Document:

exv10w1

 

Exhibit 10.1

SENIOR SECURED REVOLVING CREDIT AGREEMENT

Among

KAISER ALUMINUM CORPORATION,

KAISER ALUMINUM INVESTMENTS COMPANY,

KAISER ALUMINUM FABRICATED PRODUCTS, LLC AND

KAISER ALUMINIUM INTERNATIONAL, INC.,

as Borrowers

and

THE LENDERS PARTY HERETO

and

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent 

J.P. MORGAN SECURITIES, INC.

as Sole Bookrunner

J.P. MORGAN SECURITIES, INC.

and

THE CIT GROUP/BUSINESS CREDIT, INC.

as Co-Lead Arrangers

THE CIT GROUP/BUSINESS CREDIT, INC.

and

BANK OF AMERICA

as Co-Syndication Agents

and

WACHOVIA BANK

and

WELLS FARGO FOOTHILL

as Co-Documentation Agents

Dated as of July 6, 2006

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	ARTICLE 1. DEFINITIONS	 	 	1	 
	 

	 	SECTION 1.01
	 	Defined Terms
	 	 	1	 
	 

	 	SECTION 1.02
	 	Classifications of Loans and Borrowings; Terms Generally
	 	 	37	 
	 

	 	SECTION 1.03
	 	The Parent As Agent For Borrowers
	 	 	38	 
	 

	 	SECTION 1.04
	 	The Term “Borrower” or “Borrowers”
	 	 	38	 
	 

	 	SECTION 1.05
	 	Secured Obligations Not Affected
	 	 	38	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 2. AMOUNT AND TERMS OF CREDIT	 	 	39	 
	 

	 	SECTION 2.01
	 	The Facility
	 	 	39	 
	 

	 	SECTION 2.02
	 	Revolving Loans
	 	 	39	 
	 

	 	SECTION 2.03
	 	Loans and Borrowings
	 	 	39	 
	 

	 	SECTION 2.04
	 	Requests for Borrowings
	 	 	39	 
	 

	 	SECTION 2.05
	 	Protective Advances
	 	 	40	 
	 

	 	SECTION 2.06
	 	Swingline Loans
	 	 	41	 
	 

	 	SECTION 2.07
	 	Letters of Credit
	 	 	42	 
	 

	 	SECTION 2.08
	 	Funding of Borrowings
	 	 	47	 
	 

	 	SECTION 2.09
	 	Interest Elections
	 	 	48	 
	 

	 	SECTION 2.10
	 	Termination of Commitments
	 	 	50	 
	 

	 	SECTION 2.11
	 	Repayment of Loans; Evidence of Debt
	 	 	50	 
	 

	 	SECTION 2.12
	 	Prepayment of Loans
	 	 	51	 
	 

	 	SECTION 2.13
	 	Fees
	 	 	53	 
	 

	 	SECTION 2.14
	 	Interest
	 	 	54	 
	 

	 	SECTION 2.15
	 	Alternate Rate of Interest
	 	 	54	 
	 

	 	SECTION 2.16
	 	Increased Costs
	 	 	55	 
	 

	 	SECTION 2.17
	 	Breakfunding Payments
	 	 	56	 
	 

	 	SECTION 2.18
	 	Taxes
	 	 	57	 
	 

	 	SECTION 2.19
	 	Payments Generally; Allocation of Proceeds; Sharing of Set-offs
	 	 	58	 
	 

	 	SECTION 2.20
	 	Mitigation Obligations; Replacement of Lenders
	 	 	61	 
	 

	 	SECTION 2.21
	 	Indemnity for Returned Payments
	 	 	61	 
	 

	 	SECTION 2.22
	 	Facility Increase
	 	 	62	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 3. REPRESENTATIONS AND WARRANTIES	 	 	63	 
	 

	 	SECTION 3.01
	 	Organization and Authority
	 	 	63	 
	 

	 	SECTION 3.02
	 	Due Execution
	 	 	63	 
	 

	 	SECTION 3.03
	 	Statements Made
	 	 	64	 
	 

	 	SECTION 3.04
	 	Financial Statements
	 	 	64	 
	 

	 	SECTION 3.05
	 	Real Property
	 	 	64	 
	 

	 	SECTION 3.06
	 	Liens
	 	 	65	 
	 

	 	SECTION 3.07
	 	Compliance with Law
	 	 	65	 
	 

	 	SECTION 3.08
	 	Insurance
	 	 	65	 
	 

	 	SECTION 3.09
	 	Use of Proceeds
	 	 	65	 
	 

	 	SECTION 3.10
	 	Litigation.
	 	 	65	 

i

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 

	 	SECTION 3.11
	 	Investment and Holding Company Status
	 	 	65	 
	 

	 	SECTION 3.12
	 	Taxes
	 	 	65	 
	 

	 	SECTION 3.13
	 	ERISA
	 	 	66	 
	 

	 	SECTION 3.14
	 	Disclosure
	 	 	66	 
	 

	 	SECTION 3.15
	 	Material Agreements
	 	 	66	 
	 

	 	SECTION 3.16
	 	Reportable Transaction
	 	 	66	 
	 

	 	SECTION 3.17
	 	Capitalization and Subsidiaries
	 	 	66	 
	 

	 	SECTION 3.18
	 	Common Enterprise
	 	 	67	 
	 

	 	SECTION 3.19
	 	Location of Bank Accounts
	 	 	67	 
	 

	 	SECTION 3.20
	 	Labor Disputes
	 	 	67	 
	 

	 	SECTION 3.21
	 	Environmental Matters
	 	 	67	 
	 

	 	SECTION 3.22
	 	Confirmation Order; District Court Order
	 	 	69	 
	 

	 	SECTION 3.23
	 	Consummation Date
	 	 	69	 
	 

	 	SECTION 3.24
	 	Solvency
	 	 	69	 
	 

	 	SECTION 3.25
	 	Security Interest in Collateral
	 	 	70	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 4. CONDITIONS OF LENDING	 	 	70	 
	 

	 	SECTION 4.01
	 	Conditions Precedent to Initial Loans and Initial Letters of Credit
	 	 	70	 
	 

	 	SECTION 4.02
	 	Conditions Precedent to Each Loan and Each Letter of Credit
	 	 	74	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 5. AFFIRMATIVE COVENANTS	 	 	75	 
	 

	 	SECTION 5.01
	 	Financial Statements, Reports, etc.
	 	 	75	 
	 

	 	SECTION 5.02
	 	Corporate Existence
	 	 	79	 
	 

	 	SECTION 5.03
	 	Insurance
	 	 	79	 
	 

	 	SECTION 5.04
	 	Obligations and Taxes
	 	 	80	 
	 

	 	SECTION 5.05
	 	Notice of Event of Default, etc.
	 	 	80	 
	 

	 	SECTION 5.06
	 	Access to Books and Records
	 	 	80	 
	 

	 	SECTION 5.07
	 	Borrowing Base Certificate
	 	 	81	 
	 

	 	SECTION 5.08
	 	Collateral Monitoring and Review
	 	 	81	 
	 

	 	SECTION 5.09
	 	Projections
	 	 	81	 
	 

	 	SECTION 5.10
	 	Maintenance of Properties and Intellectual Property Rights
	 	 	81	 
	 

	 	SECTION 5.11
	 	Compliance with Laws
	 	 	81	 
	 

	 	SECTION 5.12
	 	Use of Proceeds and Letters of Credit
	 	 	82	 
	 

	 	SECTION 5.13
	 	Additional Collateral; Further Assurances
	 	 	82	 
	 

	 	SECTION 5.14
	 	Environmental Covenant
	 	 	83	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 6. NEGATIVE COVENANTS	 	 	83	 
	 

	 	SECTION 6.01
	 	Liens
	 	 	84	 
	 

	 	SECTION 6.02
	 	Merger, etc.
	 	 	84	 
	 

	 	SECTION 6.03
	 	Indebtedness
	 	 	84	 
	 

	 	SECTION 6.04
	 	Guarantees and Other Liabilities
	 	 	86	 
	 

	 	SECTION 6.05
	 	Dividends; Capital Stock
	 	 	86	 
	 

	 	SECTION 6.06
	 	Transactions with Affiliates
	 	 	86	 
	 

	 	SECTION 6.07
	 	Investments, Loans, Advances, Guaranties and Acquisitions
	 	 	87	 
	 

	 	SECTION 6.08
	 	Creation of Subsidiaries
	 	 	88	 
	 

	 	SECTION 6.09
	 	Disposition of Assets
	 	 	88	 

ii

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 

	 	SECTION 6.10
	 	Nature of Business
	 	 	88	 
	 

	 	SECTION 6.11
	 	Restrictive Agreements
	 	 	88	 
	 

	 	SECTION 6.12
	 	Prepayment of Indebtedness; Subordinated Indebtedness
	 	 	89	 
	 

	 	SECTION 6.13
	 	Fixed Charge Coverage
	 	 	89	 
	 

	 	SECTION 6.14
	 	Amendments to Orders
	 	 	90	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 7. EVENTS OF DEFAULT	 	 	90	 
	 

	 	SECTION 7.01
	 	Events of Default
	 	 	90	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 8. THE ADMINISTRATIVE AGENT	 	 	93	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 9. MISCELLANEOUS	 	 	96	 
	 

	 	SECTION 9.01
	 	Notices
	 	 	96	 
	 

	 	SECTION 9.02
	 	Waivers; Amendments
	 	 	97	 
	 

	 	SECTION 9.03
	 	Expenses; Indemnity; Damage Waiver
	 	 	99	 
	 

	 	SECTION 9.04
	 	Successors and Assigns
	 	 	101	 
	 

	 	SECTION 9.05
	 	Survival
	 	 	105	 
	 

	 	SECTION 9.06
	 	Counterparts; Integration; Effectiveness
	 	 	105	 
	 

	 	SECTION 9.07
	 	Severability
	 	 	105	 
	 

	 	SECTION 9.08
	 	Right of Setoff
	 	 	105	 
	 

	 	SECTION 9.09
	 	Governing Law; Jurisdiction; Consent to Service of Process
	 	 	106	 
	 

	 	SECTION 9.10
	 	WAIVER OF JURY TRIAL
	 	 	107	 
	 

	 	SECTION 9.11
	 	Headings
	 	 	107	 
	 

	 	SECTION 9.12
	 	Confidentiality
	 	 	107	 
	 

	 	SECTION 9.13
	 	Several Obligations; Nonreliance; Violation of Law
	 	 	108	 
	 

	 	SECTION 9.14
	 	USA PATRIOT Act
	 	 	108	 
	 

	 	SECTION 9.15
	 	Disclosure
	 	 	108	 
	 

	 	SECTION 9.16
	 	Appointment for Perfection
	 	 	108	 
	 

	 	SECTION 9.17
	 	Interest Rate Limitation
	 	 	108	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 10. CASH MANAGEMENT	 	 	109	 
	 

	 	SECTION 10.01
	 	Cash Management
	 	 	109	 
	 

	 	SECTION 10.02
	 	Cash Dominion
	 	 	109	 

iii

 

	 	 	 	 	 
	ANNEX A

	 	-
	 	Commitment Schedule
	EXHIBIT A-1

	 	-
	 	Form of Reorganization Plan
	EXHIBIT A-2

	 	-
	 	Form of Confirmation Order
	EXHIBIT A-3

	 	-
	 	Form of District Court Order
	EXHIBIT B

	 	-
	 	Form of Security and Pledge Agreement
	EXHIBIT C

	 	-
	 	Form of Opinion of Counsel
	EXHIBIT D

	 	-
	 	Form of Assignment and Assumption
	EXHIBIT E

	 	-
	 	Form of Borrowing Base Certificate
	EXHIBIT F

	 	-
	 	Form of Joinder Agreement
	EXHIBIT G

	 	-
	 	Form of Borrowing Request
	EXHIBIT H

	 	-
	 	Form of Mortgage
	EXHIBIT I

	 	-
	 	Form of Intercompany Subordination Agreement
	EXHIBIT J

	 	-
	 	Form of Second Amended and Restated Fee Letter
	 	 	 	 	 
	SCHEDULE 1.01(a)

	 	-
	 	Designated Asset Sales
	SCHEDULE 1.01(b)

	 	-
	 	Specified Account Debtors
	SCHEDULE 1.01(c)

	 	-
	 	Restructuring Transactions
	SCHEDULE 1.01(d)

	 	-
	 	Reliance Account Debtors
	SCHEDULE 2.07

	 	-
	 	Existing Letters of Credit
	SCHEDULE 3.05

	 	-
	 	Real Property
	SCHEDULE 3.06

	 	-
	 	Liens
	SCHEDULE 3.07

	 	-
	 	Compliance with Laws
	SCHEDULE 3.10

	 	-
	 	Litigation
	SCHEDULE 3.12

	 	-
	 	Taxes
	SCHEDULE 3.15

	 	-
	 	Material Agreements
	SCHEDULE 3.17

	 	-
	 	Capitalization and Subsidiaries
	SCHEDULE 3.19

	 	-
	 	Location of Bank Accounts
	SCHEDULE 3.20

	 	-
	 	Labor Disputes
	SCHEDULE 3.21

	 	-
	 	Environmental Matters
	SCHEDULE 4.01(e)

	 	-
	 	Mortgaged Properties
	SCHEDULE 4.01(n)

	 	-
	 	Material Consents
	SCHEDULE 6.03

	 	-
	 	Existing Indebtedness
	SCHEDULE 6.07

	 	-
	 	Existing Investments
	SCHEDULE 6.09

	 	-
	 	Disposition of Assets
	SCHEDULE 6.11

	 	-
	 	Restrictive Agreements
	SCHEDULE 10.01

	 	-
	 	Bank Accounts

iv

 

SENIOR SECURED REVOLVING CREDIT AGREEMENT

          SENIOR SECURED REVOLVING CREDIT AGREEMENT, dated as of July 6, 2006, among KAISER ALUMINUM
CORPORATION, a Delaware corporation (the “Parent”), KAISER ALUMINUM INVESTMENTS COMPANY, a
Delaware corporation (“KAIC”), KAISER ALUMINUM FABRICATED PRODUCTS, LLC, a Delaware limited
liability company (“KAFP”), and KAISER ALUMINIUM INTERNATIONAL, INC., a Delaware
corporation (“KAII”, and together with the Parent, KAIC, KAFP and each other Subsidiary
that becomes a Borrower pursuant to Section 5.13, each a “Borrower” and
collectively, the “Borrowers”), JPMORGAN CHASE BANK, N.A., a national banking association
organized under the laws of the United States (“JPMorgan Chase”), THE CIT GROUP/BUSINESS
CREDIT, INC., a New York corporation (“CIT”), and each of the other financial institutions
from time to time party hereto (together with JPMorgan Chase and CIT, the “Lenders”) and
JPMORGAN CHASE BANK, N.A., as administrative agent (in such capacity, the “Administrative
Agent”) for the Lenders.

INTRODUCTORY STATEMENT

          The Borrowers have requested that the Lenders make available to the Borrowers loans and other
extensions of revolving credit in an aggregate principal amount not to exceed $200,000,000 (subject
to an increase of up to $75,000,000 pursuant to Section 2.22), which extensions of credit
will be used by the Borrowers for the purposes set forth in Section 3.09.

          The Borrowers have agreed to secure all of the Secured Obligations by granting to the
Administrative Agent, on behalf of the Lenders, a security interest in and lien upon the Collateral
as set forth in the Security and Pledge Agreement and any Mortgages.

          Accordingly, the parties hereto hereby agree as follows:

     ARTICLE 1. DEFINITIONS

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

          “ABR Borrowing” shall mean a Borrowing comprised of ABR Loans.

          “ABR Loan” shall mean any Loan bearing interest at a rate determined by reference to
the Alternate Base Rate in accordance with the provisions of Article 2.

          “Account” shall mean “account” as defined in Article 9 of the Uniform Commercial Code
as in effect from time to time in the State of New York, or when the context implies, the Uniform
Commercial Code as in effect from time to time in any other applicable jurisdiction.

          “Account Debtor” shall mean any Person obligated on an Account.

          “Act” shall have the meaning given such term in Section 9.14.

 

 

          “Adjusted LIBO Rate” shall mean, with respect to any Eurodollar Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/100 of
1%) equal to the LIBO Rate for such interest period multiplied by the Statutory Reserve Rate.

          “Administrative Agent” shall have the meaning set forth in the first paragraph of this
Agreement and together with its successors appointed pursuant to Article 8.

          “Administrative Questionnaire” shall mean an Administrative Questionnaire in a form
supplied by the Administrative Agent.

          “Affiliate” shall mean, as to any Person, any other Person which, directly or
indirectly, is in Control of, is Controlled by, or is under common Control with, such Person.

          “Aggregate Credit Exposure” shall mean, at any time, the sum of the Revolving Credit
Exposure of each of the Lenders.

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

          “Alternate Base Rate” shall mean, for any day, a rate per annum (rounded, if
necessary, to the nearest 1/100 of 1%) equal to the greater of (a) the Prime Rate in effect on such
day and (b) the Federal Funds Effective Rate in effect on such day plus 0.50%. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be
effective from and including the effective date of such change in the Prime Rate or the Federal
Funds Effective Rate, respectively.

          “Anglesey” shall mean Anglesey Aluminium Limited, a United Kingdom corporation, in
which KAIC holds a 49% interest.

          “Applicable Commitment Fee Rate” shall mean, at any time, with respect to the
Commitment Fees payable hereunder, a rate equal to 0.20% per annum.

          “Applicable Equipment Value” shall mean, with respect to Eligible Equipment that is
Class 2 Equipment, Class 3 Equipment, Class 4 Equipment, Class 5 Equipment or Class 6 Equipment,
(x) from the date of purchase of such Eligible Equipment to the date such Eligible Equipment is
appraised in accordance with the terms hereof, an amount equal to 80% of the cash purchase price of
such Eligible Equipment (excluding any portion thereof attributable to engineering, design and
other soft costs or to taxes, shipping, handling, storage, delivery or similar charges) paid by the
acquiring Borrower to purchase such Eligible Equipment and (y) at all times thereafter, the lesser
of (i) the amount determined in accordance with clause (x) and (ii) 80% of the appraised Net
Orderly Liquidation Value of such Eligible Equipment.

          “Applicable Margin” shall mean, for any day, with respect to any ABR Loan or
Eurodollar Loan, the applicable rate per annum set forth below under the caption “ABR Spread” or
“Eurodollar Spread”, as the case may be, based on Quarterly Available Credit, provided
that, until the end of the Fiscal Quarter ending September 30, 2006, the “Applicable
Margin” shall be the applicable rate per annum set forth below in Category 2.

2

 

	 	 	 	 	 	 	 	 	 
	 	 	Revolver	 	Revolver
	Quarterly Available Credit	 	ABR Spread	 	Eurodollar Spread
	Category 1 
>125,000,000
	 	 	0.00	%	 	 	1.50	%
	Category 2 
< 125,000,000 and > 75,000,000
	 	 	0.00	%	 	 	1.75	%
	Category 3
< 75,000,000
	 	 	0.25	%	 	 	2.00	%

          For purposes of the foregoing, (a) the Applicable Margin shall be determined as of the end of
each Fiscal Quarter of the Borrowers on a prospective basis for the immediately succeeding Fiscal
Quarter based upon the Quarterly Available Credit for such ending Fiscal Quarter determined (absent
manifest error) by the Administrative Agent using (i) the lesser of the Total Commitment and the
Borrowing Base reported on each of the Borrowing Base Certificates delivered by the Borrowers’
Agent to the Administrative Agent pursuant to Section 5.07 during such Fiscal Quarter and
(ii) the Aggregate Credit Exposure for each date of such Fiscal Quarter and (b) each change in the
Applicable Rate resulting from a change in Quarterly Available Credit shall be effective as of the
first date of such succeeding Fiscal Quarter following the quarter with respect to which the
Quarterly Available Credit is calculated and ending on the date immediately preceding the effective
date of the next such change, provided that Quarterly Available Credit shall be
deemed to be in Category 3 (A) at any time that an Event of Default has occurred and is continuing
or (B) at the option of the Administrative Agent if the Borrowers’ Agent fails to deliver the
Borrowing Base Certificate required to be delivered by it pursuant to clause (a) above, during the
period from the expiration of the time for delivery thereof until the date that such Borrowing Base
Certificate is delivered. The Administrative Agent shall provide the Borrowers’ Agent with a
statement of each calculation of Quarterly Available Credit promptly following the end of each
Fiscal Quarter.

          “Approved Fund” shall have the meaning given such term in Section 9.04(b).

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

          “Availability” shall mean, at any time, an amount equal to (a) the lesser of (i) the
Total Commitment and (ii) the Borrowing Base, minus (b) the Aggregate Credit Exposure.

          “Availability Period” shall mean the period from and including the Closing Date to but
excluding the Termination Date.

          “Banking Services” shall mean each and any of the following bank services provided to
any Borrower by any Lender or any of its Affiliates: (a) commercial credit cards, (b) stored value
cards, (c) purchasing cards and (d) treasury management services (including, without limitation,
controlled disbursement, automated clearinghouse transactions, return items, overdrafts and
interstate depository network services).

3

 

          “Banking Services Obligations” shall mean, with respect to any Borrower, any and all
obligations of such Borrower, whether absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all renewals, extensions and modifications thereof and
substitutions therefor) in connection with Banking Services.

          “Banking Services Reserves” shall mean all Reserves which the Administrative Agent
from time to time establishes in its Permitted Discretion for Banking Services then provided or
outstanding.

          “Bankruptcy Code” shall mean The Bankruptcy Reform Act of 1978, as heretofore and
hereafter amended, and codified as 11 U.S.C. Section 101 et seq.

          “Bankruptcy Court” shall mean the United States Bankruptcy Court for the District of
Delaware or any other court having jurisdiction over the Cases from time to time.

          “Board” shall mean the Board of Governors of the Federal Reserve System of the United
States.

          “Borrowers” shall have the meaning as set forth in the first paragraph of this
Agreement.

          “Borrowers’ Agent” shall mean the Parent, in its capacity as agent for the Borrowers,
as more fully described in Section 1.03.

          “Borrowing” shall mean (a) Revolving Loans of the same Type, made, converted or
continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest
Period is in effect, (b) a Swingline Loan or (c) a Protective Advance.

          “Borrowing Base” shall mean, at any time, an amount that is equal to the sum of:

               (i) 85% of Eligible Accounts Receivable; plus

               (ii) the lesser of (a) 65% of Eligible Inventory (valued at the lower of cost
or market value, determined on a first-in, first-out basis), and (b) 85% of the Net
Recovery Percentage (based upon the most recent Inventory appraisal delivered to the
Administrative Agent in accordance with the terms hereof) of Eligible Inventory
(valued at the lower of cost or market value, determined on a first-in, first-out
basis); plus

               (iii) the Real Property Percentage multiplied by 65% of the appraised Fair
Market Value of Eligible Real Estate; plus

               (iv) the sum of (A) the Class 1 Equipment Percentage multiplied by 80% of the
appraised Net Orderly Liquidation Value of the Class 1 Equipment, plus (B)
the Class 2 Equipment Percentage multiplied by the Applicable Equipment Value of the
Class 2 Equipment, plus (C) the Class 3 Equipment Percentage multiplied by
the Applicable Equipment Value of the Class 3 Equipment, plus (D) the Class
4 Equipment Percentage multiplied by the

4

 

Applicable Equipment Value of the Class 4 Equipment, plus (E) the Class
5 Equipment Percentage multiplied by the Applicable Equipment Value of the Class 5
Equipment, plus (F) the Class 6 Equipment Percentage multiplied by the
Applicable Equipment Value of the Class 6 Equipment; minus

               (v) Reserves.

          The maximum amount that may be included in the Borrowing Base pursuant to clauses
(iii) and (iv) above is $50,000,000, plus an amount equal to that portion of any
Facility Increase allocated to the Fixed Asset Sublimit in accordance with Section 2.22
(the aggregate amount set forth in this sentence, the “Fixed Asset Sublimit”). The
Administrative Agent retains the right to, from time to time, in its Permitted Discretion,
establish additional standards of eligibility and reserves against eligibility and to reduce
advance rates, with any changes in such standards to be effective upon delivery of notice thereof
to the Borrowers’ Agent.

          “Borrowing Base Certificate” shall mean a certificate substantially in the form of
Exhibit E together with all supporting documentation required to be delivered as specified
in Schedule 1 to Exhibit E (with such changes therein from time to time as may be required
by the Administrative Agent in its Permitted Discretion to reflect the components of and reserves
against the Borrowing Base as provided for hereunder from time to time), executed and certified by
a Financial Officer of the Borrowers’ Agent.

          “Borrowing Request” shall mean a borrowing request substantially in the form of
Exhibit G or any other form approved by the Administrative Agent.

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

          “Capital Expenditures” shall mean, without duplication, any actual cash expenditure
for any purchase or other acquisition of any asset which would be classified as a fixed or capital
asset on a consolidated balance sheet of the Parent and its Subsidiaries prepared in accordance
with GAAP.

          “Capital Lease” shall mean, with respect to any Person, any agreement pursuant to
which such Person obtains the right to use any real or personal Property which is required to be
classified and accounted for as a capital lease on the balance sheet of such Person under GAAP.

          “Capital Lease Obligations” shall mean, with respect to any Person, the obligations of
such Person to pay rent or other amounts under any Capital Lease and, for purposes of this
Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at
such time determined in accordance with GAAP.

          “Cases” shall mean, collectively, the jointly administered cases filed by the Parent
and certain of its Subsidiaries under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court.

5

 

          “Cash Collateralization” shall have the meaning given such term in Section
2.07(j).

          “Cash Management Accounts” shall mean those bank accounts of the Borrowers and their
Significant Subsidiaries (excluding any foreign Subsidiary) listed on Schedule 3.19 that
are maintained at one or more Cash Management Banks listed on Schedule 3.19.

          “Cash Management Bank” shall have the meaning given such term in Section
10.01(a).

          “CERCLA” shall mean the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended or otherwise modified from time to time.

          “CERCLIS” shall mean the Comprehensive Environmental Response Compensation Liability
Information System List.

          “Change in Law” shall mean (a) the adoption of any law, rule or regulation after the
date of this Agreement; (b) any change in any law, rule or regulation or in the interpretation or
application thereof by any Governmental Authority after the date of this Agreement; or (c)
compliance by any Lender or the Issuing Bank (or, for purposes of Section 2.16(b), by any
lending office of such Lender or by such Lender’s or the Issuing Bank’s holding company, if any)
with any request, guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.

          “Change of Control” shall mean (a) the acquisition after the date hereof of ownership,
directly or indirectly, beneficially or of record, by any Person or group (within the meaning of
the Securities Exchange Act of 1934 and the rules of the SEC thereunder as in effect on the date
hereof) (other than the VEBA Trusts), of shares representing more than 45% of the aggregate
ordinary voting power represented by the issued and outstanding capital stock of the Parent; (b)
the occupation of a majority of the seats (other than vacant seats) on the Board of Directors of
the Parent by Persons who were neither (1) nominated by the Board of Directors of the Parent nor
(2) appointed by directors so nominated or (c) the acquisition of direct or indirect Control of any
of the Borrowers by any Person or group (within the meaning of the Securities Exchange Act of 1934
and the rules of the SEC thereunder as in effect on the date hereof) other than the Parent.

          “Claims” shall have the meaning set forth in Section 101(5) of the Bankruptcy Code.

          “Class”, when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, are Revolving Loans, Swingline Loans or Protective
Advances.

          “Class 1 Equipment” shall mean, collectively, any and all Eligible Equipment in
existence on the Closing Date and for which the Administrative Agent has received an appraisal
report with respect to such Eligible Equipment from an independent appraiser reasonably
satisfactory to the Administrative Agent setting forth the Net Orderly Liquidation Value of such
Eligible Equipment.

6

 

          “Class 1 Equipment Percentage” shall mean, as of any date, the percentage equal to one
hundred percent (100%) minus the percentage obtained by dividing the number of full calendar months
elapsed since the Closing Date by eighty-four (84).

          “Class 2 Equipment” shall mean, collectively, any and all Eligible Equipment acquired
by any Borrower after the Closing Date and on or before December 31, 2006.

          “Class 2 Equipment Percentage” shall mean, as of any date after December 31, 2006, the
percentage equal to one hundred percent (100%) minus the percentage obtained by dividing the number
of full calendar months elapsed since December 31, 2006 by eighty-four (84).

          “Class 3 Equipment” shall mean, collectively, any and all Eligible Equipment acquired
by any Borrower during the period beginning January 1, 2007 and ending December 31, 2007.

          “Class 3 Equipment Percentage” shall mean, as of any date after December 31, 2007, the
percentage equal to one hundred percent (100%) minus the percentage obtained by dividing the number
of full calendar months elapsed since December 31, 2007 by eighty-four (84).

          “Class 4 Equipment” shall mean, collectively, any and all Eligible Equipment acquired
by any Borrower during the period beginning January 1, 2008 and ending December 31, 2008.

          “Class 4 Equipment Percentage” shall mean, as of any date after December 31, 2008, the
percentage equal to one hundred percent (100%) minus the percentage obtained by dividing the number
of full calendar months elapsed since December 31, 2008 by eighty-four (84).

          “Class 5 Equipment” shall mean, collectively, any and all Eligible Equipment acquired
by any Borrower during the period beginning January 1, 2009 and ending December 31, 2009.

          “Class 5 Equipment Percentage” shall mean, as of any date after December 31, 2009, the
percentage equal to one hundred percent (100%) minus the percentage obtained by dividing the number
of full calendar months elapsed since December 31, 2009 by eighty-four (84).

          “Class 6 Equipment” shall mean, collectively, any and all Eligible Equipment acquired
by any Borrower during the period beginning January 1, 2010 and ending December 31, 2010.

          “Class 6 Equipment Percentage” shall mean, as of any date after December 31, 2010, the
percentage equal to one hundred percent (100%) minus the percentage obtained by dividing the number
of full calendar months elapsed since December 31, 2010 by eighty-four (84).

7

 

          “Closing Date” shall mean the date on which this Agreement has been executed and the
conditions precedent to the making of the initial Loans set forth in Section 4.01 have been
satisfied or waived, which date shall occur on the date requested by the Borrowers’ Agent following
the date of entry of the Confirmation Order and the District Court Order but in no event later than
August 31, 2006.

          “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and
the regulations promulgated and rulings issued thereunder.

          “Collateral” shall mean any and all property owned, leased or operated by a Person
granted as security for the Secured Obligations pursuant to any other Loan Document and any and all
other property of any Borrower, now existing or hereafter acquired, that may at any time be or
become subject to a security interest or Lien in favor of the Administrative Agent, on behalf of
itself and the Lenders, to secure the Secured Obligations.

          “Collateral Access Agreement” shall mean any landlord waiver or other agreement, in
form and substance reasonably satisfactory to the Administrative Agent, between the Administrative
Agent, for the benefit of the Administrative Agent and the Lenders, and any third party (including
any bailee, consignee, customs broker, or other similar Person) in possession of any Collateral or
any landlord of any Borrower for any real Property where any Collateral is located and pursuant to
which such third party, among other things, waives or subordinates any Lien such third party may
have in respect of the Collateral, as such landlord waiver or other agreement may be amended,
restated, supplemented or otherwise modified from time to time.

          “Collateral Documents” shall mean, collectively, the Security and Pledge Agreement,
the Mortgages and any other documents granting a Lien upon the Collateral as security for payment
of the Secured Obligations.

          “Collateral Monitoring Fees” shall have the meaning set forth in Section 5.08.

          “Commitment” shall mean, with respect to any Lender, the commitment of such Lender to
make Revolving Loans and to acquire participations in Letters of Credit, Swingline Loans and
Protective Advances hereunder, as such commitment may be (a) reduced from time to time pursuant to
the terms hereof and (b) reduced or increased from time to time pursuant to assignments by or to
Lender pursuant to Section 9.04(b) or pursuant to a Facility Increase in accordance with
Section 2.22. The initial amount of each Lender’s Commitment is set forth on Annex A –
Commitment Schedule or, if applicable, in the Assignment and Assumption pursuant to which such
Lender shall have assumed its Commitment. The initial aggregate amount of all of the Lenders’
Commitments is $200,000,000.

          “Commitment Fee” shall have the meaning set forth in Section 2.13.

          “Commitment Letter” shall mean that certain Commitment Letter, dated January 14, 2005,
among the Administrative Agent, JPMSI, CIT, the Parent and KACC, as amended by Amendment No. 1
thereto, dated January 10, 2006, Amendment No. 2 thereto, dated April 26, 2006, and Amendment No. 3
thereto, dated April 26, 2006.

8

 

          “Commitment Percentage” shall mean, with respect to any Lender, (a) with respect to
Revolving Loans, Letter of Credit Exposure or Swingline Loans, a portion thereof equal to a
fraction the numerator of which is such Lender’s Commitment and the denominator of which is the
Total Commitment (if the Commitments have terminated or expired, the Commitment Percentages shall
be determined based upon the Commitments most recently in effect, giving effect to any
assignments), (b) with respect to Protective Advances or with respect to the Aggregate Credit
Exposure prior to the Termination Date, a portion thereof equal to a fraction the numerator of
which is such Lender’s Commitment and the denominator of which is the Total Commitment, and (c)
with respect to Protective Advances or with respect to the Aggregate Credit Exposure after the
Termination Date, a portion thereof equal to a fraction the numerator of which is such Lender’s
Revolving Credit Exposure and the denominator of which is the Aggregate Credit Exposure.

          “Commitment Schedule” shall mean the Schedule attached as Annex A hereto and
identified as the Commitment Schedule.

          “Commodity Swap Agreement” shall mean any Swap Agreement involving or settled by
reference to one or more commodities.

          “Confirmation Order” shall mean the order confirming the Reorganization Plan, attached
as Exhibit A-2, entered by the Bankruptcy Court on February 6, 2006.

          “Consummation Date” shall mean the date of the substantial consummation (as defined in
Section 1101 of the Bankruptcy Code and which for purposes of this Agreement shall be no later than
the effective date of a Reorganization Plan) of a Reorganization Plan that is confirmed pursuant to
the Confirmation Order and affirmed by the District Court Order.

          “Control” shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through the ability to
exercise voting power, by contract or otherwise. “Controlling” and “Controlled”
have meanings correlative thereto.

          “Covenant Release Event” shall mean, as of any date following the occurrence of a
Covenant Trigger Event, the first date upon which both of the following conditions have been
satisfied: (i) Availability has exceeded $50,000,000 for each day during the ninety (90)
consecutive calendar day period ending on such date after the immediately preceding Covenant
Trigger Event and (ii) at least 365 days have elapsed since the date of the last Covenant Release
Event, if any.

          “Covenant Trigger Event” shall mean any date on which Availability has been less than
$35,000,000 for any period of five (5) consecutive Business Days ending on such date. A Covenant
Trigger Event shall be deemed to have occurred and be continuing from the occurrence of such
Covenant Trigger Event up to but not including the first date upon which a Covenant Release Event
occurs following such Covenant Trigger Event.

          “Default” shall mean any event or condition which constitutes an Event of Default or
which upon notice, lapse of time, or both would, unless cured or waived, constitute an Event of
Default.

9

 

          “Defaulting Lender” shall have the meaning given to such term in Section
2.08(b).

          “Departing Lender” shall have the meaning given to such term in Section
2.20(b).

          “Designated Asset Sale” shall mean each asset sale that is described on Schedule
1.01(a) hereto.

          “Disqualified Indebtedness” shall mean any Indebtedness for borrowed money and any
bond, note, indenture or similar instrument issued, assumed or acquired in connection with an
acquisition if the instrument governing such Indebtedness or other obligation (i) has a scheduled
maturity date earlier than ninety (90) days after the Maturity Date or (ii) requires any Borrower
to make any scheduled or mandatory payments of principal or to otherwise purchase or redeem, or
make sinking fund or other similar payments with respect to, such Indebtedness earlier than ninety
(90) days after the Maturity Date; provided that the amount of such Indebtedness under this
clause (ii) shall be the aggregate principal amount of all such scheduled or mandatory
payments, purchases, redemptions, or sinking fund or other similar payments required to be made
earlier than ninety (90) days after the Maturity Date.

          “District Court” shall mean the United States District Court for the District of
Delaware.

          “District Court Order” shall mean the order affirming the Confirmation Order, attached
as Exhibit A-3, entered by the District Court on May 11, 2006.

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

          “Dominion Release Event” shall mean, as of any date following the occurrence of a
Dominion Trigger Event, the first date upon which both of the following conditions have been
satisfied: (i) Availability has exceeded $65,000,000 for each day during the ninety (90)
consecutive calendar day period ending on such date after the immediately preceding Dominion
Trigger Event and (ii) at least 365 days have elapsed since the date of the last Dominion Release
Event, if any.

          “Dominion Trigger Event” shall mean any date on which Availability has been less than
$50,000,000 for any period of five (5) consecutive Business Days ending on such date. A Dominion
Trigger Event shall be deemed to have occurred and be continuing from the occurrence of such
Dominion Trigger Event up to but not including the first date upon which a Dominion Release Event
occurs following such Dominion Trigger Event.

          “EBITDA” shall mean, for the Borrowers and their Subsidiaries on a consolidated basis,
for any period, in each case as determined in accordance with GAAP, Net Income for such period
plus, (a) to the extent deducted in determining Net Income for such period, (i) Interest Expense,
(ii) expense or benefit for income taxes, (iii) depreciation, (iv) amortization, (v) extraordinary
losses incurred, and (vi) any other non-cash charges except to the extent that any such non-cash
charge (x) could reasonably be expected to result in a cash payment during the term of this
Agreement or (y) represents amortization of a prepaid cash item paid in a prior period,
minus (b) to the extent included in determining Net Income, extraordinary gains realized.

10

 

          “EDGAR” shall mean the SEC’s Electronic Data Gathering Analysis and Retrieval System
(or any successor system).

          “Eligible Accounts Receivable” shall mean, at any time, all Accounts of the Borrowers
unless such Account is excluded from “Eligible Accounts Receivable” in accordance with the
following provisions of this definition. Without limiting the Administrative Agent’s Permitted
Discretion provided herein, Eligible Accounts Receivable shall not include any Account: (i) which
is not subject to a perfected first-priority security interest in favor of the Administrative
Agent; (ii) which is subject to any Lien other than (a) a Lien in favor of the Administrative Agent
and (b) a Permitted Lien or other Lien permitted under this Agreement in each case, which does not
have priority over the Lien in favor of the Administrative Agent; (iii) with respect to which more
than ninety (90) days have elapsed since the date of the original invoice therefor; (iv) owing by
an Account Debtor as to which 25% or more of the dollar amount of all accounts owing by such
Account Debtor are more than ninety (90) days past the date of the original invoice for such
accounts; (v) to any one Account Debtor or group of affiliated Account Debtors that are in excess
of 15% of total Eligible Accounts Receivable (or, solely in the case of the Reliance Account
Debtors, that are in excess of 25% of total Eligible Accounts Receivable); provided
that in each such case only those Accounts Receivable owing to such Account Debtor or group
of affiliated Account Debtors that are in excess of 15% (or 25% in the case of the Reliance Account
Debtors) of the total Eligible Accounts Receivable as set forth on the most recent Borrowing Base
Certificate delivered hereunder shall be deemed ineligible as a result of this clause (v);
(vi) with respect to which any covenant, representation, or warranty contained in this Agreement or
in the Security Agreement has been breached in any material respect or is not true in all material
respects; (vii) which does not arise from the sale of goods or performance of services in the
ordinary course of the applicable Borrower’s business; (viii) which is not evidenced by an invoice
or other documentation reasonably satisfactory to the Administrative Agent which has been sent to
the Account Debtor; (ix) which is contingent upon the completion of any further performance by any
Borrower or Affiliate of any Borrower (other than alumina purchase or sales agreements and product
returns in the ordinary course of business); (x) owing by a director, officer, employee or
Affiliate of any Borrower; (xi) for which the goods giving rise to such Account have not been
shipped to the Account Debtor or for which the services giving rise to such Account have not been
performed by the applicable Borrower (other than bill and hold Accounts which satisfy the
requirements set forth in clause (xxiii) below); (xii) which is owed by an Account Debtor
which has (a) applied for, suffered, or consented to the appointment of any receiver, custodian,
trustee, or liquidator of its assets, (b) had possession of all or a material part of its property
taken by any receiver, custodian, trustee or liquidator, (c) filed, or had filed against it, any
request or petition for liquidation, reorganization, arrangement, adjustment of debts, adjudication
as bankrupt, winding-up, or voluntary or involuntary case under any state or federal bankruptcy
laws, (d) admitted in writing its inability, or is generally unable to, pay its debts as they
become due, (e) become insolvent, or (f) ceased operation of its business; provided,
however, that in each case of clauses (a) through (f) above the
Administrative Agent may determine, in its Permitted Discretion, that post-petition Accounts owning
by a debtor-in-possession under Chapter 11 of the Bankruptcy Code shall
not be deemed ineligible;
(xiii) which is owed by any Account Debtor which has sold all or substantially all of its assets;
(xiv) which is owed by (a) the government (or any department, agency, public corporation, or
instrumentality thereof) of any country other than the U.S. unless such Account is backed by a
Letter of Credit acceptable to the Administrative Agent which is in the possession of

11

 

the Administrative Agent, or (b) the government of the United States of America, or any
department, agency, public corporation, or instrumentality thereof, unless the Federal Assignment
of Claims Act of 1940, as amended (31 U.S.C. § 3727 et seq. and 41 U.S.C. § 15 et seq.), and any
other steps necessary to perfect the Lien of the Administrative Agent in such Account have been
complied with to the Administrative Agent’s satisfaction; (xv) which is owed by an Account Debtor
which (a) does not maintain its chief executive office in the U.S., the United Kingdom or Canada
(other than the Canadian province of Quebec) or (b) is not organized under applicable law of the
U.S., any state of the U.S., the United Kingdom, Canada, or any province of Canada (other than the
Canadian province of Quebec) unless such Account is either (x) backed by a Letter of Credit
acceptable to the Administrative Agent which is in the possession of the Administrative Agent or
(y) owed by an Account Debtor specified by the Administrative Agent in its Permitted Discretion;
provided, however, such Accounts of Account Debtors under this clause (y)
shall not exceed 20% of the total Eligible Accounts Receivable, or (z) owed by an Account Debtor
listed on Schedule 1.01(b), as such schedule may be amended from time to time by the
Borrowers’ Agent with the consent of the Required Lenders; (xvi) which is or is reasonably likely
to be subject to any counterclaim, deduction, defense, setoff or dispute and then only to the
extent of such counterclaim, deduction, defense, setoff or dispute; (xvii) which is evidenced by
any promissory note, chattel paper or instrument; (xviii) which is owed by an Account Debtor
located in any jurisdiction which requires filing of a “Notice of Business Activities Report” or
other similar report in order to permit the applicable Borrower to seek judicial enforcement in
such jurisdiction of payment of such Account, unless such Borrower has filed such report or is
qualified to do business in such jurisdiction; (xix) with respect to which any Borrower or
Affiliate of any Borrower has made any agreement with the Account Debtor for any reduction thereof,
other than discounts and adjustments given in the ordinary course of business; (xx) which the
Administrative Agent determines in its Permitted Discretion may not be paid by reason of the
Account Debtor’s inability to pay or which the Administrative Agent otherwise determines in its
Permitted Discretion is unacceptable for any reason whatsoever; (xxi) that is payable in any
currency other than Dollars, other than Accounts (a) payable in Euros, Pounds Sterling, or Canadian
Dollars and (b) specified by the Administrative Agent in its Permitted Discretion; provided,
however, that the amount of all such Accounts payables in Euros, Pounds Sterling and Canadian
Dollars shall not exceed in the aggregate $4,000,000; provided, further, that, with
respect to Accounts owed in any currency other than Dollars, the value of such Accounts for
purposes of calculating the Borrowing Base shall be expressed in Dollars as of the date of the
applicable Borrowing Base Certificate, each such value to be calculated on a basis acceptable to
the Administrative Agent in its Permitted Discretion; (xxii) which is a guaranteed sale, sale and
return, sale on approval, consignment, cash-on-delivery or other repurchase or return basis
(excluding Accounts that are subject to returns in the ordinary course of business); (xxiii) that
is the subject of a bill and hold or for which the goods have not been shipped (provided
that such Account will be deemed eligible if the Account Debtor with respect to such
Account has delivered an agreement (in form and substance acceptable to the Agent) between the
Account Debtor, the applicable Borrower and the Administrative Agent pursuant to which such Account
Debtor unconditionally agrees to accept delivery of such goods and waives any rights of off-set
with respect to such Account or such Account Debtor unconditionally agrees to pay in cash for such
Account in the event such Account Debtor elects not to take delivery); (xxiv) which represents a
progress billing; and (xxv) such other categories as may be established by the Administrative Agent
in its Permitted

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Discretion. Notwithstanding the foregoing, any domestic Account which would otherwise be
deemed ineligible may be deemed eligible by the Administrative Agent in its Permitted Discretion if
such Account is supported by a letter of credit in form and substance acceptable to the
Administrative Agent.

