect to all payments to be made
under the Credit Agreement and the other Loan Documents.

 

Upon the date of (i) the execution of a
counterpart of this Agreement by the Incremental Lenders, the Borrower, and, unless
such Incremental Lender is already a Lender, the Agent (such consent of the
Agent not to be unreasonably withheld) and the delivery thereof to the Agent
(including by facsimile and counterparts), (ii) the payment of any fees
required in connection herewith and (iii) the satisfaction of any
conditions precedent set forth in Section 2.17(b) of the Credit
Agreement and Section 4 of Annex I (such date, the “Agreement Effective
Date”) each Incremental Lender (x) will become a party to the Credit
Agreement if it is not already a party to the Credit Agreement, (y) shall
be obligated to make Loans provided to be made by it as provided in this
Agreement on the terms, and subject to the conditions, set forth herein and in
the Credit Agreement and (z) to the extent provided in this Agreement,
will have the rights and obligations of a Lender under the Credit Agreement and
the other Loan Documents.

 

The Borrower acknowledges and agrees that (i) it
will be liable for all Loans made and other Obligations incurred pursuant to
the Incremental Commitments and (ii) those Loans and other Obligations
will be entitled to the benefits of the Security Documents.

 

You
may accept this Agreement by executing the enclosed copies in the space
provided below, and returning an executed copy to us before the close of
business on
                    
    ,
          .  If you do not so accept this Agreement by
that time, our Incremental Commitments set forth in this Agreement will be
deemed cancelled.

 

After the execution and delivery to the Agent
of a fully executed copy of this Agreement (including by way of counterparts
and by facsimile) by the parties hereto, this Agreement will constitute a Loan
Document and may only be changed, modified or varied by written instrument in
accordance with the requirements for the modification of Loan Documents
pursuant to Section 10.1 of the Credit Agreement.

 

*      *     
*

 

2

 

THIS AGREEMENT WILL BE CONSTRUED
IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF TEXAS.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  [NAMES OF INCREMENTAL LENDERS]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  [OTHER INCREMENTAL LENDERS]

  

 

	
  Agreed and Accepted

  	
   

  
	
  this        day of
                      ,
          :

  	
   

  
	
   

  	
   

  
	
  COMFORT SYSTEMS USA, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  [WELLS FARGO BANK, NATIONAL ASSOCIATION

  	
   

  
	
   

  	
  as Agent

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:](1)

  	
   

  

 

(1) 
Agent’s consent required only if Incremental Lender is not already a Lender,
and is not to be unreasonably withheld.

 

 

ANNEX
I TO 

INCREMENTAL COMMITMENT AGREEMENT

 

1.             Incremental
Commitment Amounts (as of the Agreement Effective Date):

 

	
  Name of Incremental

  Lender

  	
   

  	
  Amount
  of Incremental

  Commitment

  	
   

  	
  Amount
  of Revolving

  Loan Commitment

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total(2)

  	
   

  	
   

  	
   

  	
  $

  	
  [                    

  	
  ]

  
							

 

2.                                       Up-Front Fee; Other Fees(3):

 

[3.            Applicable
Margins]

 

4.                                       Other Conditions:(4)

 

(2)               Must be at least $5,000,000 and not more than $50,000,000.

 

(3)               Insert up-front fees and any other fees as may be agreed to by the
Borrower and the Incremental Lenders with respect to the Incremental
Commitments.

 

(4)               Insert any conditions which may be required to be satisfied prior to the
Agreement Effective Date as contemplated in Section 2.17 of the Credit
Agreement.

 

1

 

EXHIBIT 6.2(b)

 

CERTIFICATE ACCOMPANYING

FINANCIAL STATEMENTS

 

Reference is made to that certain Second Amended and
Restated Credit Agreement dated as of July 16, 2010 (as from time to time
amended, the “Agreement”), by and among Comfort Systems USA, Inc. (“Borrower”),
Wells Fargo Bank, National Association, as Agent, and certain financial
institutions (“Lenders”), which Agreement is in full force and effect on the
date hereof.  Terms which are defined in
the Agreement are used herein with the meanings given them in the Agreement.

 

This Certificate is furnished pursuant to Section 6.2(b) of
the Agreement.  Together herewith
Borrower is furnishing to Agent and each Lender the [audited/unaudited]
financial statements of Borrower (the “Financial Statements”) as at
                        
(the “Reporting Date”).  Borrower hereby
represents, warrants, and acknowledges to Agent and each Lender that:

 

(a)           the
officer of Borrower signing this instrument is the duly elected, qualified and
acting
                        
of Borrower and as such is Borrower’s chief financial officer;

 

(b)           the
Financial Statements are fair and complete in all material respects and satisfy
the requirements of the Agreement;

 

(c)           attached
hereto is a schedule of calculations showing Borrower’s compliance as of the
Reporting Date with the requirements of Section 7.11 of the Agreement
*[and Borrower’s non-compliance as of such date with the requirements of Section                         
of the Agreement];

 

(d)           on
the Reporting Date Borrower was, and on the date hereof Borrower is, in full
compliance with the disclosure requirements of Section 6.2 of the
Agreement, and no Default otherwise existed on the Reporting Date or otherwise
exists on the date of this instrument *[except for Default(s) under
Section(s)                         
of the Agreement, which *[is/are] more fully described on a schedule attached
hereto].

 

The officer of Borrower signing this instrument hereby
certifies that he has reviewed the Loan Documents and the Financial Statements
and has otherwise undertaken such inquiry as is in his opinion necessary to
enable him to express an informed opinion with respect to the above.

 

1

 

IN WITNESS WHEREOF, this instrument is executed as of
                        ,
20    .

 

	
   

  	
  Comfort Systems USA, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  

 

2

 

EXHIBIT 10.5

 

ASSIGNMENT AND ACCEPTANCE

 

Reference is made to the Second Amended and Restated
Credit Agreement dated as of July 16, 2010 (the “Credit Agreement”) among
Comfort Systems USA, Inc., a Delaware corporation (the “Borrower”), the
Lenders (as defined in the Credit Agreement) and Wells Fargo Bank, National
Association, as Administrative Agent for the Lenders (the “Agent”).  Terms defined in the Credit Agreement are
used herein with the same meaning.

 

The “Assignor” and the “Assignee” referred to on
Schedule 1 agree as follows:

 

1.             The
Assignor hereby sells and assigns to the Assignee, without recourse and without
representation or warranty except as expressly set forth herein, and the
Assignee hereby purchases and assumes from the Assignor, an interest in and to
the Assignor’s rights and obligations under the Credit Agreement and the other
Loan Documents as of the date hereof equal to the percentage interest specified
on Schedule 1 of all outstanding rights and obligations under the Credit
Agreement and the other Loan Documents. 
After giving effect to such sale and assignment, the Assignee’s
Commitment and the amount of the Loans owing to the Assignee will be as set
forth on Schedule 1.

 

2.             The
Assignor (i) represents and warrants that it is the legal and beneficial
owner of the interest being assigned by it hereunder and that such interest is
free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Loan Documents
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Loan Documents or any other instrument or document furnished
pursuant thereto; (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Restricted Person
or the performance or observance by any Restricted Person of any of its
obligations under the Loan Documents or any other instrument or document
furnished pursuant thereto; and (iv) attaches the Note held by the
Assignor and requests that Agent exchange such Note for new Notes payable to
the order of the Assignee in an amount equal to the Commitment assumed by the
Assignee pursuant hereto and to the Assignor in an amount equal to the
Commitment retained by the Assignor, if any, as specified on Schedule 1.

