Document:

exv10w2

Exhibit 10.2

SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT 

     This SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”), dated as of
April 9, 2009, among ALON REFINING KROTZ SPRINGS, INC. (the “Company”), as a Borrower, ALON
REFINING LOUISIANA, INC. (“Holdings”), and BANK OF AMERICA, N.A. (“Bank of
America”), as the Agent and as a Lender. Initially capitalized terms and phrases used but not
defined in this Amendment have the respective meanings set forth in the Loan Agreement (as defined
below), as amended hereby.

R E C I T A L S:

     A. WHEREAS, the Company, each other party joined thereto as a Borrower from time to time,
Holdings, the Lenders party thereto from time to time, and the Agent executed that certain Loan and
Security Agreement dated as of July 3, 2008 (as amended, supplemented, or otherwise modified from
time to time, the “Loan Agreement”), pursuant to which the Lenders have agreed to make
available to the Borrowers a revolving line of credit on the terms and conditions set forth
therein; and

     B. WHEREAS, the Company, Holdings, the Lenders, and the Agent desire that the Loan Agreement
be amended in certain respects in accordance with the terms of this Amendment.

     NOW, THEREFORE, in consideration of the premises and for other valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

     1. Recitals. The foregoing Recitals are accurate and are incorporated herein and made
a part hereof for all purposes.

     2. Amendments to Loan Agreement. Subject to the terms and conditions set forth herein,
as of the Second Amendment Effective Date (as defined below), the Loan Agreement is hereby amended
as follows:

          (a) Amendment of Certain Definitions. The following definitions set forth in
Section 1.1 of the Loan Agreement are hereby amended and restated in their entirety to read as
follows:

“Applicable Margin: with respect to any Type of Loan or the Unused Line Fee,
the margin set forth below, as determined by the Fixed Charge Coverage Ratio for the
last Four Quarter Period:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	LIBOR	 	Standby	 	Documentary	 	 
	 	 	Fixed Charge	 	Base Rate	 	Revolver	 	Letters of	 	Letters of	 	Unused
	Level	 	Coverage Ratio	 	Loans	 	Loans	 	Credit	 	Credit	 	Line Fee
	I

	 	Greater than 1.40 to 1.00
	 	 	2.50	%	 	 	4.00	%	 	 	4.00	%	 	 	3.50	%	 	 	0.50	%
	II

	 	Less than or equal to 1.40 to

1.00 but greater than 1.25 to
1.00
	 	 	2.75	%	 	 	4.25	%	 	 	4.25	%	 	 	3.75	%	 	 	0.50	%
	III

	 	Less than or equal to 1.25 to
1.00
	 	 	3.00	%	 	 	4.50	%	 	 	4.50	%	 	 	4.00	%	 	 	0.625	%

Until the date of receipt by the Agent of the quarterly financial statements
delivered for the Fiscal Quarter ending March 31, 2009, the Applicable Margins shall
be determined as

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if Level I were applicable. Thereafter, the margins shall be subject to increase or
decrease upon receipt by Agent pursuant to Section 10.1.4 of the financial
statements and corresponding Compliance Certificate for the last Fiscal Quarter,
which change shall be effective on the first day of the calendar month following
receipt. If, by the first day of a month, any financial statements and Compliance
Certificate due in the preceding month have not been received, then the margins
shall be determined as if Level III were applicable, from such day until the first
day of the calendar month following actual receipt.”

“Availability Reserve: the Availability Block, plus the sum of each
of the following (without duplication of any of the following) in such amounts and
with respect to such matters as the Agent in its credit judgment, reasonably
exercised, may elect to impose from time to time: (a) the Dilution Reserve; (b) the
Inventory Reserve; (c) the Rent and Charges Reserve; (d) the LC Reserve; (e) the
Bank Product Reserve; (f) all accrued Royalties, whether or not then due and payable
by a Borrower; (g) the Earnout Reserve, (h) the aggregate amount of liabilities
secured by Liens upon ABL Priority Collateral that are senior to Agent’s Liens (but
imposition of any such reserve shall not waive an Event of Default arising
therefrom); (i) the First Purchaser Lien Reserve; (j) reserves for customs charges
and estimated excise fuel Taxes; and (k) such additional reserves, in such amounts
and with respect to such matters as the Agent in its credit judgment, reasonably
exercised, may elect to impose from time to time, in each case of the foregoing
clauses (a) through (k), without duplication of reserves taken or reductions made in
determining Eligible Petroleum Inventory, Eligible Petroleum Inventory in Transit,
Eligible Cash and Eligible Investments. For the avoidance of doubt, the
Availability Block shall not be deemed to be duplicative of any other reserves or
reductions.”

“Borrowing Base: on any date of determination, an amount equal to the lesser
of:

(a) the aggregate amount of Revolver Commitments, minus the LC Obligations;
and

(b) the difference of:

(i) the sum of:

     (A) 90% of the Net Amount of Eligible Major Accounts; provided,
that such percentage shall be reduced to 85% on May 1, 2009;
plus

     (B) 85% of the Net Amount of Eligible Other Accounts;
plus

     (C) 85% of the sum of (1) Eligible Petroleum Inventory and (2)
Eligible Petroleum Inventory in Transit; provided, that such
percentage shall be reduced to 80% on May 1, 2009; plus

     (D) 85% of the DOE Contract Value through June 1, 2009 only;
plus

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     (E) 100% of Eligible Cash; plus

     (F) 95% of Eligible Investments; plus

     (G) 100% of the amount available to be drawn by the Agent on
the Supporting Letter of Credit; plus

     (H) 100% of Paid but Unexpired Letters of Credit; minus

(ii) the Availability Reserve;

provided, that no Accounts or Petroleum Product acquired in an Acquisition
consummated by any Obligor after the Closing Date shall be included in any
calculation of the Borrowing Base until completion of all field exams, appraisals,
audits and other evaluation of Collateral in a manner and with results acceptable to
Agent.”

“Borrowing Base Certificate: a certificate signed by a Financial Officer, in
form and substance satisfactory to the Agent, by which Borrowers certify calculation
of the Borrowing Base.”

“Compliance Certificate: a certificate, in the form of Exhibit H, duly
completed and signed by a Financial Officer and otherwise satisfactory to the
Agent.”

“DOE Contract Value: on any date of determination, an amount equal to the
difference, if any, between the maximum undrawn amount of all Letters of Credit
issued in favor of the DOE in respect of the DOE Contracts, on the one hand, and the
cost value (based on Platt’s Oilgram Price Report, or if such report is not
available, valued on a Marked-to-Market Basis) of the undelivered exchange oil plus
premium barrels required to be delivered by the Borrower to the DOE pursuant to the
DOE Contracts, on the other hand.”

“Earnout Reserve: the reserve in respect of payments that may become due
under the Earnout Agreement, which reserve may be established and maintained from
time to time by the Agent in a maximum amount not to exceed the sum of all past due
payments under the Earnout Agreement, if any, plus (without duplication),
the following: (a) during any period from July 3 of each Loan Year through
September 30 of such Loan Year, 25% of the anticipated annual payments that may
become due under the Earnout Agreement in respect of such Loan Year; (b) during any
period from October 1 of each Loan Year through December 31 of such Loan Year, 50%
of the anticipated annual payments that may become due under the Earnout Agreement
in respect of such Loan Year; (c) during any period from January 1 of each Loan Year
through April 30 of such Loan Year, 75% of the anticipated annual payments that may
become due under the Earnout Agreement in respect of such Loan Year; and (d) during
any period from May 1 of each Loan Year through July 2 of such Loan Year, 100% of
the anticipated annual payments that may become due under the Earnout Agreement in
respect of such Loan Year. Upon receipt by Agent of evidence (in form and substance
reasonably satisfactory to Agent) that a required payment under the Earnout
Agreement has been made, such reserve will be
reduced in the amount of such payment, but in no event to an amount less than zero.”

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“Eligible Cash: the sum of cash of the Borrowers that is subject to (a) the
first priority Lien of Agent in favor of the Lenders and (b) a blocked account
control agreement establishing the Agent’s control and exclusive dominion over such
cash.”

“Eligible Investments: all Qualifying Investments owned by the Obligors that
are held in a custody account subject to the Agent’s control and exclusive dominion
and that are subject to a valid, first priority, perfected Lien and security
interest in favor of the Agent, for the benefit of the Lenders.”

“Fee Letter: the fee letter agreement dated as of the date hereof between
Agent and the Company, as amended from time to time.”

“Other Agreement: each Note; the Intercreditor Agreement; the Intercreditor
Acknowledgement; the Related Real Estate Documents; each LC Document; the Fee
Letter; each Lien Waiver; each Borrowing Base Certificate and Interim Borrowing Base
Certificate; each Compliance Certificate; each financial statement or report
delivered hereunder; or each other document, instrument or agreement (other than
this Agreement or a Security Document) now or hereafter delivered by an Obligor or
other Person to Agent or a Lender in connection with any transactions relating
hereto.”

“Paid but Unexpired Letters of Credit: at any given time, the amount by
which (a) the maximum aggregate amount payable by the Obligors in connection with
purchases (or, solely to the extent expressly permitted below, exchanges) of
Petroleum Product by the Obligors supported by Letters of Credit has been reduced
below (b) the maximum undrawn amount of all such Letters of Credit; provided that
only fully-liquidated, cash sums certain that are not subject to market fluctuation
or otherwise subject to change may be included as a reduction in the calculation of
clause (a) above; and provided, further, that no amounts may be included as a
reduction in the calculation of clause (a) above in respect of transactions
involving the exchange of Petroleum Product, unless the Obligors have demonstrated
to the reasonable satisfaction of Agent (unless Agent in its sole discretion waives
any such requirement in writing) and the Agent has provided confirmation in writing
that it is satisfied with each of the following (such confirmation not to be
unreasonably withheld or delayed): (i) the contracts underlying such transactions
expressly permit the Obligors to irrevocably convert such exchange transaction into
a purchase and sale (for payment of only cash sums certain that are not subject to
market fluctuation or otherwise subject to change) of Petroleum Product by the
counterparty to such contract to one or more of the Obligors, (ii) such conversion
does not arise upon or in connection with any breach or default by the Obligors
under such contracts, (iii) all conditions (if any) to such conversion have been
irrevocably satisfied in full or waived in writing, and (iv) such contract does not
allow for the reversion of such transaction to an exchange or otherwise to any
transaction other than a purchase for cash sums certain not subject to market
fluctuation or otherwise subject to change.”