          “Eligible Equipment” shall mean machinery, equipment and rolling stock (solely for
purposes of this definition and any definition used in the calculation of the Borrowing Base,
“Equipment”) owned by a Borrower and located in the United States, which satisfies each of
the following requirements: (i) the applicable Borrower has good and marketable title to the
Equipment; (ii) the full purchase price for the Equipment has been paid by the applicable Borrower;
(iii) the Equipment is located on premises owned or leased by the applicable Borrower
(provided that with respect to Equipment that is located at a leased facility, the
Administrative Agent shall have received a Collateral Access Agreement in form and substance
acceptable to the Administrative Agent or the Administrative Agent shall have implemented Reserves
in an amount equal to three (3) months rent for such leased facility, but without duplication of
any Reserves for rent pursuant to any other provision of this Agreement); (iv) the Equipment is in
good repair and working order; (v) the Equipment is not subject to any agreement which restricts
the ability of the applicable Borrower to use, sell, transport or dispose of the Equipment or which
restricts the Administrative Agent’s ability to take possession of, sell or otherwise dispose of
the Equipment; (vi) the Equipment does not constitute “fixtures” under the applicable laws of the
jurisdiction in which the Equipment is located; (vii) solely in the case of Class 1 Equipment, the
Administrative Agent has received an appraisal report with respect to the Equipment from an
independent appraiser reasonably satisfactory to the Administrative Agent setting forth the Net
Orderly Liquidation Value of the Equipment; (viii) the Administrative Agent has a perfected
first-priority Lien on the Equipment subject to no other Liens, except Liens permitted under
Section 6.01 hereof that are subordinate and junior to the Lien in favor of the
Administrative Agent; and (ix) the Administrative Agent has not determined, in its Permitted
Discretion that such Equipment is ineligible.

          “Eligible Inventory” shall mean, at any time, the Inventory of a Borrower unless such
Inventory is excluded from the definition of Eligible Inventory in accordance with the following
provisions of this definition. Without limiting the Administrative Agent’s Permitted Discretion
provided herein, Eligible Inventory shall not include any Inventory: (i) which is not subject to a
first-priority perfected security interest in favor of the Administrative Agent; (ii) which is
subject to any Lien other than (a) a Lien in favor of the Administrative Agent and (b) a Lien
permitted under Section 6.01 hereof which Lien is subordinate and junior to the Lien in
favor of the Administrative Agent; (iii) which is, in the Administrative Agent’s opinion, applying
its Permitted Discretion, slow moving, obsolete, unmerchantable, defective, unfit for sale, not
salable at prices approximating at least the cost of such Inventory in the ordinary course of
business or unacceptable due to age, type, category and/or quantity; (iv) with respect to which any
covenant, representation, or warranty contained in this Agreement or the Security Agreement has
been breached in any material respect or is not true in all material respects; (v) which does not
conform in all material respects to all standards imposed by any governmental authority; (vi)
located outside of the United States and Canada or located in the Canadian province of Quebec;
(vii) that is in transit except for Inventory in transit between locations controlled by a
Borrower; (viii) which is located in any location not owned or operated by a Borrower or is in the
possession of a bailee unless the owner of such property, the bailee, and any other applicable

13

 

party has delivered to the Administrative Agent a Collateral Access Agreement and such other
documentation as the Administrative Agent may in its Permitted Discretion require
(provided, however, that $4,000,000 of such Inventory may be included in the
Borrowing Base even if Collateral Access Agreements and such other documentation as the
Administrative Agent may require have not been obtained for such Inventory); (ix) which is located
in any location not owned by a Borrower but is operated by such Borrower, unless the owner of such
property and any other applicable party has delivered to the Administrative Agent a Collateral
Access Agreement and such other documentation as the Administrative Agent may in its Permitted
Discretion require or the Administrative Agent shall have implemented Reserves equal to three
months rent for such facility, but without duplication of any Reserves for rent pursuant to any
other provision of this Agreement; (x) which contains or bears any intellectual property rights
licensed from any party other than a Borrower unless the Administrative Agent is satisfied, in its
Permitted Discretion, that it may sell or otherwise dispose of such Inventory without (a)
infringing the rights of such licensor, (b) violating any contract with such licensor, or (c)
incurring any liability with respect to payment of royalties other than royalties incurred pursuant
to sale of such Inventory under the current licensing agreement; (xi) which is not reflected in the
books and records of the applicable Borrower; (xii) that is held by any Borrower on consignment or
which any Borrower has placed on consignment with another Person (other than a Person that is a
third party processor of such Inventory (in which case such Inventory shall be included as Eligible
Inventory to the extent provided in clause (viii) above)); (xiii) that consists of display
items or packing or shipping materials or stores; provided that such stores may be
deemed eligible in the Administrative Agent’s Permitted Discretion upon receipt of an inventory
appraisal with respect to such stores, which appraisal shall be done in a manner acceptable to the
Administrative Agent by an appraiser acceptable to the Administrative Agent; (xiv) which is
bill-and-hold goods, returned or repossessed goods, or goods which are not of a type held for sale
in the ordinary course of the applicable Borrower’s business; (xv) which is perishable; and (xvi)
such other categories as may be established by the Administrative Agent in its Permitted
Discretion.

          “Eligible Real Estate” shall mean any real Property which meets all of the following
specifications:

               (a) one of the Borrowers is the record owner of and has good fee title to such real Property;

               (b) such Borrower has the right to subject such real Property to a Lien in favor of the
Administrative Agent for the ratable benefit of the Lenders;

               (c) the Administrative Agent shall have received a Mortgage with respect to such real
Property, duly executed by such Borrower, together with evidence that (i) counterparts of the
Mortgage have been duly delivered for filing or recording in all filing or recording offices that
the Administrative Agent may reasonably deem necessary or desirable in order to create a first
priority perfected Lien in favor of the Administrative Agent for the benefit of the Lenders on such
real Property, free and clear of all Liens of any nature whatsoever (except for Permitted Liens
acceptable to the Administrative Agent in its Permitted Discretion) and (ii) all filing and
recording taxes and fees necessary to properly record the Mortgage in such offices have been paid;

14

 

               (d) such real Property is not subject to any contractual restriction on the Administrative
Agent’s ability to sell or otherwise dispose of such real Property;

               (e) the Administrative Agent shall have received Phase I (and, if necessary, Phase II)
environmental reports delivered with respect to such real Property together with letters from the
environmental engineering firms reasonably satisfactory to the Administrative Agent providing that
the Administrative Agent and the Lenders may rely upon such reports, each in form and substance
reasonably acceptable to the Administrative Agent;

               (f) with respect to such real Property, such surveys or surveyor certificates as the
Administrative Agent may reasonably require, each of which shall be in form and substance
reasonably satisfactory to the Administrative Agent;

               (g) the Administrative Agent shall have received evidence reasonably acceptable to the
Administrative Agent as to whether such real Property is located in an area designated by the
Federal Emergency Management Agency as having special flood or mud slide hazards and requiring
either the applicable Borrower that is the owner of the real Property or the Administrative Agent
to purchase special flood insurance and, if so required, evidence that the applicable Borrower that
owns such real Property has obtained flood hazard insurance as required by law;

               (h) with respect to such real Property, the Administrative Agent shall have received an ALTA
loan title insurance policy or an unconditional commitment therefor with extended coverage,
including insurance over matters that would be disclosed by an accurate survey, issued by a title
company reasonably satisfactory to Administrative Agent insuring the Administrative Agent, for the
benefit of the Administrative Agent and the Lenders, that the applicable Mortgage insured thereby
creates a valid first lien on such real Property, in an amount not less than the appraised fair
market value of such real Property and insuring that fee simple title to such Property is vested in
the applicable Borrower, subject only to any exceptions as may be reasonably acceptable to the
Administrative Agent and which appear as exceptions on Schedule B to the applicable title insurance
loan policy, which policy shall include endorsements, including a comprehensive lender’s
endorsement and any other legally available endorsements, assurances or affirmative coverage
reasonably requested by the Administrative Agent;

               (i) the Administrative Agent shall have received copies of all recorded documents listed as
exceptions to title or otherwise referred to in such title insurance loan policy and any other such
documents as Administrative Agent shall reasonably request;

               (j) the Administrative Agent shall have received appraisals, together with reliance letters
where applicable, concerning such real Property from one or more independent real estate appraisers
reasonably satisfactory to the Administrative Agent, which appraisals shall set forth the Fair
Market Value of such real Property and be in form, scope and substance reasonably satisfactory to
the Administrative Agent and shall satisfy the requirements of any applicable laws and regulation;

               (k) if requested by the Administrative Agent, the Administrative Agent shall have received an
opinion of local counsel for the Borrowers in the State in which the

15

 

real Property is located with respect to the enforceability and perfection of the Mortgage and
any related fixture filings in form and substance reasonably satisfactory to the Administrative
Agent;

               (l) in the event that the Mortgage with respect to such real Property is not sufficient,
pursuant to local law, to perfect the Lien of the Administrative Agent in the Fixtures located on
such real Property, a UCC fixture financing statement shall have been duly delivered for filing or
recording in all filing or recording offices that the Administrative Agent may reasonably deem
necessary or desirable in order to create a first priority perfected Lien in favor of the
Administrative Agent for the benefit of the Lenders on such Fixtures; and

               (m) the Administrative Agent has not determined, in its Permitted Discretion, that such real
Property is ineligible.

          “Environmental Compliance Reserve” shall mean any reserve which the Administrative
Agent establishes in its Permitted Discretion from time to time for amounts that are reasonably
likely to be expended by the Borrowers and their Subsidiaries in order for the Borrowers and their
Subsidiaries and their respective operations and property (a) to comply with Environmental Laws in
all material respects, (b) to correct in all material respects any such non-compliance with
Environmental Laws or (c) to satisfy any Environmental Liability.

          “Environmental Laws” shall mean all applicable federal, state, local or foreign
statutes, laws, regulations, ordinances, codes, rules, requirements and guidelines (including
consent decrees and administrative orders to which any Borrower or any of its Subsidiaries is
subject) relating to protection of human health or the environment or imposing liability or
standards of conduct concerning any Hazardous Material, as any of the foregoing may be from time to
time amended or supplemented.

          “Environmental Liability” shall mean any liability, contingent or otherwise (including
any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of
the Borrowers or any of their Subsidiaries directly or indirectly resulting from or based upon (a)
violation of any Environmental Law; (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials; (c) exposure to any Hazardous Materials; (d) the
release or threatened release of any Hazardous Materials into the environment; or (e) any contract,
agreement or other consensual arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.

          “Environmental Lien” shall mean a Lien in favor of any Governmental Authority for (a)
any liability under Environmental Laws; or (b) damages arising from or costs incurred by such
Governmental Authority in response to a release or threatened release of a hazardous or toxic
waste, substance or constituent, or other substance into the environment.

          “Equipment” shall mean (a) any machinery or equipment and (b) any other Property
classified as “equipment” under the UCC.

          “Equity Interests” shall mean shares of capital stock in a corporation, partnership
interests in a partnership, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a Person, and any warrants, options or
other rights entitling the holder thereof to purchase or acquire any of the foregoing.

16

 

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

          “ERISA Affiliate” shall mean each person (as defined in Section 3(9) of ERISA) which
together with any Borrower or any Subsidiary of any Borrower would be deemed to be a single
employer within the meaning of Section 414(b), (c), (m), or (o) of the
Code.

          “Eurodollar Borrowing” shall mean a Borrowing comprised of Eurodollar Loans.

          “Eurodollar Loan” shall mean any Loan bearing interest at a rate determined by
reference to the Adjusted LIBO Rate in accordance with the provisions of Section 2.

          “Event of Default” shall have the meaning given such term in Section 7.

          “Excluded Asset Disposition” shall mean (i) any Designated Asset Sale, (ii) any sale
of inventory in the ordinary course of business and (iii) any sale, transfer or other disposition
of one or more assets in a single transaction or series of related transactions if the aggregate
proceeds received in connection with such transaction or series of related transactions is less
than $500,000.

          “Excluded Subsidiaries” shall mean Reorganized KACC, Kaiser Bauxite and Trochus and
any of their Subsidiaries. Under no circumstances will an Excluded Subsidiary be, or be deemed to
be, a Significant Subsidiary or a Subsidiary hereunder.

          “Excluded Taxes” shall mean, with respect to the Administrative Agent, any Lender, the
Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of
the Borrowers hereunder, (a) Taxes imposed on or measured by its overall net income or its overall
gross income (other than withholding Taxes) and franchise Taxes imposed in lieu thereof by the
United States of America or by the jurisdiction (or any political subdivision thereof) under the
laws of which such recipient is organized or in which its lending office or principal executive
office is located, (b) any branch profits Taxes imposed by the United States of America or any
similar Tax imposed by any other jurisdiction in which such lending office or principal executive
office is located and (c) in the case of a Lender, any withholding Tax that is imposed on amounts
payable to such Lender at the time such Lender becomes a party to this Agreement (or designates a
new lending office) or is attributable to such Lender’s failure to comply with Section
2.18(e), provided however, that an assignee of a Lender or a newly designated
lending office shall not be subject to this clause (c) to the extent of any additional
amounts which at the time of designation or assignment the designating or assigning Lender was
entitled to receive that were not subject to this clause (c).

          “Existing Credit Agreement” shall mean that certain Secured Super-Priority
Debtor-in-Possession Revolving Credit and Guaranty Agreement dated as of February 11, 2005, as
amended, among the “Borrowers” (as defined therein), the “Guarantors” (as defined therein), the
Existing Lenders and JPMorgan Chase, as administrative agent.

          “Existing Lenders” shall mean the financial institutions from time to time party to
the Existing Credit Agreement.

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          “Existing Letters of Credit” shall mean the letters of credit described on
Schedule 2.07.

          “Extraordinary Receipts” shall mean any Net Proceeds received by any Borrower not in
the ordinary course of business, including, without limitation, (i) foreign, United States, state
or local tax refunds, (ii) pension plan reversions, (iii) judgments, proceeds of settlements or
other consideration of any kind in connection with any cause of action, (iv) indemnity payments,
(v) any purchase price adjustment received in connection with any purchase agreement, and (vi) any
proceeds from any escrow; provided, however, that such indemnity payments or
proceeds shall not include proceeds from any insurance for asbestos claims and demands, silica
claims and demands, coal tar pitch volatile claims and demands and noise induced hearing loss
claims in escrow as of the date hereof or later received.

          “Facility Increase” shall have the meaning specified in Section 2.22.

          “Facility Increase Amount” shall have the meaning specified in Section 2.22.

          “Facility Increase Effective Date” shall have the meaning specified in Section
2.22.

          “Fair Market Value” shall mean, with respect to real Property of any Person, the fair
market value thereof as determined in the most recent appraisal received by the Administrative
Agent in accordance with the terms hereof, which appraisal shall be done in a manner acceptable to
the Administrative Agent by an appraiser acceptable to the Administrative Agent.

          “Federal Funds Effective Rate” shall mean, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received
by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

          “Fee Letter” shall mean, collectively (i) that certain Second Amended and Restated Fee
Letter, dated July 6, 2006, among JPMorgan Chase, JPMSI, the Parent and KACC, (ii) that certain
Amendment Fee Letter, dated December 23, 2005, among JPMorgan Chase, the Parent and KACC, and (iii)
that certain Second Amendment Fee Letter, dated April 26, 2006, among JPMorgan Chase, the Parent
and KACC.

          “Fees” shall collectively mean the Commitment Fee, the Letter of Credit Fees, the
Collateral Monitoring Fees, other fees referred to in Section 2.13, and all other fees
referred to in any Loan Document.

          “Financial Officer” shall mean, with respect to any Person, the chief financial
officer, principal accounting officer, treasurer, assistant treasurer or controller of such Person
or

18

 

any other Person who performs a function similar to any of the foregoing and has been
identified in writing to the Administrative Agent as a “Financial Officer” hereunder.

          “Fiscal Month” shall mean any of the monthly accounting periods of the Borrowers and
their Subsidiaries.

          “Fiscal Quarter” shall mean any of the quarterly accounting periods of the Borrowers
and their Subsidiaries, ending on March 31, June 30, September 30 and December 31 of each year.

          “Fiscal Year” shall mean any of the annual accounting periods of the Borrowers and
their Subsidiaries ending on December 31 of each year.

          “Fixed Asset Sublimit” shall have the meaning specified in the definition of Borrowing
Base.

          “Fixed Charge Coverage Ratio” shall mean the ratio, determined as of the end of any
period, of (a) EBITDA for the period of determination minus Net Capital Expenditures for such
period of determination to (b) Fixed Charges for such period of determination, all calculated for
the Borrowers and their Subsidiaries on a consolidated basis in accordance with GAAP;
provided that for periods ending prior to the end of the fourth full Fiscal Quarter
following the Closing Date, the Borrowers may submit a written request to the Administrative Agent
proposing adjustments to EBITDA and Fixed Charges for purposes of calculating the Fixed Charge
Coverage Ratio for the applicable period to more accurately reflect the allocation or exclusion of
one-time charges over two or more Fiscal Quarters and, if the Required Lenders consent to such
adjustments, such adjustment shall be made for calculating Fixed Charge Coverage Ratio for the
applicable period.

          “Fixed Charges” shall mean, for the Borrowers and their Subsidiaries on a consolidated
basis, with reference to any period, without duplication, cash Interest Expense paid during such
period, plus scheduled principal payments on Indebtedness (including rent or other payments
on Capital Lease Obligations other than imputed interest components thereof) made during such
period, plus, if and to the extent Availability at the time of measurement is less than the
amount of the Borrowing Base attributable at such time to Equipment and real estate, the reduction
in Availability during such period resulting from the amortization of the components of the
Borrowing Base consisting of Equipment and real estate, plus, expense for income taxes paid
in cash during such period, plus dividends or other distributions paid in cash to holders of Equity
Interests in the Parent in respect thereof during such period (excluding distributions paid to
holders of Equity Interests in the Parent pursuant to the Reorganization Plan on account of Claims
in the Cases).

          “Fixtures” shall mean any Property classified as “fixtures” under the UCC.

          “Foreign Lender” shall mean any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrowers’ Agent is located. For purposes of this
definition, the United States of America, each State thereof, and the District of Columbia shall be
deemed to constitute a single jurisdiction.

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          “Funding Account” shall have the meaning set forth in Section 4.01(u).

          “GAAP” shall mean generally accepted accounting principles in the United States of
America as in effect from time to time applied in accordance with Section 1.02.

          “Governmental Authority” shall mean the government of the United States of America,
any other nation or any political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.

          “Guarantee” shall mean, with respect to any Person (such Person, a
“guarantor”), any obligation, contingent or otherwise, of the guarantor guaranteeing or
having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person
(the “primary obligor”) in any manner, whether directly or indirectly, and including any
obligation of the guarantor, direct or indirect, (i) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance
or supply funds for the purchase of) any security for the payment thereof; (ii) to purchase or
lease property, securities or services for the primary purpose of assuring the owner of such
Indebtedness or other obligation of the payment thereof; (iii) to advance funds to maintain working
capital, equity capital or any other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Indebtedness or other obligation; or (iv)
as an account party in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business. The amount of any
Guarantee of any guarantor shall be deemed to be the lower of (x) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee is made and (y)
the maximum amount for which such guarantor may be liable pursuant to the terms of the instrument
embodying such Guarantee.

          “Hazardous Materials” shall mean any “hazardous substance,” as defined by CERCLA; any
“hazardous waste,” as defined by the Resource Conservation and Recovery Act, as amended; any
petroleum product; or any pollutant or contaminant or hazardous, dangerous, or toxic chemical,
material, or substance regulated under or within the meaning of any other Environmental Law.

          “Indebtedness” shall mean, at any time and with respect to any Person, without
duplication, (i) all indebtedness of such Person for borrowed money or with respect to deposits or
advances of any kind; (ii) all obligations of such Person for the deferred purchase price of
property or services (other than accounts payable arising out of the purchases of property,
including inventory, and services purchased, and expense accruals and deferred compensation items
in the ordinary course of business); (iii) all obligations of such Person upon which interest
charges are customarily paid; (iv) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments; (v) all indebtedness of such Person created or arising
under any conditional sale or other title retention agreement with respect to property acquired by
such Person; (vi) all Capital Lease Obligations of such Person; (vii) all reimbursement, payment or
similar obligations of such Person, contingent or otherwise, under acceptance, letter of credit

20

 

or similar facilities; (viii) all Swap Obligations of such Person (and the amount of
Indebtedness attributable to all Swap Obligations of such Person shall be deemed to be the Net
Mark-to-Market Exposure with respect thereto); (ix) all Guarantees by such Person of Indebtedness
of others; (x) all Indebtedness referred to in clauses (i) through (ix) above
secured by (or for which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property (including, without limitation, accounts
and contract rights) owned by such Person, even though such Person has not assumed or become liable
for the payment of such Indebtedness, provided that, if such Person has not assumed
such obligations, then the amount of Indebtedness of such Person for purposes of this clause
(x) shall be equal to the lesser of the amount of the obligations of the holder of such
obligations and the fair market value of the assets of such Person which secure such obligations;
(xi) obligations under any liquidated earn-out; and (xii) obligations of such Person to purchase
securities or other property prior to the date that is six months after the Maturity Date arising
out of or in connection with the sale of the same or substantially similar securities or property
or any other Off-Balance Sheet Liability. The Indebtedness of any Person shall include the
Indebtedness of any other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such Person’s ownership
interest in or other relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.

          “Indemnified Taxes” shall mean Taxes other than Excluded Taxes.

          “Indemnitee” shall have the meaning given to such term in Section 9.03.

          “Insufficiency” shall mean, with respect to any Plan, its “amount of unfunded benefit
liabilities” within the meaning of Section 4001(a)(18) of ERISA, if any.

          “Insurer Appeals” shall mean the appeals of the District Court Order filed by (i)
Columbia Casualty Insurance Company, Transcontinental Insurance Co., Harbor Insurance Co.,
Continental Insurance Company, docketed in the Third Circuit Court of Appeals as case number
06-3045; (ii) Republic Indemnity Company and Transport Insurance Company, f/k/a Transport Indemnity
Company, docketed in the Third Circuit Court of Appeals as case number 06-3046; and (iii) TIG
Insurance Company, docketed in the Third Circuit Court of Appeals as case number 06-3047.

          “Intercompany Subordination Agreement” shall have the meaning given to such term in
Section 6.03.

          “Intercreditor Agreement” shall mean the Intercreditor Agreement dated the date
hereof, between the Administrative Agent and Wilmington Trust Company, as collateral agent for the
holders of the “Obligations” as defined in the Term Loan Agreement.

          “Interest Election Request” shall mean a request by the Borrowers to convert or
continue a Borrowing in accordance with Section 2.09.

          “Interest Expense” shall mean, with reference to any period, the interest expense of
the Borrowers and their Subsidiaries calculated on a consolidated basis in conformity with GAAP for
such period.

21

 

          “Interest Payment Date” shall mean (i) as to any Eurodollar Loan, the last day of each
applicable Interest Period, and, in the case of any Interest Period longer than three months, on
each successive date three months after the first day of such Interest Period and (ii) as to all
ABR Loans, the last calendar day of each month in arrears and the date on which any ABR Loans are
refinanced with Eurodollar Loans pursuant to Section 2.09.

          “Interest Period” shall mean, as to any Borrowing of Eurodollar Loans, the period
commencing on the date of such Borrowing (including as a result of a refinancing of ABR Loans) or
on the last day of the preceding Interest Period applicable to such Borrowing and ending on the
numerically corresponding day (or if there is no corresponding day, the last day) in the calendar
month that is one, two, three or six months thereafter, as the Borrowers’ Agent may elect in the
related notice delivered pursuant to Sections 2.04 or 2.09; provided,
however, that (i) if any Interest Period would end on a day which shall not be a Business
Day, such Interest Period shall be extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in which case such Interest Period
shall end on the immediately preceding Business Day, and (ii) no Interest Period shall end later
than the Maturity Date.

          “Inventory” shall mean “inventory” as defined in Article 9 of the Uniform Commercial
Code as in effect from time to time in the State of New York, or when the context implies, the
Uniform Commercial Code as in effect from time to time in any other applicable jurisdiction.

          “Investments” shall have the meaning given such term in Section 6.07.

          “Issuing Bank” shall mean JPMorgan Chase, in its capacity as the issuer of Letters of
Credit hereunder, and its successors in such capacity as provided in Section 2.07. The
Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by
Affiliates of the Issuing Bank, in which case the term “Issuing Bank” shall include any such
Affiliate with respect to Letters of Credit issued by such Affiliate.

          “Joinder Agreement” shall have the meaning set forth in Section 5.13.

          “JPMorgan Chase” shall have the meaning set forth in the first paragraph of this
Agreement.

          “JPMSI” shall mean J.P. Morgan Securities Inc.

          “KACC” shall mean Kaiser Aluminum & Chemical Corporation, a Delaware corporation.

          “KACL” shall mean Kaiser Aluminum Canada Limited, an Ontario corporation.

          “KAFP” shall have the meaning set forth in the first paragraph of this Agreement.

          “KAIC” shall have the meaning set forth in the first paragraph of this Agreement.

          “KAII” shall have the meaning set forth in the first paragraph of this Agreement.

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          “Kaiser Bauxite” shall mean Kaiser Bauxite Company, a Nevada corporation.

          “Kaiser Bellwood” shall mean Kaiser Bellwood Corporation, a Delaware corporation.

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

          “Lenders” shall mean the Persons listed on the Commitment Schedule and any
other Person that shall have become a party hereto as a Lender pursuant to an Assignment and
Assumption or in connection with a Facility Increase, other than any such Person that ceases to be
a party hereto pursuant to an Assignment and Assumption. Unless the context otherwise requires,
the term “Lenders” includes the Swingline Lender.

          “Letter of Credit” shall mean any irrevocable letter of credit issued or deemed issued
pursuant to Section 2.07, which letter of credit shall be (i) a letter of credit, (ii)
issued for purposes that are consistent with the ordinary course of business of any Borrower, or
for such other purposes as are reasonably acceptable to the Administrative Agent, (iii) denominated
in Dollars and (iv) otherwise in such form as may be reasonably approved from time to time by the
Administrative Agent and the applicable Issuing Bank.

          “Letter of Credit Account” shall mean the account established by the Borrowers under
the sole and exclusive control of the Administrative Agent maintained at the office of the
Administrative Agent at 270 Park Avenue, New York, New York 10017 designated as the “Kaiser Letter
of Credit Account” that shall be used solely for the purposes set forth in Section 2.07(j).

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

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

          “Letter of Credit Fees” shall mean the fees payable in respect of Letters of Credit
pursuant to Section 2.13.

          “Letter of Credit Shortfall Amount” shall mean an amount equal to the difference of
(x) the amount of Letter of Credit Exposure at such time, less (y) the amount on deposit in the

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Letter of Credit Account at such time which is free and clear of all rights and claims of
third parties and has not been applied against the Obligations.

          “LIBO Rate” shall mean, with respect to any Eurodollar Borrowing for any Interest
Period, the rate appearing on Page 3750 of the Dow Jones Market Service (or on any successor page
or any successor to such service or any substitute page or substitute for such service, providing
rate quotations comparable to those currently provided on such page of such service, as determined
by the Administrative Agent from time to time for purposes of providing quotations of interest
rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m.,
London time, two (2) Business Days prior to the commencement of such Interest Period, as the rate
for dollar deposits (for delivery on the first day of such period) with a term equivalent to such
Interest Period. In the event that such rate is not available at such time for any reason, then
the “LIBO Rate” with respect to such Eurodollar Borrowing for such Interest Period shall be
the rate at which dollar deposits of comparable size and for a maturity comparable to such Interest
Period are offered by the principal London office of the Administrative Agent in immediately
available funds in the London interbank market at approximately 11:00 a.m., London time, two (2)
Business Days prior to the commencement of such Interest Period.

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

          “Loan” shall mean any loan or advance made by the Lenders pursuant to this Agreement
including, without limitation, Revolving Loans, unreimbursed Letter of Credit Disbursements,
Swingline Loans and Protective Advances.

          “Loan Documents” shall mean this Agreement, the Letters of Credit, the Security and
Pledge Agreement, the Mortgages, the Intercreditor Agreement and any other instrument or agreement
executed and delivered to the Administrative Agent or any Lender in connection herewith (including,
all other pledges, powers of attorney, consents, assignments, contracts, notices and letter of
credit agreements, whether heretofore, now or hereafter executed by or on behalf of any Borrower,
or any Responsible Officer of any Borrower, and delivered to the Administrative Agent or any Lender
in connection with the Agreement or the transactions contemplated thereby). Any reference in the
Agreement or any other Loan Document to a Loan Document shall include all appendices, exhibits or
schedules thereto, and all amendments, restatements, supplements or other modifications thereto,
and shall refer to the Agreement or such Loan Document as the same may be in effect at any and all
times such reference becomes operative.

          “Material Adverse Effect” shall mean a material adverse effect on (a) the business,
assets, operations, prospects or financial condition of the Borrowers taken as a whole, (b) the
ability of the Borrowers taken as a whole to perform any obligations under the Loan Documents, (c)
the Collateral, or the Administrative Agent’s Liens (on behalf of itself and the Lenders) on

24

 

the Collateral or the priority of such Liens, or (d) the rights of or benefits available to
the Administrative Agent or the Lenders hereunder or under any other Loan Document.

          “Material Indebtedness” shall mean any Indebtedness (other than the Loans and Letters
of Credit) of any one or more of the Borrowers and the Subsidiaries of any Borrower in an aggregate
principal amount exceeding $20,000,000. For purposes of determining Material Indebtedness, the
“obligations” of any Borrower or Subsidiary of any Borrower in respect of any Swap Agreement at any
time shall be the Net Mark-to-Market Exposure that such Borrower or Subsidiary would be required to
pay if such Swap Agreement were terminated at such time.

          “Maturity Date” shall mean July 6, 2011.

          “McNeil Appeal” shall mean the appeal of the District Court Order filed by Duncan J.
McNeil and pending before the Third Circuit Court of Appeals.

          “Mortgage” shall mean any mortgage, deed of trust or other agreement which conveys or
evidences a Lien in favor of the Administrative Agent, for the benefit of the Administrative Agent
and the Lenders, on real Property of a Borrower, including any amendment, modification or
supplement thereto.

          “Multiemployer Plan” shall mean a “multiemployer plan” as defined in Section
4001(a)(3) of ERISA, which is maintained or contributed to by (or to which there is an obligation
to contribute of) any Borrower or a Subsidiary of any Borrower or an ERISA Affiliate, and each such
plan for the five-year period immediately following the latest date on which any Borrower or a
Subsidiary of any Borrower or an ERISA Affiliate maintained, contributed to or had an obligation to
contribute to such plan.

          “Multiple Employer Plan” shall mean a Single Employer Plan, which (i) is maintained
for employees of any Borrower or an ERISA Affiliate and at least one person (as defined in Section
3(9) of ERISA) other than any Borrower and its ERISA Affiliates or (ii) was so maintained and in
respect of which any Borrower or an ERISA Affiliate could have liability under Section 4064 or 4069
of ERISA in the event such Plan has been or were to be terminated.

          “National Priorities List” shall mean the list established pursuant to Section 105 of
CERCLA, as amended, modified, supplemented, or replaced from time to time.

          “Net Capital Expenditures” shall mean, with respect to any period of determination,
the total Capital Expenditures for such period minus that portion of such Capital Expenditures that
are financed with Indebtedness described in Section 6.03(ii) or 6.03(xiv).

          “Net Income” shall mean, with reference to any period, the net income (or loss) of the
Parent and its Subsidiaries (other than any Excluded Subsidiary and its Subsidiaries) calculated on
a consolidated basis for such period.

          “Net Mark-to-Market Exposure” shall mean, with respect to any Person, as of any date
of determination, the excess (if any) of all unrealized losses over all unrealized profits of such
Person arising from Swap Agreement transactions. As used in this definition, “unrealized losses”
means the fair market value of the cost to such Person of replacing such Swap Agreement

25

 

transactions as of the date of determination (assuming the Swap Agreement transactions were to
be terminated as of that date), and “unrealized profits” means the fair market value of the gain to
such Person of replacing such Swap Agreement transactions as of the date of determination (assuming
such Swap Agreement transactions were to be terminated as of that date).

          “Net Orderly Liquidation Value” shall mean, with respect to Inventory or Equipment of
any Person, the orderly liquidation value thereof as determined in the most recent appraisal
received by the Administrative Agent in accordance with the terms hereof, which appraisal shall be
done in a manner acceptable to the Administrative Agent by an appraiser acceptable to the
Administrative Agent, net of all costs of liquidation thereof.

          “Net Proceeds” shall mean, if in connection with (a) an asset disposition, cash
proceeds received by any Borrower net of (i) commissions, attorneys’ fees, accountants’ fees,
investment banking fees and other reasonable and customary transaction costs, fees and expenses
properly attributable to such transaction and payable by such Borrower in connection therewith (in
each case, paid to non-Affiliates of such Borrower); (ii) taxes actually payable in respect thereof
and reasonable estimates of taxes actually payable with respect to such transaction in the tax year
of such transaction or in the following tax year; (iii) amounts payable to holders of senior Liens
on such asset (to the extent such Liens constitute Permitted Liens or other Liens permitted under
Section 6.01 hereunder), if any; (iv) an appropriate reserve for income taxes in accordance
with GAAP established in connection therewith; and (v) amounts escrowed or reserved against
indemnification, obligations or purchase price adjustments; provided, however, that
Net Proceeds shall not include any such amounts so received by such Borrower in respect of any
asset disposition made in any Fiscal Year until the aggregate amount of cash received by all
Borrowers in respect of asset dispositions during such Fiscal Year exceeds $2,500,000 (excluding
cash received in connection with any Excluded Asset Disposition), in which case Net Proceeds shall
constitute solely such amounts in excess thereof; or (b) the issuance or incurrence of
Indebtedness, cash proceeds net of attorneys’ fees, investment banking fees, accountants’ fees,
underwriting discounts and commissions and other customary fees and expenses actually incurred in
connection therewith; or (c) an equity issuance, cash proceeds net of underwriting discounts and
commissions and other reasonable costs paid to non-Affiliates in connection therewith,
provided, however, that Net Proceeds shall not include any cash received in
connection with the exercise of stock options granted to employees or directors of any Borrower or
any of its Subsidiaries; or (d) Extraordinary Receipts received by any Borrower, the amount of cash
proceeds received (directly or indirectly) from time to time by or on behalf of such Borrower or
any of its Subsidiaries after deducting therefrom only (i) expenses related thereto incurred by
such Person or such Subsidiary in connection therewith; (ii) transfer taxes paid by such Person or
such Subsidiary in connection therewith; (iii) net income taxes to be paid in connection therewith
(after taking into account any tax credits or deductions and any tax sharing arrangements); and
(iv) that portion of the cash proceeds received which the applicable Borrower is legally obligated
pursuant to any agreement binding on the applicable Borrower entered into prior to the date hereof
to pay to another Person, provided, however, that Net Proceeds shall not include
any such amounts so received by such Borrower in respect of any Extraordinary Receipt in any Fiscal
Year until the aggregate amount of cash received by all Borrowers in respect of Extraordinary
Receipts during such Fiscal Year exceeds $2,500,000, in which case Net Proceeds shall constitute
solely such amounts in excess thereof.

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          “Net Recovery Percentage” shall mean the fraction, expressed as a percentage, (a) the
numerator of which is the amount estimated to be recoverable in respect of the Net Orderly
Liquidation Value of Eligible Inventory and (b) the denominator of which is the aggregate original
cost of the Eligible Inventory (it being understood that all purchase price and inventory and
manufacturing variances are considered eligible) subject to such appraisal.

          “Non-Consenting Lender” shall have the meaning specified in Section 9.02(e).

          “Notice of Facility Increase” shall have the meaning specified in Section
2.22.

          “Obligations” shall mean all unpaid principal of and accrued and unpaid interest on
the Loans, all Letter of Credit Exposure, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations of the Borrowers to the Lenders or to any Lender,
the Administrative Agent, the Issuing Bank or any Indemnitee arising under the Loan Documents.
Nothing in this definition of Obligations shall permit the Borrowers or their Significant
Subsidiaries to incur or permit to exist any Indebtedness not otherwise permitted pursuant to the
terms hereof. The Obligations include interest (including interest that accrues or that would
accrue but for the filing of a bankruptcy case by any Borrower, whether or not such interest would
be an allowable claim under any applicable bankruptcy or other similar proceeding) and other
obligations accruing or arising after commencement of any case under any bankruptcy or similar laws
by or against any Borrower (or that would accrue or arise but for the commencement of any such
case).

          “Off-Balance Sheet Liability” shall mean, with respect to any Person, (a) any
repurchase obligation or liability for the principal amount thereof of such Person with respect to
accounts or notes receivable sold by such Person, (b) any indebtedness, liability or obligation
under any sale and leaseback transaction which is not a Capital Lease Obligation and under which
such Person retains ownership of the Property so leased for Federal income tax purposes, other than
any lease under which such Person is the lessor, or (c) any indebtedness, liability or obligation
arising with respect to any other transaction which is the functional equivalent of or takes the
place of borrowing but which does not constitute a liability on the balance sheets of such Person,
but excluding from this clause (c) operating leases and Capital Lease Obligations.

          “Offerees” shall have the meaning specified in Section 2.22.

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

          “Parent” shall have the meaning specified in the preamble to this Agreement.

          “PBGC” shall mean the Pension Benefit Guaranty Corporation, or any successor agency or
entity performing substantially the same functions.