 

3.             The
Assignee (i) confirms that it has received a copy of the Credit Agreement,
together with copies of the financial statements referred to in Section 6.2
thereof and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into this Assignment and
Acceptance; (ii) agrees that it will, independently and without reliance
upon Agent, the Assignor or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement; (iii) confirms
that it is an Eligible Assignee; (iv) appoints and authorizes Agent to
take such action as Agent on its behalf and to exercise such powers and discretion
under the Credit Agreement as are delegated to Agent by the terms thereof,
together with such powers and discretion as are reasonably incidental thereto; (v) agrees
that it will perform in accordance with their terms all of 

 

1

 

the obligations that by the terms of the Credit
Agreement are required to be performed by it as a Lender; and (vi) attaches
any required U.S. Internal Revenue Service forms.

 

4.             Following
the execution of this Assignment and Acceptance, it will be delivered to Agent
for acceptance and recording by Agent and (unless an Event of Default shall
have occurred and be continuing) acceptance by Borrower.  The effective date for this Assignment and
Acceptance (the “Effective Date”) shall be the date of acceptance hereof by
Agent and, unless an Event of Default shall have occurred and be continuing,
Borrower, unless otherwise specified on Schedule 1.

 

5.             Upon
such acceptance and recording by Agent, as of the Effective Date, (i) the
Assignee shall be a party to the Credit Agreement and, to the extent provided
in this Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement. 
Upon such acceptance and recording by Agent, from and after the
Effective Date, Agent shall make all payments under the Credit Agreement and
the Notes in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest and commitment fees with
respect thereto) to the Assignee.  The
Assignor and Assignee shall make all appropriate adjustments in payments under
the Credit Agreement and the Notes for periods prior to the Effective Date
directly between themselves.

 

6.             This
Assignment and Acceptance shall be governed by, and construed in accordance
with, the Laws of the State of Texas.

 

7.             This
Assignment and Acceptance may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement. 
Delivery of an executed counterpart of Schedule 1 to this Assignment and
Acceptance by telecopier shall be effective as delivery of a manually executed
counterpart of this Assignment and Acceptance.

 

IN WITNESS WHEREOF, the Assignor and the Assignee have
caused Schedule 1 to this Assignment and Acceptance to be executed by their
officers thereunto duly authorized as of the date specified thereon.

 

2

 

SCHEDULE 1

to

ASSIGNMENT AND ACCEPTANCE

 

	
  Percentage interest assigned:

  	
                       %

  
	
   

  	
   

  
	
  Assignee’s Revolving Loan Commitment:

  	
  $                     

  
	
   

  	
   

  
	
  Aggregate outstanding principal amount  of Revolving Loans assigned:

  	
  $                     

  
	
   

  	
   

  
	
  Principal amount of Revolving Note payable to
  Assignee:

  	
  $                     

  
	
   

  	
   

  
	
  Principal amount of Revolving Note payable to
  Assignor:

  	
  $                     

  
	
   

  	
   

  
	
  Effective Date (if other than date  of acceptance by Agent):

  	
  *              ,
  20   

  

 

 

	
   

  	
  [NAME OF ASSIGNOR], as Assignor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Dated:              ,
  20

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [NAME OF ASSIGNEE], as Assignee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  Domestic Lending Office:

  
	
   

  	
   

  
	
   

  	
  Eurodollar Lending Office:

  

 

*    This date should be no
earlier than five Business Days after the delivery of this Assignment and
Acceptance to Agent.

 

3

 

	
  Accepted [and Approved] **

  	
   

  
	
  this
         day of
                        ,
  20

  	
   

  
	
   

  	
   

  	
   

  
	
  Wells Fargo Bank, National
  Association

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  [Approved this
           day

  	
   

  
	
  of
                          ,
  20

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  [NAME OF BORROWER]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
  ]**

  	
   

  
	
   

  	
  Title:

  	
   

  
				

 

**    Required
if the Assignee is an Eligible Transferee solely by reason of subsection
(b) of the definition of “Eligible Transferee”.

 

4

 

SCHEDULE 1.1(A)

 

EXISTING LIENS

 

	
  Debtor

  	
   

  	
  Jurisdiction

  	
   

  	
  Filing Number

  	
   

  	
  Filing

  Date

  	
   

  	
  Secured Party

  
	
  AIRTEMP, Inc.

  	
   

  	
  Delaware

  	
   

  	
  00595805

  	
   

  	
  02/23/10

  	
   

  	
  Orbian Financial Services II, LLC

  
	
  Batchelor’s Mechanical
  Contractors, Inc.

  	
   

  	
  Alabama

  	
   

  	
  07-0863449

  	
   

  	
  10/15/07

  	
   

  	
  Beard Equipment Company

  
	
  Batchelor’s Mechanical
  Contractors, Inc.

  	
   

  	
  Alabama

  	
   

  	
  07-0863455

  	
   

  	
  10/15/07

  	
   

  	
  Beard Equipment Company

  
	
  California Comfort Systems
  USA, Inc.

  	
   

  	
  California

  	
   

  	
  04-7007236776

  	
   

  	
  11/24/04

  	
   

  	
  Employment Development Department

  
	
  Comfort Systems USA, Inc.

  	
   

  	
  Delaware

  	
   

  	
  20326656

  	
   

  	
  01/14/02

  	
   

  	
  Pacific Rim Capital, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
  20654099  

  (assignment)

  	
   

  	
  02/22/02

  	
   

  	
  Pullman Bank and Trust Company

  
	
   

  	
   

  	
   

  	
   

  	
  62628436  

  (continuation)

  	
   

  	
  07/31/06

  	
   

  	
  Pullman Bank and Trust Company

  
	
  Comfort Systems USA G.P., Inc.

  	
   

  	
  Delaware

  	
   

  	
  92419049

  	
   

  	
  07/28/09

  	
   

  	
  U.S. Bancorp

  
	
  Comfort Systems USA
  (Intermountain), Inc.

  	
   

  	
  Utah

  	
   

  	
  370624200940

  	
   

  	
  10/20/09

  	
   

  	
  Les Schwab Warehouse
  Center, Inc.

  
	
  Comfort Systems USA
  (Southeast), Inc.

  	
   

  	
  Delaware

  	
   

  	
  62475481

  	
   

  	
  07/18/06

  	
   

  	
  Thompson Tractor Co., Inc.

  
	
  Comfort Systems USA (Southeast), Inc.

  	
   

  	
  Delaware

  	
   

  	
  70905157

  	
   

  	
  03/09/07

  	
   

  	
  GreatAmerica Leasing Corporation

  
	
  Helm Corporation

  	
   

  	
  Colorado

  	
   

  	
  20012028540

  	
   

  	
  04/12/01

  	
   

  	
  Citicorp Vendor Finance Inc.

  
	
   

  	
   

  	
   

  	
   

  	
  2006F033790  

  (continuation)

  	
   

  	
  04/07/06

  	
   

  	
  Citicorp Vendor Finance Inc.

  
	
  Madera Mechanical Company

  	
   

  	
  Arizona

  	
   

  	
  200613969965

  	
   

  	
  01/06/06

  	
   

  	
  CNH Capital America LLC

  
	
  North American
  Mechanical, Inc.

  	
   

  	
  Delaware

  	
   

  	
  53961126

  	
   

  	
  12/21/05

  	
   

  	
  Rhyme Business Products

  
	
  North American
  Mechanical, Inc.

  	
   

  	
  Delaware

  	
   

  	
  91599379

  	
   

  	
  05/20/09

  	
   

  	
  Rhyme Business Products

  
	
  Tri-City Mechanical, Inc.