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          (b) New Definitions. The following new definitions are hereby added to Section 1.1 of
the Loan Agreement in proper alphabetical order to read in their entirety as follows:

“Availability Block: commencing May 1, 2009, on any date of determination
during each period set forth below, an amount not to exceed the corresponding
maximum amounts set forth below:

	 	 	 
	Period	 	Availability Block
	May 2009

	 	The greater of

1% of the Borrowing Base or $2,000,000
	 
	 	 
	June 2009

	 	The greater of

2% of the Borrowing Base or $4,000,000
	 
	 	 
	July 2009

	 	The greater of

3% of the Borrowing Base or $6,000,000
	 
	 	 
	August 2009

	 	The greater of 

4% of
the Borrowing Base or $8,000,000
	 
	 	 
	September 2009

	 	The greater of

5% of the Borrowing Base or $10,000,000
	 
	 	 
	October 2009

	 	The greater of

6% of the Borrowing Base or $12,000,000
	 
	 	 
	November 2009

	 	The greater of

7% of the Borrowing Base or $14,000,000
	 
	 	 
	December 2009

	 	The greater of

8% of the Borrowing Base or $16,000,000
	 
	 	 
	January 2010

	 	The greater of

9% of the Borrowing Base or $18,000,000
	 
	 	 
	February 1, 2010 and at

all times thereafter

	 	The greater of

10% of the Borrowing Base or $20,000,000

For the avoidance of doubt, the amount of the Availability Block may be adjusted by
the Agent from time to time based on the then most recent Borrowing Base Certificate
or Interim Borrowing Base Certificate, as the case may be, in accordance with the
foregoing during each of the periods set forth above to reflect changes in the
amount of the Borrowing Base during such period(s).”

“Blockage Period: means (a) the period beginning on January 1, 2009, and
ending on the date upon which the Availability Block has been fully implemented
(i.e. has been established at an amount equal to the greater of 10% of the Borrowing
Base or $20,000,000), and (b) thereafter, each period beginning on each Blockage
Period Trigger

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Date (which Blockage Period Trigger Date may have occurred prior to the date set
forth in clause (a) above) and ending on the first day of the second calendar month
following the month in which such Blockage Period Trigger Date occurs, provided,
that if such Blockage Period arises based exclusively on the occurrence or
continuance of a Default or Event of Default, such Blockage Period shall end on the
date on which such Default or Event of Default shall be cured or waived. For the
avoidance of doubt, any two or more Blockage Periods may run concurrently and/or
consecutively and a Blockage Period shall be deemed to remain in effect until all
Blockage Periods have ended.”

“Blockage Period Trigger Date: each date on which any of the following
occur: (a) Availability is less than an amount equal to the sum of (i) 15% of the
total Revolver Commitments on such date, plus (ii) an amount equal to all
Retained Unwind Proceeds delivered (or required to have been delivered) to the Agent
on such date, (b) any date on which a Default or Event of Default occurs or (c) any
date on which an Event of Default is continuing.”

“Defaulting Lender: any Lender that (a) fails to make any payment or
provide funds to the Agent or any Borrower as required hereunder or fails otherwise
to perform its obligations under any Loan Document, and such failure is not cured
within one Business Day, or (b) is the subject of any Insolvency Proceeding.”

“Dilution Reserve: the reserve established by the Agent from time to time in
an amount up to the sum of (a) (i) .1% for each .1 percentage point that the
Dilution Percent exceeds 2.5%, multiplied by (ii) the Net Amount of Eligible
Major Accounts, plus (b) (i) .1% for each .1 percentage point that the
Dilution Percent exceeds 2.5%, multiplied by (ii) the Net Amount of Eligible
Other Accounts.”

“DOE: the United States of America acting through the Department of
Energy.”

“DOE Contracts: those certain Department of Energy Oil Exchange Agreements
(DE-FE 93008, DE-FE 92300, DE-FE 93003, DE-FE 93006 and DE-FE 93010) between the
Borrower and the DOE, as in effect on the Second Amendment Date.”

“Double-Sided Application Period: each period beginning on each
Double-Sided Application Trigger Date and ending on the first day of the second
calendar month following the month in which such Double-Sided Application Trigger
Date occurs; provided, that if such Double-Sided Application Period arises based
exclusively on the occurrence or continuance of a Default or Event of Default, such
Double-Sided Application Period shall end on the date on which such Default or Event
of Default shall be cured or waived. For the avoidance of doubt, any two or more
Double-Sided Application Periods may run concurrently and/or consecutively and a
Double-Sided Application Period shall be deemed to remain in effect until all
Double-Sided Application Periods have ended.”

“Double-Sided Application Trigger Date: each date on which any of the
following occur: (a) Availability has been less than $15,000,000 for three (3)
consecutive Business Days, (b) any date on which a Default or Event of Default
occurs or (c) any date on which an Event of Default is continuing.”

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“Interim Borrowing Base Certificate: a certificate signed by a Financial
Officer, in form
and substance satisfactory to the Agent, providing only updated calculations of
Eligible Accounts consistent with the calculation of Eligible Accounts in the
Borrowing Base Certificates heretofore delivered to Agent and reflecting changes in
the outstanding principal amount of Loans, in each case since delivery of the last
Borrowing Base Certificate or Interim Borrowing Base Certificate, as the case may
be, and pursuant to which Borrowers certify such calculations of the Eligible
Accounts portion of such certificate and such changes in the outstanding principal
amount of Loans as set forth in such certificate.”

“New Cash Equity Contributions: means the contribution by any Person (other
than any Obligor) made to Holdings in cash in the form of common equity, and made in
turn by Holdings to the Company in cash and in the form of common equity, each such
contribution to be made directly to a Dominion Account upon prior or concurrent
written notice to the Agent of the making of such contribution and the source of
such contribution, all in detail reasonably satisfactory to the Agent.”

“Retained Unwind Proceeds: has the meaning set forth in Section 10.1.9.”

“Second Amendment Date: April 9, 2009.”

“Term Loan First Amendment: that certain First Amendment Agreement dated as
of April 9, 2009 to Term Loan Agreement, among Holdings, the Borrower, the Term Loan
Agent and the lenders party thereto.”

“Trailing Twelve Month Period: a period of twelve full consecutive calendar
months, taken together as one accounting period for the Company and its consolidated
Subsidiaries; provided, prior to the end of the twelfth full consecutive calendar
month following the Closing Date, ‘Trailing Twelve Month Period’ shall mean the
cumulative number of calendar months ending after the Closing Date.”

“Unwind Proceeds” shall mean (a) any amounts arising out of the unwinding
and/or termination of the Crack Spread Hedging Agreement as contemplated by Section
10.1.9, and (b) any other proceeds received by the Borrowers or any other person
from the Crack Spread Hedging Agreement on or after the Second Amendment Date.”

          (c) Reduction of Revolver Commitments and Amendment to Schedule 1.1. The aggregate
amount of the Revolver Commitments is hereby reduced to $250,000,000 (as such amount may be
increased in accordance with Section 2.2) and Schedule 1.1 to the Loan Agreement is hereby replaced
with the schedule attached hereto as Attachment 1, which is incorporated herein by reference.

          (d) Amendment of Section 2.2. Section 2.2 of the Loan Agreement is hereby amended and
restated in its entirety as follows:

     “2.2 Increase in Revolving Credit Facility.

     2.2.1 Request for Increase. So long as there exists no Default or
Event of Default and upon written notice to the Agent (which shall promptly notify
the Lenders), the Borrower Agent may from time to time, request an increase in the
Revolving Credit Facility by an amount (for all such requests) not exceeding
$150,000,000; provided, that any such request for an increase shall be in a minimum
amount of $25,000,000 and
increments of $25,000,000 in excess thereof; and provided, further, that:

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     (a) in connection with any such increase in the Revolving Credit Facility to
$275,000,000, so long as the advance rate for Eligible Major Accounts has been
reduced to 85%, the advance rate for Eligible Petroleum Product has been reduced to
80%, and the full amount (i.e. the greater of 10% of the Borrowing Base or
$20,000,000) of the Availability Block has been implemented, in each case, either in
accordance with the scheduled term therefor or earlier by express written agreement
of the Borrower Agent, then Bank of America as Lender shall increase its
Revolver Commitment by $25,000,000 (without regard to the provisions of Sections
2.2.2, 2.2.3, and 2.2.4) on the date set forth in such notice so long as the
Borrower Agent has delivered to the Agent the certificate(s) required by Section
2.2.5; and

     (b) (i) the aggregate amount of the Revolving Credit Facility shall not be
increased in excess of $275,000,000 unless Bank of America’s Revolver Commitment has
been reduced to no greater than $75,000,000, and (ii) the aggregate amount of the
Revolving Credit Facility shall not be increased in excess of $300,000,000 unless
Bank of America’s Revolver Commitment has been reduced to no greater than
$50,000,000; provided that in no event shall the Revolving Credit Facility be
increased in excess of $400,000,000.

At the time of sending such notice, the Borrower Agent (in consultation with the
Agent) shall specify the date by which each Lender is requested to respond or, in
the case of an increase in the Revolving Credit Facility to $275,000,000 pursuant to
clause (a) above, the date upon which such increase is to become effective (which
date shall in no event be less than ten Business Days from the date of delivery of
such notice to the Agent). Nothing in this Section 2.2 shall be deemed to impair or
otherwise affect any Lender’s rights under Section 13; provided that,
notwithstanding anything in this Agreement to the contrary, it is hereby agreed that
Bank shall not be permitted to assign all of its Loans hereunder prior to an
increase in the Revolving Credit Facility pursuant to Section 2.2.1(a) above unless
an assignee of Bank of America has agreed, pursuant to documentation reasonably
acceptable to Borrowers, to be bound by Section 2.2.1(a) to the same extent as Bank
of America.

          2.2.2 Lender Elections to Increase. Except as otherwise expressly
provided in Section 2.2.1(a) above, each Lender shall have the right, but shall be
under no obligation, to participate in any requested increase in the Revolving
Credit Facility under this Section 2.2. Each Lender shall notify the Agent within
the time period specified in accordance with Section 2.2.1 whether or not it agrees
to increase its Revolver Commitment and, if so, whether by an amount equal to,
greater than, or less than its Pro Rata share of such requested increase. Any
Lender not responding within such time period shall be deemed to have declined to
increase its Revolver Commitment.

          2.2.3 Notification by Agent; Additional Lenders. The Agent shall
notify the Borrower Agent and each Lender of the Lenders’ responses to each request
made hereunder. To achieve the full amount of a requested increase, and subject to
the approval of the Agent and the Issuing Bank (which approvals shall not be
unreasonably withheld), the Borrowers may also invite additional Eligible Assignees
to become Lenders pursuant to a joinder agreement in form and substance satisfactory
to the Agent
and its counsel.

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          2.2.4 Closing Date and Allocations. If the Revolving Credit Facility
is increased in accordance with this Section, the Agent and the Borrowers shall
determine the effective date (the ‘Revolver Increase Closing Date’) and the
final allocation of such increase. The Agent shall promptly notify the Borrowers
and the Lenders of the final allocation of such increase and the Revolver Increase
Closing Date. Upon the satisfaction of the conditions precedent set forth in
Section 2.2.5 on the proposed Revolver Increase Closing Date and, with respect to
any new Lenders participating in the proposed increase, delivery to the Agent by
such Lenders of a joinder agreement in form and substance satisfactory to the Agent
and its counsel and a processing fee of $3,500 (unless otherwise agreed by the Agent
in its discretion), the Revolving Credit Facility shall be so increased, Schedule
1.1 shall be deemed automatically amended and replaced to reflect any new Lenders
and such increase, and the applicable Lenders, the Agent and the Borrowers shall
make appropriate arrangements for issuance of replacement and/or new Notes, as
applicable.