          “Permitted Acquisition” shall mean any acquisition by any Borrower in a transaction
that satisfies each of the following requirements:

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          (a) such acquisition is not a hostile or contested acquisition;

          (b) the business acquired in connection with such acquisition (i) is predominantly located in
the U.S. and the parent company and its material subsidiaries are organized under U.S. and
applicable state laws, and (ii) is not engaged, directly or indirectly, in any material line of
business other than the businesses in which the Borrowers are engaged on the Closing Date and any
business activities that are substantially similar, related, or incidental thereto;

          (c) both before and after giving effect to such acquisition and the Loans (if any) requested
to be made in connection therewith, each of the representations and warranties in the Loan
Documents is true and correct in all material respects (except (i) any such representation or
warranty which relates to a specified prior date and (ii) to the extent the Lenders have been
notified in writing by the Borrowers’ Agent that any representation or warranty is not correct and
the Required Lenders have explicitly waived in writing compliance with such representation or
warranty);

          (d) as soon as available, but not less than thirty (30) days prior to such acquisition, the
applicable Borrower has provided the Administrative Agent (i) notice of such acquisition and (ii) a
copy of all business and financial information reasonably requested by the Administrative Agent
including pro forma financial statements, statements of cash flow, and Availability projections;

          (e) if the Accounts and Inventory acquired in connection with such Acquisition are proposed to
be included in the determination of the Borrowing Base, the Administrative Agent shall have
conducted an audit and field examination of such Accounts and Inventory to its satisfaction prior
to such inclusion;

          (f) the sum of the cash consideration paid in connection with such acquisition plus the amount
of Disqualified Indebtedness assumed, acquired or issued in connection with such acquisition does
not exceed $50,000,000 in the aggregate for all acquisitions made during the term of this Agreement
(excluding, however, all acquisitions to which this clause (f) does not apply by operation
of the proviso below); provided that this clause (f) shall not apply if, after
giving effect to the completion of such acquisition, Availability immediately after the completion
of such acquisition will not be less than $150,000,000 on a pro forma basis which pro forma
presentation shall treat all cash consideration given, and the amount of Disqualified Indebtedness
assumed, acquired or issued, in connection with such acquisition as having been paid in cash at the
time of making such acquisition; provided, further, that if a Facility Increase
occurs, such $150,000,000 minimum pro forma Availability shall be increased on the Facility
Increase Effective Date by 66.67% of the actual Facility Increase Amount occurring on such date,
such that, in the event of a Facility Increase of $75,000,000, such minimum pro forma Availability
shall be $200,000,000;

          (g) if such acquisition is an acquisition of the Equity Interests of a Person or a merger or
consolidation with another Person, the acquisition, merger or consolidation is structured so that
the Person so acquired, merged or consolidated shall become a wholly-owned

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Subsidiary of the applicable Borrower and, in accordance with Section 5.13(a), a
Borrower pursuant to the terms of this Agreement;

          (h) if such acquisition is an acquisition of assets, the acquisition is structured so that a
Borrower shall acquire such assets;

          (i) if such acquisition is an acquisition of Equity Interests, such acquisition will not
result in any violation of Regulation U;

          (j) no Borrower shall, as a result of or in connection with any such acquisition, assume or
incur any direct or contingent liabilities (whether relating to environmental, tax, litigation, or
other matters) that at the time of such acquisition could be reasonably expected to have a Material
Adverse Effect;

          (k) in connection with an acquisition of the Equity Interests of any Person, all Liens on
property of such Person (other than liens in favor of the Administrative Agent securing the Secured
Obligations and any Liens that would constitute Liens permitted under Section 6.01) shall
be terminated unless the Lenders in their sole discretion consent otherwise, and in connection with
an acquisition of the assets of any Person, all Liens on such assets (other than liens in favor of
the Administrative Agent securing the Secured Obligations and any Liens that would constitute Liens
permitted under Section 6.01) shall be terminated;

          (l) if the applicable acquisition is to be consummated during a Dominion Trigger Event, the
Fixed Charge Coverage Ratio shall be greater than 1.00 to 1.00 for the most recently completed
Fiscal Quarter;

          (m) the Borrowers’ Agent shall certify (and provide the Lenders with a pro forma calculation
in form and substance reasonably satisfactory to the Lenders) to the Lenders that, after giving
effect to the completion of such acquisition, Availability immediately after the completion of such
acquisition will not be less than $75,000,000 on a pro forma basis which pro forma presentation
shall treat all cash consideration given, and the amount of Disqualified Indebtedness assumed,
acquired or issued, in connection with such acquisition as having been paid in cash at the time of
making such acquisition; provided, further, that if a Facility Increase occurs,
such $75,000,000 minimum pro forma Availability shall be increased on the Facility Increase
Effective Date by 33.33% of the actual Facility Increase Amount occurring on such date, such that,
in the event of a Facility Increase of $75,000,000, such minimum pro forma Availability shall be
$100,000,000; and

          (n) no Default exists or would result therefrom.

          “Permitted Commodity Swap Agreement” shall mean any Commodity Swap Agreement that (i)
involves or is settled with respect to electricity, natural gas, alumina, bauxite or other mineral
or metal used in the business of the Borrowers or their Significant Subsidiaries, and (ii) is
entered into in the ordinary course of business to hedge against fluctuations in the price of
electricity, natural gas, alumina, bauxite or other minerals or metals used in the business of the
Borrowers or their Significant Subsidiaries and not for speculative purposes.

29

 

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

          “Permitted Investments” shall mean:

          (a) direct obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent
such obligations are backed by the full faith and credit of the United States of America), in each
case maturing within twelve months from the date of acquisition thereof;

          (b) without limiting the provisions of clause (d) below, investments in commercial
paper maturing within six months from the date of acquisition thereof and having, at such date of
acquisition, a rating of at least “A-2” or the equivalent thereof from Standard & Poor’s, a
division of The McGraw-Hill Companies, Inc. or of at least “P-2” or the equivalent thereof from
Moody’s Investors Service, Inc.;

          (c) investments in certificates of deposit, bankers acceptances and time deposits (including
Eurodollar time deposits) maturing within six months from the date of acquisition thereof issued or
guaranteed by or placed with (i) any domestic office of the Administrative Agent or the bank with
whom the Borrowers maintain their cash management system; provided that if such
bank is not a Lender hereunder, such bank shall have entered into an agreement with the
Administrative Agent pursuant to which such bank shall have waived all rights of setoff and
confirmed that such bank does not have, nor shall it claim, a security interest therein or (ii) any
domestic office of any other commercial bank of recognized standing organized under the laws of the
United States of America or any State thereof that has a combined capital and surplus and undivided
profits of not less than $250,000,000 and is the principal Banking Subsidiary of a bank holding
company having a long-term unsecured debt rating of at least “A-2” or the equivalent thereof from
Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. or at least “P-2” or the
equivalent thereof from Moody’s Investors Service, Inc.;

          (d) investments in commercial paper issued by any Person organized under the laws of any state
of the United States and rated at least “P-1” (or the then equivalent grade) by Moody’s Investors
Service, Inc. or at least “A-1” (or the then equivalent grade) by Standard & Poor’s, a division of
The McGraw-Hill Companies, Inc., in each case, with maturities of not more than 360 days from the
date of acquisition thereof;

          (e) investments in repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (a) above entered into with any
office of a bank or trust company meeting the qualifications specified in clause (c) above;
and

          (f) investments in money market funds substantially all the assets of which are comprised of
securities of the types described in clauses (a) through (e) above.

          “Permitted Liens” shall mean (i) Liens imposed by law (other than Environmental Liens
and any Lien imposed under ERISA) for Taxes not yet delinquent or which are being contested in
compliance with Section 5.04; (ii) Liens of landlords and Liens of carriers,

30

 

warehousemen, workmen, repairmen, vendors, consignors, mechanics, materialmen and other Liens
(other than Environmental Liens and any Lien imposed under ERISA) imposed by law and created in the
ordinary course of business; (iii) Liens (other than any Lien imposed under ERISA) incurred or
deposits made in the ordinary course of business (including, without limitation, surety bonds and
appeal bonds) in connection with workers’ compensation, unemployment insurance and other types of
social security benefits or governmental insurance or to secure the performance of tenders, bids,
leases, contracts (other than for the repayment of Indebtedness), statutory obligations and other
similar obligations or arising as a result of progress payments under government contracts; (iv)
easements (including, without limitation, reciprocal easement agreements and utility agreements),
rights-of-way, covenants, consents, reservations, mineral leases, encroachments, variations and
zoning laws, ordinances, other restrictions and rights reserved to or vested in any municipality or
government or proper authority to control or regulate any Property of the Parent or its
Subsidiaries, charges or encumbrances (whether or not recorded) and interest of ground lessors,
minor defects and irregularities in the title to any Property, which do not interfere materially
with the ordinary conduct of the business of the Borrowers, and which do not materially detract
from the value of the property to which they attach or materially impair the use thereof to the
Borrowers; (v) purchase money Liens (including capital leases) upon or in any property acquired or
held in the ordinary course of business to secure the purchase price of such property solely for
the purpose of financing the acquisition of such property to the extent such purchase money Liens
secure Indebtedness incurred in accordance with Section 6.03(ii); (vi) pledges or deposits
in the ordinary course to secure leases entered into in the ordinary course of business; (vii)
pledges and deposits of cash and Permitted Investments with a commodity broker or dealer for the
purpose of margining or securing the obligations of any Borrower or Significant Subsidiary under a
Permitted Commodity Swap Agreement; (viii) any interest of a consignor in goods held by any
Borrower or Significant Subsidiary on consignment provided that such goods are held on consignment
in the ordinary course of business consistent with past practices; and (ix) extensions, renewals,
or replacements of any Lien referred to in clauses (i) through (viii) above;
provided that the principal amount of the obligation secured thereby is not
increased and that any such extension, renewal or replacement is limited to the property encumbered
thereby.

          “Person” shall mean any natural person, corporation, and division of a corporation,
limited liability company, partnership, trust, joint venture, association, company, estate,
unincorporated organization, Governmental Authority or other entity.

          “PI Trust” shall have the meaning given to such term in the Reorganization Plan.

          “PI Trust Assets” shall have the meaning given to such term in the Reorganization
Plan.

          “Plan” shall mean a Single Employer Plan or a Multiple Employer Plan.

          “Prime Rate” shall mean the rate of interest per annum publicly announced from time to
time by JPMorgan Chase as its prime rate; each change in the Prime Rate shall be effective from and
including the date such change is publicly announced as being effective.

          “Projections” shall have the meaning assigned such to term in Section 5.01(e).

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          “Property” shall mean any interest in any kind of property or asset, whether real,
personal or mixed, tangible or intangible.

          “Protective Advance” shall have the meaning assigned to such term in Section
2.05.

          “Quarterly Available Credit” means, with respect to any Fiscal Quarter, the average
daily Availability for such Fiscal Quarter, provided that with respect to the Fiscal Quarter during
which the Closing Date occurs, any day prior to the Closing Date shall not be included in such
calculation.

          “Real Property Percentage” shall mean, as of any date, the percentage equal to one
hundred percent (100%) minus the percentage obtained by dividing the number of full calendar months
elapsed since the Closing Date by one hundred twenty (120).

          “Register” shall have the meaning set forth in Section 9.04.

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

          “Release” shall mean any release, spill, emission, leaking, pumping, pouring,
injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of
Hazardous Materials into the indoor or outdoor environment (including, without limitation, the
abandonment or disposal of any barrels, containers or other closed receptacles containing any
Hazardous Materials), or into or out of any property, including the movement of any Hazardous
Material through the air, soil, surface water, groundwater or property.

          “Reliance Account Debtor” shall mean each Account Debtor that is listed on
Schedule 1.01(d) hereto.

          “Reorganization Plan” shall mean a plan of reorganization attached as Exhibit
A-1 hereto.

          “Reorganized KACC” shall mean Kaiser Aluminum & Chemical Corporation, LLC, a Delaware
limited liability company.

          “Report” shall mean any report prepared by the Administrative Agent or another Person
showing the results of appraisals, field examinations or audits pertaining to the assets of any
Borrower from information furnished by or on behalf of the Borrowers, which Reports may be
distributed to the Lenders by the Administrative Agent.

          “Required Lenders” shall mean, at any time, Lenders having Revolving Credit Exposure
and unused Commitments representing at least 51% of the sum of the Aggregate Credit Exposure and
Unused Total Commitments at such time.

          “Requirement of Law” shall mean, as to any Person, the certificate of incorporation
and by-laws or other organizational or governing documents of such Person, and

32

 

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

          “Reserves” shall mean, collectively, any and all reserves which the Administrative
Agent deems necessary, in its Permitted Discretion, to maintain (including, without limitation,
Banking Services Reserves, Environmental Compliance Reserves, reserves for rent at locations leased
by any Borrower and for consignee’s, warehousemen’s and bailee’s charges, reserves for dilution of
Accounts, reserves for Inventory shrinkage, reserves for customs charges and shipping charges
related to any Inventory in transit, reserves for Swap Obligations, reserves for contingent
liabilities of any Borrower, reserves for uninsured losses of any Borrower, reserves for uninsured,
underinsured, unindemnified or underindemnified liabilities or potential liabilities with respect
to any litigation and reserves for taxes, fees, assessments, and other governmental charges) with
respect to the Collateral or any Borrower.

          “Responsible Officer” shall mean, with respect to any Person, the president, chief
executive officer, chief financial officer, treasurer or controller of such Person, or any attorney
in the office of such Person’s general counsel.

          “Restructuring Transactions” shall mean the transactions scheduled to occur on or
prior to the effective date of the Reorganization Plan and which are listed on Schedule
1.01(c).

          “Revolving Credit Exposure” shall mean, with respect to any Lender at any time, the
sum of (a) the outstanding principal amount of such Lender’s Revolving Loans and its Letter of
Credit Exposure; plus (b) an amount equal to its Commitment Percentage of the aggregate principal
amount of Swingline Loans at such time (without duplication of amounts transferred by such Lender
in respect of a Settlement pursuant to Section 2.06(c) to the extent included in clause (a)
above), plus (c) an amount equal to its Commitment Percentage of the aggregate principal
amount of Protective Advances outstanding at such time.

          “Revolving Loan” shall mean any Loan made pursuant to Section 2.02.

          “SEC” shall mean the Securities and Exchange Commission.

          “Secured Obligations” shall mean all Obligations, together with all (i) Banking
Services Obligations and (ii) Swap Obligations owing to one or more Lenders or their respective
Affiliates; provided that prior to or within 10 Business Days (or longer if the
Administrative Agent otherwise agrees) following the time that any transaction relating to such
Banking Services Obligation or Swap Obligation, as applicable is executed, the Lender party thereto
(other than JPMorgan Chase) shall have delivered written notice to the Administrative Agent that
such a transaction has been entered into and that it constitutes a Secured Obligation entitled to
the benefits of the Collateral Documents.

          “Secured Party” shall mean the Administrative Agent, the Issuing Bank, each Lender and
each other Person that is from time to time the holder of a Secured Obligation.

          “Security and Pledge Agreement” shall have the meaning set forth in Section
4.01(d).

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          “Settlement” shall have the meaning assigned to such term in Section 2.06(c).

          “Settlement Agreement” shall mean the agreement reached with the PBGC and approved by
the Bankruptcy Court on January 24, 2005, as amended (such amendment approved by the Bankruptcy
Court on October 26, 2005).

          “Settlement Date” shall have the meaning assigned to such term in Section
2.06(c).

          “Significant Subsidiary” shall mean (other than an Excluded Subsidiary) each
Subsidiary of the Parent that

               (a) is listed on Schedule 3.17;

               (b) accounted for at least 5% of consolidated revenues of the Parent and its Subsidiaries from
sales to third parties for the four Fiscal Quarters of the Parent ending on the last day of the
last Fiscal Quarter of the Parent immediately preceding the date as of which any such determination
is made; or

               (c) has assets (other than assets which are eliminated in consolidation) which represent at
least 5% of the consolidated assets of the Parent and its Subsidiaries as of the last day of the
last Fiscal Quarter of the Parent immediately preceding the date as of which any such determination
is made,

all of which, with respect to clauses (b) and (c), shall be as included in the
consolidated financial statements of the Parent for the period, or as of the date, in question.

          “Single Employer Plan” shall mean a single employer plan, as defined in Section
4001(a)(15) of ERISA, that (i) is maintained for employees of any Borrower or an ERISA Affiliate or
(ii) was so maintained and in respect of which any Borrower or an ERISA Affiliate could have
liability under Title IV of ERISA in the event such Plan has been or were to be terminated.

          “Statutory Reserve Rate” shall mean a fraction (expressed as a decimal), the numerator
of which is the number one and the denominator of which is the number one minus the aggregate of
the maximum reserve percentages (including any marginal, special, emergency or supplemental
reserves) expressed as a decimal as in effect on any date of determination and established by the
Board to which the Administrative Agent is subject with respect to the Adjusted LIBO Rate, for
eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the
Board). Such reserve percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such
reserve requirements without benefit of or credit for proration, exemptions or offsets that may be
available from time to time to any Lender under such Regulation D or any comparable regulation.
The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage.

          “Subsidiary” shall mean, with respect to any Person (herein referred to as the
“parent”), any corporation, association or other business entity (whether now existing or

34

 

hereafter organized) of which at least a majority of the securities or other ownership
interests having ordinary voting power for the election of directors is, at the time as of which
any determination is being made, owned or controlled by the parent or one or more subsidiaries of
the parent or by the parent and one or more subsidiaries of the parent. Under no circumstances
will an Excluded Subsidiary be, or be deemed to be, a Significant Subsidiary or a Subsidiary
hereunder.

          “Supporting Letter of Credit” shall mean a standby letter of credit, in form and
substance satisfactory to the Administrative Agent, issued by an issuer satisfactory to the
Administrative Agent, in a stated amount equal to 105% of the Letter of Credit Shortfall Amount.

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

          “Swap Obligations” shall mean, with respect to any Person, any and all obligations of
such Person, whether absolute or contingent and howsoever and whensoever created, arising,
evidenced or acquired (including all renewals, extensions and modifications thereof and
substitutions therefor), under (a) any and all Swap Agreements, and (b) any and all cancellations,
buybacks, reversals, terminations or assignments of any Swap Agreement transaction.

          “Swingline Lender” shall mean JPMorgan Chase, in its capacity as lender of Swingline
Loans hereunder.

          “Swingline Loan” shall have the meaning assigned to such term in Section
2.06(a).

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

          “Tax Related Person” shall mean any Person (including, without limitation, a
beneficial owner of an interest in a pass-through entity) whose income is realized through or
determined by reference to the Administrative Agent, Issuing Bank or any Participant or any Tax
Related Person of any of the foregoing.

          “Terminated Plans” shall mean (i) the Kaiser Aluminum Salaried Employees Retirement
Plan, terminated by the PBGC effective December 17, 2003; (ii) the Kaiser Aluminum Pension Plan,
terminated by the PBGC effective April 30, 2004; and (iii) the Kaiser Aluminum Inactive Pension
Plan, terminated by the PBGC effective June 30, 2004.

          “Termination Date” shall mean the earlier to occur of (i) the Maturity Date and (ii)
the acceleration of the Loans and the termination of the Total Commitment in accordance with the
terms hereof.

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          “Termination Event” shall mean, except with respect to the Terminated Plans or Plans
actually terminated in accordance with the terms of the Settlement Agreement, (i) with respect to
any Plan sponsored or contributed to by the Borrowers or any ERISA Affiliate, a “reportable event”,
as such term is described in Section 4043(c) of ERISA (other than a “reportable event” as to which
the 30-day notice is waived) or an event described in Section 4068 of ERISA and excluding events
which would not be reasonably likely (as reasonably determined by the Agent) to have a material
adverse effect on the financial condition, operations, business, properties or assets of the
Borrowers taken as a whole; (ii) any reportable event or other event related to the withdrawal of
the Borrowers or any ERISA Affiliate from a Multiple Employer Plan during a plan year in which it
was a “substantial employer,” as such term is defined in Section 4001(a)(2) of ERISA, (iii) the
incurrence of liability by the Borrowers or any ERISA Affiliate under Section 4064 of ERISA upon
the termination of a Multiple Employer Plan; (iv) the existence with respect to any Plan of an
“accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (v) the filing pursuant to Section 412(d) of the Code or Section 303(d) of
ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (vi)
the incurrence by the Borrowers or any of their ERISA Affiliates of any liability under Title IV of
ERISA with respect to the termination of any Plan (other than a Terminated Plan); (vii) the receipt
by the Borrowers or any ERISA Affiliate from the PBGC or a plan administrator of any notice
relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any
Plan (other than a Terminated Plan); (viii) the incurrence by the Borrowers or any of its ERISA
Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan
(other than a Terminated Plan) or Multiemployer Plan; or (ix) the receipt by the Borrowers or any
ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrowers or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination
that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the
meaning of Title IV of ERISA.

          “Term Loan Agreement” shall mean that Term Loan and Guaranty Agreement dated the date
hereof among KAFP, as Borrower, Parent, KAIC and KAII, as Guarantors, the “Lenders” (as defined
therein) party thereto, JPMorgan Chase, as administrative agent, and Wilmington Trust Company, as
collateral agent.

          “Total Commitment” shall mean, at any time, the sum of the Commitments at such time.

          “Trochus” shall mean Trochus Insurance Company, Ltd., a Bermuda entity.

          “Type” when used in respect of any Loan or Borrowing shall refer to the Rate of
interest by reference to which interest on such Loan or on the Loans comprising such Borrowing is
determined. For purposes hereof, “Rate” shall mean the Adjusted LIBO Rate or the Alternate Base
Rate, as applicable.

          “UCC” shall mean the Uniform Commercial Code as in effect from time to time in the
State of New York or any other state the laws of which are required to be applied in connection
with the issue of perfection of security interests.

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          “United States” and “U.S.” shall mean the United States of America.

          “Unliquidated Obligations” shall mean, at any time, any Secured Obligations (or
portion thereof) that are contingent in nature or unliquidated at such time, including any Secured
Obligation that is: (i) an obligation to reimburse a bank for drawings not yet made under a letter
of credit issued by it; (ii) any other obligation (including any guarantee) that is contingent in
nature at such time; or (iii) an obligation to provide collateral to secure any of the foregoing
types of obligations.

          “Unused Total Commitment” shall mean, with respect to all Lenders, at any time, (i)
the Total Commitment less (ii) the sum of (x) the aggregate outstanding principal amount of all
Loans and (y) the aggregate Letter of Credit Exposure.

          “VEBA Trusts” shall mean the Union VEBA Trust (as defined in the Reorganization Plan)
and the Retired Salaried Employees VEBA Trust (as defined in the Reorganization Plan).

          “Withdrawal Liability” shall have the meaning given such term under Part I of Subtitle
E of Title IV of ERISA.

          SECTION 1.02 Classifications of Loans and Borrowings; Terms Generally. For purposes of
this Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving
Loan”) or by Type (e.g., a “Eurodollar Loan”) or by Class and Type
(e.g., a “Eurodollar Revolving Loan”). Borrowings also may be classified and
referred to by Class (e.g., a “Revolving Borrowing”) or by Type (e.g., a
“Eurodollar Borrowing”) or by Class and Type (e.g., a “Eurodollar Revolving
Borrowing”). The definitions in Section 1.01 shall apply equally to both the singular
and plural forms of the terms defined. Whenever the context may require, any pronoun shall include
the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and
“including” shall be deemed to be followed by the phrase “without limitation.” All references
herein to Sections, Exhibits and Schedules shall be deemed references to Sections of, and Exhibits
and Schedules to, this Agreement unless the context shall otherwise require. The words “asset” and
“property” shall be construed to have the same meaning and effect and refer to any and all tangible
and intangible assets and properties. Except as otherwise expressly provided herein, all terms of
an accounting or financial nature shall be construed in accordance with GAAP, as in effect from
time to time; provided that, if the Borrowers’ Agent notifies the Administrative
Agent that the Borrowers request an amendment to any provision hereof to eliminate the effect of
any change occurring after the date hereof in GAAP or in the application thereof on the operation
of such provision (or if the Administrative Agent notifies the Borrowers’ Agent that the Required
Lenders request an amendment to any provision hereof for such purpose), regardless of whether any
such notice is given before or after such change in GAAP or in the application thereof, then such
provision shall be interpreted on the basis of GAAP as in effect and applied immediately before
such change shall have become effective until such notice shall have been withdrawn or such
provision amended in accordance herewith. Terms that are defined in the Uniform Commercial Code as
in effect in the State of New York from time to time shall have the same meaning herein unless
otherwise defined herein.

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          SECTION 1.03 The Parent As Agent For Borrowers. Each Borrower hereby irrevocably appoints
the Parent as the borrowing agent and attorney-in-fact for all Borrowers (the “Borrowers’
Agent”) which appointment shall remain in full force and effect unless and until the
Administrative Agent shall have received prior written notice signed by each Borrower that such
appointment has been revoked and that another Borrower has been appointed the Borrowers’ Agent.
Each Borrower hereby irrevocably appoints and authorizes the Borrowers’ Agent (i) to provide the
Administrative Agent with all notices with respect to Borrowings and Letters of Credit obtained for
the benefit of any Borrower and all other notices and instructions under this Agreement and (ii) to
take such action as the Borrowers’ Agent deems appropriate on its behalf to obtain Borrowings and
Letters of Credit and to exercise such other powers as are reasonably incidental thereto to carry
out the purposes of this Agreement. It is understood that the handling of the Funding Account,
Cash Management Account, Concentration Account and Collateral of Borrowers in a combined fashion,
as more fully set forth herein, is done solely as an accommodation to Borrowers in order to utilize
the collective borrowing powers of Borrowers in the most efficient and economical manner and at
their request, and that no Lender shall incur any liability to any Borrower as a result hereof.

          SECTION 1.04 The Term “Borrower” or “Borrowers”. Unless otherwise specifically provided
herein, all references to “Borrower” or “Borrowers” herein shall refer to and include each Borrower
separately and all representations contained herein shall be deemed to be separately made by each
of them, and each of the covenants, agreements and obligations set forth herein shall be deemed to
be the joint and several covenants, agreements and obligations of them. Any notice, request,
consent, report or other information or agreement delivered to the Administrative Agent or any
other Lender by any Borrower shall be deemed to be ratified by, consented to and also delivered by
each other Borrower. Unless otherwise specified in this Agreement, the parties hereto anticipate
that any notice, request, consent, report or other information or agreement to be delivered in
connection with this Agreement by Borrowers to the Administrative Agent will be executed by the
Borrowers’ Agent, on behalf of Borrowers, and that any such notice, request, consent, report or
other information or agreement delivered to the Administrative Agent and executed by the Borrowers’
Agent shall be deemed to be executed by the Borrowers’ Agent on behalf of all the Borrowers. In
addition, unless otherwise specified in this Agreement, the parties hereto anticipate that any
advances made hereunder by any Lender to Borrowers shall be disbursed directly to the Borrowers’
Agent.

          SECTION 1.05 Secured Obligations Not Affected. The Secured Obligations of the Borrowers
shall not be affected by (i) the failure of the Administrative Agent or a Lender to assert any
claim or demand or to enforce any right or remedy against any Borrower under the provisions of this
Agreement or any other Loan Document or otherwise; (ii) any extension or renewal of any provision
hereof or thereof; (iii) any rescission, waiver, compromise, acceleration, amendment or
modification of any of the terms or provisions of any of the Loan Documents; (iv) the release,
exchange, waiver or foreclosure of any security held by the Administrative Agent for the Secured
Obligations or any of them; (v) the failure of the Administrative Agent or a Lender to exercise any
right or remedy against any other Borrower; (vi) the release or substitution of any Borrower; or
(vii) any other circumstance
that might otherwise constitute a discharge of a surety, other than, in each case, the payment in
full in cash of the Secured Obligations.

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     ARTICLE 2. AMOUNT AND TERMS OF CREDIT

          SECTION 2.01 The Facility. Subject to the terms and conditions set forth herein, each
Lender agrees to make Loans to the Borrowers from time to time during the Availability Period in an
aggregate principal amount that will not result in (i) such Lender’s Revolving Credit Exposure
exceeding such Lender’s Commitment or (ii) the Aggregate Credit Exposures exceeding the Total
Commitment. The Issuing Bank will issue Letters of Credit hereunder on the terms and conditions
set forth below. The Facility shall be composed of Revolving Loans, Swingline Loans, Protective
Advances and Letters of Credit as set forth below.

          SECTION 2.02 Revolving Loans. Subject to the terms and conditions set forth herein, each
Lender agrees to make Revolving Loans to the Borrowers from time to time during the Availability
Period in an aggregate principal amount that will not result in (i) such Lender’s Revolving Credit
Exposure exceeding such Lender’s Commitment or (ii) the Aggregate Credit Exposure exceeding the
lesser of (x) the sum of the Total Commitments or (y) the Borrowing Base, subject to the
Administrative Agent’s authority, in its sole discretion, to make Protective Advances pursuant to
the terms of Section 2.05. Within the foregoing limits and subject to the terms and
conditions set forth herein, the Borrowers may borrow, prepay and reborrow Revolving Loans.

          SECTION 2.03 Loans and Borrowings.

               (a) Each Revolving Loan shall be made as part of a Borrowing consisting of Revolving Loans
made by the Lenders ratably in accordance with their respective Commitments. Any Protective
Advance shall be made in accordance with the procedures set forth in Section 2.05. Subject
to Section 2.04 and Section 2.15, each Borrowing shall be comprised entirely of ABR
Loans or Eurodollar Loans as the Borrowers’ Agent may request in accordance herewith. Each
Swingline Loan shall be an ABR Loan. Subject to Section 2.15, each Lender at its option
may make a Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to
make such Loan; provided that any exercise of such option shall not affect the
obligation of the Borrowers to repay such Loan in accordance with the terms of this Agreement.

               (b) At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing
shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than
$5,000,000. ABR Revolving Borrowings may be in any amount. Borrowings of more than one Type may
be outstanding at the same time; provided that there shall not at any time be more
than a total of ten (10) Eurodollar Borrowings outstanding.

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

          SECTION 2.04 Requests for Borrowings. To request a Borrowing, the Borrowers’ Agent shall
notify the Administrative Agent of such request by telephone, fax, e-mail or written Borrowing
Request (a) in the case of a Eurodollar Borrowing, not later than 12:00 noon, Central time, three
Business Days before the date of the proposed Borrowing or (b) in the

39

 

case of an ABR Borrowing, not
later than 12:00 p.m., Central time, on the date of the proposed Borrowing. Any such Borrowing
Request shall be irrevocable and shall, if made in writing, by facsimile, or by e-mail, be signed
by the Borrowers’ Agent or, if made by telephone, be confirmed promptly by hand delivery, e-mail or
facsimile to the Administrative Agent of a written Borrowing Request and be signed by the
Borrowers’ Agent. Each such telephonic and written Borrowing Request shall specify the following
information in compliance with Section 2.03:

               (i) the aggregate amount of the requested Borrowing;

               (ii) the date of such Borrowing, which shall be a Business Day;

               (iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing; and

               (iv) in the case of a Eurodollar Borrowing, the initial Interest Period to be
applicable thereto, which shall be a period contemplated by the definition of the
term “Interest Period.”

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

          SECTION 2.05 Protective Advances.

               (a) Subject to the limitations set forth below, the Administrative Agent is authorized by the
Borrowers and the Lenders, from time to time after the occurrence and during the continuance of an
Event of Default in the Administrative Agent’s sole discretion (but shall have absolutely no
obligation to), to make Loans to the Borrowers, on behalf of all Lenders, which the Administrative
Agent, in its Permitted Discretion, deems necessary or desirable (i) to preserve or protect the
Collateral, or any portion thereof, (ii) to enhance the likelihood of, or maximize the amount of,
repayment of the Loans and other Secured Obligations, or (iii) to pay any other amount chargeable
to or required to be paid by the Borrowers pursuant to the terms of
this Agreement, including payments of principal, interest, Letter of Credit Disbursements,
fees, premiums, reimbursable expenses and other sums payable under the Loan Documents (any of such
Loans are herein referred to as “Protective Advances”); provided that no
Protective Advance shall cause the Aggregate Credit Exposure to exceed the Total Commitment;
provided further that the aggregate amount of Protective Advances outstanding at any time,
which were made pursuant to clauses (i), (ii) and (iii) above, shall not at
any time exceed $10,000,000. Protective Advances may be made even if the conditions precedent set
forth in Section 4.02 have not been satisfied. The Protective Advances shall be secured by
the Liens in favor of the Administrative Agent in and to the Collateral and shall constitute
Obligations hereunder. All Protective Advances shall be ABR Borrowings. The Administrative
Agent’s authorization to

40

 

make Protective Advances may be revoked at any time by the Required
Lenders. Any such revocation must be in writing and shall become effective prospectively upon the
Administrative Agent’s receipt thereof. At any time that there is sufficient Availability and the
conditions precedent set forth in Section 4.02 have been satisfied, the Administrative
Agent may request the Lenders to make a Revolving Loan to repay a Protective Advance. At any other
time the Administrative Agent may require the Lenders to fund their risk participations described
in Section 2.05(b).

               (b) Upon the making of a Protective Advance by the Administrative Agent (whether before or
after the occurrence of a Default), each Lender shall be deemed, without further action by any
party hereto, to have unconditionally and irrevocably purchased from the Administrative Agent
without recourse or warranty, an undivided interest and participation in such Protective Advance in
proportion to its Commitment Percentage.

          SECTION 2.06 Swingline Loans.

               (a) The Administrative Agent, the Swingline Lender and the Revolving Lenders agree that in
order to facilitate the administration of this Agreement and the other Loan Documents, promptly
after the Borrowers request an ABR Borrowing, the Swingline Lender may elect to have the terms of
this Section 2.06(a) apply to such Borrowing Request by advancing, on behalf of the Lenders
and in the amount requested, same day funds to the Borrowers on the applicable Borrowing date to
the Funding Account (each such Loan made solely by the Swingline Lender pursuant to this
Section 2.06(a) is referred to in this Agreement as a “Swingline Loan”), with
settlement among them as to the Swingline Loans to take place on a periodic basis as set forth in
Section 2.06(c). Each Swingline Loan shall be subject to all the terms and conditions
applicable to other ABR Loans funded by the Lenders, except that all payments thereon shall be
payable to the Swingline Lender solely for its own account. In addition, the Borrowers hereby
authorize the Swingline Lender to, and the Swingline Lender shall, subject to the terms and
conditions set forth herein (but without any further written notice required), not later than 3:00
p.m., Central time, on each Business Day, make available to the Borrowers by means of a credit to
the Funding Account, the proceeds of a Swingline Loan to the extent necessary to pay items to be
drawn on any Cash Management Account that day (as determined based on notice from the Agent). The
aggregate amount of Swingline Loans outstanding at any time shall not exceed $17,500,000. The
Swingline Lender shall not make any Swingline Loan if the requested Swingline Loan exceeds
Availability either before giving effect
to the Swingline Loan or immediately after giving effect to such Swingline Loan. All
Swingline Loans shall be ABR Borrowings.

               (b) Upon the making of a Swingline Loan (whether before or after the occurrence of a Default
and regardless of whether a Settlement has been requested with respect to such Swingline Loan),
each Lender shall be deemed, without further action by any party hereto, to have unconditionally
and irrevocably purchased from the Swingline Lender or the Administrative Agent, as the case may
be, without recourse or warranty, an undivided interest and participation in such Swingline Loan in
proportion to its Commitment Percentage of the Commitment. The Swingline Lender or the
Administrative Agent may, at any time, require the Lenders to fund their participations. From and
after the date, if any, on which any Lender is required to fund its participation in any Swingline
Loan purchased hereunder, the Administrative

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Agent shall promptly distribute to such Lender, such
Lender’s Commitment Percentage of all payments of principal and interest and all proceeds of
Collateral received by the Administrative Agent in respect of such Loan.

               (c) The Administrative Agent, on behalf of the Swingline Lender, shall request settlement (a
“Settlement”) with the Lenders on at least a weekly basis on any date that the
Administrative Agent elects, by notifying the Lenders of such requested Settlement by facsimile,
telephone, or e-mail no later than 12:00 noon, Central time on the date of such requested
Settlement (the “Settlement Date”). Each Lender (other than the Swingline Lender, in the
case of the Swingline Loans) shall transfer the amount of such Lender’s Commitment Percentage of
the outstanding principal amount of the applicable Loan with respect to which Settlement is
requested to the Administrative Agent, to such account of the Administrative Agent as the
Administrative Agent may designate, not later than 2:00 p.m., Central time, on such Settlement
Date. Settlements may occur during the existence of a Default and whether or not the applicable
conditions precedent set forth in Section 4.02 have then been satisfied. Such amounts
transferred to the Administrative Agent shall be applied against the amounts of the Swingline
Lender’s Swingline Loans and, together with Swingline Lender’s Commitment Percentage of such
Swingline Loan, shall constitute Revolving Loans of such Lenders, respectively. If any such amount
is not transferred to the Administrative Agent by any Lender on such Settlement Date, the Swingline
Lender shall be entitled to recover such amount on demand from such Lender together with interest
thereon as specified in Section 2.08.

          SECTION 2.07 Letters of Credit.

               (a) General. Subject to the terms and conditions set forth herein, the Borrowers’
Agent may request the issuance of Letters of Credit for the account of any Borrower, in a form
reasonably acceptable to the Administrative Agent and the Issuing Bank, at any time and from time
to time during the Availability Period. In the event of any inconsistency between the terms and
conditions of this Agreement and the terms and conditions of any form of letter of credit
application or other agreement submitted by the Borrowers’ Agent or any Borrower to, or entered
into by any such Person with, the Issuing Bank relating to any Letter of Credit, the terms and
conditions of this Agreement shall control.

               (b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To request
the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter
of Credit), the Borrowers’ Agent shall hand deliver or facsimile (or transmit by electronic
communication, if arrangements for doing so have been approved by the Issuing Bank) to the Issuing
Bank and the Administrative Agent (prior to 1:00 p.m., Central time, at least three (3) Business
Days (or such shorter period as may be agreed by the Borrowers’ Agent and the Issuing Bank) prior
to the requested date of issuance, amendment, renewal or extension) a notice requesting the
issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or
extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a
Business Day), the date on which such Letter of Credit is to expire (which shall comply with
paragraph (c) of this Section), the amount of such Letter of Credit, the name and
address of the beneficiary thereof and such other information as shall be necessary to prepare,
amend, renew or extend such Letter of Credit. If requested by the Issuing Bank, the Borrowers’
Agent also shall submit a letter of credit application on the Issuing

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Bank’s standard form in
connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended,
renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of
Credit the Borrowers shall be deemed to represent and warrant that), after giving effect to such
issuance, amendment, renewal or extension (i) the Letter of Credit Exposure shall not exceed
$60,000,000, (ii) the total Revolving Credit Exposures shall not exceed the lesser of (x) the Total
Commitments and (y) the Borrowing Base and (iii) such requested Letter of Credit is satisfactory to
the Issuing Bank and the Administrative Agent.

               (c) Expiration Date. Each Letter of Credit shall expire (the “Expiration
Date”) at or prior to the close of business on the date one year after the date of the issuance
of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such
renewal or extension); provided that if the Expiration Date is a date which is on
or after the 5th Business Day prior to the Maturity Date, then on or prior to the Maturity Date,
the Borrowers shall cash collateralize the Obligations with respect to such Letter of Credit in
accordance with Section 2.07(j)(ii).

               (d) Participations. By the issuance of a Letter of Credit (or an amendment to a
Letter of Credit increasing the amount thereof) and without any further action on the part of the
Issuing Bank or the Lenders, the Issuing Bank hereby grants to each Lender, and each Lender hereby
acquires from the Issuing Bank, a participation in such Letter of Credit equal to such Lender’s
Commitment Percentage of the aggregate amount available to be drawn under such Letter of Credit.
In consideration and in furtherance of the foregoing, each Lender hereby absolutely and
unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank,
such Lender’s Commitment Percentage of each Letter of Credit Disbursement made by the Issuing Bank
and not reimbursed by the Borrowers on the date due as provided in paragraph (e) of this
Section, or of any reimbursement payment required to be refunded to the Borrowers for any
reason. Each Lender acknowledges and agrees that its obligation to acquire participations pursuant
to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be
affected by any circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the
Commitments, and that each such payment shall be made without any offset, abatement, withholding or
reduction whatsoever.

               (e) Reimbursement. If the Issuing Bank shall make any Letter of Credit Disbursement
in respect of a Letter of Credit, the Borrowers shall reimburse such Letter of Credit Disbursement
by paying to the Administrative Agent an amount equal to such Letter of Credit Disbursement not
later than 3:00 p.m., Central time, on the date that such Letter of Credit Disbursement is made, if
the Borrowers’ Agent shall have received notice of such Letter of Credit Disbursement prior to 1:00
p.m., Central time, on such date, or, if such notice has not been received by the Borrowers’ Agent
prior to such time on such date, then not later than 1:00 p.m., Central time, on (i) the Business
Day that the Borrowers’ Agent receives such notice, if such notice is received prior to 10:00 a.m.,
Central time, on the day of receipt, or (ii) the Business Day immediately following the day that
the Borrowers’ Agent receives such notice, if such notice is not received prior to such time on the
day of receipt. The Borrowers may, subject to the conditions of borrowing set forth herein,
request in accordance with Sections 2.04 or 2.06 that such payment be financed with
an ABR Borrowing or Swingline Loan in an equivalent amount. Unless the Borrowers otherwise
specify, each such payment automatically will be

43

 

financed with a Swingline Loan in an equivalent
amount, subject to the satisfaction of the conditions set forth in Section 4.02. To the
extent any such payment is financed with an ABR Loan or a Swingline Loan, the Borrowers’ obligation
to make such payment shall be discharged and replaced by the resulting ABR Loan or Swingline Loan.
If the Borrowers are ineligible to finance such payment with an ABR Loan or a Swingline Loan due to
its inability to satisfy the conditions set forth in Section 4.02 or otherwise fails to
make such payment when due, the Administrative Agent shall notify each Lender of the applicable
Letter of Credit Disbursement, the payment then due from the Borrowers in respect thereof and such
Lender’s Commitment Percentage thereof. Promptly following receipt of such notice, each Lender
shall pay to the Administrative Agent its Commitment Percentage of the payment then due from the
Borrowers, in the same manner as provided in Section 2.08 with respect to Loans made by
such Lender (and Section 2.08 shall apply, mutatis mutandis, to the payment
obligations of the Lenders), and the Administrative Agent shall promptly pay to the Issuing Bank
the amounts so received by it from the Lenders. Promptly following receipt by the Administrative
Agent of any payment from the Borrowers pursuant to this paragraph, the Administrative Agent shall
distribute such payment to the Issuing Bank or, to the extent that Lenders have made payments
pursuant to this paragraph to reimburse the Issuing Bank, then to such Lenders and the Issuing Bank
as their interests may appear. Any payment made by a Lender pursuant to this paragraph to
reimburse the Issuing Bank for any Letter of Credit Disbursement (other than the funding of ABR
Revolving Loans or a Swingline Loan as contemplated above) shall not constitute a Loan and shall
not relieve the Borrowers of their obligation to reimburse such Letter of Credit Disbursement.