  	
   

  	
  Arizona

  	
   

  	
  200413234076

  	
   

  	
  07/06/04

  	
   

  	
  Ferguson Enterprises, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
  200413234076  

  (continuation)

  	
   

  	
  06/18/09

  	
   

  	
  Ferguson Enterprises, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
  200413234076  

  (amendment –name/address of
  secured party)

  	
   

  	
  06/22/09

  	
   

  	
  Air Cold Supply

  
	
   

  	
   

  	
   

  	
   

  	
  200413234076  

  (amendment –additional
  secured party)

  	
   

  	
  06/25/09

  	
   

  	
  Air Cold Supply  Webb Distributors

  

 

1

 

SCHEDULE 1.1(b)

 

EXISTING LETTERS OF CREDIT

 

	
   

  	
   

  	
   

  	
   

  	
  Date

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  June 30,

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Issued

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  2010

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Cancelled

  	
   

  	
  Maturity

  	
   

  	
   

  	
   

  	
  Notional

  	
   

  
	
  Issuer

  	
   

  	
  Obligor

  	
   

  	
  Or Reduced

  	
   

  	
  Dates

  	
   

  	
  Beneficiary

  	
   

  	
  Amount

  	
   

  
	
  Wachovia

  	
   

  	
  Comfort
  Systems USA, Inc.

  	
   

  	
  7/17/2008

  	
   

  	
  12/17/2010

  	
   

  	
  American
  Zurich Insurance Co./ Zurich

  	
   

  	
  8,787,414.00

  	
   

  
	
  Wachovia

  	
   

  	
  Comfort
  Systems USA, Inc. (Fagan)

  	
   

  	
  2/25/2004

  	
   

  	
  12/31/2010

  	
   

  	
  Kansas
  Division of Workers’ Compensation

  	
   

  	
  50,000.00

  	
   

  
	
  Wachovia

  	
   

  	
  Comfort
  Systems USA, Inc. (Fagan)

  	
   

  	
  1/28/2004

  	
   

  	
  12/31/2010

  	
   

  	
  Employers
  Reinsurance Corporation

  	
   

  	
  200,000.00

  	
   

  
	
  Wachovia

  	
   

  	
  Comfort
  Systems USA, Inc. (EL Pruitt)

  	
   

  	
  2/27/2008

  	
   

  	
  3/9/2011

  	
   

  	
  Royal
  Bank of Canada

  	
   

  	
  19,792.00

  	
   

  
	
  Wachovia

  	
   

  	
  Comfort
  Systems USA, Inc. (Shambaugh)

  	
   

  	
  7/8/2008

  	
   

  	
  4/1/2010

  	
   

  	
  Royal
  Bank of Canada

  	
   

  	
  —

  	
   

  
	
  Wachovia

  	
   

  	
  Comfort
  Systems USA, Inc.

  	
   

  	
  12/17/2007

  	
   

  	
  12/17/2010

  	
   

  	
  Ace
  American Insurance Company

  	
   

  	
  10,680,603.00

  	
   

  
	
  Wachovia

  	
   

  	
  Comfort
  Systems USA, Inc.

  	
   

  	
  11/28/2008

  	
   

  	
  11/29/2010

  	
   

  	
  Ace
  American Insurance Company

  	
   

  	
  7,934,991.00

  	
   

  
	
  Wachovia

  	
   

  	
  Comfort
  Systems USA, Inc. (Riddleberger)

  	
   

  	
  6/24/2008

  	
   

  	
  1/31/2011

  	
   

  	
  Liberty
  Mutual Insurance Company

  	
   

  	
  400,000.00

  	
   

  
	
  Wachovia

  	
   

  	
  Comfort
  Systems USA, Inc. (Riddleberger)

  	
   

  	
  7/7/2008

  	
   

  	
  9/28/2010

  	
   

  	
  Travelor’s
  Indemnity Company

  	
   

  	
  26,000.00

  	
   

  
	
  Wachovia

  	
   

  	
  Comfort
  Systems USA, Inc. (Riddleberger)

  	
   

  	
  9/22/2008

  	
   

  	
  9/28/2010

  	
   

  	
  Travelor’s
  Indemnity Company

  	
   

  	
  11,100.00

  	
   

  
	
  Wachovia

  	
   

  	
  Comfort
  Systems USA, Inc.

  	
   

  	
  11/25/2008

  	
   

  	
  11/21/2010

  	
   

  	
  Discover
  Property & Casualty Insurance Co.

  	
   

  	
  3,800,000.00

  	
   

  
	
  Wachovia

  	
   

  	
  Comfort
  Systems USA, Inc.

  	
   

  	
  11/25/2008

  	
   

  	
  11/21/2010

  	
   

  	
  Lexington
  Insurance Company

  	
   

  	
  2,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Grand Totals

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Actual Balances

  	
   

  	
  33,909,900.00

  	
   

  

 

1

 

SCHEDULE 3.1

 

LENDERS SCHEDULE

 

	
  Domestic Lending Office

  	
   

  	
  Eurodollar

  Lending

  Office

  	
   

  	
  Percentage

  Share

  	
   

  	
  Revolving Loan

  Commitment

  	
   

  
	
  Wells Fargo Bank, N.A.

  1000 Louisiana, 3rd Floor

  Houston, TX 77002

  Telephone: (713) 319-1630

  	
   

  	
  Same

  	
   

  	
  28

  	
  %

  	
  $

  	
  35,000,000

  	
   

  
	
  Capital One, N.A.

  5718 Westheimer, Suite 600

  Houston, Texas 77057

  Telephone: (713) 435-5024

  Fax: (713) 706-5499

  	
   

  	
  Same

  	
   

  	
  20

  	
  %

  	
  $

  	
  25,000,000

  	
   

  
	
  Bank of Texas, N.A.

  5 Houston Center

  1401 McKinney, Suite 1650

  Houston, Texas 77010

  Telephone: (713) 289-5855

  Fax: (713) 289-5825

  	
   

  	
  Same

  	
   

  	
  20

  	
  %

  	
  $

  	
  25,000,000

  	
   

  
	
  Regions Bank

  5005 Woodway

  Houston, Texas 77056

  Telephone: (713) 426-7157

  Fax: (713) 426-7180

  	
   

  	
  Same

  	
   

  	
  20

  	
  %

  	
  $

  	
  25,000,000

  	
   

  
	
  Branch Bank & Trust Company

  200 W. 2nd St., 16th Floor

  Winston-Salem, North Carolina 27101

  Telephone: (336) 733-2741

  Fax: (336) 733-2740

  	
   

  	
  Same

  	
   

  	
  12

  	
  %

  	
  $

  	
  15,000,000

  	
   

  

 

1

 

SCHEDULE 4.1

 

SECURITY DOCUMENTS

 

1.                                       Second Amended and Restated Security Agreement by and among Borrower and
its subsidiaries and Wells Fargo Bank, National Association, as Agent.

 

2.                                       Second Amended and Restated Pledge Agreement by and among Borrower and
its subsidiaries and Wells Fargo Bank, National Association, as Agent.