          2.2.5 Conditions to Effectiveness of Increase. As a condition
precedent to such increase, the Borrower Agent shall deliver to the Agent a
certificate of each Obligor dated as of the Revolver Increase Closing Date signed by
a Senior Officer of such Obligor (a) certifying and attaching the resolutions
adopted by such Obligor approving or consenting to such increase, and (b) in the
case of the Borrowers, certifying that, before and after giving effect to such
increase, (i) the representations and warranties contained in Section 9 and in the
other Loan Documents are true and correct in all material respects on and as of the
Revolver Increase Closing Date, except to the extent that such representations and
warranties specifically refer to an earlier date, in which case they are true and
correct in all material respects as of such earlier date, and except that for
purposes of this Section 2.2.5, the representations and warranties contained in
Section 9.1.5 shall be deemed to refer to the most recent statements furnished
pursuant to clauses (a) (i) and (ii), respectively, of Section 10.1.4, and (ii) no
Default or Event of Default exists. The Borrowers shall pay all reasonable
documented out of pocket costs of the Agent and the Lenders, if any, incurred in
connection with each such increase. The Borrowers shall prepay any Revolver Loans
outstanding on the Revolver Increase Closing Date (and pay any additional amounts
required pursuant to Section 3.9) to the extent necessary to keep the outstanding
Revolver Loans ratable with any revised change in the Pro Rata interests of the
Lenders arising from any nonratable increase in the Revolver Commitments under this
Section.

          2.2.6 Conflicting Provisions. This Section shall supersede any
provisions in Section 14.1 to the contrary. To the extent that the Borrowers comply
with the last sentence of Section 2.2.5 above, Section 12.5 shall not be applicable
to the increase in the Revolver Commitments on any Revolver Increase Closing Date.”

          (e) Amendment of Section 2.3.1(a). Section 2.3.1(a) of the Loan Agreement is hereby
amended and restated in its entirety as follows:

“(a) Each Borrower acknowledges that Issuing Bank’s willingness to issue any Letter
of Credit is conditioned upon Issuing Bank’s receipt of a LC Application with
respect to the requested Letter of Credit, as well as such other instruments and
agreements as Issuing Bank may customarily require for issuance of a letter of
credit of similar type and

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amount. Issuing Bank shall have no obligation to issue any Letter of Credit unless
(i) Issuing Bank receives a LC Request and LC Application at least three Business
Days prior to the requested date of issuance; (ii) each LC Condition is satisfied;
and (iii) if a Defaulting Lender exists, such Lender or the Borrowers have entered
into arrangements satisfactory to the Agent and Issuing Bank to eliminate any
funding risk associated with the Defaulting Lender. If Issuing Bank receives
written notice from a Lender at least five Business Days before issuance of a Letter
of Credit that any LC Condition has not been satisfied, Issuing Bank shall have no
obligation to issue the requested Letter of Credit (or any other) until such notice
is withdrawn in writing by that Lender or until Required Lenders have waived such
condition in accordance with this Agreement. Prior to receipt of any such notice,
Issuing Bank shall not be deemed to have knowledge of any failure of LC Conditions.”

          (f) Amendment of Section 2.3.3. Section 2.3.3 of the Loan Agreement is hereby amended
and restated in its entirety as follows:

“2.3.3 Cash Collateral. If any LC Obligations, whether or not then due or
payable, shall for any reason be outstanding at any time (a) that an Event of
Default exists, (b) that Availability is less than zero, (c) after the Commitment
Termination Date, or (d) within 20 Business Days prior to the Revolver Termination
Date, then Borrowers shall, at Issuing Bank’s or Agent’s request, Cash Collateralize
the stated amount of all outstanding Letters of Credit and pay to Issuing Bank the
amount of all other LC Obligations. The Borrowers shall, on demand by Issuing Bank
or the Agent from time to time, Cash Collateralize the LC Obligations of any
Defaulting Lender. If Borrowers fail to provide Cash Collateral as required herein,
Lenders may (and shall upon direction of Agent) advance, as Revolver Loans, the
amount of the Cash Collateral required (whether or not the Commitments have
terminated, an Overadvance exists or the conditions in Section 6 are satisfied).”

          (g) Amendment of Section 4.1.2. Section 4.1.2 of the Loan Agreement is hereby amended
and restated in its entirety as follows:

“4.1.2 Fundings by Lenders. Each Lender shall timely honor its Revolver
Commitment by funding its Pro Rata share of each Borrowing of Revolver Loans that is
properly requested hereunder. Except for Borrowings to be made as Swingline Loans,
Agent shall endeavor to notify Lenders of each Notice of Borrowing (or deemed
request for a Borrowing) by 12:00 noon on the proposed funding date for Base Rate
Loans or by 3:00 p.m. at least two Business Days before any proposed funding of
LIBOR Loans. Each Lender shall fund to Agent such Lender’s Pro Rata share of the
Borrowing to the account specified by Agent in immediately available funds not later
than 2:00 p.m. on the requested funding date, unless Agent’s notice is received
after the times provided above, in which event Lender shall fund its Pro Rata share
by 11:00 a.m. on the next Business Day. Subject to its receipt of such amounts from
Lenders, Agent shall disburse the proceeds of the Revolver Loans as directed by
Borrower Agent. Unless Agent shall have received (in sufficient time to
act) written notice from a Lender that it does not intend to fund its Pro Rata share
of a Borrowing, Agent may assume that such Lender has deposited or promptly will
deposit its share with Agent, and Agent may disburse a corresponding amount to
Borrowers. If a Lender’s share of any Borrowing or of any settlement pursuant to
Section 4.1.3(b) is not in fact received by Agent, then Borrowers agree to repay to
Agent on demand the amount of such share, together with interest
thereon from the date disbursed until repaid, at the rate applicable to such
Borrowing.”

10

 

          (h) Amendment of Section 4.1.3(b). Section 4.1.3(b) of the Loan Agreement is hereby
amended and restated in its entirety as follows:

“(b) To facilitate administration of the Revolver Loans, Lenders and Agent agree
(which agreement is solely among them, and not for the benefit of or enforceable by
any Borrower) that settlement among them with respect to Swingline Loans and other
Revolver Loans may take place on a date determined from time to time by Agent, which
shall occur at least once each week. On each settlement date, settlement shall be
made with each Lender in accordance with the Settlement Report delivered by Agent to
Lenders. Between settlement dates, Agent may in its discretion apply payments on
Revolver Loans to Swingline Loans, regardless of any designation by Borrower or any
provision herein to the contrary. Each Lender’s obligation to make settlements with
Agent is absolute and unconditional, without offset, counterclaim or other defense,
and whether or not the Commitments have terminated, an Overadvance exists or the
conditions in Section 6 are satisfied. If, due to an Insolvency Proceeding with
respect to a Borrower or otherwise, any Swingline Loan may not be settled among
Lenders hereunder, then each Lender shall be deemed to have purchased from Agent a
Pro Rata participation in each unpaid Swingline Loan and shall transfer the amount
of such participation to Agent, in immediately available funds, within one Business
Day after Agent’s request therefor.”

          (i) Amendment of Section 4.2. Section 4.2 of the Loan Agreement is hereby amended and
restated in its entirety as follows:

“4.2 Defaulting Lender. The Agent may (but shall not be required to), in
its discretion, retain any payments or other funds received by the Agent that are to
be provided to a Defaulting Lender hereunder, and may apply such funds to such
Lender’s defaulted obligations or readvance the funds to the Borrowers in accordance
with this Agreement. The failure of any Lender to fund a Loan, to make any payment
in respect of LC Obligations or to otherwise perform its obligations hereunder shall
not relieve any other Lender of its obligations, and no Lender shall be responsible
for default by another Lender. The Lenders and Agent agree (which agreement is
solely among them, and not for the benefit of or enforceable by any Obligor) that,
solely for purposes of determining a Defaulting Lender’s right to vote on matters
relating to the Loan Documents and to share in payments, fees and Collateral
proceeds thereunder, a Defaulting Lender shall not be deemed to be a ‘Lender’ until
all its defaulted obligations have been cured to the satisfaction of the Agent.”

          (j) Amendment of Section 5.3.2. Section 5.3.2 of the Loan Agreement is hereby amended
and restated in its entirety as follows:

     “5.3.2 Extraordinary Receipts.

(a) If Holdings or any Obligor shall receive any Extraordinary Receipts at any time,
Borrowers shall concurrently with such receipt repay all outstanding Revolving Loans
in an amount equal to all Extraordinary Receipts; and

(b) Without limiting the foregoing, Borrowers shall irrevocably direct the Crack
Spread Hedging Counterparty that all Retained Unwind Proceeds are to be paid
directly

11

 

to the Agent at such account as the Agent may designate to the Crack Spread Hedging
Counterparty in writing from time to time and all such Retained Unwind Proceeds
shall be applied by the Agent to repay outstanding Revolving Loans (it being
understood and agreed that such repayments shall not, in and of themselves, result
in a reduction in the Commitments).”

          (k) Amendment of Section 8.1. Section 8.1 of the Loan Agreement is hereby amended and
restated in its entirety as follows:

     “8.1 Borrowing Base Certificates. The Borrowers shall deliver to the Agent:

     (a)  if no Low Availability Period is in effect, then (i) on or before the 15th
day of each month, a Borrowing Base Certificate as of the end of the previous month,
and (ii) such additional Borrowing Base Certificates as and when requested by the
Agent in writing from time to time in the Agent’s credit judgment, reasonably
exercised, or

     (b)  if a Low Availability Period is in effect, then (i) on each Tuesday of
each week for the period ending Friday of the immediately prior week, a Borrowing
Base Certificate as of the end of such prior week, and (ii) if the last calendar day
of any month is more than three calendar days prior to a Friday, then on or before
the 5th Business Day after the end of such month, an additional Borrowing Base
Certificate as of the last day of such month.

Together with each such Borrowing Base Certificate, the Borrowers shall deliver:
(1) a schedule of the Borrowers’ Accounts created, credits given, cash collected,
and other adjustments to Accounts since the last such schedule; (2) an aging of the
Borrower’s Accounts, together with a reconciliation to the corresponding Borrowing
Base and to the Borrowers’ general ledger; (3) an aging of the Borrowers’ accounts
payable; (4) a detailed calculation and description of Eligible Petroleum Inventory,
the DOE Contract Value, Eligible Cash, Eligible Investments, Eligible In-Transit
Petroleum Inventory, First Purchaser Liens, and Paid but Unexpired Letters of
Credit; (5) a schedule in reasonable detail setting forth the additions and
reductions in the Borrowers’ accounts receivable since delivery of the previous
Borrowing Base Certificate with a reconciliation to the corresponding accounts
receivable aging; and (6) Inventory reports by category, together with
reconciliation to the corresponding Borrowing Base and to the Borrowers’ general
ledger. Upon request of the Agent, the Borrowers shall deliver: (A) inventory
reports by location; (B) copies of invoices in connection with the Borrowers’
Accounts, customer statements, credit memos, remittance advices and reports, deposit
slips, shipping and delivery documents in connection with the Borrowers’ Accounts
and for Inventory and Equipment acquired by the Borrowers, purchase orders, and
invoices; (C) a statement of the balance of each intercompany Account, if any;
(D) such other reports as to the Collateral as the Agent shall reasonably request
from time to time; and (E) with the delivery of each of the foregoing, a certificate
of the Borrower Agent executed by a Financial Officer thereof certifying as to the
accuracy and completeness of the foregoing. If the Borrowers’ records or reports of
the Collateral are prepared by an accounting service or other agent, the Borrowers
hereby authorize such service or agent to deliver such records, reports, and related
documents to the Agent, for distribution to the Lenders.