               (f) Obligations Absolute. The Borrowers’ obligation to reimburse Letter of Credit
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this
Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity
or enforceability of any Letter of Credit or this Agreement, or any term or provision therein, (ii)
any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or
invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii)
payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other
document that does not comply with the terms of such Letter of Credit, or (iv) any other event or
circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the
provisions of this Section, constitute a legal or equitable discharge of, or provide a
right of setoff against, the Borrowers’ obligations hereunder. Neither the Administrative Agent,
the Lenders nor the Issuing Bank, nor any of their Related Parties, shall have any liability or
responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit
or any payment or failure to make any payment thereunder (irrespective of any of the circumstances
referred to in the preceding sentence), or any error, omission, interruption, loss or delay in
transmission or delivery of any draft, notice or other communication under or relating to any
Letter of Credit (including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond the control of the
Issuing Bank; provided that the foregoing shall not be construed to excuse the
Issuing Bank from liability to the Borrowers to the extent of any direct damages (as opposed to
consequential damages, claims in respect of which are hereby waived by the Borrowers to the extent
permitted by applicable law) suffered by any Borrower that are caused by the Issuing Bank’s failure
to exercise care when determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of

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gross negligence or willful misconduct on the part of the Issuing Bank (as finally determined by a
court of competent jurisdiction), the Issuing Bank shall be deemed to have exercised care in each
such determination. In furtherance of the foregoing and without limiting the generality thereof,
the parties agree that, with respect to documents presented which appear on their face to be in
substantial compliance with the terms of a Letter of Credit, the Issuing Bank may, in its sole
discretion, either accept and make payment upon such documents without responsibility for further
investigation, regardless of any notice or information to the contrary, or refuse to accept and
refuse to make payment upon such documents if such documents are not in strict compliance with the
terms of such Letter of Credit.

               (g) Disbursement Procedures. The Issuing Bank shall, promptly following its receipt
thereof, examine all documents purporting to represent a demand for payment under a Letter of
Credit. The Issuing Bank shall promptly notify the Administrative Agent and the Borrowers’ Agent
by telephone (confirmed by facsimile) of such demand for payment and whether the Issuing Bank has
made or will make a Letter of Credit Disbursement thereunder; provided that any
failure to give or delay in giving such notice shall not relieve the Borrowers of their obligation
to reimburse the Issuing Bank and the Lenders with respect to any such Letter of Credit
Disbursement.

               (h) Interim Interest. If the Issuing Bank shall make any Letter of Credit
Disbursement, then, unless the Borrowers shall reimburse such Letter of Credit Disbursement in full
on the date such Letter of Credit Disbursement is made, the unpaid amount thereof shall bear
interest, for each day from and including the date such Letter of Credit Disbursement is made to
but excluding the date that the Borrowers reimburse such Letter of Credit Disbursement, at the rate
per annum then applicable to ABR Revolving Loans; provided that, if the Borrowers
fail to reimburse such Letter of Credit Disbursement when due pursuant to paragraph (e) of
this Section, then Section 2.14(d) shall apply. Interest accrued pursuant to this
paragraph shall be for the account of the Issuing Bank, except that interest accrued on and after
the date of payment by any Lender pursuant to paragraph (e) of this Section to
reimburse the Issuing Bank shall be for the account of such Lender to the extent of such payment.

               (i) Replacement of the Issuing Bank. The Issuing Bank may be replaced at any time by
written agreement among the Borrowers, the Administrative Agent, the
replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify
the Lenders of any such replacement of the Issuing Bank. At the time any such replacement shall
become effective, the Borrowers shall pay all unpaid fees accrued for the account of the replaced
Issuing Bank pursuant to Section 2.13(b). From and after the effective date of any such
replacement, (i) the successor Issuing Bank shall have all the rights and obligations of the
Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and
(ii) references herein to the term “Issuing Bank” shall be deemed to refer to such successor or to
any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context
shall require. After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall
remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank
under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but
shall not be required to issue additional Letters of Credit.

45

 

               (j) Cash Collateralization.

               (i) If any Event of Default shall occur and be continuing, on the Business Day
that the Borrowers’ Agent receives notice from the Administrative Agent or the
Required Lenders (or, if the maturity of the Loans has been accelerated, Lenders
with Letter of Credit Exposure representing greater than 50% of the total Letter of
Credit Exposure) demanding the deposit of cash collateral pursuant to this
paragraph, the Borrowers shall deposit in the Letter of Credit Account an amount in
cash equal to 105% of the Letter of Credit Shortfall as of such date (“Cash
Collateralization”); provided that the obligation to deposit
such cash collateral shall become effective immediately, and such deposit shall
become immediately due and payable, without demand or other notice of any kind, upon
the occurrence of any Event of Default with respect to the Borrowers described in
clause (h), (i), (j) or (m) of Section 7.01.
Such deposit shall be held by the Administrative Agent as collateral for the
payment and performance of the Secured Obligations. The Administrative Agent shall
have exclusive dominion and control, including the exclusive right of withdrawal,
over such account and the Borrowers hereby grant the Administrative Agent a security
interest in the Letter of Credit Account. Such deposits shall not bear interest
other than any interest earned on the investment of such deposits, which investments
shall solely be made upon the request of the Borrowers’ Agent in an interest bearing
account chosen in the sole discretion of the Administrative Agent. Any such
investment shall be made at the Borrower’s risk and expense. Interest or profits,
if any, on such investments shall accumulate in such account. Moneys in such
account shall be applied by the Administrative Agent to reimburse the Issuing Bank
for Letter of Credit Disbursements for which it has not been reimbursed and, to the
extent not so applied, shall be held for the satisfaction of the reimbursement
obligations of the Borrowers for the Letter of Credit Exposure at such time or, if
the maturity of the Loans has been accelerated (but subject to the consent of
Lenders with Letter of Credit Exposure representing greater than 50% of the total
Letter of Credit Exposure), be applied to satisfy other Secured Obligations. If the
Borrowers are required to provide an amount of cash collateral hereunder as a result
of the occurrence of an Event of Default, such amount (to the extent not applied as
aforesaid) shall be returned to the Borrowers within three (3) Business
Days after all such Events of Default have been cured or waived, unless needed
to satisfy Section 2.07(j)(ii).

               (ii) If, notwithstanding the provisions of this Section 2.07, any
Letter of Credit is outstanding on the Termination Date, then on such date the
Borrowers shall deposit with the Administrative Agent, for the benefit of the
Administrative Agent and the Lenders, with respect to all Letter of Credit Exposure,
as the Administrative Agent in its discretion shall specify, either (i) a Supporting
Letter of Credit (under which the Administrative Agent is entitled to draw amounts
necessary to reimburse the Issuing Bank for Letter of Credit Disbursements for which
it has not been reimbursed and any fees and expenses associated with such
outstanding Letter of Credit), or (ii) cash, in immediately available funds, in an
amount equal to 105% of the Letter of Credit Shortfall

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Amount to be held in the
Letter of Credit Collateral Account. Such Supporting Letter of Credit or deposit of
cash shall be held by the Administrative Agent, for the benefit of the
Administrative Agent and the Lenders, as collateral for the payment and performance
of the obligations of the Borrowers under any such Letter of Credit remaining
outstanding.

               (k) Existing Letters of Credit. On the Closing Date, (i) each Existing Letter of
Credit, to the extent outstanding, shall be automatically and without further action by the parties
thereto be deemed converted to Letters of Credit issued pursuant to this Section 2.07 for
the account of the Borrowers and subject to the provisions hereof, and for this purpose the Letter
of Credit Fees shall be payable (in substitution for any fees set forth in the applicable letter of
credit reimbursement agreements or applications relating to such letters of credit, except to the
extent that such fees are also payable pursuant to Section 2.13(b)) as if such letters of
credit had been issued on the Closing Date, (ii) JPMorgan Chase shall be deemed to be the Issuing
Bank hereunder solely for the purpose of maintaining such letters of credit, (iii) such letters of
credit shall be included in the calculation of Letter of Credit Exposure and (iv) all liabilities
of the Borrowers with respect to such letters of credit shall constitute Obligations. No letter of
credit converted in accordance with this clause (k) shall be amended, extended or renewed
except in accordance with the terms hereof. Notwithstanding the foregoing, Borrowers shall not be
required to pay any additional issuance fees with respect to the issuance of such Letter of Credit
solely as a result of such Letter of Credit being converted to a Letter of Credit hereunder, but
being understood that the fronting and participation fees set forth in Section 2.13(b)
shall apply to such Letters of Credit.

          SECTION 2.08 Funding of Borrowings.

               (a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof
by wire transfer of immediately available funds by 3:00 p.m., Central time, to the account of the
Administrative Agent most recently designated by it for such purpose by notice to the Lenders in an
amount equal to such Lender’s Commitment Percentage; provided that Swingline Loans
shall be made as provided in Section 2.06. The Administrative Agent will make such Loans
available to the Borrowers by promptly crediting the amounts so received, in
like funds, to the Funding Account; provided that ABR Revolving Loans made to
finance the reimbursement of (i) a Letter of Credit Disbursement as provided in Section
2.07(e) shall be remitted by the Administrative Agent to the Issuing Bank and (ii) a Protective
Advance shall be retained by the Administrative Agent.

               (b) Unless the Administrative Agent shall have received notice from a Lender (a) in the case
of a Eurodollar Borrowing, prior to the proposed date of any Borrowing or (b) in the case of an ABR
Borrowing, not later than 2:00 p.m., Central time, on the proposed date of any Borrowing, that such
Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing,
the Administrative Agent may assume that such Lender has made such share available on such date in
accordance with paragraph (a) of this Section 2.08 and may, in reliance upon such
assumption, make available to the Borrowers a corresponding amount. In such event, if a Lender has
not in fact made its share of the applicable Borrowing available to the Administrative Agent (a
“Defaulting Lender”), then the applicable Lender and the Borrowers severally agree to pay
to the Administrative Agent forthwith on demand such corresponding

47

 

amount with interest thereon,
for each day from and including the date such amount is made available to the Borrowers to but
excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the
greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in
accordance with banking industry rules on interbank compensation or (ii) in the case of the
Borrowers, the interest rate applicable to ABR Loans. If such Lender pays such amount to the
Administrative Agent, then such amount shall constitute such Lender’s Loan included in such
Borrowing. The Administrative Agent shall not be obligated to transfer to a Defaulting Lender any
payments made by the Borrowers to the Administrative Agent for the Defaulting Lender’s benefit,
and, in the absence of such transfer to the Defaulting Lender, the Administrative Agent shall
transfer any such payments to each other non-Defaulting Lender ratably in accordance with their
Commitment Percentage of the Commitments (but only to the extent that such Defaulting Lender’s
Borrowing was funded by the other Lenders) or, if so directed by the Borrowers’ Agent and if no
Default has occurred and is continuing (and to the extent such Defaulting Lender’s Borrowing was
not funded by the other Lenders), retain the same to be re-advanced to the Borrowers as if such
Defaulting Lender had made Loans to the Borrowers. Subject to the foregoing, the Administrative
Agent may hold and, in its Permitted Discretion, setoff such Defaulting Lender’s funding shortfall
against that Defaulting Lender’s Commitment Percentage of all payments received from the Borrowers
or re-lend to the Borrowers for the account of such Defaulting Lender the amount of all such
payments received and retained by the Administrative Agent for the account of such Defaulting
Lender. Until a Defaulting Lender cures its failure to fund its Commitment Percentage of any
Borrowing (i) solely for the purposes of voting or consenting to matters with respect to the Loan
Documents, such Defaulting Lender shall be deemed not to be a “Lender” and such Defaulting Lender’s
Commitment shall be deemed to be zero, (ii) such Defaulting Lender shall not be entitled to any
portion of the Commitment Fee and (iii) the Commitment Fee shall accrue in favor of the Lenders
which have funded their respective Commitment Percentages of such requested Borrowing and shall be
allocated among such non-Defaulting Lenders ratably based on their Commitment Percentage of the
Commitments. This Section 2.08 shall remain effective with respect to such Defaulting
Lender until (x) the Obligations under this Agreement shall have been declared or shall have become
immediately due and payable, (y) the non-Defaulting Lenders, the Administrative Agent, and the
Borrowers shall have waived such Defaulting Lender’s default in writing, or (z) the Defaulting
Lender makes its Commitment Percentage of the applicable
Borrowing and pays to Administrative Agent all amounts owing by the Defaulting Lender in
respect thereof. The operation of this Section shall not be construed to increase or
otherwise affect the Commitment of any Lender, to relieve or excuse the performance by such
Defaulting Lender or any other Lender of its duties and obligations hereunder, or to relieve or
excuse the performance by the Borrowers of their duties and obligations hereunder.

          SECTION 2.09 Interest Elections.

               (a) Each Borrowing initially shall be of the Type specified in the applicable Borrowing
Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as
specified in such Borrowing Request. Thereafter, the Borrowers may elect to convert such Borrowing
to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may
elect Interest Periods therefor, all as provided in this Section 2.09. The Borrowers may
elect different options with respect to different portions of the affected Borrowing, in which case
each such portion shall be allocated ratably among the Lenders

48

 

holding the Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing.
This Section 2.09 shall not apply to Swingline Borrowings or Protective Advances, which may
not be converted or continued.

               (b) To make an election pursuant to this Section 2.09, the Borrowers’ Agent shall
notify the Administrative Agent of such election by telephone by the time that a Borrowing Request
would be required under Section 2.04 if the Borrowers’ Agent were requesting a Borrowing of
the Type resulting from such election to be made on the effective date of such election. Each such
telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or facsimile to the Administrative Agent of a written Interest Election Request in a form
approved by the Administrative Agent and signed by the Borrower.

               (c) Each telephonic and written Interest Election Request shall specify the following
information in compliance with Section 2.03:

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

                    (ii) the effective date of the election made pursuant to such Interest Election
Request, which shall be a Business Day;

                    (iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing; and

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

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

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

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

49

 

Borrowing and (ii) unless
repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest
Period applicable thereto.

          SECTION 2.10 Termination of Commitments.

               (a) Unless previously terminated, the Commitments shall terminate on the Termination Date.

               (b) The Borrowers may at any time terminate the Commitments upon (i) the payment in full of
all outstanding Loans, together with accrued and unpaid interest thereon, (ii) the cancellation and
return of all outstanding Letters of Credit (or alternatively, with respect to each such Letter of
Credit, the furnishing to the Administrative Agent of a cash deposit or Supporting Letter of Credit
as required by Section 2.07(j)(ii)) and (iii) the payment in full of all reimbursable
expenses and other Obligations together with accrued and unpaid interest thereon.

               (c) The Borrowers’ Agent shall notify the Administrative Agent of any election to terminate
the Commitments under paragraph (b) of this Section at least two (2) Business Days prior to
the closing date of such termination, specifying such election and the effective date thereof.
Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the
contents thereof. Each notice delivered by the Borrowers’ Agent pursuant to this Section
shall be irrevocable. Any termination of the Commitments shall be permanent.

          SECTION 2.11 Repayment of Loans; Evidence of Debt.

               (a) The Borrowers hereby unconditionally promise to pay (i) to the Administrative Agent for
the account of each Lender the then unpaid principal amount of each Revolving Loan on the
Termination Date, (ii) to the Administrative Agent the then unpaid amount of each Protective
Advance on the earlier of the Termination Date and demand by the Administrative Agent. All unpaid
Obligations shall be paid in full in cash by the Borrowers on the Termination Date.

               (b) At all times that the Dominion Trigger Event is in effect pursuant to Section
10.02, each Business Day, at or before 12:00 noon, Central time, the Administrative Agent
shall apply (subject to Section 2.19(b) hereof) all immediately available funds credited to
the Cash Management Account first to prepay any Protective Advances that may be
outstanding, pro rata, second, to repay the Swingline Loans and third, to prepay
the Revolving Loans and, if an Event of Default has occurred and is continuing, to cash
collateralize outstanding Letter of Credit Exposure in an amount equal to 105% of the Letter of
Credit Shortfall Amount.

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

               (d) The Administrative Agent shall maintain accounts in which it shall record (i) the amount
of each Loan made hereunder, the Type thereof and the Interest Period applicable thereto, (ii) the
amount of any principal or interest due and payable or to become due

50

 

and payable from the Borrowers
to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder for the account of the Lenders and each Lender’s share thereof.

               (e) The entries made in the accounts maintained pursuant to paragraph (c) or
(d) of this Section shall be prima facie evidence of the existence
and amounts of the obligations recorded therein; provided that in the event of a
conflict between an account maintained pursuant to paragraph (c) and an account maintained
pursuant to paragraph (d) of this Section, the account maintained under
paragraph (d) shall control; provided further, that the failure of any
Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any
manner affect the obligation of the Borrowers to repay the Loans in accordance with the terms of
this Agreement.

               (f) Any Lender may request that Loans made by it be evidenced by a promissory note. In such
event, the Borrowers shall prepare, execute and deliver to such Lender a promissory note payable to
the order of such Lender (or, if requested by such Lender, to such Lender and its registered and
permitted assigns) and in a form approved by the Administrative Agent. Thereafter, the Loans
evidenced by such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more promissory notes in such
form payable to the order of the payee named therein (or, if such promissory note is a registered
note, to such payee and its registered assigns) except to the extent that any such Lender
subsequently returns any such promissory note for cancellation and requests that such Loans once
again be evidenced as described in paragraphs (c) and (d) above.

          SECTION 2.12 Prepayment of Loans.

               (a) The Borrowers shall have the right at any time and from time to time to prepay any
Borrowing in whole or in part, subject to prior notice in accordance with paragraph (c) of
this Section.

               (b) (i) The Borrowers shall immediately repay the Revolving Loans, Letter of Credit Exposure
and/or Swingline Loans if at any time the Aggregate Credit Exposure exceeds the lesser of (A) the
Total Commitments and (B) the Borrowing Base, to the extent required to eliminate such excess;
provided that any such repayments shall be applied first to pay any
Protective Advances that may be outstanding, second to prepay Swingline Loans that may be
outstanding, third to prepay Revolving Loans that may be outstanding, fourth to pay
any unreimbursed Letter of Credit Disbursements, and fifth, if an Event of Default shall
have occurred and be continuing, to cash collateralize Letters of Credit.

                     (ii) During a Dominion Trigger Event, no later than the next Business Day after
receipt by any Borrower of the Net Proceeds of any asset disposition (other than
Excluded Asset Dispositions), the Borrowers shall prepay the Obligations in an
amount equal to 100% of such Net Proceeds as set forth in paragraph (b)(vii)
below.

                     (iii) During a Dominion Trigger Event, if any Borrower issues Equity Interests
or Indebtedness (other than Indebtedness permitted by

51

 

Section 6.03), the
Borrowers shall prepay the Obligations in an amount equal to 100% of the Net
Proceeds of such issuance no later than the Business Day following the date of
receipt of such Net Proceeds as set forth in paragraph (b)(vii) below.

                    (iv) During a Dominion Trigger Event, any insurance or condemnation proceeds
to be applied to the Obligations in accordance with Section 5.03 shall be
applied as set forth in paragraph (b)(vii) below.

                    (v) During a Dominion Trigger Event, promptly (and in no event, later than one
(1) Business Day after the receipt thereof) upon receipt by any Borrower of the Net
Proceeds of any Extraordinary Receipts, the Borrowers shall prepay the Obligations
in an amount equal to 100% of such Net Proceeds as set forth in paragraph
(b)(vii) below.

                    (vi) Without in any way limiting the foregoing, immediately upon receipt by any
Borrower of proceeds of any sale of any Collateral, the Borrowers shall cause such
Borrower to deliver such proceeds to the Administrative Agent, or deposit such
proceeds in a deposit account subject to a control agreement acceptable to the
Administrative Agent. All of such proceeds shall be applied during a Dominion
Trigger Event as set forth in accordance with paragraph (b)(vii) below or
otherwise as provided in Section 2.19(b). Nothing in this Section
shall be construed to constitute Administrative Agent’s or any
Lender’s consent to any transaction that is not permitted by other provisions
of this Agreement or the other Loan Documents.

                    (vii) All such amounts pursuant to Sections 2.12(b)(ii), (iii),
(iv) (to the extent such insurance or condemnation proceeds arise from
casualties or losses to Equipment, Fixtures and real Property), (v), and
(vi), in each case, to the extent such proceeds are received during a
Dominion Trigger Event, shall be applied (subject to Section 2.19(b)
hereof), first to prepay any Protective Advances that may be outstanding,
pro rata, second to prepay Swingline Loans that may be outstanding, and
third to prepay the Revolving Loans without a corresponding reduction in the
Commitment and thereafter, if an Event of Default shall have occurred and be
continuing, to cash collateralize any outstanding Letter of Credit Exposure.

               (c) The Borrowers’ Agent shall notify the Administrative Agent (and, in the case of prepayment
of a Swingline Loan, the Swingline Lender) by telephone (confirmed by facsimile) of any prepayment
hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 12:00 noon,
Central time, three Business Days before the date of prepayment, (ii) in the case of prepayment of
an ABR Borrowing, not later than 1:00 p.m., Central time, one Business Day before the date of
prepayment. Promptly following receipt of any such notice relating to a Borrowing, the
Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of
any Borrowing shall be in an amount that would be permitted in the case of an advance of a
Borrowing of the same Type as provided in Section 2.03. Each prepayment of a Borrowing
shall be applied ratably to the Revolving Loans included in the

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prepaid Borrowing. Prepayments
shall be accompanied by accrued interest to the extent required by Section 2.14.

          SECTION 2.13 Fees.

               (a) The Borrowers agree to pay to the Administrative Agent for the account of each Lender a
commitment fee (the “Commitment Fee”), which shall accrue at the Applicable Commitment Fee
Rate on the average daily amount of the Unused Total Commitment of such Lender during the period
from and including the Closing Date to but excluding the date on which the Lenders’ Commitments
terminate. Accrued Commitment Fees shall be payable in arrears on the last day of each calendar
month and on the date on which the Commitments terminate, commencing on the first such date to
occur after the date hereof. All Commitment Fees shall be computed on the basis of a year of 360
days and shall be payable for the actual number of days elapsed (including the first day but
excluding the last day).

               (b) The Borrowers agree to pay (i) to the Administrative Agent for the account of each Lender
a participation fee with respect to its participations in Letters of Credit, at a per annum rate
equal to the Applicable Margin for Eurodollar Loans on the average daily amount of such Lender’s
Letter of Credit Exposure (excluding any portion thereof attributable to unreimbursed Letter of
Credit Disbursements) during the period from and including the Closing Date to but excluding the
later of the date on which such Lender’s Commitment terminates and
the date on which such Lender ceases to have any Letter of Credit Exposure, and (ii) to the
Issuing Bank a fronting fee, which shall accrue at the rate of 0.125% per annum on the average
daily amount of the Letter of Credit Exposure (excluding any portion thereof attributable to
unreimbursed Letter of Credit Disbursements) during the period from and including the Closing Date
to but excluding the later of the date of termination of the Commitments and the date on which
there ceases to be any Letter of Credit Exposure, as well as the Issuing Bank’s standard fees with
respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of
drawings thereunder. Participation fees and fronting fees accrued through and including the last
day of each calendar month shall be payable on the third Business Day following such last day,
commencing on the first such date to occur after the Closing Date; provided that all such fees
shall be payable on the date on which the Commitments terminate and any such fees accruing after
the date on which the Commitments terminate shall be payable on demand. Any other fees payable to
the Issuing Bank pursuant to this paragraph shall be payable within fourteen (14) days after
demand. All participation fees and fronting fees shall be computed on the basis of a year of 360
days and shall be payable for the actual number of days elapsed (including the first day but
excluding the last day).

               (c) The Borrowers agree to pay to the Administrative Agent, for its own account, fees payable
in the amounts and at the times separately agreed upon between the Borrowers and the Administrative
Agent in the Commitment Letter and the Fee Letter.

               (d) The Borrowers agree to pay all Collateral Monitoring Fees pursuant to Section
5.08.

               (e) All fees payable hereunder shall be paid on the dates due, in immediately available funds,
to the Administrative Agent (or to the Issuing Bank, in the case of

53

 

fees payable to it) for
distribution, in the case of Commitment Fees and participation fees, to the Lenders. Fees paid
shall not be refundable under any circumstances.

          SECTION 2.14 Interest.

               (a) The Loans comprising each ABR Borrowing (including each Swingline Loan) shall bear
interest at the Alternate Base Rate plus the Applicable Margin.

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

               (c) Each Protective Advance shall bear interest at the Alternate Base Rate plus the
Applicable Margin for Revolving Loans plus 2.00%.

               (d) Notwithstanding the foregoing, during the occurrence and continuance of an Event of
Default, the Administrative Agent or the Required Lenders may, at their option, by notice to the
Borrowers (which notice may be revoked at the option of the Required Lenders notwithstanding any
provision of Section 9.02 requiring the consent of each Lender affected thereby for
reductions in interest rates), declare that (i) all Loans shall bear
interest at 2.00% plus the rate otherwise applicable to such Loans as provided in the
preceding paragraphs of this Section or (ii) in the case of any other amount outstanding
hereunder, such amount shall accrue at 2.00% plus the rate applicable to such fee or other
obligation as provided hereunder.

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

               (f) All interest hereunder shall be computed on the basis of a year of 360 days, and shall be
payable for the actual number of days elapsed (including the first day but excluding the last day).
The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest error.

          SECTION 2.15 Alternate Rate of Interest. If prior to the commencement of any Interest
Period for a Eurodollar Borrowing:

               (a) the Administrative Agent determines (which determination shall be conclusive absent
manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO
Rate or the LIBO Rate, as applicable, for such Interest Period; or

54

 

               (b) the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate or
the LIBO Rate, as applicable, for such Interest Period will not adequately and fairly reflect the
cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in
such Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrowers’ Agent and the Lenders by
telephone or facsimile as promptly as practicable thereafter and, until the Administrative Agent
notifies the Borrowers’ Agent and the Lenders that the circumstances giving rise to such notice no
longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to,
or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective, and (ii) if any
Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR
Borrowing.

          SECTION 2.16 Increased Costs.

               (a) If any Change in Law shall:

                    (i) impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Lender (except any such reserve requirement reflected in the
Adjusted LIBO Rate) or the Issuing Bank; or

                    (ii) impose on any Lender or the Issuing Bank or the London interbank market
any other condition affecting this Agreement or Eurodollar Loans made by such Lender
or any Letter of Credit or participation therein;

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

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

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amount or amounts as will compensate such
Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company for any such
reduction suffered.

               (c) A certificate of a Lender or the Issuing Bank setting forth the amount or amounts
necessary to compensate such Lender or the Issuing Bank or its holding company, as the case may be,
as specified in paragraph (a) or (b) of this Section shall be delivered to
the Borrowers and shall be conclusive absent manifest error. The Borrowers shall pay such Lender
or the Issuing Bank, as the case may be, the amount shown as due on any such certificate within
fourteen (14) days after receipt thereof.

               (d) Failure or delay on the part of any Lender or the Issuing Bank to demand compensation
pursuant to this Section shall not constitute a waiver of such Lender’s or the Issuing
Bank’s right to demand such compensation; provided that the Borrowers shall not be required to
compensate a Lender or the Issuing Bank pursuant to this Section for any increased costs or
reductions incurred more than one hundred eighty (180) days prior to the date that such Lender or
the Issuing Bank, as the case may be, notifies the Borrowers’ Agent of the Change in Law giving
rise to such increased costs or reductions and of such Lender’s or the Issuing Bank’s intention to
claim compensation therefor; provided further that, if the Change in Law giving
rise
to such increased costs or reductions is retroactive, then the 180-day period referred to
above shall be extended to include the period of retroactive effect thereof.

          SECTION 2.17 Breakfunding Payments. In the event of (a) the payment of any principal of
any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including
as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the
last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or
prepay any Eurodollar Loan on the date specified in any notice delivered pursuant hereto, or (d)
the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable
thereto as a result of a request by the Borrowers pursuant to Section 2.20, then, in any
such event, the Borrowers shall compensate each Lender for the loss, cost and expense attributable
to such event. In the case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be
deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount
of interest which would have accrued on the principal amount of such Loan had such event not
occurred, at the Adjusted LIBO Rate (without including the Applicable Margin in such calculation)
that would have been applicable to such Loan, for the period from the date of such event to the
last day of the then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period for such Loan), over
(ii) the amount of interest which would accrue on such principal amount for such period at the
interest rate which such Lender would bid were it to bid, at the commencement of such period, for
dollar deposits of a comparable amount and period from other banks in the eurodollar market. A
certificate of any Lender setting forth any amount or amounts that such Lender is entitled to
receive pursuant to this Section shall be delivered to the Borrowers’ Agent and shall be
conclusive absent manifest error. The Borrowers shall pay such Lender the amount shown as due on
any such certificate within fourteen (14) days after receipt thereof.

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          SECTION 2.18 Taxes.

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

               (b) In addition, the Borrowers shall pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law.

               (c) The Borrowers shall indemnify the Administrative Agent, each Lender and the Issuing Bank
for the full amount of any Indemnified Taxes paid by the Administrative Agent, such Lender or the
Issuing Bank and each of their Tax Related Persons, as the case may be, on or with respect to any
payment by or on account of any obligation of the Borrowers hereunder (including Indemnified Taxes
imposed or asserted on or attributable to amounts payable under this Section) and any
penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or
not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority, but excluding penalties, interest and other expenses to the extent solely
and directly attributable to the gross negligence or willful misconduct of the Person claiming such
indemnity. Payment under this Section 2.18(c) shall be made within fourteen (14) days
after the Administrative Agent, Lender or the Issuing Bank makes written demand therefor. A
certificate as to the amount of such payment or liability delivered to the Borrowers by a Lender or
the Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a Lender or the
Issuing Bank or their respective Tax Related Persons, shall be conclusive absent manifest error.

               (d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the
Borrowers to a Governmental Authority, to the extent such Indemnified Taxes or Other Taxes are
imposed with respect to any payment by or on account of any obligation of the Borrowers hereunder
or with respect to any Loan Document, the Borrowers shall deliver to the Administrative Agent the
original or a certified copy of a receipt issued by such Governmental Authority evidencing such
payment, a copy of the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.

               (e) Any Lender that is entitled to an exemption from or reduction of withholding tax under the
law of the jurisdiction in which any Borrower is located, or any treaty to which such jurisdiction
is a party, with respect to payments under this Agreement shall deliver to the Borrowers’ Agent and
the Administrative Agent, at the time or times prescribed by applicable law, the appropriate
properly completed and executed Internal Revenue Service Form

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W-8 (including, without limitation,
Form W-8ECI, W-8BEN or W-8IMY) or Form W-9 or any successor form thereto or such other evidence
satisfactory to the Borrowers’ Agent and the Administrative Agent as will permit such payments to
be made without withholding or at a reduced rate. “United States persons” (within the meaning of
Code Section 7701(a)(30)) that are “exempt recipients” (within the meaning of Treasury Regulations
Section 1.6049-4(c)(1)(ii) (without regard to the third sentence thereof)) shall not be required to
furnish an Internal Revenue Service Form W-9 unless (i) Borrowers’ Agent reasonably believes that
such person is, in fact, not an “exempt recipient,” and (ii) Borrowers’ Agent timely and reasonably
requests a Form W-9 from such Person (provided, however, that if a United States
person is not legally entitled to deliver a Form W-9 as a result of a change in law occurring after
the date hereof, such Person shall not be required to deliver such Form W-9).

               (f) If the Administrative Agent or a Lender determines, in its sole discretion, that it has
received a refund of or credit against any Taxes paid by any Borrower or as to which it has been
indemnified by any Borrower or with respect to which any Borrower has paid additional amounts
pursuant to this Section 2.18, it shall pay over such refund or the amount of such credit
to such Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by
such Borrower under this Section 2.18 with respect to the Taxes
giving rise to such refund or credit), net of all out-of-pocket expenses and Taxes of the
Administrative Agent or such Lender and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund) within thirty (30) days of the receipt
of such amount; provided, that the Borrowers upon the request of the Administrative Agent
or such Lender, agree to repay the amount paid over to any Borrower (plus any penalties, interest
or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or
such Lender in the event the Administrative Agent or such Lender is required to repay such refund
to such Governmental Authority. Nothing in this Section 2.18 shall be construed to require
the Administrative Agent, any Lender, the Issuing Bank (or any of their Tax Related Persons) to
make available its Tax returns (or any other information relating to its Taxes which it deems
confidential) to any Borrower or any other Person.

          SECTION 2.19 Payments Generally; Allocation of Proceeds; Sharing of Set-offs.

               (a) The Borrowers shall make each payment required to be made by it hereunder (whether of
principal, interest, fees or reimbursement of Letter of Credit Disbursements, or of amounts payable
under Section 2.16, 2.17 or 2.18, or otherwise) prior to 1:00 p.m., Central
time, on the date when due, in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the Administrative Agent, be
deemed to have been received on the next succeeding Business Day for purposes of calculating
interest thereon. All such payments shall be made to the Administrative Agent at its offices at
120 South LaSalle Street, Chicago, Illinois, except payments to be made directly to the Issuing
Bank or Swingline Lender as expressly provided herein and except that payments pursuant to
Sections 2.16, 2.17, 2.18 and 9.03 shall be made directly to the
Persons entitled thereto. The Administrative Agent shall distribute any such payments received by
it for the account of any other Person to the appropriate recipient promptly following receipt
thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for
payment shall be extended to the next succeeding Business Day, and, in the case of any payment
accruing

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interest, interest thereon shall be payable for the period of such extension. All
payments hereunder shall be made in Dollars. Solely for purposes of determining the amount of
Loans available for borrowing purposes, checks and cash or other immediately available funds from
collections of items of payment and proceeds of any Collateral shall be applied in whole or in part
against the Obligations, on the day of receipt, subject to actual collection.

               (b) Any proceeds of Collateral received by the Administrative Agent (i) not constituting
either (A) a specific payment of principal, interest, fees or other sum payable under the Loan
Documents (which shall be applied as specified by the Borrowers’ Agent), (B) a mandatory prepayment
(which shall be applied in accordance with Section 2.12) or (C) amounts to be applied from
the Cash Management Account (which shall be applied in accordance with Section 2.11(b)) or
(ii) after an Event of Default has occurred and is continuing and the Administrative Agent so
elects or the Required Lenders so direct, such funds shall be applied ratably first, to pay
any fees, indemnities, or expense reimbursements including amounts then due to the Administrative
Agent and the Issuing Bank from the Borrowers (other than in connection with Banking Services or
Swap Obligations), second, to pay any fees or expense
reimbursements then due to the Lenders from the Borrowers (other than in connection with
Banking Services or Swap Obligations), third, to pay interest due in respect of the
Protective Advances, fourth, to pay the principal of the Protective Advances,
fifth, to pay interest then due and payable on the Swingline Loans ratably, sixth,
to pay the principal on the Swingline Loans ratably, seventh, to pay interest then due and
payable on the Revolving Loans ratably, eighth, to prepay principal on the Revolving Loans
and unreimbursed Letter of Credit Disbursements ratably, ninth, if an Event of Default has
occurred and is continuing, to pay an amount to the Administrative Agent equal to one hundred five
percent (105%) of the aggregate undrawn face amount of all outstanding Letters of Credit and the
aggregate amount of any unpaid Letter of Credit Disbursements, to be held as cash collateral for
such Obligations, tenth, to payment of any amounts owing with respect to Banking Services
and Swap Obligations (to the extent the same are Secured Obligations), and eleventh, to the
payment of any other Secured Obligation due to the Administrative Agent or any Lender by the
Borrowers. Notwithstanding anything to the contrary contained in this Agreement, unless so
directed by the Borrowers’ Agent, or unless a Default is in existence, neither the Administrative
Agent nor any Lender shall apply any payment which it receives to any Eurodollar Loan, except (a)
on the expiration date of the Interest Period applicable to any such Eurodollar Loan or (b) in the
event, and only to the extent, that there are no outstanding ABR Loans and, in such case, the
Borrowers shall pay the breakfunding payment required in accordance with Section 2.17. The
Administrative Agent and the Lenders shall have the continuing and exclusive right to apply and
reverse and reapply any and all such proceeds and payments to any portion of the Secured
Obligations.

               (c) At the election of the Administrative Agent, all payments of principal, interest, Letter
of Credit Disbursements, fees, premiums, reimbursable expenses (including, without limitation, all
reimbursement for fees and expenses pursuant to Section 9.03), and other sums payable under
the Loan Documents, may be paid from the proceeds of Borrowings made hereunder
whether made
following a request by the Borrowers’ Agent pursuant to Section 2.04 or a deemed request as
provided in this Section or may be deducted from any deposit account of any Borrower
maintained with the Administrative Agent. The Borrowers hereby irrevocably authorize (i) the
Administrative Agent to make a Borrowing for the purpose of paying each payment of principal,
interest and fees as it becomes due hereunder

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or any other amount due under the Loan Documents and
agrees that all such amounts charged shall constitute Loans (including Swingline Loans and
Protective Advances) and that all such Borrowings shall be deemed to have been requested pursuant
to Sections 2.04, 2.05 or 2.06, as applicable and (ii) the Administrative
Agent to charge any deposit account of the Borrowers maintained with the Administrative Agent for
each payment of principal, interest and fees as it becomes due hereunder or any other amount due
under the Loan Documents, to the extent such payment has not already been made.

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

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

               (f) If any Lender shall fail to make any payment required to be made by it pursuant to
Section 2.06, 2.07(d) or (e), 2.08(b), 2.19(e) or
Article 8, then the

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Administrative Agent may, in its discretion (notwithstanding any
contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for
the account of such Lender to satisfy such Lender’s obligations under such Sections or Articles
until all such unsatisfied obligations are fully paid.

          SECTION 2.20 Mitigation Obligations; Replacement of Lenders. If any Lender requests
compensation under Section 2.16, or if the Borrowers are required to pay any additional
amount to any Lender or any Governmental Authority for the account of any Lender pursuant to
Section 2.18, then:

               (a) such Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another
of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.16 or
2.18, as the case may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender (and
the Borrowers hereby agree to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment); and

               (b) the Borrowers may, at their sole expense and effort, require such Lender or any Defaulting
Lender (such Lender or Defaulting Lender herein, a “Departing Lender”), upon notice by the
Borrowers’ Agent to the Departing Lender and the Administrative Agent, to assign and delegate,
without recourse (in accordance with and subject to the restrictions contained in Section
9.04), all its interests, rights and obligations under this Agreement to an assignee that shall
assume such obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) the Borrowers shall have received the prior written
consent of the Administrative Agent (and, if a Commitment is being assigned, the Issuing Bank),
which consent shall not unreasonably be withheld, conditioned or delayed, (ii) the Departing Lender
shall have received payment of an amount equal to the outstanding principal of its Loans and
participations in Letter of Credit Disbursements and Swingline Loans, accrued interest thereon,
accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the Borrowers (in the case of all
other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation
under Section 2.16 or payments required to be made pursuant to Section 2.18, such
assignment will result in a reduction in such compensation or payments. A Departing Lender shall
not be required to make any such assignment and delegation if, prior thereto, as a result of a
waiver by such Lender or otherwise, the circumstances entitling the Borrowers to require such
assignment and delegation cease to apply.

          SECTION 2.21 Indemnity for Returned Payments. If after receipt of any payment which is
applied to the payment of all or any part of the Secured Obligations, the Administrative Agent or
any Lender is for any reason compelled to surrender such payment or proceeds to any Person because
such payment or application of proceeds is invalidated, declared fraudulent, set aside, determined
to be void or voidable as a preference, impermissible setoff, or a diversion of trust funds, or for
any other reason, then the Secured Obligations or part thereof intended to be satisfied shall be
revived and continued and this Agreement shall continue in full force as if such payment or
proceeds had not been received by the Administrative Agent or such

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Lender and the Borrowers shall
be liable to pay to the Administrative Agent and the Lenders, and each Borrower hereby indemnifies
the Administrative Agent and the Lenders and holds the Administrative Agent and the Lenders
harmless for the amount of such payment or proceeds surrendered. The provisions of this
Section 2.21 shall be and remain effective notwithstanding any contrary action which may
have been taken by the Administrative Agent or any Lender in reliance upon such payment or
application of proceeds, and any such contrary action so taken shall be without prejudice to the
Administrative Agent’s and the Lenders’ rights under this Agreement and shall be deemed to have
been conditioned upon such payment or application of proceeds having become final and irrevocable.
The provisions of this Section 2.21 shall survive the termination of this Agreement.

          SECTION 2.22 Facility Increase. The Borrowers may, from time to time, request an increase in the Total Commitment by an
aggregate amount of up to $75,000,000 (each such increase, a “Facility Increase”). Each
Facility Increase shall be made on notice given by the Borrowers’ Agent to the Administrative Agent
not later than 1:00 p.m., (Central time), ten (10) Business Days prior to the date of the proposed
Facility Increase. Each such notice (a “Notice of Facility Increase”) shall be in a form
reasonably satisfactory to the Administrative Agent and shall specify (i) the date of such proposed
Facility Increase (the “Facility Increase Effective Date”), (ii) the aggregate amount of
such proposed Facility Increase, which shall be in an amount not less than $10,000,000 or in an
integral multiple of $5,000,000 in excess thereof (the “Facility Increase Amount”), (iii)
the portion of such Facility Increase that shall be allocated to increase the Fixed Asset Sublimit
(which shall not be greater than 33.33% of any such Facility Increase), (iv) that, at the time of
and after giving effect to such Facility Increase, the Borrowers shall be in compliance with the
financial covenant set forth in Section 6.13, and (v) that no Default or Event of Default
has occurred and is continuing, or will result from such Facility Increase. The Administrative
Agent shall give to each Lender prompt notice of the Administrative Agent’s receipt of a Notice of
Facility Increase and shall offer such facility to such Lenders, other financial institutions or
other Persons engaged in making, purchasing, holding or investing in bank loans or similar
extensions of credit in the ordinary course of business as the Administrative Agent may determine
in consultation with the Borrowers’ Agent (the “Offerees”). Each Offeree shall have until
the second Business Day preceding the Facility Increase Effective Date to commit in writing to all
or a portion of the Facility Increase. In the event that the Offerees deliver commitments with
respect to such Facility Increase in an amount in excess of the Facility Increase Amount, then the
Administrative Agent shall allocate the Facility Increase to the Offerees committing to the
Facility Increase on any basis the Administrative Agent determines is appropriate in consultation
with the Borrowers’ Agent. On the Facility Increase Effective Date, (A) each Person committing to
a portion of such Facility Increase that is not a Lender shall execute an assumption agreement
satisfactory to the Administrative Agent and satisfying the requirements of Section
9.04(b)(i)(C) pursuant to which such Person agrees to be bound by the terms of this Agreement
as a Lender, (B) the Total Commitment will be increased by the Facility Increase Amount, (C) the
Commitment of each Lender (including any Person executing an assumption agreement under clause
(A) of this sentence) will be increased in accordance with the allocations determined by the
Administrative Agent, and (D) each Lender (including any Person executing an assumption agreement
under clause (A) of this sentence), after giving effect to such Facility Increase, shall
purchase or sell the Loans and Letter of Credit Exposure held by it from or to the other Lenders,
as directed by the Administrative Agent, such that, after giving effect to such purchases and
sales, each Lender holds its Commitment

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Percentage of the outstanding Loans and Letter of Credit
Exposure. In the event the commitments of the Offerees in respect of such Facility Increase are
less than the Facility Increase Amount, neither the Lenders nor the Administrative Agent shall have
any obligation to commit to the uncommitted portion of such Facility Increase, and the Borrowers
may elect either to reduce the Facility Increase Amount accordingly or to terminate their request
for a Facility Increase; provided, however, that the Administrative Agent shall use its
commercially reasonable efforts to identify, and make offers to, such additional Offerees as
necessary until it shall receive commitments in an aggregate amount equal to the Facility Increase
Amount. Notwithstanding the foregoing, no Facility Increase shall be effected unless the
conditions set forth in Section 4.02 (other than clauses (a) and (f)
thereof) are satisfied on the
Facility Increase Effective Date. This Section 2.22 shall supersede any provisions in
Section 9.02 to the contrary.