 

1

 

SCHEDULE 5

 

DISCLOSURE SCHEDULE

 

To supplement the following sections of the Agreement
of which this Schedule is a part, Borrower hereby makes the following
disclosures:

 

1

 

SECTION 5.7 to SCHEDULE 5

 

Material Restrictions

 

NONE

 

1

 

SECTION 5.9 to SCHEDULE 5

 

Litigation

 

NONE

 

1

 

SECTION 5.10 to SCHEDULE 5

 

Labor Disputes and Acts of God

 

NONE

 

1

 

SECTION 5.11 to SCHEDULE 5

 

ERISA Plans and Liabilities

 

ERISA Plans

 

Comfort Systems USA Health & Welfare Plan

MJ Mechanical Employee Healthcare Plan

Riddleberger Brothers, Inc. Employee Benefits
Plan

North American Mechanical Inc. Employee Benefit Plan

Delcard Associates, Inc. Employee Benefits Plan

Comfort Systems USA (Syracuse) Employee Benefits Plan

Eastern Heating & Cooling, Inc. Health
Plan

Air Systems Engineering Inc. Health Care Benefits Plan

Acorn Industrial, Inc. Employee Benefits Plan

Dillingham & Smith Employee Benefits Plan

 

Comfort Systems USA, Inc. 401(k) Plan

Dillingham & Smith Mechanical &
Sheet Metal Contractors 401(k) Profit-Sharing Plan

Acorn Retirement Plan

 

1

 

SECTION 5.12 to SCHEDULE 5

 

Environmental and Other Laws

 

NONE

 

1

 

SECTION 5.13 to SCHEDULE 5

 

Names and Places of Business

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  PRIOR

  	
   

  	
  PRIOR NAMES

  
	
  ENTITY NAME

  	
   

  	
  ADDRESS TYPE

  	
   

  	
  ADDRESS

  	
   

  	
  ADDRESSES

  	
   

  	
  & TRADE NAMES

  
	
  Comfort Systems USA, Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  675 Bering Drive, Suite 400, Houston, Texas
  77057

  	
   

  	
  777 Post Oak Blvd Suite 500, Houston, Texas
  77056

  	
   

  	
   

  
	
  ACI Mechanical, Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  3116 S. Duff Avenue, Ames, Iowa 50010

  	
   

  	
   

  	
   

  	
   

  
	
  ARC Comfort Systems USA, Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  675 Bering Drive, Suite 400, Houston, Texas
  77057

  	
   

  	
  777 Post Oak Blvd., Suite 500, Houston, TX
  77056

  	
   

  	
   

  
	
  Accurate Air Systems, Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  9745 Bent Oak Drive, Houston, Texas 77040

  	
   

  	
   

  	
   

  	
  Atlas Comfort Systems USA

   

  Accurate Air Systems, L.P.

  
	
  Accu-Temp GP, Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  675 Bering Drive, Suite 400, Houston, Texas
  77057

  	
   

  	
  777 Post Oak Blvd Suite 500, Houston, Texas
  77056

  	
   

  	
   

  
	
  Accu-Temp LP, Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  675 Bering Drive, Suite 400, Houston, Texas
  77057

  	
   

  	
  777 Post Oak Blvd Suite 500, Houston, Texas
  77056

  	
   

  	
   

  
	
  Acorn Industrial, Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  7311 ACC Boulevard, Raleigh, North Carolina 27617

  	
   

  	
   

  	
   

  	
   

  
	
  Air Systems Engineering, Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  3602 South Pine Street, Tacoma, Washington 98409

  	
   

  	
   

  	
   

  	
   

  
	
  AirTemp, Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  11 Wallace Avenue, South Portland, Maine 04106

  	
   

  	
   

  	
   

  	
   

  
	
  Atlas-Accurate Holdings, L.L.C.

  	
   

  	
  Principal Place of Business

  	
   

  	
  675 Bering Drive, Suite 400, Houston, Texas
  77057

  	
   

  	
  777 Post Oak Blvd. Suite 500, Houston, Texas
  77056

  	
   

  	
   

  
	
  Atlas Comfort Systems USA, Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  675 Bering Drive, Suite 400, Houston, Texas
  77057

  	
   

  	
  4133 Southerland, Houston, Texas 77092

  	
   

  	
   

  

 

1

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  PRIOR

  	
   

  	
  PRIOR NAMES

  
	
  ENTITY NAME

  	
   

  	
  ADDRESS TYPE

  	
   

  	
  ADDRESS

  	
   

  	
  ADDRESSES

  	
   

  	
  & TRADE NAMES

  
	
  Atlas Comfort Systems USA, L.L.C.

  	
   

  	
  Principal Place of Business

  	
   

  	
  9745 Bent Oak Drive, Houston, Texas 77040

  	
   

  	
  4133 Southerland, Houston, Texas 77092

  	
   

  	
  Atlas Air Conditioning Company, L.P.  

   

  Atlas Comfort Systems USA, L.P.  

   

  Atlas Comfort Systems USA

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  1225 E. Crosby Road, Suite B-14, Carrollton,
  Texas 75006

  	
   

  	
  10693 Wakeman Drive, Manassas, Virginia 20110  

   

  17745 Ashley Drive, Suite B, Panama City Beach,
  Florida 32413  

   

  340 East Shelbourne Avenue, Las Vegas, Nevada 89123  

   

  620 Magnolia Avenue, Suite E, Ontario,
  California 91762

  	
   

  	
  Atlas Comfort Systems Nevada  

   

  Comfort Systems USA Las Vegas

  
	
  Batchelor’s Mechanical Contractors, Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  15444 Industrial Drive, Loxley, Alabama 36551

  	
   

  	
  3110 Old Shell Road, Mobile, Alabama 36607

  	
   

  	
   

  
	
  BCM Controls Corporation

  	
   

  	
  Principal Place of Business

  	
   

  	
  30 Commerce Way, Woburn, Massachusetts 01801

  	
   

  	
   

  	
   

  	
   

  
	
  California Comfort Systems USA, Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  9750 Distribution Avenue, San Diego, California
  92121

  	
   

  	
  650 Alpine Way, Escondido, CA 92029  

   

  4660 Viewridge Ave., San Diego, CA 92123

  	
   

  	
   

  
	
  Comfort Systems USA (Arkansas), Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  4806 Rixey Road, North Little Rock, Arkansas 72117

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  116 Commerical Drive, Lowell, Arkansas 72745

  	
   

  	
  1915 North Shiloh, Fayetteville, Arkansas 72704

  	
   

  	
   

  
	
  Comfort Systems USA (Bristol), Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  294 Blevins Blvd., Bristol, Virginia 24203-0757

  	
   

  	
   

  	
   

  	
  Fred Hayes Heating & Air Conditioning
  Service Co.  

   

  Comfort Systems USA New River (Bristol)

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  106 St. John Road, Salem, Virginia 24153

  	
   

  	
   

  	
   

  	
   

  

 

2

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  PRIOR

  	
   

  	
  PRIOR NAMES

  
	
  ENTITY NAME

  	
   

  	
  ADDRESS TYPE

  	
   

  	
  ADDRESS

  	
   

  	
  ADDRESSES

  	
   

  	
  & TRADE NAMES

  
	
  Comfort Systems USA (CS1), Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  675 Bering Drive, Suite 400, Houston, Texas
  77057

  	
   

  	
   

  	
   

  	
   

  
	
  Comfort Systems USA Energy Services, Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  50 Baker Hollow Road Ste. A, Windsor, Connecticut
  06095

  	
   

  	
   

  	
   

  	
  Comfort Systems USA (Hartford), Inc.

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  650 S. Shackleford Road, #224, Little Rock, Arkansas
  72211

  	
   

  	
   

  	
   

  	
   

  
	
  Comfort Systems USA Federal Services, LLC

  	
   

  	
  Principal Place of Business

  	
   

  	
  3601 Commerce Drive, Suite 114, Baltimore,
  Maryland 21227

  	
   

  	
  2105 Emmorton Park Road, Suite 104, Edgewood,
  Maryland 21040

  	
   

  	
  Comfort Systems USA (Baltimore), Inc.

  
	
  Comfort Systems USA G.P., Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  675 Bering Drive, Suite 400, Houston, Texas
  77057

  	
   

  	
  777 Post Oak Blvd. Suite 500, Houston, Texas
  77056

  	
   

  	
   

  
	
  Comfort Systems USA (Intermountain), Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  2035 S. Milestone Drive, Salt Lake City, Utah 84104

  	
   

  	
   

  	
   

  	
  Contract Services  

   

  Salmon & Alder, LLC  

   

  SA Associates, Inc.