All calculations of Availability in any Borrowing Base Certificate (or Interim
Borrowing Base Certificate) shall originally be made by Borrower Agent and certified
by a Financial

12

 

Officer; provided that:

     (i) the Agent may (but shall not be required to) from time to time
review and adjust any such calculation to the extent the calculation is not
made in accordance with this Agreement or does not accurately reflect the
Availability Reserve (or any portion thereof); and

     (ii) upon prior written notice to the Borrower that a Double-Sided
Application Period is in effect, and only during each Double-Sided
Application Period, the Agent may (but shall not be required to) from time
to time review and adjust any such calculation to reduce Eligible Accounts
by an amount not greater than collections received in the Dominion Accounts
after the effective date of the most recently delivered Borrowing Base
Certificate (or Interim Borrowing Base Certificate); provided that during
any such period, the Borrower may (but shall not be required to) provide
Interim Borrowing Base Certificates to the Agent and the Agent will adjust
the calculation of the Borrowing Base to reflect the Eligible Accounts set
forth in the most recently delivered Interim Borrowing Base Certificate to
the extent constituting Eligible Accounts (subject to further adjustment by
the Agent under clause (i) above and pursuant to this clause (ii).

          (l) Amendment of Section 8.2.4. Section 8.2.4 of the Loan Agreement is hereby amended
and restated in its entirety as follows:

“8.2.4 Maintenance of Dominion Account. The Borrowers shall maintain
Dominion Accounts pursuant to lockbox or other arrangements acceptable to the Agent.
The Borrowers shall obtain a Deposit Account Control Agreement from each lockbox
servicer and bank where a Dominion Account or Approved Deposit Account (other than
Excluded Deposit Accounts) is located, establishing the Agent’s control and
exclusive dominion over and Lien in the lockbox or Approved Deposit Account and,
with respect to all Approved Deposit Account other than Shared Deposit Accounts and
Excluded Deposit Accounts, requiring, at all times immediate deposit of all
remittances received in the lockbox or Approved Deposit Account (other than Shared
Deposit Accounts and Excluded Deposit Accounts) to a Dominion Account for
application to the Obligations at all times, whether or not a Low Availability
Period exists. If a Dominion Account is not maintained with Bank of America, the
Agent may require immediate transfer of all funds in such account to a Dominion
Account maintained with Bank of America. Neither the Agent nor the Lenders assume
any responsibility to the Borrowers for any lockbox arrangement, Approved Deposit
Account or Dominion Account, including any claim of accord and satisfaction or
release with respect to any Payment Items accepted by any bank.”

          (m) Amendment of Section 9.1.25. The introductory clause of Section 9.1.25 of the
Loan Agreement is hereby amended and restated in its entirety as follows:

“9.1.25 Accounts. Agent may rely, in determining which Accounts are
Eligible Accounts, on all statements and representations made by Borrowers with
respect thereto. Borrowers warrant, with respect to each Account at the time it is
shown as an Eligible Account in a Borrowing Base Certificate or Interim Borrowing
Base Certificate, that:”

13

 

In all other respects, Section 9.1.25 remains in effect as set forth in the Loan Agreement.

          (n) Amendment of Section 10.1.4(a)(ii). Section 10.1.4(a)(ii) of the Loan Agreement
is hereby amended and restated in its entirety as follows:

“(ii) within 30 days after the end of each month, the Company’s consolidated and
consolidating balance sheet and related consolidated and consolidating statements of
income and cash flows, showing the financial condition of the Company and its
consolidated Subsidiaries as of the close of such month and the results of their
operations and cash flows for such month and the then elapsed portion of the Fiscal
Year, comparative figures for the same periods in the immediately preceding Fiscal
Year, and an operating report in the form prepared by the Company for delivery
pursuant to the Term Loan Agreement that includes the information described on
Schedule 10.1.4(a)(ii) for and as at the end of the month, all certified by a
Financial Officer of the Company as fairly presenting the financial condition and
results of operations and cash flows of the Company and its consolidated
Subsidiaries on a consolidated and consolidating basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the absence
of certain footnotes;”

          (o) New Schedule 10.1.4(a)(ii). A new Schedule 10.1.4(a)(ii) is hereby added to the
Loan Agreement in the form attached hereto as Attachment 2, which is incorporated herein by
reference.

          (p) Amendment of Section 10.1.4(a)(iv). Section 10.1.4(a)(iv) of the Loan Agreement
is hereby amended and restated in its entirety as follows:

“(iv) concurrently with the delivery of the financial statements under clauses (i)
and (ii) above, a Compliance Certificate.”

          (q) Amendment to Exhibit H. Exhibit H to the Loan Agreement is hereby replaced with
the form attached hereto as Attachment 3, which is incorporated herein by reference.

          (r) Amendment of Section 10.1.4(a). The word “and” at the end of
Section 10.1.4(a)(xvi) is hereby deleted; the period at the end of Section 10.1.4(a)(xvii) is
hereby deleted and the phrase “; and” is hereby substituted in lieu thereof; and the following new
clause (xviii) is hereby added to Section 10.1.4(a) of the Loan Agreement in appropriate
alphanumeric order to read in its entirety as follows:

“ (xviii) promptly after request therefor by Agent, copies of any Hedging Agreement
described on the most recent monthly operating report delivered pursuant to
Section 10.1.4(a)(ii) above and/or any trade confirmations executed in connection
therewith.”

In all other respects, and except as otherwise amended by this Amendment, Section 10.1.4(a) remains
in effect as set forth in the Loan Agreement.

          (s) Amendment of Section 10.1.6(b). Section 10.1.6(b) of the Loan Agreement is hereby
amended and restated in its entirety as follows:

“(b) Holdings and each Subsidiary will permit any representatives designated by the

14

 

Agent or any Lender to visit and inspect the financial records and the properties of
such Person during regular business hours upon reasonable prior notice and as often
as reasonably requested and to make extracts from and copies of such financial
records, and permit any representatives designated by the Agent or any Lender to
discuss the affairs, finances and condition of such Person with the officers thereof
and independent accountants therefor; provided, that Holdings and each Subsidiary
will reimburse the Agent for all reasonable charges, costs and expenses of the Agent
in connection with up to four (4) examinations per Loan Year of any Obligor’s books
and records or any other financial or Collateral matters as the Agent deems
appropriate, including, without limitation, expenses of the Agent’s outside
appraisal group for any and all appraisals conducted by or on behalf of the Agent.
Holdings and each Subsidiary will cooperate fully (including by promptly providing
such information and documents as may be reasonably requested by the Agent or its
designees) in the conduct and completion of a full field examination by the Agent or
its designees to commence no later than Monday, March 16, 2009.”

          (t) Amendment of Section 10.1.9. Section 10.1.9 of the Loan Agreement is hereby
amended and restated in its entirety as follows:

“10.1.9 Crack Spread Hedging Agreement. The Borrowers will, on or prior to
the Second Amendment Date, (a) commence to completely unwind and terminate the Crack
Spread Hedging Agreement, and cause the Crack Spread Hedging Agreement to be
completely unwound and terminated and (b) cause the Unwind Proceeds and the Crack
Spread Hedging Cash Collateral to be distributed and provided in full directly to
the Agent, for the benefit of the Lenders, or to the Term Loan Agent, for
application to the Term Loan Facility, in each case as further described below,
within six (6) weeks from the Second Amendment Date; provided that if there shall be
any material market disruption in the market for Hydrocarbon Agreements which
extends beyond such six (6) week period and has a material adverse effect on the
Borrowers’ ability to effect the unwind and termination of the Crack Spread Hedging
Agreement, such six (6) week period shall be extended on a day-to-day basis during
the pendency of such disruption for a period not to exceed an additional four (4)
weeks. The Borrowers shall (x) consult with the Agent on an ongoing basis as to the
status of the unwinding of the Crack Spread Hedging Agreement, (y) provide to the
Agent copies of all trade confirmations executed and/or delivered in connection with
the unwinding of the Crack Spread Hedging Agreement, and (z) provide updates on the
progress thereof upon request of the Agent. As a condition precedent to the unwind
of the Crack Spread Hedging Agreement, the Borrowers, the Agent and the Term Loan
Agent shall have given irrevocable instructions (which, notwithstanding any
provision in the Loan Documents (including the Intercreditor Agreement) to the
contrary, shall not be subject to or affected by any default or event of default
under the Loan Agreement or the Term Loan Facility, or any notice with respect
thereto) to the Crack Spread Hedging Counterparty (I) to, within three business days
of the Second Amendment Date, cause the Crack Spread Hedging Cash Collateral to be
distributed to the Term Loan Agent to be applied in accordance with the Term Loan
Agreement (as amended by the Term Loan First Amendment), and (II) to distribute the
Unwind Proceeds as follows (with Unwind Proceeds being applied pursuant to each
clause set forth below until payment in full thereof and then to the next succeeding
clause):

     First, an amount up to $45,400,000 of the Unwind Proceeds will be

15

 

distributed to the Term Loan Agent to be applied to the obligations
under the Term Loan Facility in accordance with the Term Loan Agreement (as
in effect on the Second Amendment Date);

     Second, an amount up to $25,000,000 of the Unwind Proceeds will be
distributed to the Agent for application to the Obligations in accordance
with this Agreement;

     Third, an amount up to $25,000,000 of the Unwind Proceeds will be
distributed to the Term Loan Agent to be applied to the obligations under
the Term Loan Facility in accordance with the Term Loan Agreement (as in
effect on the Second Amendment Date);

     Fourth, an amount up to $25,000,000 of the Unwind Proceeds will be
distributed to the Agent for application to the Obligations in accordance
with this Agreement (any amounts to be distributed for application to the
Obligations pursuant to clause Second and clause Fourth hereof are referred
to herein as the “Retained Unwind Proceeds”); and

     Fifth, the remainder of such proceeds will be distributed to the Term
Loan Agent to be applied to the obligations under the Term Loan Facility in
accordance with the Term Loan Agreement (as in effect on the Second
Amendment Date).

     The Borrowers shall cause the Crack Spread Hedging Counterparty to promptly,
and in any event within 5 Business Days of any settlement, termination or unwinding
of any portion of the Crack Spread Hedging Agreement (but in any event on the same
day as the Borrower would have otherwise been entitled to receive such amounts
absent this Section 10.1.9), pay all Unwind Proceeds arising in connection
with any such settlement, termination or unwinding directly to the Agent or the Term
Loan Agent as provided above. The Borrowers shall also cause the Crack Spread
Hedging Counterparty to promptly, and in any event within 3 Business Days of the
Second Amendment Date (but in any event not later than the same day as the Borrowers
would have otherwise been entitled to receive such amounts absent this Section
10.1.9), pay the Crack Spread Hedging Cash Collateral directly to the Term Loan
Agent to be applied in accordance with the Term Loan Agreement (as amended by the
Term Loan First Amendment).