     ARTICLE 3. REPRESENTATIONS AND WARRANTIES

          In order to induce the Lenders to make Loans and issue and/or participate in Letters of Credit
hereunder, each of the Borrowers jointly and severally represent and warrant as follows:

          SECTION 3.01 Organization and Authority. Each of the Borrowers (i) is duly organized and
validly existing under the laws of the jurisdiction of its organization and is duly qualified as a
foreign organization and is in good standing in each jurisdiction in which the failure to so
qualify would reasonably be expected to have a Material Adverse Effect; (ii) has the requisite
corporate power and authority to effect the transactions contemplated hereby, and by the other Loan
Documents to which it is a party; and (iii) has all requisite organizational power and authority
and the legal right to own, pledge, mortgage and operate its properties, and to conduct its
business as now or currently proposed to be conducted.

          SECTION 3.02 Due Execution. The execution, delivery and performance by each of the
Borrowers of each of the Loan Documents to which it is a party (i) are within the respective
organizational powers of each of the Borrowers, have been duly authorized by all necessary
organizational action including the consent of equity holders where required, and do not (A)
contravene the charter or by-laws or other constituent documents of any of the Borrowers, (B)
violate any law (including, without limitation, the Securities Exchange Act of 1934) or regulation
(including, without limitation, Regulations T, U or X of the Board of Governors of the Federal
Reserve System), or any order or decree of any court or Governmental Authority, (C) conflict with
or result in a breach of, or constitute a default under, any material indenture, mortgage or deed
of trust or any material lease, agreement or other instrument binding on the Borrowers or any of
their properties, or (D) result in or require the creation or imposition of any Lien upon any of
the property of any of the Borrowers other than the Liens granted pursuant to this Agreement or the
other Loan Documents; and (ii) do not require the consent, authorization by or approval of or
notice to or filing or registration with any Governmental Authority, other than (x) any actions
required outside of the United States (with respect to Collateral located outside of the United
States or Collateral consisting of stock of foreign issuers) and (y) actions required under the
Federal Assignment of Claims Act of 1940 in order to perfect the security interests of the
Administrative Agent in the Collateral. This Agreement has been duly executed and delivered by
each of the Borrowers. This Agreement is, and each of the other Loan Documents to which any of the
Borrowers is or will be a party, when delivered hereunder or

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thereunder, will be, a legal, valid
and binding obligation of each Borrower party thereto enforceable against such Borrower, in
accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors’ rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law.

          SECTION 3.03 Statements Made. The information that has been delivered in writing by any of
the Borrowers to the Administrative Agent in connection with any Loan Document, and any financial
statement delivered pursuant hereto or thereto (other than to the extent that any such statements
constitute Projections), taken as a whole and in light of the circumstances in which made, as of
the date of delivery of such information or financial statement (other than Projections), contains
no untrue statement of a material fact and does not omit to state a material fact necessary to make
such statements not misleading (for the purpose of clarification, any financial statements that
have been delivered, other than financial statements filed with the SEC and the annual financial
statements delivered or to be delivered pursuant to Section 5.01(a), do not contain notes
that would otherwise be required by GAAP); and, to the extent that any such information constitutes
Projections, such Projections were prepared in good faith on the basis of assumptions, methods,
data, tests and information believed by such Borrower to be reasonable at the time such Projections
were furnished. It is understood by the Administrative Agent and the Lenders that all the
Projections may not prove to be correct, that actual future financial performance may vary from the
Projections and that nothing contained in this Section 3.03 shall be construed as a
warranty or guarantee of future financial performance.

          SECTION 3.04 Financial Statements. The Borrowers have furnished the Administrative Agent
with copies of, or have provided the Administrative Agent with an electronic link to the copies
that have been made available through their website or that have been filed with the SEC via EDGAR,
the unaudited consolidated financial statements of the Borrowers for the most recent Fiscal Quarter
ended at least fifty (50) days prior to the Closing Date (unless such Fiscal Quarter is the fourth
Fiscal Quarter, in which case the Borrowers shall have delivered such financial statements for the
Fiscal Quarter ended immediately prior thereto) and the audited consolidated financial statements
of the Borrowers for the most recent Fiscal Year ended at least one hundred and five (105) days
prior to the Closing Date. Subject to any qualifications set forth therein, (i) such financial
statements present fairly the financial condition and results of operations of the Borrowers and
their Subsidiaries on a consolidated basis as of such date and for such period, (ii) such balance
sheets and any notes thereto disclose all liabilities, direct or contingent, of the Borrowers as of
the dates thereof required to be disclosed by GAAP and (iii) such financial statements were
prepared in a manner consistent with GAAP. No event that had a Material Adverse Effect has
occurred since December 31, 2005.

          SECTION 3.05 Real Property. As of the Closing Date, Schedule 3.05 sets forth a
correct and complete list of all material real Property owned or leased by each Borrower. No
material default by any Borrower under any lease or sublease related to any leased or subleased
real Property set forth on Schedule 3.05 exists and, to the knowledge of the Borrowers, no
material default by any other party to any such lease or sublease exists. Except as set forth on
Schedule 3.05, each of the Borrowers has good and indefeasible title to, or valid leasehold
interests in, all of its material real and personal Property, free of all Liens other than those
permitted by Section 6.01.

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          SECTION 3.06 Liens. Except for Liens existing on the Closing Date as reflected on
Schedule 3.06, there are no Liens of any nature whatsoever on any assets of any Borrower
other than: (i) Permitted Liens; (ii) other Liens permitted pursuant to Section 6.01; and
(iii) Liens in favor of the Administrative Agent and the Lenders. No Borrower is a party to any
contract, agreement, lease or instrument the performance of which, either unconditionally or upon
the happening of an event, will result in or require the creation of a Lien on any assets of any
Borrower or otherwise result in a violation of this Agreement other than (x) the Liens granted to
the Administrative Agent and the Lenders as provided for in this Agreement and (y) the Liens
granted to the “Collateral Agent” (as defined in the Term Loan Agreement) as provided for in the
Term Loan Agreement, which Liens are subject to the terms of the Intercreditor Agreement.

          SECTION 3.07 Compliance with Law. Except as set forth on Schedule 3.07, no
Borrower is, to the best of its knowledge, in violation of any law (except those relating to
Environmental Laws set forth on Schedule 3.21), rule or regulation, or in default with
respect to any judgment, writ, injunction or decree of any Governmental Authority the violation of
which, or a default with respect to which, would have a Material Adverse Effect.

          SECTION 3.08 Insurance. All policies of insurance of any kind or nature owned by or issued
to any of the Borrowers, including, without limitation, policies of life, fire, theft, product
liability, public liability, property damage, other casualty, employee fidelity, workers’
compensation, employee health and welfare, title, property and liability insurance, are in full
force and effect and are of a nature and provide such coverage as is customarily carried by
companies of the size and character of such Borrowers.

          SECTION 3.09 Use of Proceeds. The proceeds of the Loans are being used by the Borrowers in
accordance with, and in a manner and subject to the limitations described in, Section 5.12.

          SECTION 3.10 Litigation. Other than as set forth on Schedule 3.10, there are no
actions, suits, proceedings or investigations pending or, to the actual knowledge of any of the
Borrowers, threatened against or affecting any Borrower or any of its respective properties, before
any court or governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which would be reasonably likely to have a Material Adverse Effect.

          SECTION 3.11 Investment and Holding Company Status. None of the Borrowers nor any of their
Subsidiaries is (a) an “investment company” as defined in, or subject to regulation under, the
Investment Company Act of 1940 or (b) a “holding
company” as defined in, or subject to regulation under, the Public Utility Holding Company Act of
1935.

          SECTION 3.12 Taxes. Except as set forth on Schedule 3.12, each of the Borrowers
has timely filed or caused to be filed all federal and all state and other material Tax returns and
reports required by law to have been filed by it and has paid or caused to be paid all federal and
all state and other material Taxes required by law to have been paid by it, except Taxes that are
being contested in good faith by appropriate proceedings and for which such Borrower has set aside
on its books adequate reserves. Except as set forth on Schedule 3.12, no

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Tax Liens have
been filed, and no claims are being asserted with respect to any such Taxes except claims that are
being contested in accordance with Section 5.04.

          SECTION 3.13 ERISA. No Termination Event has occurred that, when taken together with all
other such Termination Events for which liability is reasonably expected to occur, could reasonably
be expected to result in a Material Adverse Effect. The present value of all accumulated benefit
obligations under each Plan (excluding the Terminated Plans) as of December 31, 2004, or the date
of the most recent audited financial statements reflecting such amounts (based on the assumptions
used for purposes of Statement of Financial Accounting Standards No. 87), did not exceed by more
than $20,000,000 the fair market value of the assets of such Plan, and the present value of all
accumulated benefit obligations of all underfunded Plans did not exceed by more than $20,000,000
the fair market value of the assets of all such underfunded Plans.

          SECTION 3.14 Disclosure. Except as disclosed in the Form 10-Q filed with the SEC by the
Parent and KACC on May 10, 2006, or in other periodic reports filed with the SEC after May 10,
2006, and prior to July 6, 2006, the Borrowers have disclosed to the Administrative Agent all
agreements, instruments and corporate or other restrictions to which the Borrowers or any of their
Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect. No Lien has arisen with
respect to any Plan.

          SECTION 3.15 Material Agreements. As of the Closing Date, all material agreements and
contracts to which any Borrower is a party or is bound as of the date of this Agreement and which,
under applicable law would be required to be filed with the SEC are either: (a) filed as exhibits
to, or incorporated by reference in, the last Form 10-K or Form 10-Q prior to the Closing Date, or
any Form 10-K, Form 10-Q or 8-K thereafter, in each case filed with the SEC by the Parent and/or
KACC, or (b) are listed on Schedule 3.15. No Borrower is in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions contained in (x) any
material agreement to which it is a party or (y) any agreement or instrument evidencing or
governing Indebtedness.

          SECTION 3.16 Reportable Transaction. The Borrowers do not intend to treat the Borrowings or issuances of Letters of Credit and
related transactions as being a “reportable transaction” (within the meaning of Treasury Regulation
Section 1.6011-4). In the event the Borrowers determine to take any action inconsistent with such
intention, the Borrowers’ Agent will promptly notify the Administrative Agent thereof.

          SECTION 3.17 Capitalization and Subsidiaries. Schedule 3.17 sets forth (a) a
correct and complete list of the name and relationship to each Borrower of each and all of such
Borrower’s Significant Subsidiaries, (b) a true and complete listing of each class of each of the
authorized Equity Interests of each Borrower, of which all of such issued shares are validly
issued, outstanding, fully paid and non-assessable, and owned beneficially and of record by the
Persons identified on Schedule 3.17, and (c) the type of entity of each of the Borrowers
and each of their Significant Subsidiaries. All of the issued and outstanding Equity Interests
owned by any Borrower has been (to the extent such concepts are relevant with respect to such
ownership interests) duly authorized and issued and is fully paid and nonassessable. The
Borrowers’ Agent

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may amend from time to time Schedule 3.17 (by delivery of a revised
Schedule 3.17 to the Agent) upon the sale of any Significant Subsidiary which is permitted
in this Agreement.

          SECTION 3.18 Common Enterprise. Each Borrower expects to derive benefit (and its board of
directors or other governing body has determined that it may reasonably be expected to derive
benefit), directly and indirectly, from (i) successful operations of each of the other Borrowers
and (ii) the credit extended by the Lenders to the Borrowers hereunder, both in their separate
capacities and as members of the group of companies. Each of the Borrowers has determined that
execution, delivery, and performance of this Agreement and any other Loan Documents to be executed
by such Borrower is within its purpose, will be of direct and indirect benefit to such Borrower,
and is in its best interest.

          SECTION 3.19 Location of Bank Accounts. Schedule 3.19, as amended from time to
time by the Borrowers’ Agent upon any change to the accounts maintained by any Borrower (by
delivery of a revised Schedule 3.19 to the Agent), sets forth initially, as of the Closing
Date, a complete and accurate list of all deposit, checking and other bank accounts, all securities
and other accounts maintained with any broker dealer and all other similar accounts maintained by
any Borrower, together with a description thereof (i.e., the bank or broker dealer at which such
deposit or other account is maintained and the account number and the purpose thereof). As of the
Closing Date, no Borrower maintains any other accounts other than those set forth on Schedule
3.19.

          SECTION 3.20 Labor Disputes. Except as set forth on Schedule 3.20, as of the date
of this Agreement (a) there is no collective bargaining agreement or other labor contract covering
employees of the Borrowers, (b) no such collective bargaining agreement or other labor contract is
scheduled to expire during the term of this Agreement, (c) to the knowledge of any of the
Borrowers, no union or other labor organization is seeking to organize, or to be recognized as, a
collective bargaining unit of
employees of any of the Borrowers or any of their Subsidiaries or for any similar purpose, and (d)
there is no pending or, to the knowledge of any of the Borrowers, threatened, strike, work
stoppage, material unfair labor practice claim, or other material labor dispute against or
affecting the Borrowers or their Subsidiaries or their employees.

          SECTION 3.21 Environmental Matters.

               (a) Except as set forth on Schedule 3.21(a):

                    (i) all facilities and Property (including underlying groundwater) owned,
operated, or leased by the Borrowers or any of their Subsidiaries have been, and
continue to be, in material compliance with all Environmental Laws;

                    (ii) there are no pending or, to the knowledge of the Borrowers after due
inquiry, threatened

                         (A) claims, complaints, notices, or requests for information
received by any of the Borrowers or any of their Subsidiaries, from
any Governmental Authority, or from

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any Person which has commenced a
legal proceeding against any of the Borrowers or any of their
Subsidiaries, with respect to any alleged violation of any
Environmental Law, or

                         (B) complaints, notices, or inquiries to any of the Borrowers
or any of their Subsidiaries, from any Governmental Authority, or
from

any Person which has commenced a legal proceeding against any
of the Borrowers or any of their Subsidiaries, regarding potential
liability under any Environmental Law;

                    (iii) there have been no Releases of Hazardous Materials at, on, into or under
any Property now or previously owned, operated, or leased by any of the Borrowers or
any of their Subsidiaries that, singly or in the aggregate, could reasonably be
expected to have a Material Adverse Effect;

                    (iv) the Borrowers and their Subsidiaries have been issued and are in material
compliance with all permits, certificates, approvals, licenses, and other
authorizations required by any applicable Environmental Law relating to any
environmental matters and necessary for their businesses;

                    (v) no Property now or previously owned, operated, or leased by any of the
Borrowers or any of their Subsidiaries is listed or, to the knowledge of any of the
Borrowers, proposed for listing (with respect to owned Property only) on the
National Priorities List pursuant to CERCLA or in the
CERCLIS, or, to the knowledge of any of the Borrowers, on any similar state
list of sites requiring investigation or clean-up;

                    (vi) there are no underground storage tanks (as defined in 40 C.F.R. §280.1, as
the same may be amended, modified, supplemented, or replaced from time to time),
active or abandoned, including petroleum storage tanks, on or under any Property now
or previously owned or leased by any of the Borrowers or any of their Subsidiaries
that, singly or in the aggregate, could reasonably be expected to have a Material
Adverse Effect;

                    (vii) none of the Borrowers nor any of their Subsidiaries has, to the knowledge
of any
Borrower, transported or arranged for the transportation of any Hazardous
Material to any location which is listed or proposed for listing on the National
Priorities List pursuant to CERCLA, on the CERCLIS or any similar state list or
which is the subject of federal, state, or local enforcement actions or other
investigations that could reasonably be expected to result in material claims
against any of the Borrowers or any of their Subsidiaries for any remedial work,
damage to natural resources, or personal injury, including claims under CERCLA; and

                    (viii) there are no polychlorinated biphenyls or friable asbestos present at
any real Property now or previously owned or leased by any of

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the Borrowers or any
of their Subsidiaries that, singly or in the aggregate, could reasonably be expected
to have a Material Adverse Effect.

               (b) Schedule 3.21(b) identifies all sites at which any of the Borrowers or any of
their Subsidiaries are currently conducting cleanup or remediation or an investigation as to
whether such cleanup or remediation is warranted or required.

          SECTION 3.22 Confirmation Order; District Court Order. The Confirmation Order has been
entered by the Bankruptcy Court, is in full force and effect and has been affirmed by the District
Court Order. The District Court has entered the District Court Order, such District Court Order is
in full force and effect and the time to appeal such District Court Order or to seek review,
rehearing or certiorari with respect to such District Court Order has expired, and no appeal or
petition for review, rehearing or certiorari with respect to such order of the District Court is
pending other than the Insurer Appeals and the McNeil Appeal, none of which will adversely affect
the transactions contemplated hereby or have a Material Adverse Effect.

          SECTION 3.23 Consummation Date. All conditions to the occurrence of the Consummation Date
have occurred or have been waived with the consent of the Administrative Agent and otherwise in
accordance with the terms of the Reorganization Plan, and the Consummation Date has occurred or
shall occur concurrently with the closing of this Agreement.

          SECTION 3.24 Solvency. (a) Immediately after the consummation of the transactions to occur on the date hereof,
including the Restructuring Transactions and all distributions to be made on or about the
Consummation Date in accordance with the Reorganization Plan and the incurrence of Indebtedness
under the Term Loan, and immediately following the making of each Borrowing and the issuance of
each Letter of Credit, if any, made hereunder and after giving effect to the application of the
proceeds of such Borrowing or such issuance of a Letter of Credit, (i) the fair value of the assets
of each Borrower, at a fair valuation, will exceed the debts and liabilities, subordinated,
contingent or otherwise, of each such Borrower; (ii) the present fair saleable value of the
Property of each Borrower is not less than the amount that will be required to pay the probable
liability of such Borrower on its debts and other liabilities, subordinated, contingent or
otherwise, as such debts and other liabilities become absolute and matured; (iii) each Borrower
will be able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts
and liabilities become absolute and matured; and (iv) each Borrower will not have unreasonably
small capital with which to conduct the businesses in which it is engaged as such businesses are
now conducted and are proposed to be conducted after the date hereof. The amount of contingent
liabilities at any time shall be computed as the amount that, in light of all facts and
circumstances existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.

               (b) No Borrower intends to, or believes that it or any of its Subsidiaries will, incur debts
beyond its ability to pay such debts as they mature, taking into account the timing of and amounts
of cash to be received by it or any such Subsidiary and the timing of the amounts of cash to be
payable on or in respect of its Indebtedness or the Indebtedness of any such Subsidiary.

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          SECTION 3.25 Security Interest in Collateral. The provisions of the Security and Pledge
Agreement and the other Loan Documents create legal and valid Liens on all the Collateral in favor
of the Administrative Agent, for the benefit of the Administrative Agent and the Secured Parties,
and such Liens constitute perfected and continuing Liens on the Collateral, securing the Secured
Obligations, enforceable against the applicable Borrower and having priority over all other Liens
on the Collateral except in the case of (a) Liens permitted under Section 6.01, to the
extent any such Permitted Liens would have priority over the Liens in favor of the Administrative
Agent pursuant to any applicable law or any applicable agreement that is permitted hereunder, (b)
Liens perfected only by possession (including possession of any certificate of title) to the extent
the Administrative Agent has not obtained or does not maintain possession of such Collateral, and
(c) Liens on real Property perfected only by recordation of a mortgage or deed of trust to the
extent the Administrative Agent does not elect to require such a recorded instrument pursuant to
Section 4.01(e) hereof.

     ARTICLE 4. CONDITIONS OF LENDING

          SECTION 4.01 Conditions Precedent to Initial Loans and Initial Letters of Credit. The obligation of the Lenders to make the initial Loans or the Issuing Bank to issue the initial
Letter of Credit, whichever may occur first, is subject to the satisfaction (or waiver in
accordance with Section 9.02) of the following conditions precedent:

               (a) Supporting Documents. The Administrative Agent shall have received for each of
the Borrowers:

                    (i) a copy of such entity’s certificate of incorporation or formation, as
amended, certified as of a recent date by the Secretary of State of the state of its
incorporation or formation;

                    (ii) a certificate of such Secretary of State, dated as of a recent date, as to
the good standing of and payment of taxes by that entity and as to the charter
documents on file in the office of such Secretary of State;

                    (iii) a certificate of the Secretary or an Assistant Secretary of that entity
dated the date of the initial Loans or the initial Letter of Credit hereunder,
whichever first occurs, and certifying (A) that attached thereto is a true and
complete copy of the by-laws or limited liability company agreement of that entity
as in effect on the date of such certification, (B) that attached thereto is a true
and complete copy of resolutions adopted by the Board of Directors or managers of
that entity authorizing the Borrowings and Letter of Credit extensions hereunder,
the execution, delivery and performance in accordance with their respective terms of
this Agreement, the Loan Documents and any other documents required or contemplated
hereunder or thereunder and the granting of the security interest in the Letter of
Credit Account and other Liens contemplated hereby, (C) that the certificate of
incorporation or formation of that entity has not been amended since the date of the
last amendment thereto indicated on the certificate of the Secretary of State
furnished pursuant to clause (i) above and (D) as to the incumbency and specimen
signature of each officer or manager of that

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entity executing this Agreement and the
Loan Documents or any other document delivered by it in connection herewith or
therewith (such certificate to contain a certification by another officer or manager
of that entity as to the incumbency and signature of the officer signing the
certificate referred to in this clause (iii));

                    (iv) (A) a copy of the Reorganization Plan, substantially in the form of
Exhibit A-1 and which is in all respects in form and substance satisfactory
to the Administrative Agent and Lenders, and (B) all orders of the Bankruptcy Court
approving the Reorganization Plan, this Agreement, the Commitment Letter and the Fee
Letter, in form and substance acceptable to the Agents and the Lenders; and

                    (v) a copy of the Confirmation Order, substantially in the form of Exhibit
A-2, entered by the Bankruptcy Court and which is in all respects in form and
substance satisfactory to the Administrative Agent and the Lenders and which is in
full force and effect and has been affirmed by the District Court Order; and

                    (vi) a copy of the District Court Order, substantially in the form of
Exhibit A-3, entered by the District Court which affirms the Confirmation
Order and which is in all respects in form and substance satisfactory to the
Administrative Agent and the Lenders and which is in full force and effect and the
time to appeal the District Court Order or to seek review, rehearing or certiorari
with respect to the District Court Order shall have expired and no appeal or
petition for review, rehearing or certiorari with respect to the Confirmation Order
shall be pending other than the Insurer Appeals and the McNeil Appeal.

               (b) Consummation Date. All conditions to the occurrence of the effective date of the
Reorganization Plan shall have occurred or shall have been waived in accordance with the terms of
the Reorganization Plan, and the Consummation Date shall have occurred or shall occur concurrently
with the closing of this Agreement.

               (c) Terms of Restructuring. The Administrative Agent and the Lenders shall be
satisfied with, to the extent not specifically described in the Reorganization Plan, the material
terms of the restructuring of the Borrowers (including, without limitation, changes to the current
composition of the Board of Directors and of senior management and the capital and tax structure of
each Borrower and each of their Significant Subsidiaries).

               (d) Security and Pledge Agreement. Each of the Borrowers shall have duly executed and
delivered to the Administrative Agent a Security and Pledge Agreement in substantially the form of
Exhibit B (the “Security and Pledge Agreement”), pursuant to which each of the
Borrowers shall have granted to the Administrative Agent, for the benefit of the Lenders, a first
priority, perfected security interest in the Collateral (free and clear of all Liens, other than
Permitted Liens and other Liens permitted under the Loan Documents), and shall have (i) filed
appropriately completed and duly executed Uniform Commercial Code financing statements and (ii)
delivered to the Administrative Agent any pledged Collateral required to be delivered thereunder.

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               (e) Mortgages. Each of the Borrowers shall have duly executed and delivered to the
Administrative Agent a Mortgage, substantially in the form of Exhibit H, duly executed by
the applicable Borrower, in or to any real Property listed on Schedule 4.01(e).

               (f) Intercreditor Agreement. Pursuant to the Intercreditor Agreement, the “Lenders”
(as defined in the Term Loan Agreement) shall have agreed to lien subordination terms and
conditions acceptable to the Administrative Agent.

               (g) Cash Management. Each of the Borrowers shall be in compliance with Article
10, including the requirement to deliver tri-party control, blocked account or lockbox
agreements with respect to accounts set forth on Schedule 10.01, in each case, in form and
substance reasonably acceptable to the Administrative Agent.

               (h) Intellectual Property. Each of the Borrowers shall have made arrangements
satisfactory to the Administrative Agent to duly record all appropriate documents in the U.S.
Patent and Trademark Office, the United States Copyright Office, and any applicable domain name
registry, as applicable.

               (i) Repayment of Existing Indebtedness. The Existing Credit Agreement and all
commitments thereunder to lend shall have been terminated, all amounts outstanding thereunder
(other than in respect of Existing Letters of Credit issued thereunder which, as provided in
Section 2.07(k), shall become “Letters of Credit” hereunder) shall have been paid in full
or cash collateralized and all Liens on the assets of the Borrowers or any of their Subsidiaries
securing any obligations thereunder or under any related agreement shall have been permanently
released and the Administrative Agent shall have received evidence satisfactory in form and
substance to it demonstrating such termination, payment and release.

               (j) Opinion of Counsel. The Administrative Agent and the Lenders shall have received
the favorable written opinion of counsel to the Borrowers reasonably acceptable to the
Administrative Agent, dated the date of the initial Loans or the issuance of the initial Letter of
Credit, whichever first occurs, substantially in the form of Exhibit C.

               (k) Fees and Expenses. The Borrowers shall have paid to the Administrative Agent (i)
the then unpaid balance of all accrued and unpaid Fees due under and pursuant to this Agreement and
the Fee Letter, and (ii) all accrued and unpaid legal fees and expenses of the Administrative Agent
that the Borrowers are not otherwise prohibited from paying by an order of the Bankruptcy Court.
The Administrative Agent shall also have received a duly executed and delivered Second Amended and
Restated Fee Letter, substantially in the form of Exhibit J.

               (l) Field Exams, Environmental Reports, Appraisals. The Administrative Agent shall be
satisfied with the results of field examinations. The Borrowers shall have delivered to the
Administrative Agent reasonably

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satisfactory appraisals of the Borrowers’ Inventory and Equipment
and such appraisals shall be from an appraiser selected and engaged by the Administrative Agent,
and prepared on a basis satisfactory to the Administrative Agent, such appraisals to include,
without limitation, information required by applicable law and regulations. The Borrowers shall
have also delivered to the Administrative Agent reasonably satisfactory appraisals, environmental
reports, surveys and title insurance with respect to material real Property to the extent the
Borrowers propose to include such real Property in the Borrowing Base (provided that reasonably
satisfactory appraisals, environmental reports, surveys, and title insurance may be delivered on a
post-closing basis so long as any related real Property is not included in the Borrowing Base until
such reasonably satisfactory appraisals, environmental reports, surveys and title insurance are
received by the Agent).

               (m) Certificates of Insurance. The Borrowers shall have delivered to the
Administrative Agent certificates of insurance reasonably satisfactory to the Administrative Agent
evidencing the existence of all insurance required to be maintained by the Borrowers pursuant to
Section 5.03 of this Agreement.

               (n) Material Consents. The Borrowers shall have delivered to the Administrative Agent
all material consents listed on
Schedule 4.01(n).

               (o) Corporate and Judicial Proceedings. All corporate and judicial proceedings and
all instruments and agreements in connection with the transactions among the Borrowers, the
Administrative Agent and the Lenders contemplated by this Agreement shall be
reasonably satisfactory in form and substance to the Administrative Agent, and the
Administrative Agent shall have received all information and copies of all material documents and
papers, which the Administrative Agent may have reasonably requested in connection therewith, such
documents and papers where appropriate to be certified by proper corporate, governmental or
judicial authorities.

               (p) Information. The Administrative Agent shall have received such information
(financial or otherwise) as may be reasonably requested by the Administrative Agent.

               (q) Projections. The Administrative Agent and the Lenders shall have received a copy
of the initial Projections of the Parent, which Projections shall cover a period commencing on or
prior to the Closing Date and ending December 31, 2008, such Projections shall be satisfactory in
form and substance to the Administrative Agent.

               (r) Compliance with Material Laws and Regulations. The Borrowers shall have granted
the Administrative Agent access to and the right to inspect all reports, audits and other internal
information of the Borrowers relating to environmental matters, and any third party verification of
certain matters relating to compliance with Environmental Laws reasonably requested by the
Administrative Agent, and the Administrative Agent shall be reasonably satisfied (x) that the
Borrowers are in compliance in all material respects with all applicable material laws and
regulations (including but not limited to ERISA (except for such violations as set forth on
Schedule 3.07), margin regulations, bank regulatory limitations and Environmental Laws) and
(y) that the Borrowers have made adequate provision for the costs of maintaining such compliance.

               (s) UCC Searches. The Administrative Agent shall have received UCC searches
(including tax liens and judgments) and patent and trademark searches conducted in the
jurisdictions in which the Borrowers conduct business (dated as of a date reasonably satisfactory
to the Agent), reflecting the absence of Liens and encumbrances on the assets of the

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Borrowers
other than such Liens permitted under the Loan Documents and other Liens as may be satisfactory to
the Administrative Agent.

               (t) Minimum Availability. The Borrowers shall have minimum Availability at closing
(on a pro forma basis after giving effect to the Loans made and the Letters of Credit issued or
deemed issued on the Closing Date) in an amount not less than $75,000,000.

               (u) Funding Account. The Borrowers’ Agent shall have delivered to the Administrative
Agent a notice setting forth the deposit account of the Borrowers (the “Funding Account”)
to which the Lenders are authorized by the Borrowers to transfer the proceeds of any Borrowing
requested or authorized pursuant to this Agreement.

               (v) Closing Documents. The Administrative Agent shall have received all documents
required by Section 4.01 and each item listed on the closing checklist, in each case, each
reasonably satisfactory in form and substance to the Administrative Agent.

          SECTION 4.02 Conditions Precedent to Each Loan and Each Letter of Credit. The obligation of the Lenders to make each Loan and of the Issuing Bank to issue each Letter of
Credit, including the initial Loan and the initial Letter of Credit is subject to the following
conditions precedent:

               (a) Notice. To the extent required by Article 2, the Administrative Agent
shall have received a notice with respect to such borrowing or issuance, as the case may be, as
required by Article 2.

               (b) Representations and Warranties. Either (i) all representations and warranties
contained in this Agreement and the other Loan Documents shall be true and correct in all material
respects on and as of the date of each Borrowing or the issuance, renewal or extension of each
Letter of Credit hereunder with the same effect as if made on and as of such date except to the
extent such representations and warranties expressly relate to an earlier date, in which case they
shall be true and correct in all material respects as of such earlier date, or (ii) if any such
representation and warranty is not true and correct in all material respects, neither the
Administrative Agent nor the Required Lenders shall have determined not to make any Loan or
instructed the Issuing Bank not to issue Letters of Credit as a result of the fact that such
representation or warranty is untrue or incorrect in any material respect.

               (c) No Default. At the time of and immediately after giving effect to such Borrowing
or the issuance, renewal or extension of such Letter of Credit, as applicable, either (i) no
Default shall have occurred and be continuing or (ii) if a Default has occurred and is continuing,
neither the Administrative Agent nor the Required Lenders shall have determined not to make such
Borrowing or instructed the Issuing Bank not to issue such Letter of Credit as a result of such
Default.

               (d) Payment of Fees. The Borrowers shall have paid to the Administrative Agent the
then unpaid balance of all accrued and unpaid Fees then payable under and pursuant to this
Agreement and the letter referred to in Section 2.13.

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               (e) Borrowing Base Certificate. The Administrative Agent shall have received the
timely delivery of the most recent Borrowing Base Certificate required to be delivered hereunder,
substantially in the form of Exhibit E (except that the initial Borrowing Base Certificate
shall be delivered by the Closing Date).

               (f) Availability. After giving effect to any Borrowing or the issuance of any Letter
of Credit, Availability is not less than zero.

The request or deemed request by the Borrowers’ Agent or the Borrowers for, and the acceptance by
any Borrower of, an extension of credit hereunder shall be deemed to be a representation and
warranty by the Borrowers that the conditions specified in this Section 4.02 have been
satisfied or waived at that time. The Administrative Agent may (but shall not be obligated to)
require a duly completed compliance certificate with respect to the foregoing as a condition to
making a Borrowing or requesting the issuance of Letter of Credit.

     ARTICLE 5. AFFIRMATIVE COVENANTS

          From the date hereof and for so long as any Commitment shall be in effect or any Letter of
Credit shall remain outstanding or any amount shall remain outstanding or unpaid under this
Agreement or any other Loan Document, each of the Borrowers agrees, jointly and severally with each
other Borrower, that it will:

          SECTION 5.01 Financial Statements, Reports, etc. In the case of the Borrowers, deliver to
the Administrative Agent:

               (a) on or before the date upon which the Parent’s annual report on Form 10-K is required to be
filed with the SEC (and in any event within one hundred five (105) days after the end of each
Fiscal Year), the Parent’s (i) audited consolidated balance sheet and related statements of income,
stockholders’ equity and cash flows, showing the financial condition of the Parent and its
Subsidiaries on a consolidated basis as of the close of such Fiscal Year and the results of their
operations during such year, such consolidated financial statements to be audited for the Parent
and its Subsidiaries by Deloitte & Touche LLP or other independent public accountants of recognized
national standing and accompanied by an audit opinion of such accountants (without (i) in the case
of Fiscal Years ending on or after December 31, 2006, a “going concern” or like qualification,
exception, or explanatory paragraph and (ii) in the case of any Fiscal Year, without any
qualification or exception as to the scope of such audit) and to be certified by a Financial
Officer of the Parent to the effect that such consolidated financial statements fairly present the
financial condition and results of operations of the Parent and its Subsidiaries on a consolidated
basis in accordance with GAAP and (ii) unaudited consolidating balance sheet and related unaudited
consolidating statements of income as of the close of the fourth Fiscal Quarter and as of the close
of such Fiscal Year, all such consolidating financial statements showing separately the financial
condition of the Parent and its Significant Subsidiaries; provided, however, that
any document required to be delivered pursuant to this Section 5.01(a) shall be deemed to
have been furnished to the Administrative Agent if the Borrowers have provided the Administrative
Agent with a link to such documents that have been made available through their website or that
have been filed with the SEC via EDGAR;

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               (b) on or before the date upon which the Parent’s quarterly report on Form 10-Q is required to
be filed with the SEC (and in any event within fifty (50) days after the end of each of the first
three Fiscal Quarters of the Parent), the Parent’s (i) unaudited consolidated balance sheets and
related unaudited statements of income, stockholders’ equity and cash flows, showing the financial
condition of the Parent and its Subsidiaries on a consolidated basis as of the close of such Fiscal
Quarter and the results of their operations during such Fiscal Quarter and the then elapsed portion
of the Fiscal Year, certified by a Financial Officer of the Parent as fairly presenting the
financial condition and results of operations of the Parent and its Subsidiaries on a consolidated
basis in accordance with GAAP, subject to normal year-end audit adjustments and the absence of
footnotes and (ii) unaudited consolidating balance sheet and related unaudited consolidating
statements of income as of the close of the such Fiscal Quarter, all such consolidating financial
statements showing separately the financial condition of the Parent and its Significant
Subsidiaries; provided, however, that any document required to be delivered
pursuant to this Section 5.01(b) shall be deemed to have been furnished to the
Administrative Agent if the Borrowers have provided the Administrative Agent with a link to
such documents that have been made available through their website or that have been filed with the
SEC via EDGAR;

               (c) commencing with the first Fiscal Month following the Closing Date as soon as available,
but no more than 30 days after the end of each month, the unaudited consolidated balance sheet as
of the close of such Fiscal Month and related unaudited consolidated statements of income and cash
flow of the Parent and its Subsidiaries during such month and the year to date period;

               (d) (i) concurrently with any delivery of financial statements under paragraphs (a),
(b) and (c) above, a certificate of a Financial Officer certifying that such
financial statements fairly present the financial condition and results of operations of the Parent
and its Subsidiaries in accordance with GAAP, subject to normal year-end audit adjustments and the
absence of footnotes, (ii) concurrently with any delivery of financial statements under
paragraph (a) above, a certificate in accordance with prevailing professional
standards (which certificate may be limited to accounting matters and disclaim responsibility for
legal interpretations) of the accountants auditing the consolidated financial statements delivered
under paragraph (a) above certifying that, in the course of the regular audit of the
business of the Parent and its Subsidiaries, such accountants have obtained no knowledge that a
Default or Event of Default has occurred and is continuing or if, in the opinion of such
accountants, a Default or Event of Default has occurred and is continuing, specifying the nature
thereof and all relevant facts with respect thereto;

               (e) as soon as available, but not more than sixty (60) days after the end of each Fiscal Year,
commencing with the Fiscal Year ending December 31, 2006, a copy of the plan and forecast
(including a projected consolidated balance sheet, income statement and funds flow statement) of
the Parent on a consolidated basis for each month of the then current Fiscal Year (the
“Projections”) in form reasonably satisfactory to the Administrative Agent;

               (f) as soon as available but in any event within fifteen (15) days of the end of each calendar
month, and during a Dominion Trigger Event more frequently as needed to

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redetermine Availability,
but in any event not more frequently than weekly, as of the period then ended:

                    (i) a detailed aging of the Borrowers’ Accounts (A) aged by invoice date and
(B) reconciled to the Borrowing Base Certificate delivered as of such date, prepared
in a manner reasonably acceptable to the Administrative Agent, together with a
summary specifying the name, address, and balance due for each Account Debtor;

                    (ii) a schedule detailing the Borrowers’ Inventory, in form satisfactory to the
Administrative Agent, by location (showing Inventory in transit, any Inventory
located with a third party under any consignment, bailee arrangement, or warehouse
agreement), by class (raw material, work-in-process and finished goods), which
Inventory shall be valued at the lower of cost
(determined on a first-in, first-out basis) or market and reconciled to the
Borrowing Base Certificate delivered as of such date;

                    (iii) a summary of categories of Accounts excluded from Eligible Accounts
Receivable and Eligible Inventory; and

                    (iv) a reconciliation of the Borrowers’ Accounts and Inventory between the
amounts shown in the applicable Borrower’s general ledger and financial statements
and the reports delivered pursuant to clauses (i) and (ii) above;

               (g) such other information respecting any Borrower or any of their Subsidiaries as the
Administrative Agent may from time to time reasonably request;

               (h) within thirty (30) days of each December 31, an updated customer list for the Borrowers
and their Subsidiaries, which list shall state the customer’s name, mailing address and phone
number and shall be certified as true and correct by a Financial Officer of the Parent;

               (i) within thirty (30) days following the first Business Day of each March and September, a
certificate of good standing for each Borrower from the appropriate governmental officer in its
jurisdiction of incorporation, formation, or organization, as applicable;

               (j) promptly after the same become publicly available, copies of all periodic and other
reports, proxy statements and other materials filed by the Borrowers with the SEC (provided
that any such documents shall be deemed delivered on the date Borrowers provide to
Administrative Agent a link to where such documents were filed electronically via EDGAR or such
documents have been made publicly available on their website), or any governmental authority
succeeding to any of or all the functions of said commission, or with any national securities
exchange, as the case may be;

               (k) promptly upon receipt thereof, any and all default notices received under or with respect
to any leased location or public warehouse where Collateral is located (which shall be delivered
within two Business Days after receipt thereof);

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               (l) promptly upon any Borrower obtaining knowledge thereof or having reason to know, notice of
a material portion of Eligible Accounts Receivable, Eligible Equipment, Eligible Inventory or
Eligible Real Estate, as the case may be, becoming ineligible under the Borrowing Base;

               (m) as soon as available and in any event within thirty (30) days after the Borrowers or any
of their ERISA Affiliates knows that any Termination Event has occurred with respect to any Plan, a
statement of a Financial Officer of such Borrower describing the full details of such Termination
Event and the action, if any, which such Borrower or such ERISA Affiliate is required or proposes
to take with respect thereto, together with any notices required or proposed to be given to or
filed with or by such Borrower, the ERISA Affiliate, the PBGC, a Plan participant or the Plan
administrator with respect thereto;

               (n) promptly and in any event within ten (10) days after receipt thereof by any Borrower or
any ERISA Affiliate from a Multiemployer Plan sponsor, a copy of each notice received by any
Borrower or any ERISA Affiliate concerning (A) the imposition of Withdrawal Liability by a
Multiemployer Plan, (B) the determination that a Multiemployer Plan is, or is expected to be, in
reorganization within the meaning of Title IV of ERISA, (C) the termination of a Multiemployer Plan
within the meaning of Title IV of ERISA, or (D) the amount of liability incurred, or which may be
incurred, by any Borrower or any ERISA Affiliate in connection with any event described in clause
(A), (B) or (C) above;

               (o) promptly and in any event within ten (10) days after receipt thereof by such Borrower or
any of its ERISA Affiliates from the PBGC copies of each notice received by the Borrowers or any
such ERISA Affiliate of the PBGC’s intention to terminate any Single Employer Plan of any Borrower
or such ERISA Affiliate other than the Terminated Plans or to have a trustee appointed to
administer any such Plan;

               (p) within ten (10) days after notice is given or required to be given to the PBGC under
Section 302(f)(4)(A) of ERISA of the failure of any Borrower or any of their ERISA Affiliates to
make timely payments to a Plan other than such payments as are required to be made within 31 days
after the effective date of the Settlement Agreement, a copy of any such notice filed and a
statement of a Financial Officer of such Borrower setting forth (A) sufficient information
necessary to determine the amount of any lien under Section 302(f)(3), (B) the reason for the
failure to make the required payments and (C) the action, if any, which such Borrower or any of its
ERISA Affiliates proposed to take with respect thereto;

               (q) promptly upon obtaining knowledge thereof, notice of any written notice by the holder of
any Equity Interests of any Borrower or the holder of any Indebtedness of any Borrower in excess of
$20,000,000 that any default exists with respect thereto or that any Borrower is not in compliance
with the terms thereof;

               (r) promptly upon receipt thereof, any notice of any governmental investigation or any
litigation commenced or threatened against any Borrower that could reasonably be expected to have a
Material Adverse Effect;

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               (s) promptly upon any Borrower obtaining knowledge thereof, notice of any Lien (other than
Permitted Liens and other Liens permitted under the Loan Documents) or any claim made or asserted
against Collateral having a value in excess of $5,000,000;

               (t) promptly upon the commencement thereof, notice of any proceedings with respect to any Tax,
fee, assessment, or other governmental charge in excess of $5,000,000;

               (u) prior to the opening thereof, notice of any new deposit account by any Borrower with any
bank or other financial institution;

               (v) promptly upon obtaining knowledge thereof, notice of any loss, damage, or destruction to
Collateral having a book value of $5,000,000 or more, whether or not covered by insurance;

               (w) immediately after any Borrower obtaining knowledge thereof, notice of any pending strike,
work stoppage, unfair labor practice claim, or other labor dispute affecting any Borrower or any of
its Subsidiaries in a manner which could reasonably be expected to have a Material Adverse Effect;
and

               (x) promptly upon obtaining knowledge thereof, notice of any other development that results
in, or could reasonably be expected to result in, a Material Adverse Effect.