  
	
  Comfort Systems USA (Kentucky), Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  3405 Robards Court, Louisville, Kentucky 40218

  	
   

  	
   

  	
   

  	
  Rademaker Corporation

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  1960 Louisville Road, Bldg 2 Unit, Bowling Green,
  Kentucky 42101

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  2400 Waterson Trail, Louisville, Kentucky 40299

  	
   

  	
   

  	
   

  	
   

  
	
  Comfort Systems USA (MidAtlantic), LLC

  	
   

  	
  Principal Place of Business

  	
   

  	
  1057 Bill Tuck Highway, So Boston, Virginia 24592

  	
   

  	
   

  	
   

  	
  Comfort Systems USA (Carolinas), Inc.  

   

  Climate Control, Inc.  

   

  Climate Control, LLC  

   

  CCI Systems, Inc.

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  5171 Glenwood Avenue, Suite 480, Raleigh, North
  Carolina 27612

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  6600 Northpark Blvd, Charlotte, North Carolina 28216

  	
   

  	
   

  	
   

  	
   

  
	
  Comfort Systems USA (Midwest), LLC

  	
   

  	
  Principal Place of Business

  	
   

  	
  9103 Swanson Blvd., Suite 7, Clive, Iowa
  50325

  	
   

  	
   

  	
   

  	
   

  
	
  Comfort Systems USA National Accounts, LLC

  	
   

  	
  Principal Place of Business

  	
   

  	
  2655 Fortune Circle West,
  Suite E-F, Indianapolis, Indiana 46241

  	
   

  	
   

  	
   

  	
  Accu-Temp, LLC

  

 

3

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  PRIOR

  	
   

  	
  PRIOR NAMES

  
	
  ENTITY NAME

  	
   

  	
  ADDRESS TYPE

  	
   

  	
  ADDRESS

  	
   

  	
  ADDRESSES

  	
   

  	
  & TRADE NAMES

  
	
  Comfort Systems USA (Ohio), Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  7401 First Place, Oakwood Village, Ohio 44146

  	
   

  	
  30300 Bruce Industrial Parkway, Solon, Ohio 44139

  	
   

  	
   

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  2874 E. Kemper Road, Sharonville, Ohio 45241

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  3080 South Tech Blvd, Miamisburg, Ohio 45342

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  690 A Lakeview Plaza Blvd., Worthington, Oh 43085

  	
   

  	
  670 K Lakeview Plaza Blvd., Worthington, Oh 43085

  	
   

  	
   

  
	
  Comfort Systems USA Puerto
  Rico, Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  P.O. Box 4956 Ste 1134, Caguas, Puerto Rico
  00726-4956  

   

  Road #1, KM 27.5; Int. Sector El Barranco; B. Rio
  Canas; Caguas, Puerto Rico 00725

  	
   

  	
  Caguas, PR 00726-4956 Carr #1KM -23 HM.O B.O. , Rio
  Guaynbabo, PR 00970

  	
   

  	
  James Air Conditioning
  Enterprises, Inc.

  
	
  Comfort Systems USA (Southeast), Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  435 Corday Street, Pensacola, Florida 32503

  	
   

  	
   

  	
   

  	
  Comfort Systems USA (Atlanta), Inc.  

   

  H & M Mechanical, Inc.  

   

  Gulfside Mechanical, Inc.  

   

  Neel Mechanical Contractors, Inc.  

   

  Neel Mechanical, Inc.

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  250 Commercial Drive, Thomasville, Georgia 31757

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  13040 W. US Hwy 84, Newton, Alabama 36352

  	
   

  	
  255 Southgate Road, Dothan, Alabama 36301

  	
   

  	
   

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  3835 Gordon John Drive, Mobile, Alabama 36693

  	
   

  	
  4251 Alden Drive, Mobile, Alabama 36693

  	
   

  	
   

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  4518 Val North Drive, Valdosta, Georgia 31602

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  2275 Northwest Parkway Rd., Suite 105, Bldg.3,
  Marietta, Georgia 30067

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  8633 Elm Fair Blvd, Tampa, Florida 33610

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  3000 Highway 77, Ste B, Lynn Haven, Florida 32444

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  2734 Ledo Road, Suite 10E, Albany, Georgia
  31707

  	
   

  	
   

  	
   

  	
   

  

 

4

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  PRIOR

  	
   

  	
  PRIOR NAMES

  
	
  ENTITY NAME

  	
   

  	
  ADDRESS TYPE

  	
   

  	
  ADDRESS

  	
   

  	
  ADDRESSES

  	
   

  	
  & TRADE NAMES

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  3175 Williams Rd., Suite B, Columbus, Georgia
  31909

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  309 James E. Williams Dr., #1, Byron, Georgia 31008

  	
   

  	
   

  	
   

  	
   

  
	
  Comfort Systems USA (Syracuse), Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  6500 New Venture Gear Drive, East Syracuse, New York
  13057

  	
   

  	
   

  	
   

  	
  Armani Plumbing & Mechanical

   

  ABJ Fire Protection Company

   

  Woodcock & Associates, Inc.

   

  Woodcock & Armani

   

  Billone Mechanical Contractors

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  375 Averill Ave, Rochester, New York 14620

  	
   

  	
   

  	
   

  	
   

  
	
  Comfort Systems USA (Tennessee), Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  675 Bering Drive, Suite 400, Houston, Texas
  77057

  	
   

  	
   

  	
   

  	
   

  
	
  Comfort Systems USA (Texas), L.P.

  	
   

  	
  Principal Place of Business

  	
   

  	
  675 Bering Drive, Suite 400, Houston, Texas
  77057

  	
   

  	
  777 Post Oak Blvd. Suite 500, Houston, Texas
  77056

  	
   

  	
   

  
	
  Comfort Systems USA (Twin Cities), Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  675 Bering Drive, Suite 400, Houston, Texas
  77057

  	
   

  	
  777 Post Oak Blvd, Suite 500, Houston, TX 77056

   

  2611 Hamiline Avenue North, Suite 150,
  Roseville, MN 55113

  	
   

  	
   

  
	
  Comfort Systems USA
  (Western Michigan), Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  675 Bering Drive, Suite 400, Houston, Texas
  77057

  	
   

  	
  777 Post Oak Blvd. Suite 500, Houston, Texas
  77056

   

  421 North Lafayette St., Greenville, MI 48838

  	
   

  	
   

  
	
  CS53 Acquisition Corp.

  	
   

  	
  Principal Place of Business

  	
   

  	
  675 Bering Drive, Suite 400, Houston, Texas
  77057

  	
   

  	
  777 Post Oak Blvd. Suite 500, Houston, Texas
  77056

  	
   

  	
   

  
	
  Delcard Associates, Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  31 Blevins Drive, Suite A, Airport Industrial
  Park, New Castle, Delaware 19720

  	
   

  	
   

  	
   

  	
  Delcard Heating & Air
  Conditioning, Inc.

  
	
  Design Mechanical Incorporated

  	
   

  	
  Principal Place of Business

  	
   

  	
  168 CTC Blvd. Suite D, Louisville, Colorado
  80027

  	
   

  	
   

  	
   

  	
  Western Building Services, Inc.