     Each of the Lenders acknowledges that (a) the Company has not given any
guarantee as to the ultimate amount of the Unwind Proceeds to be realized upon the
unwinding of the Crack Spread Hedging Agreement, and (b) the Company may effect the
unwinding of the Crack Spread Hedging Agreement in one or a series of transactions
in accordance with the Term Loan Agreement (as in effect on the Second Amendment
Date).”

          (u) Amendment of Section 10.1.14. Section 10.1.14 is hereby amended by replacing the
first occurrence only of “$40,000,000” with “$66,000,000”. In all other respects, Section 10.1.14
remains in full force and effect.

          (v) Amendment of Section 10.2.1(b). Section 10.2.1(b) is hereby amended by replacing
the occurrence of “Term Loan Agreement” with “Term Loan Agreement (as amended by the Term Loan

16

 

First Amendment)”. In all other respects, Section 10.2.1(b) remains in full force and effect.

          (w) Amendment of Section 10.2.8(a)(iv). Section 10.2.8(a)(iv) of the Loan Agreement
is hereby amended and restated in its entirety as follows:

“(iv) so long as no Blockage Period shall exist before and after giving pro forma
effect thereto, (A) the Company may make payments in cash to Holdings and (B)
Holdings may declare, make or pay Restricted Payments in cash in an aggregate amount
not exceeding the aggregate amount of dividends received by Holdings from the
Company pursuant to the foregoing clause (A); and”

          (x) Amendment of Section 10.2.8(b)(iii). Section 10.2.8(b)(iii) is hereby amended by
replacing the occurrence of “(as defined in the Term Loan Agreement on the date hereof)” with “(as
defined in the Term Loan Agreement, as amended by the Term Loan First Amendment, on the Second
Amendment Date)”. In all other respects, Section 10.2.8(b)(iii) remains in full force and effect.

          (y) Amendment of Section 10.2.8(b)(iv). Section 10.2.8(b)(iv) of the Loan Agreement
is hereby amended and restated in its entirety as follows:

“(iv) so long as no Blockage Period shall exist immediately after giving pro forma
effect thereto, interest and principal payments in respect of Holdings Subordinated
Loans, to the extent not prohibited by the Holdings Subordination Agreement;”

          (z) Amendment of Section 10.2.11. Subclause (B) of clause (i) of the proviso to
Section 10.2.11 is hereby amended and restated in its entirety as follows:

“(B) restrictions and conditions imposed by the Term Loan Documents (as amended by
the Term Loan First Amendment), as such restrictions and conditions are in effect on
the Second Amendment Date, or by the Intercreditor Agreement, and”

In all other respects, Section 10.2.11 remains in full force and effect.

          (aa) Amendment of Section 10.2.13. Section 10.2.13 of the Loan Agreement is hereby
amended and restated in its entirety as follows:

“10.2.13 Fixed Charge Coverage Ratio. The Borrowers will not permit the
Fixed Charge Coverage Ratio as of the last day of any fiscal month to be less than
1.10 to 1.00 for the Trailing Twelve Month Period ended as of such day, regardless
of whether or not any Low Availability Period is in effect.”

          (bb) Amendment of Section 12.10. Section 12.10 of the Loan Agreement is hereby
amended and restated in its entirety as follows:

“12.10 Replacement of Certain Lenders. If a Lender (a) is a Defaulting
Lender, (b) fails to give its consent to any amendment, waiver or action for which
consent of all Lenders was required and Required Lenders consented, or (c) requests
compensation pursuant to Section 3.7 or becomes entitled to and requests payment for
Additional Taxes or other Taxes pursuant to Section 5.9 then, in addition to any
other rights and remedies that any Person may have, Agent, so long as no Event of
Default has occurred and is continuing, the Borrower Agent, may, by notice to such
Lender within 120 days after such event, require such Lender to assign all of its
rights and obligations under the Loan

17

 

Documents to Eligible Assignee(s) specified by Agent, pursuant to appropriate
Assignment and Acceptance(s) and within 20 days after Agent’s notice. Agent is
irrevocably appointed as attorney-in-fact to execute any such Assignment and
Acceptance if the Lender fails to execute same. Such Lender shall be entitled to
receive, in cash, concurrently with such assignment, all amounts owed to it under
the Loan Documents, including all principal, interest and fees through the date of
assignment (but excluding any prepayment charge).”

          (cc) Amendment of Section 12.11.2. Section 12.11.2 of the Loan Agreement is hereby
amended and restated in its entirety as follows:

“12.11.2 Failure to Pay. If any Lender fails to pay any amount when due by
it to Agent pursuant to the terms hereof, such amount shall bear interest from the
due date until paid at the rate determined by Agent as customary in the banking
industry for interbank compensation. In no event shall Borrowers be entitled to
receive credit for any interest paid by a Lender to Agent, nor shall any Defaulting
Lender be entitled to interest on any amounts held by Agent pursuant to Section
4.2.”

          (dd) Amendment of Section 14.1(d). Section 14.1(d) of the Loan Agreement is hereby
amended and restated in its entirety as follows:

“(d) without the prior written consent of all Lenders (except a Defaulting Lender as
provided in Section 4.2), no modification shall be effective that would (i) extend
the Revolver Termination Date; (ii) alter Section 5.6, 7.1 (except to add
Collateral) or 14.1.1; (iii) amend the definitions of Borrowing Base (and the
defined terms used in such definition), Pro Rata or Required Lenders; (iv) increase
any advance rate, decrease the Availability Block, or increase the total
Commitments; (vi) release ABL Priority Collateral with a book value greater than
$5,000,000 during any calendar year or release any material portion of any other
Collateral, except as currently contemplated by the Intercreditor Agreement or the
other Loan Documents; or (vii) release any Obligor from liability for any
Obligations, if such Obligor is Solvent at the time of the release.”

          (ee) Amendment of Section 14.3.2. Section 14.3.2 of the Loan Agreement is hereby
amended and restated in its entirety as follows:

“14.3.2 Electronic Communications; Voice Mail. Electronic mail and
internet websites may be used only for routine communications, such as financial
statements, Borrowing Base Certificates and Interim Borrowing Base Certificates and
other information required by Section 10.1.2, administrative matters including
notice by the Agent to the Borrower of any Double-Sided Application Period under
Section 8.1, distribution of Loan Documents for execution, and matters permitted
under Section 4.1.4. Agent and Lenders make no assurances as to the privacy and
security of electronic communications. Electronic and voice mail may not be used as
effective notice under the Loan Documents.”

     3. Credit Support. The Obligors agree that the Obligors will cause an aggregate
amount of $50,000,000 in credit support for the Obligations to be provided by one or more
Affiliates of the Obligors (other than the Obligors themselves) as follows, all or part of which
may, in the Obligors’ discretion, be contributed to Holdings, and contributed by Holdings, in turn,
to the Company:

          (a) The Obligors shall have demonstrated to the satisfaction of the Agent receipt by
the Company of:

18

 

     (i) not less than $10,000,000 in New Cash Equity Contributions made since April 8,
2009, and shall have delivered evidence satisfactory to the Agent of the issuance
and delivery (for the benefit of the Company) of not less than $15,000,000 in face amount of
a letter of credit issued to Chevron Products Company, a division of Chevron USA Inc. or its
Affiliates (or any supplier to the Company of Petroleum Products which is not an Affiliate
of any Obligor) to support the purchase by the Company of Petroleum Product from such
beneficiary in the Ordinary Course of Business (such letters of credit to remain in place
unless replaced, reduced or terminated as provided below or unless drawn upon by the
beneficiary thereof). The Company shall give the Agent written notice of each draw by the
beneficiary of such letter of credit within fifteen (15) days after a Senior Officer of any
Obligor has knowledge thereof or receives notice thereof from Agent, whichever is sooner;
and

     (ii) additional credit support contributed since April 8, 2009, in the form of one or
more letters of credit to be issued for the benefit of the Agent and included as a
Supporting Letter of Credit (each such letter of credit to be issued by one of the issuing
banks that has issued a letter of credit constituting a portion of the existing Supporting
Letters of Credit and in form identical to that of the existing Supporting Letters of
Credit; or otherwise issued by an issuer and in form and substance acceptable to the Agent
in its sole discretion) or one or more other letters of credit issued for the
benefit of suppliers of Petroleum Product to the Company in the Ordinary Course of Business
and with a useful life acceptable to the Agent in an aggregate face amount of not less than
$10,000,000 (to remain in place unless replaced, reduced or terminated as provided below or
unless drawn upon by the beneficiary thereof). The Company shall give the Agent written
notice of each draw by the beneficiary of any such letter of credit issued to any
beneficiary other than the Agent within fifteen (15) days after a Senior Officer of any
Obligor has knowledge thereof or receives notice thereof from Agent, whichever is sooner;
and

          (b) On or before May 20, 2009, the Obligors shall demonstrate to the reasonable satisfaction
of the Agent receipt by the Company of additional credit support in the form of additional New Cash
Equity Contributions made since April 8, 2009, in an aggregate amount of not less than $15,000,000.

Notwithstanding anything to the contrary set forth in the Loan Agreement, each of the newly issued
letters of credit described in clauses (a) and (b) above (collectively, the “Additional Letters
of Credit”) shall remain in effect in not less than the minimum amounts set forth above at all
times unless drawn upon by the beneficiary thereof; provided that:

     (1) so long as no Default or Event of Default has occurred and is continuing or would
result therefrom, the Additional Letters of Credit may be reduced or terminated upon
demonstration to the Agent that (x) the Company has actually received all of the credit
support described in clauses (a) through (c) above, (y) the Company has also actually
received additional New Cash Equity Contributions in excess of the amounts required by
clauses (a) and (c) above (each an “Additional Equity Contribution”), and (z) the
amount of all such reductions and/or terminations does not exceed, in the aggregate for all
Additional Letters of Credit, the aggregate amount of the Additional Equity Contributions
actually received by the Company; and

     (2) any of the Additional Letters of Credit may be replaced with subsequent letters of
credit with the equivalent remaining useful life or a useful life otherwise acceptable to
the Agent issued to the same or different suppliers to the Company of Petroleum Product in
the Ordinary

19

 

Course of Business (such subsequent letters of credit to constitute Additional Letters
of Credit for all purposes hereof and to remain in place unless reduced or terminated as
provided above).