With respect to any report, balance sheet, statement, certificate, plan, forecast, schedule,
summary, notice or other document delivered by the Borrowers to the Administrative Agent pursuant
to this Section, the Administrative Agent shall deliver each such report, balance sheet,
statement, certificate, plan, forecast, schedule, summary, notice or other document to the Lenders
by complying with the requirements contained in Section 9.01 or by posting such document to
Intralinks or an equivalent means of electronic delivery to which the Lenders have access. Each
notice delivered under clauses (o) through (x) of this Section shall be
accompanied by a statement of a Financial Officer or other executive officer of the Parent setting
forth the details of the event or development requiring such notice and any action taken or
proposed to be taken with respect thereto.

          SECTION 5.02 Corporate Existence. Preserve and maintain in full force and effect all
governmental rights, privileges, qualifications, permits, licenses and franchises necessary or
desirable in the normal conduct of its business except (i) if (A)in the reasonable business
judgment of the Parent, it is in the best economic interest of the Borrowers taken as a whole not
to preserve and maintain such rights, privileges, qualifications, permits, licenses and franchises,
and (B) such failure to preserve the same could not, in the aggregate, reasonably be expected to
have a Material Adverse Effect on the operations, business, properties, assets, prospects or
financial condition of the Borrowers, taken as a whole, and (ii) as otherwise permitted in
connection with sales of assets permitted by Section 6.09.

          SECTION 5.03 Insurance. Maintain with financially sound and reputable carriers acceptable
to the Administrative Agent in its Permitted Discretion (including, consistent with past practice,
insurance companies affiliated with the Parent), insurance with respect to their

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Properties and
business (including business interruption insurance, fire insurance and public liability insurance)
in such amounts, of such character and against such risks acceptable to the Administrative Agent in
its Permitted Discretion and as are usually maintained by companies engaged in the same or similar
business or having comparable properties, and in any case having a coverage which is not materially
less than the insurance of such type maintained by the Borrowers on the date of this Agreement,
provided that no Borrower will use or permit any property to be used in any manner which might
render inapplicable any such insurance coverage; provided, however, that in the
event such proceeds are received during a Covenant Trigger Event, all such proceeds shall be
applied in accordance with Section 2.12(b)(iv). All property insurance covering Collateral
maintained by the Borrowers shall name the Administrative Agent as sole loss payee. All liability
insurance maintained by the Borrowers with respect to occurrences arising out of or relating to the
Collateral shall name the Administrative Agent as additional insured. All such property and
liability insurance shall further provide for at least thirty (30) days’ prior written notice (ten
(10) days’ prior written notice with respect to cancellation for non-payment of premium or at the
request of the insured) to the Administrative Agent of the cancellation or substantial modification
thereof.

          SECTION 5.04 Obligations and Taxes. With respect to each Borrower, pay all its material
obligations promptly and in accordance with their terms and pay and discharge promptly all material
Taxes imposed upon it or upon its income or profits or in respect of its property, before the same
shall become delinquent, as well as all material lawful claims for labor, materials and supplies or
otherwise which, if unpaid, would become a Lien or charge upon such properties or any part thereof
(other than a Permitted Lien); provided, however, that no Borrower shall be
required to pay and discharge or to cause to be paid and discharged any such obligation, Tax or
claim to the extent that (i) it is being contested in good faith by appropriate proceedings, (ii)
adequate reserves for it have been set aside on the books of the Borrowers, and (iii) the failure
to make payment pending such contest could not reasonably be expected to result in a Material
Adverse Effect.

          SECTION 5.05 Notice of Event of Default, etc. Promptly but no later than five (5) Business
Days after any of the Borrowers has knowledge of a Default or an Event of Default, the Borrowers’
Agent shall give to the Administrative Agent notice in writing of such Default or Event of Default.

          SECTION 5.06 Access to Books and Records. Maintain or cause to be maintained at all times
true and complete books and records in accordance with GAAP of the financial operations of the
Borrowers; and provide the Administrative Agent and its representatives and advisors access to all
such books and records as well as any appraisals of the Collateral during regular business hours,
in order that the Administrative Agent may upon reasonable prior notice examine and make abstracts
from such books, accounts, records, appraisals and other papers for the purpose of verifying the
accuracy of the various reports delivered by the Borrowers to the Administrative Agent or the
Lenders pursuant to this Agreement or for otherwise ascertaining compliance with this Agreement;
and at any reasonable time and from time to time during regular business hours, upon reasonable
notice and with reasonable frequency, permit the Administrative Agent and any agents or
representatives (including, without limitation, appraisers) thereof to visit the properties of the
Borrowers and to

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conduct examinations of and to monitor the Collateral held by the Administrative
Agent, in each case at the expense of the Borrowers.

          SECTION 5.07 Borrowing Base Certificate. Furnish to the Administrative Agent as soon as
available and in any event on or before the 15th day of each month, a Borrowing Base Certificate as
of the last day of the immediately preceding month, or on a more frequent basis during a Dominion
Trigger Event as needed to redetermine Availability, but in any event not more frequently than
weekly.

          SECTION 5.08 Collateral Monitoring and Review. At any time upon the request of the
Administrative Agent or the Required Lenders through the Administrative Agent, permit the
Administrative Agent or professionals (including, without limitation, internal and third-party
consultants, accountants and appraisers) retained by the Administrative Agent or its professionals
to conduct: evaluations of the Borrowers’ practices in the computation of the Borrowing Base and
appraisals of the real Property and Equipment included in the Borrowing Base, provided
that, if no Event of Default has occurred and is continuing and if no Covenant Trigger
Event has occurred and is continuing, one appraisal per calendar year shall be at the sole expense
of the Borrowers (including all reasonable fees and expenses in connection therewith)
provided, further that the Borrowers’ Agent may request that the Administrative Agent order
appraisals at the sole expense of the Borrowers of the real Property included in the Borrowing Base
twice prior to the Termination Date (with the amount available under the Borrowing Base in
connection with the real Property being adjusted according to the results of such appraisals), (the
reasonable fees and expenses in connection with such evaluations and appraisals, the
“Collateral Monitoring Fees”). In connection with any collateral monitoring or review and
appraisal relating to the computation of the Borrowing Base, the Borrowers shall make such
adjustments to the Borrowing Base as the Administrative Agent shall reasonably require in its
Permitted Discretion based upon the terms of this Agreement and results of such collateral
monitoring, review or appraisal.

          SECTION 5.09 Projections. Make its Financial Officers available to discuss the Borrowers’
Projections (copies of which have heretofore been delivered to the Administrative Agent and the
Lenders pursuant to Section 4.01(q) or 5.01(e) (as applicable)) with the
Administrative Agent and/or the Lenders upon the Administrative Agent’s reasonable request.

          SECTION 5.10 Maintenance of Properties and Intellectual Property Rights. (a) Keep and
maintain all property material to the conduct of its business in good working order and condition,
ordinary wear and tear excepted, and (b) obtain and maintain in effect at all times all material
intellectual property rights, licenses and permits, which are necessary for it to own its property
or conduct its business as currently conducted and not dispose of, grant, or permit to lapse any
rights to any material intellectual property except as otherwise expressly permitted hereunder.

          SECTION 5.11 Compliance with Laws. Comply in all material respects with all laws (except
those relating to Environmental Laws, which compliance is subject to Section 5.14), rules,
regulations and orders of any Governmental Authority applicable to it or its property.

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          SECTION 5.12 Use of Proceeds and Letters of Credit. Use the proceeds of the Loans only for
(i) refinancing of the amounts outstanding under the Existing Credit Agreement, (ii) financing of
administrative expenses incurred in connection with
emerging from bankruptcy, (iii) payment of the Claims contemplated by the Reorganization Plan, (iv)
working capital, letters of credit and capital expenditures, including Permitted Acquisitions, (v)
other general corporate purposes of the Borrowers and (vi) payment of any related transaction
costs, fees and expenses. Such proceeds may not be used (a) in connection with the investigation
(including discovery proceedings), initiation or prosecution of any claims, causes of action,
adversary proceedings or other litigation against the Lenders or the Administrative Agent in their
capacities as such and (b) for any purpose that would violate any of the Regulations of the Board,
including Regulations T, U and X.

          SECTION 5.13 Additional Collateral; Further Assurances. (a) Unless the Required Lenders
otherwise consent and subject to the requirements of applicable law, cause each of its wholly owned
Subsidiaries (excluding any foreign Subsidiary and all Excluded Subsidiaries) formed or acquired
after the Closing Date in accordance with the terms of this Agreement to (i) become a Borrower by
executing a Joinder Agreement substantially in the form of Exhibit F hereto (the
“Joinder Agreement”) and (ii) grant Liens to the Administrative Agent, for the benefit of
the Administrative Agent and the Lenders, in any Property of such new Borrower which constitutes
Collateral, including Mortgages in or to any parcel of real Property located in the United States
owned by such new Borrower which the Borrowers’ Agent requests be included in the Borrowing Base.

               (b) Cause (i) 100% of the issued and outstanding Equity Interests of (A) each of the
Borrowers’ domestic Subsidiaries and (B) Reorganized KACC (provided however that neither this
provision nor any such pledge of Reorganized KACC shall effect, nor shall either be construed as
effecting, a pledge of the Equity Interests of any Subsidiary of Reorganized KACC) and Kaiser
Bauxite, and (ii) 65% of the issued and outstanding Equity Interests in (A) each foreign Subsidiary
directly owned by any Borrower and (B) Trochus, to be subject at all times to a first priority Lien
in favor of the Administrative Agent pursuant to the terms and conditions of the Loan Documents or
other security documents as the Administrative Agent shall reasonably request; provided,
that, with respect to (y) any Subsidiary that is organized outside of the United States,
Canada, or Bermuda, and is not a Significant Subsidiary, and (z) Trochus, no Borrower shall be
required to take any action under the laws of the jurisdiction of organization of such Person to
perfect or register the pledge of such shares and that the Borrowers shall have until the date that
is the 30th day after the Closing Date to perfect the pledge of shares of (i) KACL under the laws
of Canada or Ontario and (ii) Trochus under the laws of Bermuda; provided, further,
that the Borrowers shall have until the date that is the 60th day after the Closing Date
to deliver the stock certificate representing the shares of Anglesey owned by KAIC to the
Administrative Agent.

               (c) Execute and deliver, or cause to be executed and delivered, to the Administrative Agent
such documents and agreements, and take or cause to be taken such actions as the Administrative
Agent may, from time to time, reasonably request to carry out the terms and conditions of this
Agreement and the other Loan Documents, including but not limited to all items of the type required
by Section 4.01 (as applicable).

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               (d) If any material assets (including any real Property or improvements thereto or any
interest therein) are acquired by the Borrowers after the Closing
Date (other than assets constituting Collateral under the Security and Pledge Agreement that
become subject to the Lien in favor of the Administrative Agent upon acquisition thereof), the
Borrowers’ Agent will notify the Administrative Agent and the Lenders thereof, and, if requested by
the Administrative Agent or the Required Lenders after consultation with the Borrowers’ Agent, the
Borrowers will cause such assets to be subjected to a Lien securing the Secured Obligations and
will take such actions as shall be necessary or reasonably requested by the Administrative Agent,
to grant and perfect such Liens, including actions described in paragraph (c) of
this Section and, in the case of acquired owned real Property, a Mortgage, all at the
expense of the Borrowers.

          SECTION 5.14 Environmental Covenant. The Borrowers will, and will cause each of their
Subsidiaries to:

               (a) use and operate all of their respective facilities and properties in material compliance
with all Environmental Laws, keep all necessary permits, approvals, certificates, licenses, and
other authorizations required by applicable Environmental Laws relating to environmental matters in
effect and remain in material compliance therewith, and handle all Hazardous Materials in material
compliance with all applicable Environmental Laws.

               (b) (i) as soon as possible and in any event not later than fifteen (15) Business Days after
the Borrowers become aware of the receipt thereof, notify the Administrative Agent and provide
copies of all written claims, complaints, notices, or inquiries by a Governmental Authority, or any
Person which has commenced a legal proceeding against any of the Borrowers or any of their
Subsidiaries, relating to compliance by any of the Borrowers or any of their Subsidiaries with, or
potential liability of any of the Borrowers or any of their Subsidiaries under, Environmental Laws;
and

               (ii) with reasonable diligence cure all environmental defects and conditions
which are the subject of any actions and proceedings against any of the Borrowers or
any of their Subsidiaries relating to compliance with Environmental Laws, except to
the extent such actions and proceedings (or the obligation of any of the Borrowers
or any of their Subsidiaries to cure such defects and conditions) are stayed or are
being contested by any of the Borrowers or any of their Subsidiaries in good faith
by appropriate proceedings; and

               (c) provide such information, access, and certifications which the Administrative Agent may
reasonably request form time to time to evidence compliance with this Section 5.14.

     ARTICLE 6. NEGATIVE COVENANTS

          From the date hereof and for so long as any Commitment shall be in effect or any Letter of
Credit shall remain outstanding or any amount shall remain outstanding or unpaid under this
Agreement, each Borrower covenants and agrees that no Borrower will, and no Borrower will permit
any of its Significant Subsidiaries to (provided that nothing in this Article
6 shall

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prohibit (x) the consummation of the Restructuring Transactions on or about the
Consummation
Dates or (y) the creation or funding of the PI Trusts with the PI Trust Assets, in each case,
pursuant to, and in accordance with, the Reorganization Plan):

          SECTION 6.01 Liens. Incur, create, assume or suffer to exist any Lien on any asset of any
Borrower, now owned or hereafter acquired by any Borrower, other than (i) Liens described in
Schedule 3.06 hereto; (ii) Permitted Liens; (iii) Liens in favor of the Administrative
Agent and the Lenders; (iv) Liens securing purchase money Indebtedness or Capital Leases permitted
by Section 6.03(ii); provided that (y) such security interests and the
Indebtedness secured thereby are incurred prior to or within ninety (90) days after acquisition of
the financed Property or assets and (z) such security interests shall not apply to any property or
assets of any Borrower or Subsidiary of a Borrower other than the assets or property financed by
such Indebtedness or subject to such Capital Leases; (v) Liens securing judgment for the payment of
money not constituting an Event of Default under Section 7.01(k); (vi) Liens on property of
a Person existing at the time such Person is merged into or consolidated with a Borrower or
Significant Subsidiary or becomes a Borrower or a Significant Subsidiary or on any acquired
property, in each case, in connection with an Investment or acquisition permitted under Section
6.07; provided that (x) such Liens were not created in contemplation of or in
connection with such acquisition or such Person becoming a Borrower or a Significant Subsidiary, as
the case may be, (y) such Lien shall not apply to any property or assets of any Borrower other than
the assets being acquired and (z) such Lien shall secure only those obligations which it secures on
the date of such acquisition or the date such Person becomes a Borrower or a Significant
Subsidiary, as the case may be, and extensions, renewals and replacements thereof that do not
increase the outstanding principal amount of the obligations secured by such Lien and that are
otherwise permitted hereunder; (vii) precautionary UCC filings by lessors under operating leases
covering the Property subject to such leases and UCC filings in respect of Liens permitted under
this Section 6.01; and (viii) Liens granted to the “Collateral Agent” (as defined in the
Term Loan Agreement) as provided for in the Term Loan Agreement but only so long as the Collateral
Agent, the “Lenders” under (and as defined in) the Term Loan Agreement and such Liens are subject
to the Intercreditor Agreement.

          SECTION 6.02 Merger, etc. Consolidate or merge with or into another Person;
provided that (i) any Borrower may dissolve, merge or liquidate with or into
another Borrower, (ii) any Subsidiary of a Borrower may dissolve, merge or liquidate with or into a
Borrower so long as such Borrower is the entity surviving any merger, (iii) any Subsidiary of a
Borrower that is not a Borrower may dissolve, merge or liquidate with or into any other Subsidiary
of a Borrower other than an Excluded Subsidiary, and (iv) in connection with any Permitted
Acquisition under Section 6.07(iv) below, any subsidiary of a Borrower may merge or
consolidate with another Person or permit any other Person to merge into or consolidate with it
(subject to clause (g) of the definition of the term Permitted Acquisition).

          SECTION 6.03 Indebtedness. Contract, create, incur, assume or suffer to exist any
Indebtedness, except for (i) the Secured Obligations; (ii) Indebtedness with respect to existing
Capital Lease Obligations and purchase
money Indebtedness for fixed or capital assets and extensions, refinancings, replacements or
renewals of such Indebtedness permitted by clause (xiii) below; (iii) intercompany
Indebtedness of any Borrower to any Borrower; provided such intercompany Indebtedness is
subordinated to the Secured Obligations pursuant to an

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Intercompany Subordination Agreement
substantially in the form of Exhibit I hereto (the “Intercompany Subordination
Agreement”) or otherwise in a manner reasonably satisfactory to the Administrative Agent; (iv)
Indebtedness arising from Investments (other than Permitted Acquisitions) permitted by Section
6.07 and Indebtedness of a Person existing at the time such Person is merged into or
consolidated with a Borrower or Significant Subsidiary or becomes a Borrower or a Significant
Subsidiary, in each case, in connection with an Investment or acquisition permitted under
Section 6.07; provided that such Indebtedness was not incurred in
contemplation of or in connection with such Investment or acquisition; (v) Indebtedness in respect
of obligations pursuant to any Permitted Commodity Swap Agreement; (vi) Indebtedness incurred by
any Borrower under Swap Agreements entered into in the ordinary course of financial management, and
not for speculative purposes; provided that, except to the extent any such
Indebtedness is a Secured Obligation, all such obligations shall be unsecured; (vii) Indebtedness
owed to JPMorgan Chase, or any of its Lender Affiliates, in respect of any Banking Services
Obligations; (viii) Indebtedness in respect of performance, surety and appeal bonds arising in the
ordinary course of business; (ix) Indebtedness existing on the Closing Date and described on
Schedule 6.03 and extensions, refinancings, replacements or renewals of such Indebtedness
permitted by clause (xiii) below; (x) Guarantees by the Borrowers of Indebtedness of any
Subsidiary and by any Subsidiary of Indebtedness of any Borrower or any other Subsidiary,
provided that (1) the Indebtedness so Guaranteed is permitted by this Section
6.03, (2) Guarantees by any Borrower of Indebtedness of any Subsidiary that is not a Borrower
shall be subject to Section 6.07, and (3) Guarantees permitted under this clause
(x) shall be subordinated to the Secured Obligations of the applicable Borrower on the same
terms as the Indebtedness so Guaranteed is subordinated to the Secured Obligations; (xi)
Indebtedness in respect of advanced payments by customers under purchase contracts in the ordinary
course of business of the applicable Borrower; (xii) Indebtedness incurred pursuant to the Term
Loan Agreement and Guarantees thereof, and extensions, refinancings, replacements or renewals of
such Indebtedness permitted by clause (xiii) below; (xiii) Indebtedness that represents an
extension, refinancing, or renewal of any of the Indebtedness described in clauses
(ii), (ix) and (xii) hereof; provided that (1) the
principal amount of such Indebtedness is not increased and, with respect to extensions,
refinancings, replacements or renewals of Indebtedness incurred pursuant to the Term Loan Agreement
and Guarantees thereof, the then outstanding aggregate principal amount of such Indebtedness is not
(unless Availability is greater than $65,000,000 both immediately before and after such extension,
refinancing, replacement or renewal) decreased, (2) any Liens securing such Indebtedness are not
extended to any additional Property of any Borrower, except to the extent that the Lien of the
Administrative Agent extends to (and is a perfected, first priority Lien in) such additional
Property, (3) no Borrower that is not obligated with respect to repayment of such Indebtedness at
the time of such refinancing is required to become obligated with respect thereto, (4) such
extension, refinancing, replacement or renewal does not result in a shortening of the average
weighted maturity of the Indebtedness so extended, refinanced, replaced or renewed, (5) the terms
of any such extension, refinancing, replacement or renewal are not less favorable to the obligor
thereunder than the original terms of such Indebtedness, and (6) (i) with respect to extensions,
refinancings, replacements or renewals of Indebtedness incurred pursuant to the Term Loan Agreement
and Guarantees thereof, such
refinancing, renewal, replacement or extension Indebtedness is subject to the Intercreditor
Agreement, and (ii) with respect to extensions, refinancings, replacements or renewals of all other
Indebtedness, the terms and conditions of the refinancing, renewal, replacement or extension
Indebtedness include

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subordination terms and conditions that are at least as favorable to the
Administrative Agent and the Lenders as those that were applicable to the refinanced, renewed,
replaced or extended Indebtedness; and (xiv) other unsecured Indebtedness not to exceed $10,000,000
in the aggregate at any time outstanding.

          SECTION 6.04 Guarantees and Other Liabilities. Purchase or repurchase (or agree,
contingently or otherwise, so to do) the Indebtedness of, or assume, Guarantee (directly or
indirectly or by an instrument having the effect of assuring another’s payment or performance of
any obligation or capability of so doing, or otherwise), endorse or otherwise become liable,
directly or indirectly, in connection with the obligations, stock or dividends of any Person,
except (i) for any guaranty of Indebtedness or other obligations of any Borrower if such Person
could have incurred such Indebtedness or obligations under this Agreement; (ii) by endorsement of
negotiable instruments for deposit or collection in the ordinary course of business; and (iii) with
respect to Guarantees of Indebtedness pursuant to Section 6.03(viii), (x) or
(xii).

          SECTION 6.05 Dividends; Capital Stock. Declare or pay, directly or indirectly, any
dividends or make any other distribution or payment, whether in cash, property, securities or a
combination thereof, with respect to (whether by reduction of capital or otherwise) any shares of
capital stock or membership interests (or any options, warrants, rights or other equity securities
or agreements relating to any capital stock or membership interests), or set apart any sum for the
aforesaid purposes (all of the foregoing, “Restricted Payments”); provided
that (i) any Borrower may make Restricted Payments to any other Borrower that is its direct
parent; (ii) any Borrower (other than the Parent) may declare and pay dividends ratably with
respect to its Equity Interests; and (iii) the Parent may make a Restricted Payment so long as at
the time of and after giving effect to such Restricted Payment, (A) no Default is continuing or
would result therefrom and (B) the amount of such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by the Parent after the Closing Date, is less than the
sum of (1) 50% of the Net Income of the Parent and its Subsidiaries for the period, taken as one
accounting period, from the Closing Date to the end of the Parent’s most recently ended Fiscal
Quarter for which financial statements complying with Section 5.01(a) or 5.01(b)
(as applicable) have been delivered at the time of such Restricted Payment, or, if such Net Income
for such period is a deficit, less 100% of such deficit, plus (2) up to 100% of the
proceeds (such proceeds to be determined in accordance with clause (c) of the definition of
Net Proceeds without giving effect to the proviso therein) from the sale or issuance by the Parent
of any of its Equity Interest remaining after making any mandatory prepayment of Net Proceeds that
may be required at such time, if any, pursuant to Section 2.12(b)(iii) and not used to make
any Investments or other Restricted Payments, plus (3) $2,000,000.

          SECTION 6.06 Transactions with Affiliates. Sell or transfer any property or assets to, or otherwise engage in any other material
transactions with, any of its Affiliates (other than the Borrowers), other than (i) any transaction
(or, in the case of a series of related transactions, any series of related transactions taken as a
whole) in the ordinary course of business at prices and on terms and conditions not less favorable
to such Borrower than could be obtained on an arm’s-length basis from unrelated third parties; (ii)
dividends, distributions or payments permitted under Section 6.05; (iii) issuances of
securities pursuant to employee stock benefit plans approved by the board of directors of such
person, (iv) granting of stock options to

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employees or directors pursuant to a plan approved by the
board of directors of such person, (v) loans or advances to employees permitted pursuant to
Section 6.07; and (vi) reasonable fees to directors of any Borrower or Significant
Subsidiary who are not employees of the Borrowers or Significant Subsidiaries.

          SECTION 6.07 Investments, Loans, Advances, Guaranties and Acquisitions. (a) Purchase,
hold or acquire (including pursuant to a merger with any Person that was not a Borrower or a
wholly-owned subsidiary of a Borrower prior to such merger) any capital stock, evidences of
indebtedness or other securities of (including any option, warrant or other right to acquire any of
the foregoing), make or permit to exist any loans or advances to Guarantee any obligations of, or
make or permit to exist any investment in, any other Person or purchase or otherwise acquire (in
one transaction or series of transactions) any assets of any other Person constituting a business
unit (whether through purchase of assets, merger or otherwise) (all of the foregoing,
“Investments”), except for (i) ownership by the Borrowers of the capital stock or
membership interests of each of their Subsidiaries, provided that no further equity
investments may be made in any such Person that is not a Borrower; (ii) Investments by Subsidiaries
that are not Borrowers in any Borrower or Significant Subsidiary provided that any such Investment
which is a loan, advance, guaranty or other debt Investment shall be subordinated to the
Obligations pursuant to the Intercompany Subordination Agreement or such other form acceptable to
the Administrative Agent; (iii) Permitted Investments; (iv) Permitted Acquisitions; (v) advances
and loans to KACL in the ordinary course of business consistent with past practices,
provided that no Event of Default has occurred and is continuing, and provided
further that in no event shall the aggregate principal amount of such advances or loans
made after the Closing Date be greater than $10,000,000 at any one time outstanding; (vi) advances
and loans to, and Investments in, Trochus in the ordinary course of business consistent with past
practices, provided that no Event of Default has occurred and is continuing, and
provided further that in no event shall the sum of (A) the aggregate principal
amount of such advances or loans made after the Closing Date at any one time outstanding
plus (B) the amount of such Investments (other than such advances and loans under
clause (A) above) made after the Closing Date in the aggregate be greater than $8,000,000;
(vii) Investments in the form of advance payments in connection with any Permitted Commodity Swap
Agreement; (viii) Investments in respect of, including by way of contributions to, voluntary
employee beneficiary associations established for the benefit of certain hourly retirees and for
the benefit of certain salaried retirees pursuant to agreements, as amended and/or modified, that
KACC and Kaiser Bellwood negotiated with the United Steelworkers of America, the International
Association of Machinists and Aerospace Workers, and the Official Committee of Retired Employees in
the Cases, the International Union, United Automobile, Aerospace and Agricultural Implement Workers
of America and/or its Local Union No. 1186, the Paper, Allied-Industrial, Chemical and Energy
Workers International Union,
AFL-CIO, CLC and the International Chemical Workers Union Council-United Food & Commercial Workers
and approved by orders of the Bankruptcy Court entered on March 22, 2004, March 25, 2004, June 1,
2004, February 1, 2005, October 21, 2005 and January 9, 2006; (ix) loans or advances made by a
Borrower to its employees in the ordinary course of business for travel and entertainment expenses,
relocation costs and similar purposes (up to a maximum of $2,000,000 in the aggregate at any one
time outstanding), and loans or advances to directors, officers or employees of any Borrower the
proceeds of which are concurrently used to purchase Equity Interests in a Borrower;
 (x) Investments
described on Schedule 6.07 hereto and modifications, extensions, and renewals of such
Investments; (xi) other Investments not to

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exceed $10,000,000 in the aggregate at any time
outstanding; and (xii) advances and loans to Reorganized KACC from time to time in accordance with
the Reorganization Plan, provided that in no event shall the aggregate principal amount of such
advances or loans made after the Closing Date be greater than $7,000,000 at any one time
outstanding.

          SECTION 6.08 Creation of Subsidiaries. Create or acquire any Subsidiary of any Borrower
after the Closing Date, except for Subsidiaries created or acquired in accordance with the terms of
Section 5.13.

          SECTION 6.09 Disposition of Assets. Sell or otherwise dispose of any assets (including,
without limitation, the Equity Interests of any Subsidiary), except for (i) sales of Permitted
Investments; (ii) sales of Inventory in the ordinary course of business; (iii) dispositions of
surplus, obsolete or damaged assets no longer used in the business of the Borrowers and their
Subsidiaries; (iv) sales of assets set forth on Schedule 1.01(a) or Schedule 6.09
hereto; (v) the disposition of assets by any Borrower or any of its Subsidiaries in any single
transaction or series of related transactions with an aggregate fair market value of less than
$500,000; (vi) the disposition of assets by any Borrower or any of its Subsidiaries not otherwise
permitted under this Section 6.09 having a fair market value not exceeding $10,000,000
(excluding the fair market value of any asset sold or disposed of in an Excluded Asset Sale) in the
aggregate in each Fiscal Year provided that at least 75% of the consideration received by the
Borrower or a Subsidiary of the Borrower in connection with such disposition shall be cash or
assets that can be readily converted to cash without discount within ninety (90) days; (vii)
dispositions of property by (A) any Borrower to any other Borrower, (B) any Subsidiary to any
Borrower, and (C) any Subsidiary that is not a Borrower to any other Subsidiary that is not a
Borrower; (viii) the grant of any Liens permitted under Section 6.01; (ix) non-exclusive
licenses of intellectual property in the ordinary course of business; and (x) sale leaseback
transactions with respect to fixed or capital assets, provided that any such sale is made
for cash consideration in an amount not less than the fair market value of such asset and is
consummated within 90 days of the acquisition or completion of construction of such asset by such
Person.

          SECTION 6.10 Nature of Business. Modify or alter in any material manner the nature and
type of its business as conducted on the Closing Date or the manner in which such business is
conducted (except such activities as may be incidental or related thereto or reasonably related
extensions thereof), it being understood that
dispositions of assets permitted by Section 6.09 shall not constitute such a material
modification or alteration.

          SECTION 6.11 Restrictive Agreements. Enter into, incur or permit to exist any agreement or
other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of such
Borrower or any of their Significant Subsidiaries (other than Excluded Subsidiaries) to create,
incur or permit to exist any Lien upon any of its property or assets, or (b) the ability of any
Subsidiary of a Borrower to pay dividends or other distributions with respect to any shares of its
capital stock or to make or repay loans or advances to the Borrowers or any other Subsidiary of the
Borrowers or to guarantee Indebtedness of the Borrowers or any other Subsidiary of the Borrowers;
provided that (i) the foregoing shall not apply to restrictions and conditions
imposed by law or by this Agreement or the Term Loan Documents, (ii) the foregoing shall not apply
to restrictions and conditions existing on the date hereof identified on Schedule 6.11 (but
shall apply to any extension or renewal of, or any amendment or modification

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expanding the scope
of, any such restriction or condition), (iii) the foregoing shall not apply to customary
restrictions and conditions contained in agreements relating to the sale of a Subsidiary pending
such sale, provided such restrictions and conditions apply only to the Subsidiary that is to be
sold and such sale is permitted hereunder, (iv) clause (a) of the foregoing shall not apply
to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted
by this Agreement and (v) clause (a) of the foregoing shall not apply to customary
provisions in leases and other contracts restricting the assignment thereof.

          SECTION 6.12 Prepayment of Indebtedness; Subordinated Indebtedness. (a) Directly or
indirectly, voluntarily purchase, redeem, defease or prepay any principal of, premium, if any,
interest or other amount payable in respect of any Indebtedness prior to its scheduled maturity,
other than (i) the Obligations; (ii) Capital Lease Obligations permitted by Section
6.03(ii) not to exceed $10,000,000 in the aggregate in any Fiscal Year; (iii) prepayment of
Indebtedness in connection with the cancellation, termination or unwinding of Permitted Commodity
Swap Agreements; (iv) prepayment of Indebtedness in connection with the cancellation, termination
or unwinding of Swap Obligations described in Section 6.03(vi); (v) prepayments in respect
of Indebtedness in respect of advanced payments permitted by Section 6.03(xi); and (vi)
prepayments of Indebtedness incurred pursuant to the Term Loan Agreement; provided
that no such prepayment of Indebtedness incurred pursuant to the Term Loan Agreement shall
be made unless Availability is greater than $65,000,000 both before and after such prepayment;
provided, however, that notwithstanding the first proviso of this clause
(vi), the Borrowers may extend, refinance, renew or replace the Indebtedness incurred pursuant
to the Term Loan Agreement and Guarantees thereof to the extent permitted under Section
6.03.

               (b) (i) Make any amendment or modification to any indenture, note or other agreement
evidencing or governing any Indebtedness of such Person the payment of which is subordinated to
payment of the Obligations, thereof, (w) accelerating the date of any payment of principal or
interest thereunder, (x) increasing the interest rate or fees payable thereunder or converting any
interest payable in kind to current cash pay interest, (y) amending, modifying, supplementing or
otherwise modifying any of the subordination provisions of such indenture,
note or other agreement or (z) making any provision of such indenture, note or other agreement
more restrictive or burdensome on any Borrower nor any Subsidiary of any Borrower or (ii) directly
or indirectly voluntarily prepay, defease or in substance defease, purchase, redeem, retire or
otherwise acquire, any such Indebtedness.

          SECTION 6.13 Fixed Charge Coverage. Permit the Fixed Charge Coverage Ratio as of the last
day of any trailing fiscal period of the Borrowers set forth below to be less than the ratio set
forth opposite such period:

	 	 	 	 	 
	 	 	Fixed Charge Coverage
	 Period Ending	 	Ratio
	the Fiscal Quarter ending
September 30, 2006
	 	 	1.00:1.00	 
	 
	 	 	 	 
	the last two Fiscal Quarters ending December
31, 2006
	 	 	1.00:1.00	 

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	 	 	Fixed Charge Coverage
	 Period Ending	 	Ratio
	the last three Fiscal Quarters ending
March 31, 2007
	 	 	1.00:1.00	 
	 
	 	 	 	 
	the last four Fiscal Quarters ending
June 30, 2007
	 	 	1.00:1.00	 
	 
	 	 	 	 
	the last four Fiscal Quarters ending the
last day of each Fiscal Quarter thereafter
	 	 	1.10:1.00	 

; provided that no Borrower shall be required to comply with this covenant as of
the last day of any Fiscal Quarter so long as (i) no Covenant Trigger Event has occurred and is
continuing on the last day of such Fiscal Quarter and (ii) no Covenant Trigger Event occurs after
the last day of such Fiscal Quarter and on or prior to the last day of the next succeeding Fiscal
Quarter.

          SECTION 6.14 Amendments to Orders. Directly or indirectly consent to, or file any motion
or pleading in any court supporting or seeking, any amendment, supplement, modification or stay of
the Confirmation Order or the District Court Order.

     ARTICLE 7. EVENTS OF DEFAULT

          SECTION 7.01 Events of Default. If any of the following events (“Events of
Default”) shall occur:

               (a) the Borrowers shall fail to pay any principal of any Loan or any reimbursement obligation
in respect of any Letter of Credit Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed for
prepayment thereof or otherwise;

               (b) the Borrowers shall fail to pay any interest on any Loan or any fee or any other amount
(other than an amount referred to in clause (a) of this Section) payable under this
Agreement, when and as the same shall become due and payable, and such failure shall continue
unremedied for a period of three (3) Business Days after the date due;

               (c) any representation or warranty made or deemed made by or on behalf of any Borrower in or
in connection with this Agreement or any other Loan Document or any amendment or modification
thereof or waiver thereunder, or in any report, certificate, financial statement or other document
furnished pursuant to or in connection with this Agreement or any other Loan Document or any
amendment or modification thereof or waiver thereunder, shall prove to have been incorrect in any
material respect when made or deemed made;

               (d) any Borrower shall fail to observe or perform any covenant, condition or agreement
contained in Section 5.02 (with respect to a Borrower’s existence), 5.05, or
5.12 or in Article 6;

               (e) any Borrower shall fail to observe or perform any covenant, condition or agreement
contained in this Agreement or any other Loan Document (other than those which constitute a default
under another clause of this Section), and such failure shall

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continue unremedied for a
period of (i) five (5) Business Days after the earlier of such breach or notice thereof from the
Administrative Agent (which notice will be given at the request of any Lender) if such breach
relates to terms or provisions of Sections 5.01, 5.06 and Article 10 of
this Agreement or (ii) thirty (30) days after the earlier of such breach or notice thereof from the
Administrative Agent (which notice will be given at the request of any Lender) if such breach
relates to terms or provisions of any other Section of this Agreement;

               (f) any Borrower shall fail to make any payment (whether of principal or interest and
regardless of amount) in respect of any Material Indebtedness, when and as the same shall become
due and payable;

               (g) any event or condition occurs that results in any Material Indebtedness becoming due prior
to its scheduled maturity or that enables or permits (with or without the giving of notice, the
lapse of time or both) the holder or holders of any Material Indebtedness or any trustee or agent
on its or their behalf to cause any Material Indebtedness to become due, or to require the
prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity;
provided that this clause (g) shall not apply to secured Indebtedness that becomes
due as a result of the voluntary sale or transfer of the property or assets securing such
Indebtedness;

               (h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed
seeking (i) liquidation, reorganization or other relief in respect of a Borrower or any Significant
Subsidiary of a Borrower or its debts, or of a substantial part of its assets, under any Federal,
state or foreign bankruptcy, insolvency, receivership or similar law
now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for any Borrower or any Significant Subsidiary of any
Borrower or for a substantial part of its assets, and, in any such case, such proceeding or
petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering
any of the foregoing shall be entered;

               (i) any Borrower or any Significant Subsidiary shall (i) voluntarily commence any proceeding
or file any petition seeking liquidation, reorganization or other relief under any Federal, state
or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii)
consent to the institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in clause (h) of this Section, (iii) apply for or
consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar
official for such Borrower or such Significant Subsidiary or for a substantial part of its assets,
(iv) file an answer admit-ting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for
the purpose of effecting any of the foregoing;

               (j) any Borrower or any Significant Subsidiary shall become unable, admit in writing its
inability or fail generally to pay its debts as they become due;

               (k) one or more judgments for the payment of money in an aggregate amount in excess of
$5,000,000 shall be rendered against any Borrower, any Significant Subsidiary or any combination
thereof (to the extent not covered by insurance as to which the

91

 

relevant insurance company does not
dispute coverage) and the same shall remain undischarged for a period of thirty (30) consecutive
days during which execution shall not be effectively stayed, or any action shall be legally taken
by a judgment creditor to attach or levy upon any assets of any Borrower or any Significant
Subsidiary to enforce any such judgment or any Borrower or any Significant Subsidiary shall fail
within 30 days to discharge one or more non-monetary judgments or orders which, individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect, which judgments or
orders, in any such case, are not stayed on appeal or otherwise being appropriately contested in
good faith by proper proceedings diligently pursued;

               (l) a Change of Control shall occur; or

               (m) any material provision of any Loan Document shall, for any reason, cease to be valid and
binding on any of the Borrowers, or any Borrower or Affiliate of any Borrower shall so assert in
any pleading filed in any court or any material portion of any Lien (as determined by the
Administrative Agent in its Permitted Discretion) intended to be created by the Loan Documents
shall cease to be or shall not be a valid and perfected Lien having the priorities contemplated
hereby or thereby; or

               (n) (i) any Termination Event shall have occurred and shall continue unremedied (if
applicable) for more than 10 days and the sum (determined as of the date of occurrence of such
Termination Event) of the Insufficiency of the Plan in respect of which such Termination Event
shall have occurred and be continuing and the Insufficiency of any and all other Plans with respect
to which such a Termination Event shall have occurred and then exist is
equal to or greater than $5,000,000, or (ii) there exists any fact or circumstance that
reasonably could be expected to result in the imposition of a Lien or security interest under
Section 401(a)(29) or 412(n) of the Code or under ERISA with respect to any Plan of any Borrower or
an ERISA Affiliate; or

               (o) (i) any Borrower or any ERISA Affiliate thereof shall have been notified by the sponsor or
trustee of a Multiemployer Plan that it has incurred Withdrawal Liability to such Multiemployer
Plan, (ii) such Borrower or such ERISA Affiliate does not have reasonable grounds, in the opinion
of the Administrative Agent, to contest such Withdrawal Liability or is not in fact contesting such
Withdrawal Liability in a timely and appropriate manner, and (iii) the amount of such Withdrawal
Liability specified in such notice, when aggregated with all other amounts required to be paid to
Multiemployer Plans in connection with Withdrawal Liabilities (determined as of the date of such
notification), exceeds $5,000,000 allocable to obligations or requires payments exceeding $500,000
per annum in excess of the annual payments made with respect to such Multiemployer Plans by such
Borrower or such ERISA Affiliate for the plan year immediately preceding the plan year in which
such notification is received; or

               (p) any Borrower or any ERISA Affiliate thereof shall have been notified by the sponsor of a
Multiemployer Plan that such Multiemployer Plan is in reorganization or is being terminated, within
the meaning of Title IV of ERISA, if as a result of such reorganization or termination the
aggregate annual contributions of the Borrowers and its ERISA Affiliates to all Multiemployer Plans
that are then in reorganization or being terminated

92

 

have been or will be increased over the amounts
contributed to such Multiemployer Plans for the plan years that include the date hereof by an
amount exceeding $5,000,000; or

               (q) a material breach by any Borrower or any ERISA Affiliate of the Settlement Agreement shall
have occurred; or

               (r) any Borrower is criminally indicted or convicted under any law that may reasonably be
expected to lead to a forfeiture of any property of such party having a fair market value in excess
of $10,000,000; or

               (s) an order of any court of competent jurisdiction is entered amending, supplementing,
staying for any period, vacating or otherwise modifying the Confirmation Order, the District Court
Order or the PI Trust or any of the Borrowers shall apply for authority to do so; provided,
however, no Default shall occur under this subsection so long as (x) neither the District
Court Order nor the Confirmation Order is stayed or vacated and (y) any such amendment, supplement
or other modification is not adverse to the rights and interests of the Lenders under this
Agreement and the other Loan Documents and could not reasonably be expected to have a Material
Adverse Effect;

then, and in every such event (other than an event with respect to any Borrower described in
clause (h) or (i) of this Section 7.01), and at any time thereafter during
the continuance of such event, the Administrative Agent may, and at the request of the Required
Lenders shall, by notice to the Borrowers’ Agent, take either or both of the following actions, at
the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall
terminate
immediately, and (ii) declare the Loans then out-standing to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may thereafter be declared
to be due and payable), and thereupon the principal of the Loans so declared to be due and payable,
together with accrued and unpaid interest thereon and all fees and other obligations of the
Borrowers accrued hereunder, shall become due and payable immediately, without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the Borrowers; and in case
of any event with respect to any of the Borrowers described in clause (h) or (i) of
this Section 7.01, the Commitments shall automatically terminate and the unpaid principal
of the Loans then outstanding, together with accrued and unpaid interest thereon and all fees and
other obligations of the Borrowers accrued hereunder, shall automatically become due and payable,
without presentment, demand, protest or other notice of any kind, all of which are hereby waived by
the Borrowers. Upon the occurrence and the continuance of an Event of Default, the Administrative
Agent may, and at the request of the Required Lenders shall, increase the rate of interest
applicable to the Loans and other Obligations as set forth in Section 2.14(d) and exercise
any rights and remedies provided to the Administrative Agent under the Loan Documents or at law or
equity, including all remedies provided under the UCC.