  

 

5

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  PRIOR

  	
   

  	
  PRIOR NAMES

  
	
  ENTITY NAME

  	
   

  	
  ADDRESS TYPE

  	
   

  	
  ADDRESS

  	
   

  	
  ADDRESSES

  	
   

  	
  & TRADE NAMES

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  Glenwood Business Center, 282 Center Drive, Glenwood
  Springs, CO 81601

  	
   

  	
  P.O. Box 3070, 210 Marmot Lane,
  Suite B5 & B8, Eagle, Colorado 81631-3070

  	
   

  	
   

  
	
  Dillingham & Smith Mechanical and Sheet
  Metal Contractors, LLC

  	
   

  	
  Principal Place of Business

  	
   

  	
  2311 Kline Avenue, Nashville, Tennessee 37211

  	
   

  	
   

  	
   

  	
   

  
	
  Eastern Heating & Cooling, Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  880 Broadway, Albany, New York 12207-1316

  	
   

  	
   

  	
   

  	
   

  
	
  Eastern Refrigeration Co., Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  880 Broadway, Albany, New York 12207-1316

  	
   

  	
   

  	
   

  	
   

  
	
  Granite State Holdings Company, Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  675 Bering Drive, Suite 400, Houston, Texas
  77057

  	
   

  	
  777 Post Oak Blvd, Suite 500, Houston, Texas
  77056

  	
   

  	
   

  
	
  Granite State Plumbing & Heating LLC

  	
   

  	
  Principal Place of Business

  	
   

  	
  10 N. Riverdale Road, Weare, New Hampshire 03281

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Satellite

  	
   

  	
   

  	
   

  	
  26 Waterford Place, Gilford, New Hampshire 03249

  	
   

  	
   

  
	
  H&M Mechanical, Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  135 Belcher Drive, Pelham, Alabama 35124  P.O. Box 36397 Birmingham, AL 35236

  	
   

  	
   

  	
   

  	
  Comfort Systems USA (Atlanta), Inc.  

   

  Helm Corporation  

   

  MidSouth Controls LLC

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  3977 Valley East Industrial Drive, Birmingham,
  Alabama 35217

  	
   

  	
   

  	
   

  	
   

  
	
  Helm Corporation

  	
   

  	
  Principal Place of Business

  	
   

  	
  675 Bering Drive, Suite 400, Houston, Texas
  77057

  	
   

  	
  168 CTC Blvd. Suite D, Louisville, Colorado
  80027

  	
   

  	
   

  
	
  Hess Mechanical Corporation

  	
   

  	
  Principal Place of Business

  	
   

  	
  9600 Fallard Court, Upper Marlboro, Maryland
  20772-6703

  	
   

  	
   

  	
   

  	
   

  
	
  Hudson River Heating and Cooling, Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  675 Bering Drive, Suite 400, Houston, Texas
  77057

  	
   

  	
  10 Airline Drive Suite 205, Albany, New York
  12205

  	
   

  	
   

  
	
  H-VAC Supply, L.L.C.

  	
   

  	
  Principal Place of Business

  	
   

  	
  P.O. Box 4956, Suite 1134, Caguas, Puerto
  Rico 00726-4956

  	
   

  	
   

  	
   

  	
   

  
	
  Madera Mechanical

  	
   

  	
  Principal Place of Business

  	
   

  	
  1830 W. Copper St., Tucson, Arizona 85745

  	
   

  	
   

  	
   

  	
   

  

 

6

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  PRIOR

  	
   

  	
  PRIOR NAMES

  
	
  ENTITY NAME

  	
   

  	
  ADDRESS TYPE

  	
   

  	
  ADDRESS

  	
   

  	
  ADDRESSES

  	
   

  	
  & TRADE NAMES

  
	
  Mechanical Technical Services, Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  9601 Dessau Road, Bldg 3, Suite 303, Austin,
  Texas 78754

  	
   

  	
   

  	
   

  	
  Mechanical Technical Services, L.P.  

   

  MTECH

  
	
  Merit Mechanical, Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  9630 153rd Ave NE, Redmond, Washington
  98052

  	
   

  	
   

  	
   

  	
   

  
	
  MJ Mechanical Services, Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  2040 Military Road, Tonawanda, New York 14150

  	
   

  	
   

  	
   

  	
  JM State Refrigeration  

   

  Vastola Heating & Air Conditioning

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  300 Fire Tower Drive, Tonawanda, New York 14150

  	
   

  	
   

  	
   

  	
   

  
	
  North American Mechanical, Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  6135 North American Lane, De Forest, Wisconsin 53532

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  2600 W. College Avenue, Ste 4, Appleton, Wisconsin
  54914

  	
   

  	
   

  	
   

  	
   

  
	
  Plant Services Incorporated

  	
   

  	
  Principal Place of Business

  	
   

  	
  675 Bering Drive, Suite 400, Houston, Texas
  77057

  	
   

  	
  777 Post Oak Blvd Suite 500, Houston, Texas
  77056

  	
   

  	
   

  
	
  Quality Air Heating and Cooling, Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  3395 Kraft Avenue, SE, Grand Rapids, Michigan 49512

  	
   

  	
   

  	
   

  	
  Control Logic

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  2306 Winters Drive, Portage, Michigan 49002

  	
   

  	
   

  	
   

  	
   

  
	
  Riddleberger Brothers, Inc.

  	
   

  	
  Principal Place of Busines

  	
   

  	
  6127 S. Valley Pike, Mount Crawford, Virginia 22841

  	
   

  	
   

  	
   

  	
   

  
	
  S.I. Goldman Company, Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  799 Bennett Drive, Longwood, Florida 32750

  	
   

  	
   

  	
   

  	
  Comfort Systems USA (Florida), Inc.

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  320 Melody Lane, Casselberry, Florida 32707

  	
   

  	
   

  	
   

  	
   

  
	
  S.M. Lawrence Company, Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  245 Preston Street, Jackson, Tennessee 38301

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  157 Main St., Collierville, Tennessee 38017

  	
   

  	
  667 Chaney Drive, Collierville, Tennessee 38017

  	
   

  	
   

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  1187 Vultee Blvd., Nashville, Tennessee 37217

  	
   

  	
   

  	
   

  	
   

  
	
  SA Associates, Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  675 Bering Drive, Suite 400, Houston, Texas
  77057

  	
   

  	
  777 Post Oak Blvd., Suite 500, Houston, TX
  77056

  	
   

  	
  Salmon & Alder Associates

  

 

7

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  PRIOR

  	
   

  	
  PRIOR NAMES

  
	
  ENTITY NAME

  	
   

  	
  ADDRESS TYPE

  	
   

  	
  ADDRESS

  	
   

  	
  ADDRESSES

  	
   

  	
  & TRADE NAMES

  
	
  Salmon & Alder, LLC

  	
   

  	
  Principal Place of Business

  	
   

  	
  675 Bering Drive, Suite 400, Houston, Texas
  77057

  	
   

  	
  777 Post Oak Blvd., Suite 500, Houston, TX
  77056

  	
   

  	
   

  
	
  Seasonair, Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  16001-A Industrial Drive, Gaithersburg, Maryland
  20877

  	
   

  	
   

  	
   

  	
   

  
	
  Temp-Right Service, Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  101 North Catlin, Missoula, Montana 59801

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  1639 MT Highway 35, Kalispell, Montana 59901

  	
   

  	
   

  	
   

  	
   

  
	
  The Capital Refrigeration Company

  	
   

  	
  Principal Place of Business

  	
   

  	
  619 E. Jefferson Street, Montgomery, Alabama 36104

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Satellite

  	
   

  	
  480 North Dean Road-Unit G-3, Auburn, Alabama 36830

  	
   

  	
   

  	
   

  	
   

  
	
  Tri-City Mechanical, Inc.

  	
   

  	
  Principal Place of Business

  	
   

  	
  6875 W. Galveston, Chandler, Arizona 85226

  	
   

  	
   

  	
   

  	
  Conditioned Air Mechanical Services, Inc.  