          (c) On or before the date that is fifteen (15) calendar days after the Second Amendment Date,
the Obligors shall cause Irrevocable Standby Letter of Credit Number 459-02-000087/0 dated
March 16, 2009, issued by Bank Hapoalim in favor of the Agent, as Beneficiary, for an amount not
exceeding $10,000,000 (the “Subject Supporting Letter of Credit”) to be amended or
replaced, in either case to the reasonable satisfaction of the Agent, such that such amended
Subject Supporting Letter of Credit or replacement therefor (i) replacing the sentence therein
currently reading “YOUR DEMAND FOR PAYMENT ON A DATE NO EARLIER THAN DECEMBER 30, 2009 SENT TO US
BY YOUR SIGNED STATEMENT OR AUTHENTICATED SWIFT READING AS FOLLOWS” to read in its entirety as
follows “YOUR DEMAND FOR PAYMENT ON A DATE NO EARLIER THAN DECEMBER 15, 2009 SENT TO US BY YOUR
SIGNED STATEMENT OR AUTHENTICATED SWIFT READING AS FOLLOWS”, (ii) correctly refers to the date of
the Loan Agreement in all places referenced therein as July 3, 2008, and (iii) is otherwise
identical to the Subject Supporting Letter of Credit.

Notwithstanding anything to the contrary set forth in the Loan Agreement, any failure of the
Obligors to timely comply with any provision of this Section 3 shall constitute an immediate Event
of Default.

     4. First Amendment to Term Loan Agreement. The Agent and the Lenders hereby consent
to the Term Loan First Amendment in the form attached hereto as Exhibit A. The foregoing
consent is one-time consent only and is limited to the matter expressly set forth above. Nothing
herein constitutes a waiver of any other violation or breach of the Loan Agreement including,
without limitation, any future amendment of the Term Loan Agreement or other violation or breach of
the Loan Agreement. Notwithstanding anything to the contrary set forth in the Loan Agreement or
any Loan Document, the Obligors hereby authorize (a) at such time as no Default or Event of Default
has occurred and is continuing, the Agent to communicate directly with each of the Term Loan Agent,
the Term Loan Lenders, and the Crack Spread Hedging Counterparty, subject only to satisfaction of
the following conditions: (i) the Agent shall provide written notice (which may be by electronic
mail) to the Company of its desire to communicate with any such Person; (ii) the Company shall
arrange for a mutually acceptable time (and the Company hereby agrees to take reasonable steps to
make such arrangements) and, if necessary, place for any such communications, such date to be not
greater than one Business Days following any such written notice to the Company under clause (i)
above, or, if the Term Loan Agent, the Term Loan Lenders, or the Crack Spread Hedging Counterparty,
as applicable, are not available until some time following one Business Day, on the first date on
which such Person(s), the Company and the Agent are available; provided, that if the Company fails
to arrange any such meeting within the time periods set forth above, the Agent may contact the Term
Loan Agent, the Term Loan Lenders, and/or the Crack Spread Hedging Counterparty, as applicable,
directly and without the participation of the Company or its representatives, and (iii) a
representative of the Company shall participate or accompany the Agent in connection with any such
communications; provided, that if the Company fails to comply with clause (ii) above or a
representative of the Company is given the opportunity to participate in any such communications
being held at reasonable times and fails to take reasonable steps to do so, the Agent may
communicate with the Term Loan Agent, the Term Loan Lenders, or the Crack Spread Hedging
Counterparty, as the case may be, so long as the requirements of clauses (i) and (ii) have been
satisfied; and (b) if a Default or Event of Default has occurred and is continuing (whether or not
so declared), the Agent to communicate directly with each of the Term Loan Agent, the Term Loan
Lenders, and the Crack Spread Hedging Counterparty. The Obligors hereby acknowledge that they have
directed each of the Term Loan Agent, the Term Loan Lenders, and the Crack Spread Hedging
Counterparty to provide the Agent with access in accordance with the foregoing and authorize each
of the Term Loan Agent, the Term

20

 

Loan Lenders, and the Crack Spread Hedging Counterparty to disclose to the Agent any and all
information relating to the finances and affairs of Holdings, the Obligors and their respective
Subsidiaries, including, without limitation, any and all matters concerning the Term Loan Facility
and the Crack Spread Hedging Agreement (including, without limitation, the status and results of
the proposed unwinding thereof and the distribution of any proceeds therefrom), in each case
without any further consent of any Obligor. Nothing herein shall limit the right of the Agent to
discuss with the Term Loan Agent any issues concerning or directly related to the Intercreditor
Agreement.

     5. Representations and Warranties of the Obligors. The Obligors represent and warrant
to the Lenders and the Agent that:

          (a) Compliance with Loan Agreement. On the date hereof, and after giving effect to
this Amendment and any other agreements entered into by the Obligors, the Agent and the Lenders
together herewith, no Default or Event of Default has occurred and is continuing;

          (b) Representations and Warranties. On the date hereof, and after giving effect to
this Amendment and any agreements entered into by the Obligors, the Agent and the Lenders together
herewith, the representations and warranties of each Obligor in the Loan Documents are true and
correct in all material respects (except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they are true and correct in all material
respects as of such earlier date);

          (c) Power and Authority. Each Obligor is duly authorized to execute, deliver and
perform this Amendment. The execution, delivery and performance of this Amendment and the Loan
Agreement, as amended hereby, have been duly authorized by all necessary action, and do not (i)
require any consent or approval of the Term Loan Agent, other than those already obtained; (ii)
contravene the Organic Documents of any Obligor; (iii) violate or cause a default under any
Applicable Law or Material Contract; or (iv) result in or require the imposition of any Lien (other
than Permitted Encumbrances) on any Property of any Obligor;

          (d) Enforceability. This Amendment and the Loan Agreement, as amended hereby, are
legal, valid and binding obligations of each Obligor, enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors’ rights generally; and

          (e) Hedging Agreements. A true, correct and complete description of all Hedging
Agreements to which the Borrower is a party as of the date hereof (including the counterparty to
each such Hedging Agreement, the type of Hedging Agreement, the material terms of such Hedging
Agreement and the marked-to-market hedge position for such Hedging Agreement as of the date
immediately preceding the date hereof) is set forth on Attachment 4 attached hereto, which is
incorporated herein by reference.

     6. Effectiveness of this Amendment. This Amendment shall not be binding upon the
Lenders and the Agent (at the option of Lenders and Agent) until each of the following conditions
precedent has been satisfied in form and substance satisfactory to the Agent (the date upon which
such conditions are satisfied, the “Second Amendment Effective Date”):

          (a) After giving effect to this Amendment, the representations and warranties contained herein
and in the Loan Agreement, as amended hereby, shall be true and correct as of the date hereof as if
made on the date hereof, except for such representations and warranties limited by their terms to a
specific date (such representations and warranties being true and correct as of the specified date
relative thereto);

21

 

          (b) After giving effect to this Amendment, no Default or Event of Default shall have occurred
and be continuing;

          (c) The Borrowers shall have delivered to the Agent each of the following, in each case, in
form and substance satisfactory to the Agent and its counsel in their discretion:

	 	(i)	 	an executed original of this Amendment;
	 
	 	(ii)	 	an amendment to the Fee Letter;
	 
	 	(iii)	 	a joint, irrevocable instruction letter from
the Borrower, the Term Loan Agent, and the Agent to the Crack Spread
Hedging Counterparty, countersigned by the Crack Spread Hedging
Counterparty;
	 
	 	(iv)	 	each of the items required to have been
delivered pursuant to Section 3(a) above;
	 
	 	(v)	 	such information as requested by the Agent to
enable the Agent to calculate and implement the Earnout Reserve;
	 
	 	(vi)	 	a certificate signed by a Senior Officer of
each Obligor certifying that no Default or Event of Default has
occurred and is continuing and that no default or event of default
under the Term Loan Agreement has occurred and is continuing;
	 
	 	(vii)	 	a Borrowing Base Certificate as of no more
than three Business Days prior to the Second Amendment Closing Date,
reflecting the amendments set forth herein and the implementation of
the Earnout Reserve in accordance with the Loan Agreement, as amended
hereby;
	 
	 	(viii)	 	a favorable opinion of counsel with respect to the due authorization,
execution and enforceability of this Amendment and all documents
executed in connection herewith, and such other matters as may be
reasonably required by the Agent and its counsel; and
	 
	 	(ix)	 	a Subordination Agreement by and among the
Agent (on behalf of the Lenders), the Borrowers, Holdings, and one or
more Affiliates of the Borrowers or Holdings that are obligated to
reimburse the issuer or issuers of the Additional Letters of Credit for
any drawings under such Additional Letters of Credit, in substantially
the form attached hereto as Attachment 5 hereto (the “L/C
Reimbursement Subordination Agreement”).

          (d) The Borrowers shall have paid to the Agent and the Lenders all reasonable and documented
fees, costs, and expenses owed to and/or incurred by the Agent and the Lenders arising in
connection with this Amendment and the documents and opinions executed and delivered in connection
herewith and after giving effect to such payments, the funding of Loans and issuances of Letters of
Credit on the Second Amendment Effective Date, and the payment by the Borrowers of all trade
payables aged in excess of their due dates, Availability shall be greater than zero;

          (e) Holdings and the Borrowers shall have delivered to the Agent and the Lenders

22

 

(i) the projections and consolidated operating budget of the Borrowers and their subsidiaries
required to be delivered pursuant to Section 10.1.4(a)(vii) of the Loan Agreement for the 2009
Fiscal Year, and (ii) an operating report prepared by the Borrowers in the ordinary course of
business for each of January 2009 and February 2009 containing the information set forth on
Schedule 10.1.4(a)(ii) to the Loan Agreement, as amended hereby;

          (f) The Agent shall have received such other documents, corporate resolutions, corporate
certificates, and information that the Agent shall require, each in form and substance satisfactory
to the Agent;

          (g) All proceedings taken in connection with the transactions contemplated by this Amendment
and all documentation and other legal matters incident thereto shall be satisfactory to the Agent
in its sole and absolute discretion; and

          (h) The Borrowers shall have received the prior written consent of the Term Loan Agent and the
required number of lenders under the Term Loan Facility to this Amendment.

     7. Acknowledgements. The Obligors acknowledged that, as of the Second Amendment
Effective Date, a Low Availability Period, a Double-Sided Application Period, and a Blockage Period
are each in effect. Assuming no additional Low Availability Trigger Date or Double-Sided
Application Trigger Date occurs following the Second Amendment Effective Date, the first date on
which any Low Availability Period or Double-Sided Application Period may end is June 1, 2009.

     8. Effect on Loan Agreement. Except as specifically amended hereby, the terms and
provisions of the Loan Agreement and the other Loan Documents are, in all other respects, ratified
and confirmed and remain in full force and effect. No reference to this Amendment need be made in
any notice, writing, or other communication relating to the Loan Agreement and the other Loan
Documents, any such reference to the Loan Agreement and the other Loan Documents to be deemed a
reference thereto as respectively amended by this Amendment. All references to the Loan Agreement
and the other Loan Documents in any document, instrument, or agreement executed in connection with
the Loan Agreement and the other Loan Documents will be deemed to refer to the Loan Agreement and
the other Loan Documents as respectively amended hereby.