     ARTICLE 8. THE ADMINISTRATIVE AGENT

          Each of the Lenders and the Issuing Bank hereby irrevocably appoints the Administrative Agent
as its agent and authorizes the Administrative Agent to take such actions on its behalf, including
execution of the other Loan Documents, and to exercise such powers as

93

 

are delegated to the
Administrative Agent by the terms of the Loan Documents, together with such actions and powers as
are reasonably incidental thereto.

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

          The Administrative Agent shall not have any duties or obligations except those expressly set
forth in the Loan Documents. Without limiting the generality of the foregoing, (a) the
Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of
whether Default has occurred and is continuing, (b) the Administrative Agent shall not have any
duty to take any discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated by the Loan Documents that the Administrative Agent is
required to exercise in writing as directed by the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as provided in Section
9.02), and (c) except as expressly set forth in the Loan Documents, the Administrative Agent
shall not have any duty to disclose, and shall not be liable for the failure to disclose, any
information relating to any Borrower or any of their respective Subsidiaries that is communicated
to or obtained by the bank serving as Administrative Agent or any of its Affiliates in any
capacity. The Administrative Agent shall not be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or such other number or percentage of
the Lenders as shall be necessary under the circumstances as provided in Section 
9.02) or in the absence of its own gross negligence or willful misconduct. The
Administrative Agent shall be deemed not to have knowledge of any Default unless and until written
notice thereof is given to the Administrative Agent by the Borrowers’ Agent or a Lender, and the
Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i)
any statement, warranty or representation made in or in connection with any Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or in connection with any
Loan Document, (iii) the performance or observance of any of the covenants, agreements or other
terms or conditions set forth in any Loan Document, (iv) the validity, enforceability,
effectiveness or genuineness of any Loan Document or any other agreement, instrument or document,
(v) the creation, perfection or priority of Liens on the Collateral or the existence of the
Collateral, or (vi) the satisfaction of any condition set forth in Article 4 or elsewhere
in any Loan Document, other than to confirm receipt of items expressly required to be delivered to
the Administrative Agent.

          The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any notice, request, certificate, consent, statement, instrument, document or other
writing believed by it to be genuine and to have been signed or sent by the proper Person. The
Administrative Agent also may rely upon any statement made to it orally or by telephone and
believed by it to be made by the proper Person, and shall not incur any liability for relying
thereon. The Administrative Agent may consult with legal counsel (who may be counsel for the
Borrowers), independent accountants and other experts selected by it, and shall

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not be liable for
any action taken or not taken by it in accordance with the advice of any such counsel, accountants
or experts.

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

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

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

          Each Lender hereby agrees that (a) it has requested a copy of each Report prepared by or on
behalf of the Administrative Agent; (b) the Administrative Agent (i) makes no representation or
warranty, express or implied, as to the completeness or accuracy of any Report or any of the
information contained therein or any inaccuracy or omission contained in or relating to a Report,
and (ii) shall not be liable for any information contained in any Report; (c) the Reports are not
comprehensive audits or examinations, and that any Person performing any

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field examination will
inspect only specific information regarding the Borrowers and will rely significantly upon the
Borrowers’ books and records, as well as on representations of the Borrowers’ personnel and that
the Administrative Agent undertakes no obligation to update, correct or supplement the Reports; (d)
it will keep all Reports confidential and strictly for its internal use, not share the Report with
any Borrower or any other Person except as otherwise permitted pursuant to this Agreement; and (e)
without limiting the generality of any other indemnification provision contained in this Agreement,
it will pay and protect, and indemnify, defend, and hold the Administrative Agent and any such
other Person preparing a Report harmless from and against, the claims, actions, proceedings,
damages, costs, expenses, and other amounts (including reasonable attorney fees) incurred as the
direct or indirect result of any third parties who might obtain all or part of any Report through
the indemnifying Lender.

          The documentation agent, lead arranger, sole bookrunner, syndication agent and co-arranger,
each in its capacity as such, shall not have any right, power, obligation, liability,
responsibility or duty under this Agreement other than those applicable to all Lenders as such.

     ARTICLE 9. MISCELLANEOUS

          SECTION 9.01 Notices. (a) Except in the case of notices and other communications expressly
permitted to be given by telephone or by other electronic communication (and subject to paragraph
(b) below), all notices and other communications provided for herein shall be in writing and shall
be delivered by hand or overnight courier service, mailed by certified or registered mail or sent
by facsimile, as follows:

                         (i) if to any Borrower, to the Borrowers’ Agent at:

Kaiser Aluminum Corporation

27422 Portola Parkway, Suite 350

Foothill Ranch, CA 92610-2831

Attention: Office of the Chief Financial Officer

Facsimile No: (949) 636-1930

with a copy to:

Jones Day

77 West Wacker

Chicago, IL 60601-1692

Attention: Robert J. Graves

Facsimile No.: (312) 782-8585

                         (ii) if to the Administrative Agent, the Issuing Bank or the Swingline Lender,
to JPMorgan Chase Bank, National Association at:

JPMorgan Chase Bank

National Association

2200 Ross Avenue, 6th Floor

Mail Code: TX1-2921

Dallas, TX 75201

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Attention: Portfolio Manager

Facsimile No: (214) 965-2594

with a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP

333 West Wacker Drive

Chicago, IL 60606

Attention: Seth Jacobson

Facsimile No: (312) 407-0411

                    (iii) if to any other Lender, to it at its address or facsimile number set
forth in its Administrative Questionnaire.

All such notices and other communications (i) sent by hand or overnight courier service, or mailed
by certified or registered mail, shall be deemed to have been given when received or (ii) sent by
facsimile shall be deemed to have been given when sent, provided that if not given during normal
business hours for the recipient, shall be deemed to have been given at the opening of business on
the next Business Day for the recipient.

               (b) Notices and other communications to the Lenders hereunder may be delivered or furnished by
electronic communications (including e-mail and internet or intranet websites) pursuant to
procedures approved by the Administrative Agent; provided that the foregoing shall not apply to
notices pursuant to Article 2 or to compliance and no Event of
Default certificates delivered pursuant to Section 5.01 unless expressly provided for
therein or otherwise agreed by the Administrative Agent and the applicable Lender. The
Administrative Agent or the Borrowers’ Agent (on behalf of the Borrowers) may, in its discretion,
agree to accept notices and other communications to it hereunder by electronic communications
pursuant to procedures approved by it; provided that approval of such procedures
may be limited to particular notices or communications. All such notices and other communications
(i) sent to an e-mail address shall be deemed received upon the sender’s receipt of an
acknowledgement from the intended recipient (such as by the “return receipt requested” function, as
available, return e-mail or other written acknowledgement), provided that if not
given during the normal business hours of the recipient, such notice or communication shall be
deemed to have been given at the opening of business on the next Business Day for the recipient,
and (ii) posted to an Internet or intranet website shall be deemed received upon the deemed receipt
by the intended recipient at its e-mail address as described in this Section 9.01 of
notification that such notice or communication is available and identifying the website address
therefor.

               (c) Any party hereto may change its address or facsimile number for notices and other
communications hereunder by notice to the other parties hereto.

          SECTION 9.02 Waivers; Amendments. (a) No failure or delay by the Administrative Agent, the
Issuing Bank or any Lender in exercising any right or power hereunder or under any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such
right or power, or any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the

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exercise of any other right or power. The
rights and remedies of the Administrative Agent, the Issuing Bank and the Lenders hereunder and
under any other Loan Document are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provision of any Loan Document or consent to any
departure by any Borrower therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) of this Section, and then such waiver or consent shall
be effective only in the specific instance and for the purpose for which given. Without limiting
the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not
be construed as a waiver of any Default, regardless of whether the Administrative Agent, any Lender
or the Issuing Bank may have had notice or knowledge of such Default at the time.

               (b) Neither this Agreement nor any other Loan Document nor any provision hereof or thereof may
be waived, amended or modified except (i) in the case of this Agreement, pursuant to an agreement
or agreements in writing entered into by each Borrower and the Required Lenders or, (ii) in the
case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by
the Administrative Agent and the Borrower(s) that are parties thereto, with the consent of the
Required Lenders; provided, however, that no such waiver, modification or amendment
shall, without the written consent of (1) 100% of Lenders, (A) increase the advance rates set forth
in the definition of the term “Borrowing Base”, (B) except as provided in clause (d) of
this Section, release all or substantially all of the Collateral, (C) change Section
2.19(b) or (d) in a manner that would alter the manner in which payments are shared,
(D) modify any of the voting percentages, (E) amend the definition of “Class 1 Equipment
Percentage”, “Class 2 Equipment Percentage”, “Class 3 Equipment
Percentage”, “Class 4 Equipment Percentage”, “Class 5 Equipment Percentage”, “Class 6
Equipment Percentage”, or “Real Property Percentage”, (F) amend the definition of “Dominion Trigger
Event” or “Dominion Release Event”, (G) release any Borrower as a party to, or from all of its
obligations under, this Agreement (except as permitted under Section 6.02), or (H) amend
this Section 9.02(b) to change the percentage of Lenders required to approve any waiver,
amendment or modification, and (2) the Lender directly affected thereby, (A) except as expressly
provided in Section 2.22, increase the Commitment of a Lender (it being understood that a
waiver of an Event of Default shall not constitute an increase in the Commitment of a Lender) or
extend the expiry date of such Lender’s Commitment, or (B) reduce or forgive the principal amount
of any Loan or Letter of Credit Disbursement or reduce the rate of interest thereon, or reduce or
forgive any interest or fees payable hereunder, or postpone any scheduled date of payment of the
principal amount of any Loan or Letter of Credit Disbursement, or any date for the payment of any
interest, fees or other Obligations payable hereunder, or reduce the amount of, waive or excuse any
such payment, or postpone the scheduled date of expiration of any Commitment; provided
further that no such agreement shall amend, modify or otherwise affect the rights or duties
of the Administrative Agent, the Issuing Bank or the Swingline Lender hereunder without the prior
written consent of the Administrative Agent, the Issuing Bank or the Swingline Lender, as the case
may be.

               (c) The Administrative Agent may (i) amend the Commitment Schedule to reflect
assignments entered into pursuant to Section 9.04 and Facility Increases in accordance with
Section 2.22, and (ii) waive payment of the fee required under Section
9.04(b)(ii)(C) without obtaining the consent of any other party to this Agreement.

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               (d) The Lenders hereby irrevocably authorize the Administrative Agent, at its option and in
its sole discretion, to release any Liens granted to the Administrative Agent by the Borrowers on
any Collateral (i) upon the termination of the Commitment, payment and satisfaction in full in cash
of all Secured Obligations (other than Unliquidated Obligations), and the cash collateralization of
all Unliquidated Obligations in a manner satisfactory to each affected Lender, (ii) constituting
property being sold, assigned, transferred or otherwise disposed of if the Borrower disposing of
such property certifies to the Administrative Agent that such sale, assignment, transfer or
disposition is made in compliance with the terms of this Agreement (and the Administrative Agent
may rely conclusively on any such certificate, without further inquiry), (iii) constituting
property leased to a Borrower under a lease which has expired or been terminated in a transaction
permitted under this Agreement or (iv) as required to effect any sale or other disposition of such
Collateral in connection with any exercise of remedies of the Administrative Agent and the Lenders
pursuant to Section 7.01. Except as provided in the preceding sentence, the Administrative
Agent will not release any Liens on Collateral without the prior written authorization of the
Required Lenders; provided that, the Administrative Agent may in its discretion,
release its Liens on Collateral valued in the aggregate not in excess of $2,000,000 during any
calendar year without the prior written authorization of the Required Lenders. Any such release
shall not in any manner discharge, affect, or impair the Secured Obligations or any Liens (other
than those expressly being released) upon (or obligations of the Borrowers in respect of) all
interests retained by the Borrowers, including the proceeds of any sale, all of which shall
continue to constitute part of the Collateral.

               (e) If, in connection with any proposed amendment, waiver or consent requiring the consent of
“100% of Lenders” or “the Lender directly affected thereby,” the consent of the Required Lenders is
obtained, but the consent of other necessary Lenders is not obtained (any such Lender whose consent
is necessary but not obtained being referred to herein as a “Non-Consenting Lender”), then,
so long as the Administrative Agent is not a Non-Consenting Lender, the Borrowers’ Agent may elect
to replace a Non-Consenting Lender as a Lender party to this Agreement, provided
that, concurrently with such replacement, (i) another bank or other entity which is
reasonably satisfactory to the Borrowers’ Agent and the Administrative Agent shall agree, as of
such date, to purchase for cash the Loans and other Obligations due to the Non-Consenting Lender
pursuant to an Assignment and Assumption and, to the extent any such assignee is not already a
Lender, to become a Lender for all purposes under this Agreement and to assume all obligations of
the Non-Consenting Lender to be terminated as of such date and to comply with the requirements of
clause (b) of Section 9.04, and (ii) the Borrowers shall pay to such Non-Consenting
Lender in same day funds on the day of such replacement (1) all interest, fees and other amounts
then accrued but unpaid to such Non-Consenting Lender by the Borrowers hereunder to and including
the date of termination, including without limitation payments due to such Non-Consenting Lender
under Sections 2.16 and 2.18, and (2) an amount, if any, equal to the payment which
would have been due to such Lender on the day of such replacement under Section 2.17 had
the Loans of such Non-Consenting Lender been prepaid on such date rather than sold to the
replacement Lender.

          SECTION 9.03 Expenses; Indemnity; Damage Waiver. (a) The Borrowers shall pay (i) all
reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates,
including the reasonable fees, charges and disbursements of counsel for the Administrative Agent,
in connection with the syndication and distribution (including, without

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limitation, via the
internet or through a service such as Intralinks) of the credit facilities provided for herein, the
preparation and administration of the Loan Documents or any amendments, modifications or waivers of
the provisions of the Loan Documents (whether or not the transactions contemplated hereby or
thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing
Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or
any demand for payment thereunder and (iii) all out-of-pocket expenses incurred by the
Administrative Agent, the Issuing Bank or any Lender, including the fees, charges and disbursements
of any counsel for the Administrative Agent, the Issuing Bank or any Lender, in connection with the
enforcement, collection or protection of its rights in connection with the Loan Documents,
including its rights under this Section, or in connection with the Loans made or Letters of
Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of such Loans or Letters of Credit. Expenses being
reimbursed by the Borrowers under this Section include, without limiting the generality of
the foregoing, costs and expenses incurred in connection with:

                    (i) subject to Section 5.08, appraisals of all or any portion of the
Collateral (including reasonable travel, lodging, meals and other out of pocket
expenses of the appraisers);

                    (ii) subject to Section 5.08, field examinations and the preparation of
Reports at either the Administrative Agent’s then customary charge (such charge is
currently $850 per day (or portion thereof) for each Person employed by the
Administrative Agent with respect to each field examination) or at the fee charged
by a third party retained by the Administrative Agent, plus in each case travel,
lodging, meals and other out of pocket expenses;

                    (iii) lien and title searches and title insurance;

                    (iv) taxes, fees and other charges, if any, for recording the Mortgages, filing
financing statements and continuations, and other actions to perfect, protect, and
continue the Administrative Agent’s Liens;

                    (v) sums paid or incurred to take any action required of any Borrower under the
Loan Documents that such Borrower fails to pay or take; and

                    (vi) forwarding loan proceeds, collecting checks and other items of payment,
and establishing and maintaining the accounts and lock boxes, and costs and expenses
of preserving and protecting the Collateral.

All of the foregoing costs and expenses may be charged to the Borrowers as Revolving Loans or to
another deposit account, in each case in accordance with Section 2.19(c).

               (b) The Borrowers shall jointly and severally indemnify the Administrative Agent, the Issuing
Bank and each Lender, and each Related Party of any of the foregoing Persons (each such Person
being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all
losses, claims, damages, penalties, liabilities and related

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expenses, including the fees, charges
and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee
arising out of, in connection with, or as a result of (i) the execution or delivery of the Loan
Documents or any agreement or instrument contemplated thereby, the performance by the parties
hereto of their respective obligations thereunder or the consummation of the Transactions or any
other transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use of the
proceeds therefrom (including any refusal by the Issuing Bank to honor a demand for payment under a
Letter of Credit if the documents presented in connection with such demand do not strictly comply
with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of
Hazardous Materials on or from any property owned or operated by any Borrower or any of their
Subsidiaries, or any Environmental Liability related in any way to any Borrower or any of their
Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as
to any Indemnitee, be available to the extent that such losses, claims, damages, penalties,
liabilities or related expenses are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or willful misconduct of such
Indemnitee.

               (c) To the extent that the Borrowers fail to pay any amount required to be paid by the
Borrowers to the Administrative Agent, the Issuing Bank, the Swingline Lender or any Related Party
of any of the foregoing Persons under paragraph (a) or (b) of this Section,
each Lender severally agrees to pay to the Administrative Agent, the Issuing Bank, the Swingline
Lender or such Related Party, as the case may be, such Lender’s Commitment Percentage (determined
as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such
unpaid amount; provided that the unreimbursed expense or indemnified loss, claim,
damage, penalty, liability or related expense, as the case may be, was incurred by or asserted
against the Administrative Agent, the Issuing Bank, the Swingline Lender or such Related Party in
its capacity as such.

               (d) To the extent permitted by applicable law, no Borrower shall assert, and each hereby
waives, any claim against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement or any agreement or instrument contemplated
hereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.

               (e) All amounts due under this Section shall be payable promptly after written demand
therefor.

          SECTION 9.04 Successors and Assigns. (a) The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective successors and assigns
permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit),
except that (i) no Borrower may assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted assignment or
transfer by any Borrower without such consent shall be null and void) and (ii) no Lender may assign
or otherwise transfer its rights or obligations hereunder except in accordance with this
Section 9.04 (and any other attempted assignment or transfer by any party

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hereto shall be
null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon
any Person (other than the parties hereto, their respective successors and assigns permitted hereby
(including any Affiliate of the Issuing Bank that issues any Letter of Credit), Participants (to
the extent provided in paragraph (c) of this Section) and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent, the Issuing Bank and
the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

               (b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may
assign to one or more assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing to it) with the prior
written consent (such consent not to be unreasonably withheld or delayed) of:

                         (A) the Administrative Agent;

                         (B) the Issuing Bank; and

                         (C) the Borrowers’ Agent; provided that no consent of
the Borrowers’ Agent shall be required for an Assignment to a
Lender, an Affiliate of a Lender, an Approved Fund, or if an Event
of Default has occurred, any other assignee.

                    (ii) Assignments shall be subject to the following additional conditions:

                         (A) except in the case of an assignment to a Lender or an
Affiliate of a Lender or an assignment of the entire remaining
amount of the assigning Lender’s Commitment and Loans of any Class
at the time owing to it, the amount of the Commitment or Loans of
the assigning Lender subject to each such assignment (determined as
of the date the Assignment and Assumption with respect to such
assignment is delivered to the Agent) shall not be less than
$5,000,000 unless each of the Administrative Agent and the
Borrowers’ Agent otherwise consents, provided that no such consent
of the Borrowers’ Agent shall be required if an Event of Default has
occurred and is continuing;

                         (B) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loan or
Commitment so assigned;

                         (C) the parties to each assignment shall execute and deliver to
the Administrative Agent an Assignment and Assumption, together with
a processing and recordation fee of $3,500; and

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                         (D) the assignee, if it shall not be a Lender, shall deliver to
the Administrative Agent an Administrative Questionnaire.

                    (iii) Subject to acceptance and recording thereof pursuant to paragraph
(b)(iv) of this Section, from and after the effective date specified in
each Assignment and Assumption the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Assumption, have the
rights and obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the case
of an Assignment and Assumption covering all of the assigning Lender’s rights and
obligations under this Agreement, such Lender shall cease to be a party hereto but
shall continue to be entitled to the benefits of Sections 2.16,
2.17, 2.18 and 9.03). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with this
Section 
9.04 shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
paragraph (c) of this Section.

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

                    (v) Upon its receipt of a duly completed Assignment and Assumption executed by
an assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this
Section and any written consent to such assignment required by paragraph
(b) of this Section, the Administrative Agent shall accept such
Assignment and Assumption and record the information contained therein in the
Register; provided that if either the assigning Lender or the
assignee shall have failed to make any payment required to be made by it pursuant to
Section 2.06, 2.07(d) or (e), 2.08(b),
2.19(d) or 9.03(c), the Administrative Agent shall have no
obligation to accept such Assignment and Assumption and record the information
therein in the Register unless and until such payment shall have been made in full,
together with all accrued interest thereon. No assignment shall be effective for
purposes of

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this Agreement unless it has been recorded in the Register as provided
in this paragraph.

                    (vi) For the purposes of this Section 9.04(b), the term “Approved
Fund” has the following meaning: “Approved Fund” means any Person (other
than a natural person) that is engaged in making, purchasing, holding or investing
in bank loans and similar extensions of credit in the ordinary course of business
and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or
(c) an entity or an Affiliate of an entity that administers or manages a Lender.

               (c) (i) Any Lender may, without the consent of any Borrower, the Borrowers’ Agent, the
Administrative Agent, the Issuing Bank or the Swingline Lender, sell participations to one or more
banks or other entities (a “Participant”) in all or a portion of such Lender’s rights and
obligations under this Agreement (including all or a portion of its Commitment and the Loans owing
to it); provided that (A) such Lender’s obligations under this
Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (C) the Borrowers, the Borrowers’ Agent,
the Administrative Agent, the Issuing Bank and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce the Loan Documents and to approve
any amendment, modification or waiver of any provision of any Loan Document; provided that such
agreement or instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, modification or waiver described in the first proviso to
Section 9.02(b) that affects such Participant. Subject to paragraph (c)(ii) of
this Section, the Borrowers agree that each Participant shall be entitled to the benefits
of Sections 2.16, 2.17 and 2.18 to the same extent as if it were a Lender
and had acquired its interest by assignment pursuant to paragraph (b) of this
Section. To the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 9.08 as though it were a Lender, provided such Participant agrees to be
subject to Section 2.19(c) as though it were a Lender.

                    (ii) A Participant shall not be entitled to receive any greater payment under
Section 2.16 or 2.18 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the prior
written consent of the Borrowers’ Agent). A Participant that would be a Foreign
Lender or other Lender that would be required to furnish documentation pursuant to
Section 2.18(e) if it were a Lender shall not be entitled to the benefits of
Section 2.18 unless the Borrowers’ Agent is notified of the participation
sold to such Participant and such Participant complies with Section 2.18(e)
as though it were a Lender. In addition, by acquiring its participation, any
Participant shall be deemed to have agreed to comply with Section 2.18(f) as
if it were a Lender.

               (d) Any Lender may at any time pledge or assign a security interest in all or any portion of
its rights under this Agreement to secure obligations of such Lender,

104

 

including without limitation
any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section
shall not apply to any such pledge or assignment of a security interest; provided
that no such pledge or assignment of a security interest shall release a Lender from any of
its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party
hereto.

          SECTION 9.05 Survival. All covenants, agreements, representations and warranties made by
the Borrowers and their Subsidiaries party thereto in the Loan Documents and in the certificates or
other instruments delivered in connection with or pursuant to this Agreement or any other Loan
Document shall be considered to have been relied upon by the other parties hereto and shall survive
the execution and delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party or on its behalf
and notwithstanding that the Administrative Agent, the Issuing Bank or any Lender may have had
notice or knowledge of any Event of Default or incorrect representation or warranty at the time
any credit is extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the
Commitments have not expired or terminated. The provisions of Sections 2.16, 2.17,
2.18 and 9.03 and Article 8 shall survive and remain in full force and
effect regardless of the consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit and the Commitments or the
termination of this Agreement or any provision hereof.

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

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

          SECTION 9.08 Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates is hereby authorized at any time and

105

 

from time
to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final) at any time held and other obligations at any
time owing by such Lender or Affiliate to or for the credit or the account of any Borrower against
any of and all the Secured Obligations held by such Lender, irrespective of whether or not such
Lender shall have made any demand under the Loan Documents and although such obligations may be
unmatured. The applicable Lender shall notify the Borrowers’ Agent and the Administrative Agent of
such set-off or application, provided that any failure to give or delay in giving such notice shall
not effect the validity of any such set-off or application under this Section 9.08. The
rights of each Lender under this Section are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have. NOTWITHSTANDING THE FOREGOING, AT
ANY TIME
THAT ANY OF THE OBLIGATIONS SHALL BE SECURED BY REAL PROPERTY LOCATED IN CALIFORNIA, NO LENDER
SHALL EXERCISE A RIGHT OF SETOFF, LENDER’S LIEN OR COUNTERCLAIM OR TAKE ANY COURT OR ADMINISTRATIVE
ACTION OR INSTITUTE ANY PROCEEDING TO ENFORCE ANY PROVISION OF THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT UNLESS IT IS TAKEN WITH THE CONSENT OF THE LENDERS REQUIRED BY SECTION 9.02 OF THIS
AGREEMENT, IF SUCH SETOFF OR ACTION OR PROCEEDING WOULD OR MIGHT (PURSUANT TO SECTIONS 580a, 580b,
580d AND 726 OF THE CALIFORNIA CODE OF CIVIL PROCEDURE OR SECTION 2924 OF THE CALIFORNIA CIVIL
CODE, IF APPLICABLE, OR OTHERWISE) AFFECT OR IMPAIR THE VALIDITY, PRIORITY, OR ENFORCEABILITY OF
THE LIENS GRANTED TO THE ADMINISTRATIVE AGENT PURSUANT TO THE COLLATERAL DOCUMENTS OR THE
ENFORCEABILITY OF THE SECURED OBLIGATIONS HEREUNDER, AND ANY ATTEMPTED EXERCISE BY ANY LENDER OR
ANY SUCH RIGHT WITHOUT OBTAINING SUCH CONSENT OF THE PARTIES AS REQUIRED ABOVE, SHALL BE NULL AND
VOID. THIS PARAGRAPH SHALL BE SOLELY FOR THE BENEFIT OF EACH OF THE LENDERS.

          SECTION 9.09 Governing Law; Jurisdiction; Consent to Service of Process. (a) The Loan
Documents (other than those containing a contrary express choice of law provision) shall be
governed by and construed in accordance with the laws of the State of New York, but giving effect
to federal laws applicable to national banks.

               (b) Each Borrower hereby irrevocably and unconditionally submits, for itself and its property,
to the nonexclusive jurisdiction of any U.S. Federal or New York State court sitting New York, New
York in any action or proceeding arising out of or relating to any Loan Document, or for
recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such Federal court. Each
of the parties hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement or any other Loan Document shall affect any
right that the Administrative Agent, the Issuing Bank or any Lender may otherwise have to bring any
action or proceeding relating to this Agreement or any other Loan Document against any Borrower or
its properties in the courts of any jurisdiction.

106

 

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

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

          SECTION 9.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
(INCLUDING, WITHOUT LIMITATION, THE ADMINISTRATIVE AGENT) HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER
AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

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

          SECTION 9.12 Confidentiality. Each of the Administrative Agent, the Issuing Bank and the
Lenders agrees to maintain the confidentiality of the Information (as defined below), except that
Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and
agents, including accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the extent requested by
any regulatory authority, (c) to the extent required by Requirement of Law or by any subpoena or
similar legal process, (d) to any other party to this Agreement, (e) in connection with the
exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or
any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an
agreement containing provisions substantially the same as those of this Section 9.12, to
(i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to any Borrower and any of their
obligations, so long as such counterparty agrees to be bound by the

107

 

provisions of this Section
9.12, (g) with the consent of the Borrowers’ Agent, or (h) to the extent such Information (i)
becomes publicly available other than as a result of a breach of this Section or (ii)
becomes available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential
basis from a source other than the Borrowers or the Borrowers’ Agent. For the purposes of this
Section, “Information” means all information received from the Borrowers relating
to the Borrowers or their business, operations, assets, liabilities, financial
condition or position, results or operations, or prospects, other than any such information that is
available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis
prior to disclosure by the Borrowers or the Borrowers’ Agent. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered to have
complied with its obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to its own
confidential information.

          SECTION 9.13 Several Obligations; Nonreliance; Violation of Law. The respective
obligations of the Lenders hereunder are several and not joint and the failure of any Lender to
make any Loan or perform any of its obligations hereunder shall not relieve any other Lender from
any of its obligations hereunder. Each Lender hereby represents that it is not relying on or
looking to any margin stock for the repayment of the Borrowings provided for herein. Anything
contained in this Agreement to the contrary notwithstanding, neither the Issuing Bank nor any
Lender shall be obligated to extend credit to the Borrowers in violation of any Requirement of Law.

          SECTION 9.14 USA PATRIOT Act. Each Lender that is subject to the requirements of the USA
Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”)
hereby notifies the Borrowers that pursuant to the requirements of the Act, it is required to
obtain, verify and record information that identifies the Borrowers, which information includes the
name and address of the Borrowers and other information that will allow such Lender to identify the
Borrowers in accordance with the Act.

          SECTION 9.15 Disclosure. Each Borrower and each Lender hereby acknowledges and agrees that
the Administrative Agent and/or its Affiliates from time to time may hold investments in, make
other loans to or have other relationships with any of the Borrowers and their respective
Affiliates.

          SECTION 9.16 Appointment for Perfection. Each Lender hereby appoints each other Lender as
its agent for the purpose of perfecting Liens, for the benefit of the Administrative Agent and the
Lenders, in assets which, in accordance with Article 9 of the UCC or any other applicable law can
be perfected only by possession. Should any Lender (other than the Administrative Agent) obtain
possession of any such Collateral, such Lender shall notify the Administrative Agent thereof, and,
promptly upon the Administrative Agent’s request therefor shall deliver such Collateral to the
Administrative Agent or otherwise deal with such Collateral in accordance with the Administrative
Agent’s instructions.

          SECTION 9.17 Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time
the interest rate applicable to any Loan, together with all fees, charges and other amounts which
are treated as interest on such Loan under applicable law

108

 

(collectively the “Charges”),
shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for,
charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable
law, the rate of interest payable in respect of such Loan hereunder, together with all Charges
payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the
interest and Charges that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased (but not above the
Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal
Funds Effective Rate to the date of repayment, shall have been received by such Lender.

     ARTICLE 10. CASH MANAGEMENT

          SECTION 10.01 Cash Management.

               (a) The Borrowers and their Significant Subsidiaries (other than KACL and Anglesey) shall
establish and maintain cash management services of a type and on terms reasonably satisfactory to
the Administrative Agent at JPMorgan Chase or any Affiliate thereof on the Closing Date (each, a
“Cash Management Bank”) or as promptly as practicable. All Cash Management Accounts shall
be maintained solely at JPMorgan Chase or any Affiliate thereof (JPMorgan Chase agrees that such
cash management services will be provided at reasonably competitive market rates), except for those
accounts listed on Part I of Schedule 10.01, each of which is subject to a control
agreement in form and substance acceptable to the
Administrative Agent. The Borrowers shall take such reasonable steps to enforce, collect,
receive and cause all amounts owing on the Accounts of the Borrowers to be remitted directly to a
Cash Management Account (other than any payroll, operating, checking or disbursement or petty cash
account) or the Administrative Agent’s Account, and deposit or cause to be deposited promptly, and
in any event no later than the first Business Day after the date of receipt thereof, all cash
proceeds in respect of any Collateral and all collections and other amounts received by any
Borrower (including payments made by the Account Debtors directly to any Borrower) into a Cash
Management Account. All deposit and securities accounts of KACL and Anglesey as of the Closing
Date are listed on Part II of Schedule 10.01.

               (b) Each Cash Management Bank shall, from and after the Closing Date, at the election of the
Administrative Agent in its sole discretion, forward all cash deposited into the Cash Management
Accounts covered thereby by electronic funds transfer (including, but not limited to, ACH
transfers) on each Business Day to a designated Account of the Administrative Agent;
provided, however that except during a Dominion Trigger Event all such cash
deposited to such Account shall be deposited into the Borrowers’ designated operating account.

          SECTION 10.02 Cash Dominion. During a Dominion Trigger Event, the Borrowers hereby irrevocably waive the
right to direct the application of all funds in their respective Cash Management Accounts and agree
that the Administrative Agent shall apply all payments in respect of any Secured Obligations and
all available funds in the Cash Management Accounts on a daily basis in a manner provided in
Section 2.11(b).

109

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the day and the year first written.

	 	 	 	 	 	 	 
	 	 	BORROWERS:

KAISER ALUMINUM CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Daniel J. Rinkenberger 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Daniel J. Rinkenberger 	 	 
	 

	 	Title:	 	Vice President and Treasurer 	 	 
	 
	 	 	 	 	 	 
	 	 	KAISER ALUMINUM INVESTMENTS COMPANY	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Daniel J. Rinkenberger 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Daniel J. Rinkenberger 	 	 
	 

	 	Title:	 	Vice President and Treasurer 	 	 
	 
	 	 	 	 	 	 
	 	 	KAISER ALUMINUM FABRICATED PRODUCTS, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Daniel J. Rinkenberger 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Daniel J. Rinkenberger 	 	 
	 

	 	Title:	 	Vice President and Treasurer 	 	 
	 
	 	 	 	 	 	 
	 	 	KAISER ALUMINIUM INTERNATIONAL, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Daniel J. Rinkenberger 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Daniel J. Rinkenberger 	 	 
	 

	 	Title:	 	Vice President and Treasurer 	 	 

110

 

	 	 	 	 	 	 	 
	 	 	JPMORGAN CHASE BANK, N.A.,

Individually and as Administrative Agent and
Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Devin Mock 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Devin Mock	 	 
	 

	 	Title:
	 	Vice President	 	 

111

 

	 	 	 	 	 	 	 
	 	 	LENDER:	 	 
	 
	 	 	 	 	 	 
	 	 	THE CIT GROUP/BUSINESS CREDIT, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Chad Ramsey	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Chad Ramsey	 	 
	 

	 	Title:	 	Vice President	 	 

112

 

	 	 	 	 	 	 	 
	 	 	LENDER:	 	 
	 
	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Robert M. Dalton	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Robert M. Dalton	 	 
	 

	 	Title:	 	Vice President	 	 

113

 

	 	 	 	 	 	 	 
	 	 	LENDER:	 	 
	 
	 	 	 	 	 	 
	 	 	WACHOVIA BANK, N.A.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Gary D. Cassianni	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Gary D. Cassianni	 	 
	 

	 	Title:	 	Vice President	 	 

114

 

	 	 	 	 	 	 	 
	 	 	LENDER:	 	 
	 
	 	 	 	 	 	 
	 	 	WELLS FARGO FOOTHILL, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Eunnie Kim	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Eunnie Kim	 	 
	 

	 	Title:	 	Vice President	 	 

115

 

	 	 	 	 	 	 	 
	 	 	LENDER:	 	 
	 
	 	 	 	 	 	 
	 	 	GMAC COMMERCIAL FINANCE LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ David Grobosky	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	David Grobosky	 	 
	 

	 	Title:	 	Vice President	 	 

116

 

	 	 	 	 	 	 	 
	 	 	LENDER:	 	 
	 
	 	 	 	 	 	 
	 	 	MERRILL LYNCH CAPITAL, A DIVISION OF MERRILL
LYNCH BUSINESS FINANCIAL SERVICES INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Richard Holston	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Richard Holston	 	 
	 

	 	Title:	 	Vice President	 	 

117

 

	 	 	 	 	 	 	 
	 	 	LENDER:	 	 
	 
	 	 	 	 	 	 
	 	 	UBS LOAN FINANCE LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Richard L. Tavrow	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Richard L. Tavrow	 	 
	 

	 	Title:	 	Director
Banking
Products
Services U.S.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Christopher M. Atkin	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Christopher M. Atkin	 	 
	 

	 	Title:	 	Associate Director
Banking
Products
Services U.S.	 	 