   

  The Bengtsson Group, Inc.

  
	
   

  	
   

  	
  Satellite

  	
   

  	
   

  	
   

  	
  3450 S. Broadmont Blvd., Suite 100, Tucson, AZ
  85713  

   

  3250 S. Dodge Blvd #7, Tucson, Arizona 85713

  	
   

  	
   

  

 

8

 

SECTION 5.14 to SCHEDULE 5

 

Subsidiaries

 

	
  ENTITY NAME

  	
   

  	
  JURISDICTION OF

  ORGANIZATION

  	
   

  	
  FORMATION DATE

  
	
  ACI Mechanical, Inc.

  	
   

  	
  Delaware

  	
   

  	
  06/26/1998

  
	
  ARC Comfort Systems USA, Inc.

  	
   

  	
  Delaware

  	
   

  	
  03/17/1998

  
	
  Accurate Air Systems, Inc.

  	
   

  	
  Delaware

  	
   

  	
  05/24/2007

  
	
  Accu-Temp GP, Inc.

  	
   

  	
  Delaware

  	
   

  	
  05/21/1998

  
	
  Accu-Temp LP, Inc.

  	
   

  	
  Delaware

  	
   

  	
  05/20/1998

  
	
  Acorn Industrial, Inc.

  	
   

  	
  North Carolina

  	
   

  	
  01/03/1997

  
	
  Air Systems Engineering, Inc.

  	
   

  	
  Washington

  	
   

  	
  05/18/1973

  
	
  AirTemp, Inc.

  	
   

  	
  Delaware

  	
   

  	
  10/15/1998

  
	
  Atlas-Accurate Holdings, L.L.C.

  	
   

  	
  Delaware

  	
   

  	
  12/28/1998

  
	
  Atlas Comfort Systems USA, Inc.

  	
   

  	
  California

  	
   

  	
  07/31/2007

  
	
  Atlas Comfort Systems USA, L.L.C.

  	
   

  	
  Delaware

  	
   

  	
  06/08/2007

  
	
  Batchelor’s Mechanical Contractors, Inc.

  	
   

  	
  Alabama

  	
   

  	
  03/16/1981

  
	
  BCM Controls Corporation

  	
   

  	
  Massachusetts

  	
   

  	
  10/03/1984

  
	
  California Comfort Systems USA, Inc.

  	
   

  	
  California

  	
   

  	
  05/18/1983

  
	
  Comfort Systems USA (Arkansas), Inc.

  	
   

  	
  Delaware

  	
   

  	
  03/17/1998

  
	
  Comfort Systems USA (Bristol), Inc.

  	
   

  	
  Delaware

  	
   

  	
  08/25/1997

  
	
  Comfort Systems USA (CS1), Inc.

  	
   

  	
  Delaware

  	
   

  	
  12/14/2009

  
	
  Comfort Systems USA Energy Services, Inc.

  	
   

  	
  Delaware

  	
   

  	
  08/25/1997

  
	
  Comfort Systems USA Federal Services, LLC

  	
   

  	
  Delaware

  	
   

  	
  10/15/1998

  
	
  Comfort Systems USA G.P., Inc.

  	
   

  	
  Delaware

  	
   

  	
  08/12/1998

  
	
  Comfort Systems USA (Intermountain), Inc.

  	
   

  	
  Utah

  	
   

  	
  05/06/1969

  
	
  Comfort Systems USA (Kentucky), Inc.

  	
   

  	
  Kentucky

  	
   

  	
  02/10/1981

  
	
  Comfort Systems USA (MidAtlantic), LLC

  	
   

  	
  Virginia

  	
   

  	
  01/01/2010

  
	
  Comfort Systems USA (Midwest), LLC

  	
   

  	
  Iowa

  	
   

  	
  10/13/2009

  
	
  Comfort Systems USA National Accounts, LLC

  	
   

  	
  Indiana

  	
   

  	
  07/28/1998

  
	
  Comfort Systems USA (Ohio), Inc.

  	
   

  	
  Ohio

  	
   

  	
  10/10/1979

  
	
  Comfort Systems USA Puerto Rico, Inc.

  	
   

  	
  Puerto Rico

  	
   

  	
  07/02/1991

  
	
  Comfort Systems USA (Southeast), Inc.

  	
   

  	
  Delaware

  	
   

  	
  03/24/1998

  
	
  Comfort Systems USA (Syracuse), Inc.

  	
   

  	
  New York

  	
   

  	
  03/08/1965

  
	
  Comfort Systems USA (Tennessee), Inc.

  	
   

  	
  Tennessee

  	
   

  	
  12/28/2009

  
	
  Comfort Systems USA (Texas), L.P.

  	
   

  	
  Texas

  	
   

  	
  08/14/1998

  
	
  Comfort Systems USA (Twin Cities), Inc.

  	
   

  	
  Minnesota

  	
   

  	
  08/01/2001

  
	
  Comfort Systems USA
  (Western Michigan), Inc.

  	
   

  	
  Michigan

  	
   

  	
  07/21/1989

  
	
  CS53 Acquisition Corp.

  	
   

  	
  Delaware

  	
   

  	
  01/26/1999

  
	
  Delcard Associates, Inc.

  	
   

  	
  Delaware

  	
   

  	
  06/23/2000

  
	
  Design Mechanical Incorporated

  	
   

  	
  Delaware

  	
   

  	
  10/30/1997

  
	
  Dillingham & Smith Mechanical and Sheet
  Metal Contractors, LLC

  	
   

  	
  Tennessee

  	
   

  	
  12/31/2003

  
	
  Eastern Heating & Cooling, Inc.

  	
   

  	
  New York

  	
   

  	
  12/19/1988

  
	
  Eastern Refrigeration Co., Inc.

  	
   

  	
  New York

  	
   

  	
  01/30/1990

  

 

1

 

	
  ENTITY NAME

  	
   

  	
  JURISDICTION OF

  ORGANIZATION

  	
   

  	
  FORMATION DATE

  
	
  Granite State Holdings Company, Inc.

  	
   

  	
  Delaware

  	
   

  	
  11/02/2005

  
	
  Granite State Plumbing & Heating, LLC

  	
   

  	
  Delaware

  	
   

  	
  07/31/2001

  
	
  H & M Mechanical, Inc.

  	
   

  	
  Delaware

  	
   

  	
  06/25/1998

  
	
  Helm Corporation

  	
   

  	
  Colorado

  	
   

  	
  10/26/1972

  
	
  Hess Mechanical Corporation

  	
   

  	
  Delaware

  	
   

  	
  03/17/1998

  
	
  Hudson River Heating and Cooling, Inc.

  	
   

  	
  Delaware

  	
   

  	
  08/19/2005

  
	
  H-VAC Supply, L.L.C.

  	
   

  	
  Puerto Rico

  	
   

  	
  10/18/2006

  
	
  Madera Mechanical Company

  	
   

  	
  Arizona

  	
   

  	
  06/02/1983

  
	
  Mechanical Technical Services, Inc.

  	
   

  	
  Delaware

  	
   

  	
  05/24/2007

  
	
  Merit Mechanical, Inc.

  	
   

  	
  Washington

  	
   

  	
  02/14/1984

  
	
  MJ Mechanical Services, Inc.

  	
   

  	
  Delaware

  	
   

  	
  12/12/1997

  
	
  North American Mechanical, Inc.

  	
   

  	
  Delaware

  	
   

  	
  03/17/1998

  
	
  Plant Services Incorporated

  	
   

  	
  Iowa

  	
   

  	
  07/02/1986

  
	
  Quality Air Heating and Cooling, Inc.