     9. Fees and Expenses. Without limiting the terms and conditions of the Loan Documents,
the Company agrees to pay: (a) all reasonable and documented costs and expenses incurred by the
Lenders and the Agent in connection with the preparation, negotiation, and execution of this
Amendment and the other Loan Documents executed in connection herewith and any and all subsequent
amendments, modifications, and supplements hereto or thereto, including without limitation, the
costs and reasonable fees of the Lenders’ or the Agent’s legal counsel; and (b) all costs and
expenses reasonably incurred by the Lenders or the Agent in connection with the enforcement or
preservation of any rights under the Loan Agreement, this Amendment, and/or the other Loan
Documents, including without limitation, the costs and fees of the Lenders’ or Agent’s legal
counsel. All of the foregoing may be charged to the Loan Account or, if not charged thereto, shall
be paid by the Company promptly on demand therefor.

     10. Successors. This Amendment will be binding upon and inure to the benefit of the
Company, Holdings, the Lenders, the Agent, and their respective successors and assigns, provided,
however, that no interest herein may be assigned by the Company, Holdings, or any other Obligor
without the prior written consent of the Agent and each Lender.

     11. Loan Document. This Amendment shall constitute a Loan Document.

23

 

     12. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES OTHER THAN SECTION 5-1401 AND 5-1402
OF THE NEW YORK GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK (BUT GIVING EFFECT TO FEDERAL LAWS
RELATING TO NATIONAL BANKS).

     13. Consent to Forum; Arbitration. EACH OF THE COMPANY AND HOLDINGS, AS AN OBLIGOR,
HEREBY CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF ANY FEDERAL OR STATE COURT SITTING IN OR WITH
JURISDICTION OVER THE STATE OF NEW YORK, IN ANY PROCEEDING OR DISPUTE RELATING IN ANY WAY TO THIS
AMENDMENT, AND AGREES THAT ANY SUCH PROCEEDING SHALL BE BROUGHT BY IT SOLELY IN ANY SUCH COURT.
EACH OF THE COMPANY AND HOLDINGS, AS AN OBLIGOR, IRREVOCABLY WAIVES ALL CLAIMS, OBJECTIONS AND
DEFENSES THAT IT MAY HAVE REGARDING SUCH COURT’S PERSONAL OR SUBJECT MATTER JURISDICTION, VENUE OR
INCONVENIENT FORUM. Nothing herein shall limit the right of Agent or any Lender to bring
proceedings against any Obligor in any other court, nor limit the right of any party to serve
process in any other manner permitted by Applicable Law. Nothing in this Amendment shall be deemed
to preclude enforcement by Agent of any judgment or order obtained in any forum or jurisdiction.
Without limiting the applicability of any other provision of the Loan Agreement, the terms of
Sections 14.14 and 14.15 of the Loan Agreement are incorporated herein, mutatis mutandis, and shall
apply to and govern this Amendment.

     14. Counterparts. This Amendment may be executed in counterparts, each of which shall
constitute an original, but all of which when taken together shall constitute a single contract.
Delivery of a signature page of any Loan Document by telecopy or electronic mail shall be effective
as delivery of a manually executed counterpart of such agreement.

     15. Severability. Wherever possible, each provision of this Amendment shall be
interpreted in such manner as to be valid under Applicable Law. If any provision is found to be
invalid under Applicable Law, it shall be ineffective only to the extent of such invalidity and the
remaining provisions of this Amendment shall remain in full force and effect.

     16. Headings. The headings, captions, and arrangements used in this Amendment are for
convenience only, are not a part of this Amendment, and shall not affect the interpretation hereof.

     17. Representation by Counsel. The parties hereto represent and warrant that they
have been represented by independent counsel throughout their negotiation, review and execution of
this Amendment.

     18. Jointly Drafted Agreement. This Amendment shall be construed as though each of
Agent, the Lenders and the Obligors participated equally in its drafting and, it shall be
interpreted, wherever possible, to make it valid and effective. If any part of this Amendment is
determined to be invalid, unenforceable or prohibited, only that part should be affected and the
rest shall be enforced as written here.

     19. Entire Agreement. Time is of the essence of the Loan Documents. This Amendment
and the Loan Agreement, as amended hereby, and the other Loan Documents constitute the entire
contract among the parties relating to the subject matter hereof, and supersede any and all
previous agreements and understandings, oral or written, relating to the subject matter hereof.

[Remainder of Page Intentionally Left Blank]

24

 

     IN WITNESS WHEREOF, this Amendment has been executed and delivered as of the date set forth
above.

	 	 	 	 	 	 	 
	 	 	COMPANY:	 	 
	 
	 	 	 	 	 	 
	 	 	ALON REFINING KROTZ SPRINGS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Shai Even
 

Shai Even
	 	 
	 

	 	Title:
	 	Vice President and Chief Financial Officer	 	 
	 
	 	 	 	 	 	 
	 	 	HOLDINGS:	 	 
	 
	 	 	 	 	 	 
	 	 	ALON REFINING LOUISIANA, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Shai Even	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Shai Even	 	 
	 

	 	Title:
	 	Vice President and Chief Financial Officer	 	 
	 
	 	 	 	 	 	 
	 	 	AGENT AND LENDER:	 	 
	 
	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A.,	 	 
	 	 	as Agent and a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Todd R. Effertsen	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Todd R. Eggertsen	 	 
	 

	 	 	 	Vice PresidentEX-4.2

Exhibit 4.2

INSTEEL INDUSTRIES, INC.

AMENDMENT NO. 1 TO RIGHTS AGREEMENT

 

     THIS AMENDMENT NO. 1 TO RIGHTS AGREEMENT (the “Amendment No. 1”) is dated as of the 25th day
of April 2009 between Insteel Industries, Inc., a North Carolina corporation (the “Company”), and
American Stock Transfer & Trust Company, LLC (as successor rights agent to First Union National
Bank, the “Rights Agent”).

RECITALS

     WHEREAS, the Company and the Rights Agent are parties to that certain Rights Agreement dated
as of April 27, 1999 (the “Rights Agreement”);

     WHEREAS, the Board of Directors of the Company has considered the reasons underlying the
adoption of the Rights Agreement, obtained the advice of its counsel and financial advisor, and has
determined those reasons continue to be valid and in the best interests of the Company at present;

     WHEREAS, the Company and the Rights Agent desire to amend the Rights Agreement on the terms
and conditions hereinafter set forth; and

     WHEREAS, the Board of Directors of the Company has duly authorized this Amendment No. 1.

     NOW, THEREFORE, for and in consideration of the mutual promise, covenants and agreements
contained herein and other good and valuable consideration, the receipt and legal sufficiency of
which are hereby acknowledged, the parties hereto do hereby agree to amend the Rights Agreement, in
accordance with Section 27 of the Rights Agreement, as follows:

     1. Section 1(a) of the Rights Agreement is hereby amended by deleting the last sentence of
such subsection in its entirety and replacing it with the following:

Notwithstanding the first sentence of this Section 1(a), no person shall be deemed
to be an “Acquiring Person” if the Board of Directors of the Company determines in
good faith that such Person became the Beneficial Owner of 20% or more of the shares of Common Stock then outstanding inadvertently and such Person divests, as
promptly as practicable after receipt of a written notice from the Company, a
sufficient number of shares of Common Stock (or, for the avoidance of doubt, with
respect to any Derivative Common Shares, terminates the subject derivative
transaction or transactions or disposes of the subject derivative security or
securities) so that such Person is no longer the Beneficial Owner of 20% or more of
the shares of Common Stock then outstanding.

     2. Section 1(d)(ii) of the Rights Agreement is hereby amended by deleting the term “or” at the
end of the subsection.

1

 

     3. Section 1(d)(iii) of the Rights Agreement is hereby amended by deleting “acquisition.” at
the end of such subsection and replacing it with “acquisition; or”.

     4. Section 1(d) of the Rights Agreement is amended by adding the following subsection (iv) to
follow subsection (iii):

     (iv) that are the subject of a derivative transaction entered into by such
Person or any of such Person’s Affiliates or Associates, or derivative security
acquired by such Person or any of such Person’s Affiliates or Associates, which
gives such Person or any of such Person’s Affiliates or Associates the economic
equivalent of ownership of an amount of such securities due to the fact that the
value of the derivative is explicitly determined by reference to the price or value
of such securities, or which provides such Person or any of such Person’s
Affiliates or Associates an opportunity, directly or indirectly, to profit, or to
share in any profit, derived from any change in the value of such securities, in
any case without regard to whether (A) such derivative conveys any voting rights in
such securities to such Person or any of such Person’s Affiliates or Associates,
(B) the derivative is required to be, or capable of being, settled through delivery
of such securities, or (C) such Person or any of such Person’s Affiliates or
Associates may have entered into other transactions that hedge the economic effect
of such derivative. In determining the number of shares of Common Stock of the
Company beneficially owned by virtue of the operation of this Section 1(d)(iv), the
subject Person shall be deemed to beneficially own (without duplication) the
notional or other number of shares of Common Stock of the Company specified in the
documentation evidencing the derivative position as being subject to be acquired
upon the exercise or settlement of the applicable right or as the basis upon which
the value or settlement amount of such right, or the opportunity of the holder of
such right to profit or share in any profit, is to be calculated in whole or in
part, and in any case (or if no such number of shares of Common Stock of the
Company is specified in such documentation or otherwise), as determined by the
Board of Directors in good faith to be the number of shares of Common Stock of the
Company to which the derivative position relates. Such shares of Common Stock of
the Company that are deemed so beneficially owned pursuant to the operation of this
Section 1(d)(iv) shall be referred to herein as “Derivative Common Shares.”

     5. Section 1(r) of the Rights Agreement is hereby amended by deleting it in its entirety and
replacing it with the following:

     (r) “Final Expiration Date” shall mean the Close of Business on April 24,
2019, unless extended by the Board of Directors of the Company as provided in
Section 27 hereof.

     6. Section 7(b) of the Rights Agreement is hereby amended by deleting it in its entirety and
replacing it with the following:

2

 

     (b) The Purchase Price for each one two-hundredths of a share of Preferred
Stock pursuant to the exercise of a Right shall be $46.00 as of April 21, 2009 and
shall be subject to adjustment from time to time thereafter as provided in Sections
11 and 13(a) hereof and shall be payable in accordance with paragraph (c) below.

     7. The Company and Rights Agent acknowledge and agree that Rights Agent has succeeded to the
rights and obligations of First Union National Bank pursuant to Section 19 of the Rights Agreement,
and that the contact information for Rights Agent set forth in Section 26 of the Rights Agreement
is hereby deleted and replaced with the following:

American Stock Transfer & Trust Company, LLC

10150 Mallard Creek Road

Suite 307

Charlotte, NC 28262

Attention: Holly H. Drummond, VP/Senior Account Administrator

Telephone: (718) 921-8521

Facsimile: (718) 765-8742

     8. The Company and Rights Agent hereby acknowledge and agree that the amended and restated
form of Rights Certificate attached hereto as Exhibit A supersedes the Exhibit A that was attached
to the original form of this Rights Agreement as of April 27, 1999.

     9. Rights Agent acknowledges receipt of an officer’s certificate notifying Rights Agent of
this Amendment in accordance with Section 27 of the Rights Agreement.

     10. This Amendment No. 1 shall be effective as of the date hereof and, except as set forth
herein, the Rights Agreement shall remain in full force and effect and shall be otherwise
unaffected hereby. The term “Agreement” as used in the Rights Agreement shall be deemed to refer
to the Rights Agreement as amended hereby.