  	
   

  	
  Michigan

  	
   

  	
  09/10/1980

  
	
  Riddleberger Brothers, Inc.

  	
   

  	
  Virginia

  	
   

  	
  12/22/1958

  
	
  S.I. Goldman Company, Inc.

  	
   

  	
  Florida

  	
   

  	
  10/04/1976

  
	
  S.M. Lawrence Company, Inc.

  	
   

  	
  Tennessee

  	
   

  	
  03/08/1973

  
	
  SA Associates, Inc.

  	
   

  	
  Utah

  	
   

  	
  03/27/1984

  
	
  Salmon & Alder, LLC

  	
   

  	
  Utah

  	
   

  	
  07/08/1996

  
	
  Seasonair, Inc.

  	
   

  	
  Maryland

  	
   

  	
  10/28/1966

  
	
  Temp-Right Service, Inc.

  	
   

  	
  Delaware

  	
   

  	
  09/25/1997

  
	
  The Capital Refrigeration Company

  	
   

  	
  Delaware

  	
   

  	
  08/06/1998

  
	
  Tri-City Mechanical, Inc.

  	
   

  	
  Arizona

  	
   

  	
  12/23/1977

  

 

2

 

SCHEDULE 7.1

 

Existing Indebtedness

 

Indebtedness Related to Previous
Acquisitions:

 

	
  Entity/Assets Acquired

  	
   

  	
  Remaining Balance

  	
   

  
	
  Air Systems
  Engineering, Inc.

  	
   

  	
  $

  	
  375,000.00

  	
   

  
	
  Merit
  Mechanical, Inc.

  	
   

  	
  $

  	
  649,134.00

  	
   

  
	
  Riddleberger
  Brothers, Inc.

  	
   

  	
  $

  	
  750,000.00

  	
   

  
	
  Conditioned Air Mechanical
  Services, Inc.

  	
   

  	
  $

  	
  666,667.00

  	
   

  
	
  Delcard
  Associates, Inc.

  	
   

  	
  $

  	
  1,000,000.00

  	
   

  
	
  Mid South Control
  Systems, Inc.

  	
   

  	
  $

  	
  250,000.00

  	
   

  
	
  Dillingham &
  Smith Mechanical and Sheet Metal Contractors, LLC

  	
   

  	
  $

  	
  2,100,000.00

  	
   

  
	
  Acorn
  Industrial, Inc.

  	
   

  	
  $

  	
  900,000.00

  	
   

  
	
  Total

  	
   

  	
  $

  	
  6,690,801.00

  	
   

  

 

1Exhibit 10.1

 

SECOND
AMENDED AND RESTATED

DEBT
EXCHANGE AGREEMENT

 

THIS SECOND AMENDED AND RESTATED DEBT EXCHANGE
AGREEMENT (this “Agreement”) is entered into as of
this 22nd day of July, 2010 by and between ADVANCED
LIFE SCIENCES HOLDINGS, INC.,
a Delaware corporation (the “Company”), and Michael T. Flavin (the “Maker”).

 

RECITALS

 

WHEREAS, the Company and the Maker
have entered into that certain Third Amended & Restated Promissory
Note dated as of January 4, 2010 (the “Note”) relating to
indebtedness of the Company to Maker in the outstanding principal amount of
$2.0 million (the “Indebtedness”);

 

WHEREAS, on
July 7, 2010, the Company completed a registered public offering
of 379,188 units at a public offering price of $4.20 per unit (the “Units”),
with each unit consisting of (i) 100 shares of the Company’s common stock,
(ii) 100 stock warrants to purchase shares of common stock at an exercise
price of $0.042 per share (the “Stock Warrants”) and (iii) one warrant to
purchase an additional unit, consisting of 100 shares of common stock and 100
Stock Warrants, at an exercise price of $4.20 per additional unit (the “Unit
Warrants”);

 

WHEREAS, pursuant to the Amended
and Restated Debt Exchange Agreement dated as of June 15, 2010 (the “Prior
Agreement”) the Maker agreed with the Company (acting through the
independent audit committee of the Company’s board of directors) to exchange
the Note for Units on the terms and conditions described therein; and

 

WHEREAS, the Maker and the Company
(acting through the independent audit committee of the Company’s board of
directors) have agreed to amend and restate the Prior Agreement in its entirety
upon the terms and subject to the conditions of this Agreement.

 

NOW, THEREFORE, in consideration of the
foregoing Recitals and the mutual agreements and covenants contained herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Maker and the Company hereby agree as
follows:

 

ARTICLE I

DEBT EXCHANGE

 

1.1           Debt
Exchange.  The Maker shall deliver the Note to the Company for
cancellation and retirement in full of the Indebtedness and, in exchange,
receive from the Company 47,619,047 shares (the “Shares”) of the Company’s
common stock, par value $0.01 per share (the “Exchange”).

 

1.2           Accrued
Interest.  The Company shall make a cash payment to the Maker in
satisfaction of accrued and unpaid interest on the Indebtedness to but
excluding the date of the Exchange.

 

1.3           Restricted
Securities.  The Maker understands that the Shares are characterized
as “restricted securities” under the federal securities laws inasmuch as they
will be acquired in a transaction not involving a public offering, and that
under such laws and applicable regulations such securities may be resold
without registration under the federal securities laws only in certain limited
circumstances.  The certificates for the Shares shall be subject to a
legend or legends restricting transfer under the federal securities laws and
referring to restrictions on transfer herein, such legend to be substantially
as follows:

 

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”)
HAVE BEEN ISSUED AND SOLD IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), AND APPROPRIATE
EXEMPTIONS FROM REGISTRATION UNDER THE SECURITIES LAWS OF OTHER APPLICABLE
JURISDICTIONS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD OR
TRANSFERRED OTHER THAN PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE 1933 ACT AND THE
APPLICABLE SECURITIES LAWS OF ANY OTHER JURISDICTION.  THE ISSUER SHALL BE
ENTITLED TO REQUIRE AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT WITH
RESPECT TO COMPLIANCE OF THE PROPOSED SALE OR TRANSFER WITH THE REGISTRATION
REQUIREMENTS OF THE 1933 ACT OR EXEMPTION THEREFROM.

 

ARTICLE II

MISCELLANEOUS

 

2.1           Changes.  This Agreement may be modified,
amended or waived only pursuant to a written instrument signed by the Company
and the Maker.

 

2.2           Headings. 
The headings of the various sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed to be part of this
Agreement.

 

2.3           Governing
Law.  This Agreement shall be interpreted and the rights and
liabilities of the parties hereto determined in accordance with the internal
laws and decisions of the State of Illinois, without giving affect to the
conflict of laws principals thereof.  Whenever possible, each provision of
this Agreement shall be interpreted in such a manner as to be effective and
valid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or by the remaining provisions of this Agreement.

 

2

 

2.4           Counterparts. 
This Agreement may be executed in two or more counterparts, each of which shall
constitute an original, but all of which, when taken together, shall constitute
but one instrument, and shall become effective when one or more counterparts
have been signed by each party hereto and delivered to the other party.

 

2.5           Entire
Agreement.  This Agreement constitutes the entire agreement between
the parties hereto with respect to the Exchange and supersedes any prior
understandings or agreements with respect thereto.

 

[signature
page follows]

 

3

 

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

 

	
   

  	
  ADVANCED LIFE SCIENCES HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark Caputo

  
	
   

  	
   

  	
  Name:

  	
  Mark Caputo

  
	
   

  	
   

  	
  Title:

  	
  Vice President Accounting and Controller

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MICHAEL T. FLAVIN

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael T. Flavin

  

 

4

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