     11. If any term, provision, covenant or restriction of this Amendment No. 1 is held by a court
of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Amendment No. 1 shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.

     12. The Amendment No. 1 shall be deemed to be a contract under the laws of the State of North
Carolina and for all purposes shall be governed by and construed in accordance with the laws of
such State applicable to contracts to be made and performed entirely within such State.

     13. This Amendment No. 1 may be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.

[Signature Page Follows]

3

 

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to be duly executed as
of the date first written above.

	 	 	 	 	 
	 	INSTEEL INDUSTRIES, INC.

 	 
	 	By:  	/s/ James F. Petelle
 	 
	 	 	Name:  	James F. Petelle                               	 
	 	 	Title:  	Vice President and Secretary 	 
	 

	 	 	 	 	 
	 	AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC

 	 
	 	By:  	/s/ Paula Caroppoli
 	 
	 	 	Name:  	Paula Caroppoli 	 
	 	 	Title:  	Vice President 	 
	 

4

 

EXHIBIT A

[FORM OF RIGHTS CERTIFICATE]

     Certificate No. R____________

     NOT EXERCISABLE AFTER APRIL 24, 2019 OR EARLIER IF REDEEMED BY THE COMPANY. THE RIGHTS ARE
SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.005 PER RIGHT ON THE TERMS SET FORTH IN
THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING
PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS
MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE
OF AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]

RIGHTS CERTIFICATE

INSTEEL INDUSTRIES, INC.

     This certifies that _____________________, or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the owner thereof, subject to
the terms, provisions and conditions of the Rights Agreement, dated as of April 27, 1999, as
amended by Amendment Number 1 dated April 25, 2009 (collectively, the “Rights Agreement”), between
Insteel Industries, Inc., a North Carolina corporation (the “Company”), and American Stock Transfer
& Trust Company, LLC, as successor in interest to First Union National Bank (the “Rights Agent”),
to purchase from the Company at any time prior to 5:00 P.M., Mount Airy, North Carolina time, on
April 24, 2019 at the office or offices of the Rights Agent designated for such purpose, or its
successors as Rights Agent, one two-hundredths of a fully paid, nonassessable share of Series A
Junior Participating Preferred Stock (the “Preferred Stock”) of the Company, at a purchase price of
$46.00 per one two-hundredths of a share (the “Purchase Price”), upon presentation and surrender of
this Rights Certificate with the Form of Election to Purchase and related Certificate1
duly executed. The Purchase Price may be paid in cash or by certified bank check or money order
payable to the order of the Company. The number of Rights evidenced by this Rights Certificate
(and the number of shares of Preferred Stock which may be purchased upon exercise hereof) set forth
above, and the Purchase Price per share set forth above, are the number and Purchase Price as of
April 25, 2009, based on the Preferred Stock as constituted at such date.

 

			
	1	 	The portion of the legend in brackets shall be inserted
only if applicable and shall replace the immediately preceding sentence of the
legend.

 

 

     Upon the occurrence of a Section 11(a)(ii) Event (as such term is defined in the Rights
Agreement), if the Rights evidenced by this Rights Certificate are beneficially owned by (i) an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are
defined in the Rights Agreement), (ii) a transferee of any such Acquiring Person or an Associate or
Affiliate of any such Acquiring Person, or (iii) under certain circumstances specified in the
Rights Agreement, a transferee of a person who, after such transfer, became an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person, such Rights shall become null and void and
no holder hereof shall have any right with respect to such Rights from and after the occurrence of
such Section 11(a)(ii) Event.

     As provided in the Rights Agreement, the Purchase Price and the number and kind of shares of
Preferred Stock or other securities which may be purchased upon the exercise of the Rights
evidenced by this Rights Certificate are subject to modification and adjustment upon the happening
of certain events, including Triggering Events (as such term is defined in the Rights Agreement).

     This Rights Certificate is subject to all of the terms, provisions, and conditions of the
Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and immunities hereunder of
the Rights Agent, the Company and the holders of the Rights Certificates, which limitations of
rights include the temporary suspension of the exercisability of such Rights under the specific
circumstances set forth in the Rights Agreement. Copies of the Rights Agreement are available upon
written request to the Company.

     This Rights Certificate, with or without other Rights Certificates, upon surrender at the
principal office or offices of the Rights Agent designated for such purpose, may be exchanged for
another Rights Certificate or Rights Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of one two-hundredths of a share of
Preferred Stock as the Rights evidenced by the Rights Certificate or Rights Certificates
surrendered shall have entitled such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof another Rights
Certificate or Rights Certificates for the number of whole Rights not exercised.

     Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate
may be redeemed by the Company at its option at a redemption price of $0.005 per Right at any time
prior to the earliest of the Close of Business on (i) the tenth Business Day following the Stock
Acquisition Date (as such time period may be extended pursuant to the Rights Agreement) or (ii) the
Final Expiration Date. After the expiration of the redemption period referenced in clause (i)
above, the Company’s right of redemption may be reinstated if an Acquiring Person reduces his
beneficial ownership to less than 20% of the outstanding shares of Common Stock in a transaction or
series of transactions not involving the Company and there are no other Acquiring Persons.

     The Company may (but shall not be required to) issue fractional shares of Preferred Stock upon
the exercise of any Right or Rights evidenced hereby (other than
fractions which are integral multiples of one two-hundredth of a share of Preferred Stock, which may, at the
election

A-2

 

of the Company, be evidenced by depositary receipts), and in lieu thereof a cash payment
may be made, as provided in the Rights Agreement.

     No holder of this Rights Certificate, as such, shall be entitled to vote or receive dividends
or be deemed for any purpose the holder of shares of Preferred Stock or of any other securities of
the Company which may at any time be issuable on the exercise hereof, nor shall anything contained
in the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of
the rights of a shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to
any corporate action, or to receive notice of meetings or other actions affecting shareholders
(except as provided in the Rights Agreement), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by this Rights Certificate shall have been exercised
as provided in the Rights Agreement.

     This Rights Certificate shall not be valid or obligatory for any purpose until it shall have
been countersigned by the Rights Agent.

     WITNESS, the facsimile signature of the proper officers of the Company and its corporate seal.

	 	 	 	 	 
	ATTEST:

[Corporate Seal] 

 	 
	 	 
	Name:  	 	 
	Title:  	 	 
	 

	 	 	 	 	 
	Countersigned:

AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC

 	 
	By:  	 	 
	 	 	Authorized Signature 	 
	 	 	 	 
	 

	 	 	 	 	 
	 

INSTEEL INDUSTRIES, INC.

 	 
	By:  	 	 
	 	 	Name:  	Howard O. Woltz, III 	 
	 	 	Title:  	President 	 
	 

A-3

 

[FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE]

FORM OF ASSIGNMENT

[To be executed by the registered holder if such holder

desires to transfer the Rights Certificate.]

     FOR VALUE RECEIVED ___________________________ hereby sells, assigns and transfers unto [NAME
AND ADDRESS OF TRANSFEREE] this Rights Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint ____________ Attorney, to transfer
the within Rights Certificate on the books of the within-named Company, with full power of
substitution.

	 	 	 	 	 
	Dated:
	 	 	 	 
	 

	 	 
	 	 
	 

	 	 	 	Signature

Certificate

The undersigned hereby certifies by checking the appropriate boxes that:

     (1) this Rights Certificate [ ] is [ ] is not being sold, assigned and transferred by
or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of
any such Acquiring Person (as such term is defined in the Rights Agreement); and

     (2) after due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did
not acquire the Rights evidenced by this Rights Certificate from any Person who is, was or
subsequently became an Acquiring Person or an Affiliate or Associate of any such Acquiring
Person.

	 	 	 	 	 
	Dated:
	 	 	 	 
	 

	 	 
	 	 
	 

	 	 	 	Signature

      

      

      

Affix Medallion Guarantee Imprint in Box]

Note to Guarantor: Numeric code on bottom of the medallion stamp must be legible.

IMPORTANT READ CAREFULLY: The signatures on this form must correspond with the name as
written upon the face of the rights certificate in every particular without alteration or
enlargement or any changes whatsoever. The signature of the person executing this power must be
guaranteed by an Eligible Guarantor Institution such as a Commercial Bank, Securities Broker /
Dealer participating in a Medallion Program approved by the Securities Transfer Association, Inc.
Under S.E.C. Regulations, no other form of signature verification can be accepted.

A-4

 

NOTICE

     The signature to the foregoing Assignment and Certificate must correspond to the name
as written upon the face of this Rights Certificate in every particular, without alteration
or enlargement or any change whatsoever.

FORM OF ELECTION TO PURCHASE

[To be executed by the registered holder if such holder desires to exercise

Rights represented by the Rights Certificate.]

To: The Rights Agent

     The undersigned hereby irrevocably elects to exercise ____________  Rights represented
by this Rights Certificate to purchase the shares of Preferred Stock issuable upon the
exercise of the Rights (or such other securities of the Company or of any other Person which
may be issuable upon the exercise of the Rights) and requests that certificates for such
            shares be issued in the name of and delivered to:

(Please print name and address)

     Please insert social security or other identifying number:
 

________________________

     If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights shall be registered in
the name of and delivered to:

(Please print name and address)

     Please insert social security or other identifying number:

________________________

	 	 	 	 	 
	Dated:
	 	 	 	 
	 

	 	 
	 	 
	 

	 	 	 	Signature

      

      

      

Affix Medallion Guarantee Imprint in Box]

     Affix Medallion Guarantee Imprint in Box]

     Note to Guarantor: Numeric code on bottom of the medallion stamp must be legible.

     IMPORTANT READ CAREFULLY: The signatures on this form must correspond with the name as
written upon the face of the rights certificate in every particular without alteration or
enlargement or any changes whatsoever. The signature of the person executing this power must be
guaranteed by an Eligible Guarantor Institution such as a Commercial Bank, Securities Broker /
Dealer participating in a Medallion Program approved by the Securities Transfer Association, Inc.
Under S.E.C. Regulations, no other form of signature verification can be accepted.

A-5

 

Certificate

     The undersigned hereby certifies by checking the appropriate boxes that:

     (1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not being exercised
by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate
of any such Acquiring Person (as such term is defined in the Rights Agreement);

     (2) after due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did
not acquire the Rights evidenced by this Rights Certificate from any Person who is, was or
became an Acquiring Person or an Affiliate or Associate of any such Acquiring Person.

	 	 	 	 	 
	Dated:
	 	 	 	 
	 

	 	 
	 	 
	 

	 	 	 	Signature

      

      

      

Affix Medallion Guarantee Imprint in Box]

     Note to Guarantor: Numeric code on bottom of the medallion stamp must be legible.

     IMPORTANT READ CAREFULLY: The signatures on this form must correspond with the name as
written upon the face of the rights certificate in every particular without alteration or
enlargement or any changes whatsoever. The signature of the person executing this power must be
guaranteed by an Eligible Guarantor Institution such as a Commercial Bank, Securities Broker /
Dealer participating in a Medallion Program approved by the Securities Transfer Association, Inc.
Under S.E.C. Regulations, no other form of signature verification can be accepted.

A-6

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