118

 

ANNEX A

COMMITMENT SCHEDULE

	 	 	 	 	 
	Lender	 	Commitment	 
	JPMorgan Chase Bank, N.A.
	 	$	35,000,000	 
	The CIT Group/Business Credit, Inc.
	 	$	35,000,000	 
	Bank of America
	 	$	30,000,000	 
	Wachovia Bank
	 	$	25,000,000	 
	Wells Fargo Foothill
	 	$	20,000,000	 
	GMAC
	 	$	20,000,000	 
	Merrill Lynch Capital Corporation
	 	$	20,000,000	 
	UBS
	 	$	15,000,000	 
	 
	 	 	 
	Total
	 	$	200,000,000	 
	 	 	 	 

119

 

Exhibit A-1 to the

Agreement

FORM OF REORGANIZATION PLAN

120

 

Exhibit A-2 to the

Agreement

FORM OF CONFIRMATION ORDER

121

 

Exhibit A-3 to the

Agreement

FORM OF DISTRICT COURT ORDER

122

 

Exhibit B to the

Agreement

FORM OF SECURITY AND
PLEDGE AGREEMENT

123

 

Exhibit C to the

Agreement

FORM OF OPINION OF COUNSEL

124

 

Exhibit D to the

Agreement

FORM OF ASSIGNMENT AND ASSUMPTION

125

 

Exhibit E to the

Agreement

FORM OF BORROWING BASE CERTIFICATE

126

 

Exhibit F to the

Agreement

FORM OF JOINDER AGREEMENT

127

 

Exhibit G to the

Agreement

FORM OF BORROWING REQUEST

128

 

Exhibit H to the

Agreement

FORM OF MORTGAGE

129

 

Exhibit I to the

Agreement

FORM OF INTERCOMPANY SUBORDINATION AGREEMENT

130

 

Exhibit J to the

Agreement

FORM OF SECOND AMENDED AND RESTATED FEE LETTER

131exv10w2

 

Exhibit 10.2

$50,000,000

TERM LOAN AND GUARANTY AGREEMENT

among

KAISER ALUMINUM FABRICATED PRODUCTS, LLC

as Borrower

and

THE
DIRECT AND INDIRECT PARENT COMPANIES AND CERTAIN OF THE

 DIRECT OR INDIRECT SUBSIDIARIES OR AFFILIATES OF THE BORROWER

 LISTED AS
GUARANTORS ON THE SIGNATURE PAGES HERETO

as Guarantors

and

THE LENDERS PARTY HERETO

and

JPMORGAN CHASE BANK, N.A.

as Administrative Agent and Documentation Agent

and

WILMINGTON TRUST COMPANY

as Collateral Agent

and

J.P. MORGAN SECURITIES INC.,

as Lead Arranger, Sole Bookrunner

and

Syndication Agent

and

THE CIT GROUP/BUSINESS CREDIT, INC.

as Co-Arranger

Dated as of July 6, 2006

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	ARTICLE I DEFINITIONS	 	 	1	 
	          Section 1.01
	 	Defined Terms	 	 	1	 
	          Section 1.02
	 	Classifications of Loans; Terms Generally	 	 	24	 
	          Section 1.03
	 	Obligations Not Affected	 	 	25	 
	 
	 	 	 	 	 	 
	ARTICLE II AMOUNT AND TERMS OF CREDIT	 	 	25	 
	          Section 2.01
	 	Commitments	 	 	25	 
	          Section 2.02
	 	Term Loans	 	 	25	 
	          Section 2.03
	 	Notice of Borrowing; Funding of Term Loans	 	 	26	 
	          Section 2.04
	 	Interest Elections	 	 	26	 
	          Section 2.05
	 	Repayment and Amortization of Term Loans; Evidence of Debt	 	 	27	 
	          Section 2.06
	 	Prepayment of Term Loans	 	 	28	 
	          Section 2.07
	 	Fees	 	 	31	 
	          Section 2.08
	 	Interest	 	 	31	 
	          Section 2.09
	 	Alternate Rate of Interest	 	 	31	 
	          Section 2.10
	 	Increased Costs	 	 	32	 
	          Section 2.11
	 	Breakfunding Payments	 	 	33	 
	          Section 2.12
	 	Taxes	 	 	33	 
	          Section 2.13
	 	Payments Generally; Allocation of Proceeds; Sharing of Set-offs	 	 	35	 
	          Section 2.14
	 	Mitigation Obligations; Replacement of Lenders	 	 	37	 
	          Section 2.15
	 	Indemnity for Returned Payments	 	 	37	 
	 
	 	 	 	 	 	 
	ARTICLE III REPRESENTATIONS AND WARRANTIES	 	 	38	 
	          Section 3.01
	 	Organization and Authority	 	 	38	 
	          Section 3.02
	 	Due Execution	 	 	38	 
	          Section 3.03
	 	Statements Made	 	 	39	 
	          Section 3.04
	 	Financial Statements	 	 	39	 
	          Section 3.05
	 	Real Property	 	 	39	 
	          Section 3.06
	 	Liens	 	 	40	 
	          Section 3.07
	 	Compliance with Law	 	 	40	 
	          Section 3.08
	 	Insurance	 	 	40	 
	          Section 3.09
	 	Use of Proceeds	 	 	40	 
	          Section 3.10
	 	Litigation	 	 	40	 
	          Section 3.11
	 	Investment and Holding Company Status	 	 	40	 
	          Section 3.12
	 	Taxes	 	 	40	 
	          Section 3.13
	 	ERISA	 	 	41	 
	          Section 3.14
	 	Disclosure	 	 	41	 
	          Section 3.15
	 	Material Agreements	 	 	41	 
	          Section 3.16
	 	Reportable Transaction	 	 	41	 
	          Section 3.17
	 	Capitalization and Subsidiaries	 	 	41	 
	          Section 3.18
	 	Common Enterprise	 	 	42	 

i 

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	          Section 3.19
	 	[Intentionally omitted.]	 	 	42	 
	          Section 3.20
	 	Labor Disputes	 	 	42	 
	          Section 3.21
	 	Environmental Matters	 	 	42	 
	          Section 3.22
	 	Confirmation Order; District Court Order	 	 	44	 
	          Section 3.23
	 	Consummation Date	 	 	44	 
	          Section 3.24
	 	Solvency	 	 	44	 
	          Section 3.25
	 	Security Interest in Collateral	 	 	44	 
	 
	 	 	 	 	 	 
	ARTICLE IV CONDITIONS OF LENDING	 	 	45	 
	          Section 4.01
	 	Conditions Precedent to Closing Date	 	 	45	 
	          Section 4.02
	 	Conditions Precedent to Funding Date	 	 	49	 
	 
	 	 	 	 	 	 
	ARTICLE V AFFIRMATIVE COVENANTS	 	 	49	 
	          Section 5.01
	 	Financial Statements, Reports, etc	 	 	49	 
	          Section 5.02
	 	Corporate Existence	 	 	52	 
	          Section 5.03
	 	Insurance	 	 	53	 
	          Section 5.04
	 	Obligations and Taxes	 	 	53	 
	          Section 5.05
	 	Notice of Event of Default, etc	 	 	53	 
	          Section 5.06
	 	Access to Books and Records	 	 	54	 
	          Section 5.07
	 	Projections	 	 	54	 
	          Section 5.08
	 	Maintenance of Properties and Intellectual Property Rights	 	 	54	 
	          Section 5.09
	 	Compliance with Laws	 	 	54	 
	          Section 5.10
	 	Use of Proceeds	 	 	54	 
	          Section 5.11
	 	Additional Collateral; Further Assurances	 	 	54	 
	          Section 5.12
	 	Environmental Covenant	 	 	56	 
	 
	 	 	 	 	 	 
	ARTICLE VI NEGATIVE COVENANTS	 	 	56	 
	          Section 6.01
	 	Liens	 	 	56	 
	          Section 6.02
	 	Merger, etc	 	 	57	 
	          Section 6.03
	 	Indebtedness	 	 	57	 
	          Section 6.04
	 	Guarantees and Other Liabilities	 	 	58	 
	          Section 6.05
	 	Dividends; Capital Stock	 	 	59	 
	          Section 6.06
	 	Transactions with Affiliates	 	 	59	 
	          Section 6.07
	 	Investments, Loans, Advances, Guaranties and Acquisitions	 	 	59	 
	          Section 6.08
	 	Creation of Subsidiaries	 	 	61	 
	          Section 6.09
	 	Disposition of Assets	 	 	61	 
	          Section 6.10
	 	Nature of Business	 	 	61	 
	          Section 6.11
	 	Restrictive Agreements	 	 	61	 
	          Section 6.12
	 	Prepayment of Indebtedness; Subordinated Indebtedness	 	 	62	 
	          Section 6.13
	 	Fixed Charge Coverage	 	 	62	 
	          Section 6.14
	 	Amendments to Orders	 	 	63	 

ii 

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	ARTICLE VII EVENTS OF DEFAULT	 	 	63	 
	          Section 7.01
	 	Events of Default	 	 	63	 
	 
	 	 	 	 	 	 
	ARTICLE VIII THE AGENTS	 	 	66	 
	 
	 	 	 	 	 	 
	ARTICLE IX MISCELLANEOUS	 	 	70	 
	          Section 9.01
	 	Notices	 	 	70	 
	          Section 9.02
	 	Waivers; Amendments	 	 	72	 
	          Section 9.03
	 	Expenses; Indemnity; Damage Waiver	 	 	74	 
	          Section 9.04
	 	Successors and Assigns	 	 	75	 
	          Section 9.05
	 	Survival	 	 	78	 
	          Section 9.06
	 	Counterparts; Integration; Effectiveness	 	 	78	 
	          Section 9.07
	 	Severability	 	 	79	 
	          Section 9.08
	 	Right of Setoff	 	 	79	 
	          Section 9.09
	 	Governing Law; Jurisdiction; Consent to Service of Process	 	 	80	 
	          Section 9.10
	 	WAIVER OF JURY TRIAL	 	 	80	 
	          Section 9.11
	 	Headings	 	 	81	 
	          Section 9.12
	 	Confidentiality	 	 	81	 
	          Section 9.13
	 	Several Obligations; Nonreliance; Violation of Law	 	 	81	 
	          Section 9.14
	 	USA PATRIOT Act	 	 	81	 
	          Section 9.15
	 	Disclosure	 	 	82	 
	          Section 9.16
	 	Appointment for Perfection	 	 	82	 
	          Section 9.17
	 	Interest Rate Limitation	 	 	82	 
	 
	 	 	 	 	 	 
	ARTICLE X LOAN GUARANTY	 	 	82	 
	          Section 10.01
	 	Guaranty	 	 	82	 
	          Section 10.02
	 	Guaranty of Payment	 	 	83	 
	          Section 10.03
	 	No Discharge or Diminishment of Guaranty	 	 	83	 
	          Section 10.04
	 	Defenses Waived	 	 	83	 
	          Section 10.05
	 	Rights of Subrogation	 	 	84	 
	          Section 10.06
	 	Reinstatement; Stay of Acceleration	 	 	84	 
	          Section 10.07
	 	Information	 	 	84	 
	          Section 10.08
	 	Termination	 	 	84	 
	          Section 10.09
	 	Maximum Liability	 	 	85	 
	          Section 10.10
	 	Contribution	 	 	85	 
	          Section 10.11
	 	Liability Cumulative	 	 	86	 

iii 

 

	 	 	 	 	 
	ANNEX A

	 	-
	 	Commitment Schedule
	ANNEX B

	 	-
	 	Notice of Borrowing
	EXHIBIT A-1

	 	-
	 	Form of Reorganization Plan
	EXHIBIT A-2

	 	-
	 	Form of Confirmation Order
	EXHIBIT A-3

	 	-
	 	Form of District Court Order
	EXHIBIT B

	 	-
	 	Form of Security and Pledge Agreement
	EXHIBIT C

	 	-
	 	Form of Opinion of Counsel
	EXHIBIT D

	 	-
	 	Form of Assignment and Assumption
	EXHIBIT E

	 	-
	 	Form of Joinder Agreement
	EXHIBIT F

	 	-
	 	Form of Mortgage
	EXHIBIT G

	 	-
	 	Form of Intercompany Subordination Agreement
	EXHIBIT H

	 	-
	 	Form of Second Amended and Restated Fee Letter
	 
	 	 	 	 
	SCHEDULE 1.01(a)

	 	-
	 	Designated Asset Sales
	SCHEDULE 1.01(b)

	 	-
	 	Restructuring Transactions
	SCHEDULE 3.05

	 	-
	 	Real Property
	SCHEDULE 3.06

	 	-
	 	Liens
	SCHEDULE 3.07

	 	-
	 	Compliance with Laws
	SCHEDULE 3.10

	 	-
	 	Litigation
	SCHEDULE 3.12

	 	-
	 	Taxes
	SCHEDULE 3.15

	 	-
	 	Material Agreements
	SCHEDULE 3.17

	 	-
	 	Capitalization and Subsidiaries
	SCHEDULE 3.20

	 	-
	 	Labor Disputes
	SCHEDULE 3.21

	 	-
	 	Environmental Matters
	SCHEDULE 4.01(e)

	 	-
	 	Mortgaged Properties
	SCHEDULE 4.01(l)

	 	-
	 	Material Consents
	SCHEDULE 6.03

	 	-
	 	Existing Indebtedness
	SCHEDULE 6.07

	 	-
	 	Existing Investments
	SCHEDULE 6.09

	 	-
	 	Disposition of Assets
	SCHEDULE 6.11

	 	-
	 	Restrictive Agreements

iv 

 

TERM LOAN AND GUARANTY AGREEMENT

     TERM LOAN AND GUARANTY AGREEMENT, dated as of July 6, 2006 among KAISER ALUMINUM FABRICATED
PRODUCTS, LLC, a Delaware limited liability company (the “Borrower”), certain of the direct
and indirect parent companies of the Borrower and certain of the direct or indirect subsidiaries or
affiliates of the Borrower listed as “Guarantors” on the signature pages hereto (each a
“Guarantor” and collectively, the “Guarantors”), the financial institutions and
other Persons from time to time party hereto (the “Lenders”), JPMORGAN CHASE BANK, N.A., as
administrative agent (in such capacity, the “Administrative Agent”) for the Lenders, and
WILMINGTON TRUST COMPANY, as collateral agent (in such capacity, together with its successors and
assigns, the “Collateral Agent”) for the Administrative Agent and the Lenders.

INTRODUCTORY STATEMENT

     The Borrower has requested that the Lenders make available to the Borrower term loans in an
aggregate principal amount of $50,000,000, which term loans will be used by the Borrower for the
purposes set forth in Section 3.09.

     The Guarantors have agreed to guarantee all of the Obligations as set forth in Article
X.

     The Borrower and the Guarantors have agreed to secure all of the Obligations by granting to
the Collateral Agent, on behalf of the Lenders, a security interest in and Lien upon the Collateral
as set forth in the Security and Pledge Agreement and any Mortgages.

     Accordingly, the parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

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

     “ABR Loan” shall mean any Term Loan (or portion thereof) bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with the provisions of Article
II.

     “Adjusted LIBO Rate” shall mean, with respect to any Eurodollar Loan for any Interest
Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal
to the LIBO Rate for such interest period multiplied by the Statutory Reserve Rate.

     “Administrative Agent” shall have the meaning set forth in the first paragraph of this
Agreement and together with its successors appointed pursuant to Article VIII.

     “Administrative Questionnaire” shall mean an Administrative Questionnaire in a form
supplied by the Administrative Agent.

 

 

     “Affiliate” shall mean, as to any Person, any other Person which, directly or
indirectly, is in Control of, is Controlled by, or is under common Control with, such Person.

     “Agents” shall mean, collectively, the Administrative Agent and the Collateral Agent
and “Agent” shall mean, individually, the Administrative Agent and/or the Collateral Agent,
as the context may require.

     “Agreement” shall mean this Term Loan and Guaranty Agreement, as the same may be
amended, restated, modified or supplemented from time to time.

     “Alternate Base Rate” shall mean, for any day, a rate per annum (rounded, if
necessary, to the nearest 1/100 of 1%) equal to the greater of (a) the Prime Rate in effect on such
day and (b) the Federal Funds Effective Rate in effect on such day plus 0.50%. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be
effective from and including the effective date of such change in the Prime Rate or the Federal
Funds Effective Rate, respectively.

     “Applicable Margin” shall mean (a) 2.50%, in the case of ABR Loans and (b) 4.25%, in
the case of Eurodollar Loans.

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

     “Bankruptcy Code” shall mean The Bankruptcy Reform Act of 1978, as heretofore and
hereafter amended, and codified as 11 U.S.C. Section 101 et seq.

     “Bankruptcy Court” shall mean the United States Bankruptcy Court for the District of
Delaware or any other court having jurisdiction over the Cases from time to time.

     “Board” shall mean the Board of Governors of the Federal Reserve System of the United
States.

     “Borrower” shall have the meaning as set forth in the first paragraph of this
Agreement.

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

     “Capital Expenditures” shall mean, without duplication, any actual cash expenditure
for any purchase or other acquisition of any asset which would be classified as a fixed or capital
asset on a consolidated balance sheet of Parent and its Subsidiaries prepared in accordance with
GAAP.

2

 

     “Capital Lease” shall mean, with respect to any Person, any agreement pursuant to
which such Person obtains the right to use any real or personal Property which is required to be
classified and accounted for as a capital lease on the balance sheet of such Person under GAAP.

     “Capital Lease Obligations” shall mean, with respect to any Person, the obligations of
such Person to pay rent or other amounts under any Capital Lease and, for purposes of this
Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at
such time determined in accordance with GAAP.

     “Cases” shall mean, collectively, the jointly administered cases filed by Parent and
certain of its Subsidiaries under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court.

     “CERCLA” shall mean the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended or otherwise modified from time to time.

     “CERCLIS” shall mean the Comprehensive Environmental Response Compensation Liability
Information System List.

     “Change in Law” shall mean (a) the adoption of any law, rule or regulation after the
date of this Agreement; (b) any change in any law, rule or regulation or in the interpretation or
application thereof by any Governmental Authority after the date of this Agreement; or (c)
compliance by any Lender (or, for purposes of Section 2.10(b), by any lending office of
such Lender or by such Lender’s holding company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or issued after the
date of this Agreement.

     “Change of Control” shall mean (a) the acquisition after the date hereof of ownership,
directly or indirectly, beneficially or of record, by any Person or group (within the meaning of
the Securities Exchange Act of 1934 and the rules of the SEC thereunder as in effect on the date
hereof) (other than the VEBA Trusts), of shares representing more than 45% of the aggregate
ordinary voting power represented by the issued and outstanding capital stock of Parent; (b) the
occupation of a majority of the seats (other than vacant seats) on the Board of Directors of Parent
by Persons who were neither (1) nominated by the Board of Directors of Parent nor (2) appointed by
directors so nominated or (c) the acquisition of direct or indirect Control of Parent by any Person
or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the SEC
thereunder as in effect on the date hereof).

     “Claims” shall have the meaning set forth in Section 101(5) of the Bankruptcy Code.

     “Closing Date” shall mean the date on which this Agreement has been executed and the
conditions precedent to the effectiveness of this Agreement set forth in Section 4.01 have
been satisfied or waived, which date shall occur on the date requested by Parent following the date
of entry of the Confirmation Order and the District Court Order but in no event later than the
earlier of (i) the date that is thirty (30) days after the Consummation Date and (ii) August 31,
2006.

3

 

     “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and
the regulations promulgated and rulings issued thereunder.

     “Collateral” shall mean any and all property owned, leased or operated by a Person
granted as security for the Obligations pursuant to any other Loan Document and any and all other
property of the Borrower or any Guarantor, now existing or hereafter acquired, that may at any time
be or become subject to a security interest or Lien in favor of the Collateral Agent, on behalf of
itself and the Lenders, to secure the Obligations.

     “Collateral Documents” shall mean, collectively, the Security and Pledge Agreement,
the Mortgages and any other documents granting a Lien upon the Collateral as security for payment
of the Obligations.

     “Commitment” shall mean (a) with respect to any Lender, the aggregate commitment of
such Lender to make Term Loans as set forth on Annex A — Commitment Schedule or in the most
recent Assignment and Assumption executed by such Lender and (b) as to all Lenders, the aggregate
commitment of all Lenders to make Term Loans, which aggregate commitment shall be $50,000,000 on
the date of this Agreement. After advancing the Term Loans, each reference to a Lender’s
Commitment shall refer to that Lender’s Applicable Percentage of the Term Loans.

     “Commitment Letter” shall mean that certain Commitment Letter, dated January 14, 2005,
among JPMorgan Chase, JPMSI, CIT, Parent and KACC, as amended by Amendment No. 1 thereto, dated
January 10, 2006, Amendment No. 2 thereto, dated April 26, 2006, and Amendment No. 3 thereto, dated
April 26, 2006.

     “Commitment Schedule” shall mean the Schedule attached as Annex A hereto and
identified as the Commitment Schedule.

     “Commodity Swap Agreement” shall mean any Swap Agreement involving or settled by
reference to one or more commodities.

     “Confirmation Order” shall mean the order confirming the Reorganization Plan, attached
as Exhibit A-2, entered by the Bankruptcy Court on February 6, 2006.

     “Consummation Date” shall mean the date of the substantial consummation (as defined in
Section 1101 of the Bankruptcy Code and which for purposes of this Agreement shall be no later than
the effective date of a Reorganization Plan) of a Reorganization Plan that is confirmed pursuant to
the Confirmation Order and affirmed by the District Court Order.

     “Control” shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through the ability to
exercise voting power, by contract or otherwise. “Controlling” and “Controlled”
have meanings correlative thereto.

     “Covenant Release Event” shall mean, as of any date following the occurrence of a
Covenant Trigger Event, the first date upon which both of the following conditions have been
satisfied: (i) “Availability” (as defined in the Revolving Loan Documents) has exceeded

4

 

$50,000,000 for each day during the ninety (90) consecutive calendar day period ending on such
date after the immediately preceding Covenant Trigger Event and (ii) at least 365 days have elapsed
since the date of the last Covenant Release Event, if any.

     “Covenant Trigger Event” shall mean any date on which “Availability” (as defined in
the Revolving Loan Documents) has been less than $35,000,000 for any period of five (5) consecutive
Business Days ending on such date. A Covenant Trigger Event shall be deemed to have occurred and
be continuing from the occurrence of such Covenant Trigger Event up to but not including the first
date upon which a Covenant Release Event occurs following such Covenant Trigger Event.

     “Default” shall mean any event or condition which constitutes an Event of Default or
which upon notice, lapse of time, or both would, unless cured or waived, constitute an Event of
Default.

     “Departing Lender” shall have the meaning given to such term in Section 2.14.

     “Designated Asset Sale shall mean each asset sale that is described on Schedule
1.01(a) hereto.

     “Disqualified Indebtedness” shall mean any Indebtedness for borrowed money and any
bond, note, indenture or similar instrument issued, assumed or acquired in connection with an
acquisition if the instrument governing such Indebtedness or other obligation (i) has a scheduled
maturity date earlier than ninety (90) days after the Maturity Date or (ii) requires the Borrower
or any Guarantor to make any scheduled or mandatory payments of principal or to otherwise purchase
or redeem, or make sinking fund or other similar payments with respect to, such Indebtedness
earlier than ninety (90) days after the Maturity Date; provided that the amount of such
Indebtedness under this clause (ii) shall be the aggregate principal amount of all such
scheduled or mandatory payments, purchases, redemptions, or sinking fund or other similar payments
required to be made earlier than ninety (90) days after the Maturity Date.

     “District Court” shall mean the United States District Court for the District of
Delaware.

     “District Court Order” shall mean the order affirming the Confirmation Order, attached
as Exhibit A-3, entered by the District Court on May 11, 2006.

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

     “EBITDA” shall mean, for Parent and its Subsidiaries on a consolidated basis, for any
period, in each case as determined in accordance with GAAP, Net Income for such period
plus, (a) to the extent deducted in determining Net Income for such period, (i) Interest
Expense, (ii) expense or benefit for income taxes, (iii) depreciation, (iv) amortization, (v)
extraordinary losses incurred and (vi) any other non-cash charges except to the extent that any
such non-cash charge (x) could reasonably be expected to result in a cash payment during the term
of this Agreement or (y) represents amortization of a prepaid cash item paid in a prior period,
minus, (b) to the extent included in determining Net Income, extraordinary gains realized.

5

 

     “EDGAR” shall mean the SEC’s Electronic Data Gathering Analysis and Retrieval System
(or any successor system).

     “Environmental Laws” shall mean all applicable federal, state, local or foreign
statutes, laws, regulations, ordinances, codes, rules, requirements and guidelines (including
consent decrees and administrative orders to which the Borrower, any Guarantor, or any of their
Subsidiaries, is subject) relating to protection of human health or the environment or imposing
liability or standards of conduct concerning any Hazardous Material, as any of the foregoing may be
from time to time amended or supplemented.

     “Environmental Liability” shall mean any liability, contingent or otherwise (including
any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of
the Borrower, the Guarantors or any of their respective Subsidiaries directly or indirectly
resulting from or based upon (a) violation of any Environmental Law; (b) the generation, use,
handling, transportation, storage, treatment or disposal of any Hazardous Materials; (c) exposure
to any Hazardous Materials; (d) the release or threatened release of any Hazardous Materials into
the environment; or (e) any contract, agreement or other consensual arrangement pursuant to which
liability is assumed or imposed with respect to any of the foregoing.

     “Environmental Lien” shall mean a Lien in favor of any Governmental Authority for (a)
any liability under Environmental Laws; or (b) damages arising from or costs incurred by such
Governmental Authority in response to a release or threatened release of a hazardous or toxic
waste, substance or constituent, or other substance into the environment.

     “Equity Interests” shall mean shares of capital stock in a corporation, partnership
interests in a partnership, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a Person, and any warrants, options or
other rights entitling the holder thereof to purchase or acquire any of the foregoing.

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

     “ERISA Affiliate” shall mean each person (as defined in Section 3(9) of ERISA) which
together with the Borrower or any Guarantor or any Subsidiary of the Borrower or any Guarantor
would be deemed to be a single employer within the meaning of Section 414(b), (c), (m), or (o) of
the Code.

     “Eurodollar Loan” shall mean any Term Loan (or a portion thereof) bearing interest at
a rate determined by reference to the Adjusted LIBO Rate in accordance with the provisions of
Article II.

     “Event of Default” shall have the meaning given such term in Article VII.

     “Excluded Asset Disposition” shall mean (i) any Designated Asset Sale, (ii) any sale
of inventory in the ordinary course of business and (iii) any sale, transfer or other disposition
of one or more assets in a single transaction or series of related transactions if the aggregate

6

 

proceeds received in connection with such transaction or series of related transactions is
less than $500,000.

     “Excluded Subsidiaries” shall mean Reorganized KACC, Kaiser Bauxite and Trochus and
any of their Subsidiaries. Under no circumstances will an Excluded Subsidiary be, or be deemed to
be, a Significant Subsidiary or a Subsidiary hereunder.

     “Excluded Taxes” shall mean, with respect to any Agent, any Lender, or any other
recipient of any payment to be made by or on account of any obligation of the Borrower or any
Guarantor hereunder, (a) Taxes imposed on or measured by its overall net income or its overall
gross income (other than withholding Taxes) and franchise Taxes imposed in lieu thereof by the
United States of America or by the jurisdiction (or any political subdivision thereof) under the
laws of which such recipient is organized or in which its lending office or principal executive
office is located; (b) any branch profits Taxes imposed by the United States of America or any
similar Tax imposed by any other jurisdiction in which such lending office or principal executive
office is located; and (c) in the case of a Lender, any withholding Tax that is imposed on amounts
payable to such Lender at the time such Lender becomes a party to this Agreement (or designates a
new lending office) or is attributable to such Lender’s failure to comply with Section
2.12(e), provided however, that an assignee of a Lender or a newly designated
lending office shall not be subject to this clause (c) to the extent of any additional
amounts which at the time of designation or assignment the designating or assigning Lender was
entitled to receive that were not subject to this clause (c).

     “Existing Credit Agreement” shall mean that certain Secured Super-Priority
Debtor-in-Possession Credit Agreement dated as of February 11, 2005, as amended, among the
“Borrowers” (as defined therein), the “Guarantors” (as defined therein), the Existing Lenders and
JPMorgan Chase, as administrative agent.

     “Existing Lenders” shall mean the financial institutions from time to time party to
the Existing Credit Agreement.

     “Extraordinary Receipts” shall mean any Net Proceeds received by the Borrower or any
Guarantor not in the ordinary course of business, including, without limitation, (i) foreign,
United States, state or local tax refunds, (ii) pension plan reversions, (iii) judgments, proceeds
of settlements or other consideration of any kind in connection with any cause of action, (iv)
indemnity payments, (v) any purchase price adjustment received in connection with any purchase
agreement, and (vi) any proceeds from any escrow; provided, however, that such indemnity payments
or proceeds shall not include proceeds from any insurance for asbestos claims and demands, silica
claims and demands, coal tar pitch volatile claims and demands and noise induced hearing loss
claims in escrow as of the date hereof or later received.

     “Federal Funds Effective Rate” shall mean, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received

7

 

by the Administrative Agent from three Federal funds brokers of recognized standing selected
by it.

     “Fee Letter” shall mean, collectively (i) that certain Second Amended and Restated Fee
Letter, dated July 6, 2006, among JPMorgan Chase, JPMSI, Parent and KACC, (ii) that certain
Amendment Fee Letter, dated December 23, 2005, among JPMorgan Chase, Parent and KACC, and (iii)
that certain Second Amendment Fee Letter, dated April 26, 2006, among JPMorgan Chase, Parent and
KACC.

     “Fees” shall mean all fees referred to herein, in the Fee Letter or in any other Loan
Document.

     “Final Funding Date” shall mean the earlier of (i) the date that is thirty (30) days
after the Consummation Date and (ii) August 31, 2006.

     “Financial Officer” shall mean, with respect to any Person, the chief financial
officer, principal accounting officer, treasurer, assistant treasurer or controller of such Person
or any other Person who performs a function similar to any of the foregoing and has been identified
in writing to the Administrative Agent as a “Financial Officer” hereunder.

     “Fiscal Month” shall mean any of the monthly accounting periods of Parent and its
Subsidiaries.

     “Fiscal Quarter” shall mean any of the quarterly accounting periods of Parent and its
Subsidiaries, ending on March 31, June 30, September 30 and December 31 of each year.

     “Fiscal Year” shall mean any of the annual accounting periods of Parent and its
Subsidiaries ending on December 31 of each year.

     “Fixed Charge Coverage Ratio” shall mean the ratio, determined as of the end of any
period, of (a) EBITDA for the period of determination minus Net Capital Expenditures for such
period of determination to (b) Fixed Charges for such period of determination, all calculated for
Parent and its Subsidiaries on a consolidated basis in accordance with GAAP; provided that for
periods ending prior to the end of the fourth full Fiscal Quarter following the Closing Date, the
Borrower may submit a written request to the Administrative Agent proposing adjustments to EBITDA
and Fixed Charges for purposes of calculating the Fixed Charge Coverage Ratio for the applicable
period to more accurately reflect the allocation or exclusion of one-time charges over two or more
Fiscal Quarters and, if the Required Lenders consent to such adjustments, such adjustment shall be
made for calculating Fixed Charge Coverage Ratio for the applicable period.

     “Fixed Charges” shall mean, for Parent and its Subsidiaries on a consolidated basis,
with reference to any period, without duplication, cash Interest Expense paid during such period,
plus scheduled principal payments on Indebtedness (including rent or other payments on
Capital Lease Obligations other than imputed interest components thereof) made during such period,
plus, if and to the extent “Availability” (as defined in the Revolving Loan Documents) at
the time of measurement is less than the amount of the “Borrowing Base” (as defined in the
Revolving Loan Documents) attributable at such time to equipment and real estate, the reduction

8

 

in Availability during such period resulting from the amortization of the components of the
Borrowing Base consisting of equipment and real estate, plus, expense for income taxes paid
in cash during such period, plus dividends or other distributions paid in cash to holders
of Equity Interests in Parent during such period (excluding distributions paid to holders of Equity
Interests in Parent pursuant to the Reorganization Plan on account of Claims in the Cases).

     “Foreign Lender” shall mean any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of this definition,
the United States of America, each State thereof, and the District of Columbia shall be deemed to
constitute a single jurisdiction.

     “Funding Date” shall mean the date on which Term Loans to be made pursuant to this
Agreement are funded, and the conditions precedent to the making of the Term Loans set forth in
Section 4.02 have been satisfied or waived, which date shall occur on the date requested
pursuant to Section 2.03 by the Borrower following the date of entry of the Confirmation
Order and the District Court Order but in no event later than the Final Funding Date.

     “GAAP” shall mean generally accepted accounting principles in the United States of
America as in effect from time to time applied in accordance with Section 1.02.

     “Governmental Authority” shall mean the government of the United States of America,
any other nation or any political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.

     “Guarantee” shall mean, with respect to any Person (such Person, a
“guarantor”), any obligation, contingent or otherwise, of the guarantor guaranteeing or
having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person
(the “primary obligor”) in any manner, whether directly or indirectly, and including any
obligation of the guarantor, direct or indirect, (i) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance
or supply funds for the purchase of) any security for the payment thereof; (ii) to purchase or
lease property, securities or services for the primary purpose of assuring the owner of such
Indebtedness or other obligation of the payment thereof; (iii) to advance funds to maintain working
capital, equity capital or any other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Indebtedness or other obligation; or (iv)
as an account party in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business. The amount of any Guarantee of any
guarantor shall be deemed to be the lower of (x) an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Guarantee is made and (y) the maximum
amount for which such guarantor may be liable pursuant to the terms of the instrument embodying
such Guarantee.

     “Guaranteed Obligations” shall have the meaning specified in Section 10.01.

9

 

     “Guarantor” shall have the meaning set forth in the first paragraph of this Agreement.

     “Hazardous Materials” shall mean any “hazardous substance,” as defined by CERCLA; any
“hazardous waste,” as defined by the Resource Conservation and Recovery Act, as amended; any
petroleum product; or any pollutant or contaminant or hazardous, dangerous, or toxic chemical,
material, or substance regulated under or within the meaning of any other Environmental Law.

     “Indebtedness” shall mean, at any time and with respect to any Person, without
duplication, (i) all indebtedness of such Person for borrowed money or with respect to deposits or
advances of any kind; (ii) all obligations of such Person for the deferred purchase price of
property or services (other than accounts payable arising out of the purchases of property,
including inventory, and services purchased, and expense accruals and deferred compensation items
in the ordinary course of business); (iii) all obligations of such Person upon which interest
changes are customarily paid; (iv) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments; (v) all indebtedness of such Person created or arising
under any conditional sale or other title retention agreement with respect to property acquired by
such Person; (vi) all Capital Lease Obligations of such Person; (vii) all reimbursement, payment or
similar obligations of such Person, contingent or otherwise, under acceptance, letter of credit or
similar facilities; (viii) all Swap Obligations of such Person (and the amount of Indebtedness
attributable to all Swap Obligations of such Person shall be deemed to be the Net Mark-to-Market
Exposure with respect thereto); (ix) all Guarantees by such Person of Indebtedness of others; (x)
all Indebtedness referred to in clauses (i) through (ix) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien upon or in property (including, without limitation, accounts and contract rights)
owned by such Person, even though such Person has not assumed or become liable for the payment of
such Indebtedness, provided that, if such Person has not assumed such obligations, then the amount
of Indebtedness of such Person for purposes of this clause (x) shall be equal to the lesser
of the amount of the obligations of the holder of such obligations and the fair market value of the
assets of such Person which secure such obligations; (xi) obligations under any liquidated
earn-out; and (xii) obligations of such Person to purchase securities or other property prior to
the date that is six months after the Maturity Date arising out of or in connection with the sale
of the same or substantially similar securities or property or any other Off-Balance Sheet
Liability. The Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the extent such Person is
liable therefor as a result of such Person’s ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness provide that such Person is not liable
therefor.

     “Indemnified Taxes” shall mean Taxes other than Excluded Taxes.

     “Indemnitee” shall have the meaning given to such term in Section 9.03(b).

     “Insufficiency” shall mean, with respect to any Plan, its “amount of unfunded benefit
liabilities” within the meaning of Section 4001(a)(18) of ERISA, if any.

10

 

     “Insurer Appeals” shall mean the appeals of the District Court Order filed by (i)
Columbia Casualty Insurance Company, Transcontinental Insurance Co., Harbor Insurance Co.,
Continental Insurance Company, docketed in the Third Circuit Court of Appeals as case number
06-3045; (ii) Republic Indemnity Company and Transport Insurance Company, f/k/a Transport Indemnity
Company, docketed in the Third Circuit Court of Appeals as case number 06-3046; and (iii) TIG
Insurance Company, docketed in the Third Circuit Court of Appeals as case number 06-3047.

     “Intercompany Subordination Agreement” shall have the meaning given to such term in
Section 6.03.

     “Intercreditor Agreement” shall mean the Intercreditor Agreement dated the date
hereof, between the Collateral Agent and JPMorgan Chase, as agent for the holders of the “Secured
Obligations” (as defined in the Revolving Loan Documents).

     “Interest Election Request” shall mean a request by the Borrower to convert or
continue a Term Loan in accordance with Section 2.04.

     “Interest Expense” shall mean, with reference to any period, the interest expense of
Parent and its Subsidiaries calculated on a consolidated basis in conformity with GAAP for such
period.

     “Interest Payment Date” shall mean (i) as to any Eurodollar Loan, the last day of each
applicable Interest Period, and, in the case of any Interest Period longer than three months, on
each successive date three months after the first day of such Interest Period and (ii) as to all
ABR Loans, the last calendar day of each month in arrears and the date on which any ABR Loans are
refinanced with Eurodollar Loans pursuant to Section 2.04.

     “Interest Period” shall mean, as to any Eurodollar Loan, the period commencing on the
date of such Eurodollar Loan (including as a result of a refinancing of ABR Loans) or on the last
day of the preceding Interest Period applicable to such Eurodollar Loan and ending on the
numerically corresponding day (or if there is no corresponding day, the last day) in the calendar
month that is one, two, three or six months thereafter, as the Borrower may elect in the related
notice delivered pursuant to Sections 2.04; provided, however, that (i) if
any Interest Period would end on a day which shall not be a Business Day, such Interest Period
shall be extended to the next succeeding Business Day unless such next succeeding Business Day
would fall in the next calendar month, in which case such Interest Period shall end on the
immediately preceding Business Day, and (ii) no Interest Period shall end later than the Maturity
Date.

     “Investments” shall have the meaning given such term in Section 6.07.

     “Joinder Agreement” shall have the meaning set forth in Section 5.11(a).

     “JPMorgan Chase” shall mean JPMorgan Chase Bank, N.A.

     “JPMSI” shall mean J.P. Morgan Securities Inc.

11

 

     “KACC” shall mean Kaiser Aluminum & Chemical Corporation, a Delaware corporation.

     “KACL” shall mean Kaiser Aluminum Canada Limited, an Ontario corporation.

     “Kaiser Bauxite” shall mean Kaiser Bauxite Company, a Nevada corporation.

     “Kaiser Bellwood” shall mean Kaiser Bellwood Corporation, a Delaware corporation.

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

     “Lenders” shall mean the Persons listed on the Commitment Schedule and any
other Person that shall have become a party hereto as a Lender pursuant to an Assignment and
Assumption, other than any such Person that ceases to be a party hereto pursuant to an Assignment
and Assumption.

     “LIBO Rate” shall mean, with respect to any Eurodollar Loan for any Interest Period,
the rate appearing on Page 3750 of the Dow Jones Market Service (or on any successor page or any
successor to such service or any substitute page or substitute for such service, providing rate
quotations comparable to those currently provided on such page of such service, as determined by
the Administrative Agent from time to time for purposes of providing quotations of interest rates
applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London
time, two (2) Business Days prior to the commencement of such Interest Period, as the rate for
dollar deposits (for delivery on the first day of such period) with a term equivalent to such
Interest Period. In the event that such rate is not available at such time for any reason, then
the “LIBO Rate” with respect to such Eurodollar Loan for such Interest Period shall be the
rate at which dollar deposits of comparable size and for a maturity comparable to such Interest
Period are offered by the principal London office of the Administrative Agent in immediately
available funds in the London interbank market at approximately 11:00 a.m., London time, two (2)
Business Days prior to the commencement of such Interest Period.

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

12

 

     “Loan Documents” shall mean this Agreement, the Security and Pledge Agreement, the
Mortgages, the Intercreditor Agreement and any other instrument or agreement executed and delivered
to the Administrative Agent, the Collateral Agent or any Lender in connection herewith (including,
all other pledges, powers of attorney, consents, assignments, contracts, notices, and letter of
credit agreements whether heretofore, now or hereafter executed by or on behalf of the Borrower or
any Guarantor, or any Responsible Officer of the Borrower or any Guarantor, and delivered to the
Administrative Agent, the Collateral Agent or any Lender in connection with the Agreement or the
transactions contemplated thereby). Any reference in the Agreement or any other Loan Document to a
Loan Document shall include all appendices, exhibits or schedules thereto, and all amendments,
restatements, supplements or other modifications thereto, and shall refer to the Agreement or such
Loan Document as the same may be in effect at any and all times such reference becomes operative.

     “Material Adverse Effect” shall mean a material adverse effect on (a) the business,
assets, operations, prospects or financial condition, of the Borrower and the Guarantors taken as a
whole, (b) the ability of the Borrower and the Guarantors taken as a whole to perform any
obligations under the Loan Documents, (c) the Collateral, or the Collateral Agent’s Liens (on
behalf of itself, the Administrative Agent and the Lenders) on the Collateral or the priority of
such Liens, or (d) the rights of or benefits available to the Administrative Agent, the Collateral
Agent or the Lenders hereunder or under any other Loan Document.

     “Material Indebtedness” shall mean any Indebtedness (other than the Term Loans) of the
Borrower, any of the Guarantors, or any of the Subsidiaries of the Borrower or any Guarantor in an
aggregate principal amount exceeding $20,000,000. For purposes of determining Material
Indebtedness, the “obligations” of the Borrower, any Guarantor, or any Subsidiary of the Borrower
or any Guarantor in respect of any Swap Agreement at any time shall be the Net Mark-to-Market
Exposure that the Borrower, such Guarantor or such Subsidiary would be required to pay if such Swap
Agreement were terminated at such time.

     “Maturity Date” shall mean July 6, 2011.

     “Maximum Liability” shall have the meaning specified in Section 10.09.

     “McNeil Appeal” shall mean the appeal of the District Court Order filed by Duncan J.
McNeil and pending before the Third Circuit Court of Appeals.

     “Mortgage” shall mean any mortgage, deed of trust or other agreement which conveys or
evidences a Lien in favor of the Collateral Agent, for the benefit of the Collateral Agent, the
Administrative Agent and the Lenders, on real Property of the Borrower or any Guarantor, including
any amendment, modification or supplement thereto.

     “Multiemployer Plan” shall mean a “multiemployer plan” as defined in Section
4001(a)(3) of ERISA, which is maintained or contributed to by (or to which there is an obligation
to contribute of) the Borrower or any Guarantor or a Subsidiary of the Borrower or any Guarantor or
an ERISA Affiliate, and each such plan for the five-year period immediately following the latest
date on which the Borrower, any Guarantor or a Subsidiary of the Borrower

13

 

or any Guarantor or an ERISA Affiliate maintained, contributed to or had an obligation to
contribute to such plan.

     “Multiple Employer Plan” shall mean a Single Employer Plan, which (i) is maintained
for employees of the Borrower or any Guarantor or an ERISA Affiliate and at least one person (as
defined in Section 3(9) of ERISA) other than the Borrower or any Guarantor and its ERISA Affiliates
or (ii) was so maintained and in respect of which the Borrower or any Guarantor or an ERISA
Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such Plan has been
or were to be terminated.

     “National Priorities List” shall mean the list established pursuant to Section 105 of
CERCLA, as amended, modified, supplemented, or replaced from time to time.

     “Net Capital Expenditures” shall mean, with respect to any period of determination,
the total Capital Expenditures for such period minus that portion of such Capital Expenditures that
are financed with Indebtedness described in Section 6.03(ii) or 6.03(xiv).

     “Net Income” shall mean, with reference to any period, the net income (or loss) of
Parent and its Subsidiaries (other than any Excluded Subsidiary and its Subsidiaries) calculated on
a consolidated basis for such period.

     “Net Mark-to-Market Exposure” shall mean, with respect to any Person, as of any date
of determination, the excess (if any) of all unrealized losses over all unrealized profits of such
Person arising from Swap Agreement transactions. As used in this definition, “unrealized losses”
means the fair market value of the cost to such Person of replacing such Swap Agreement
transactions as of the date of determination (assuming the Swap Agreement transactions were to be
terminated as of that date), and “unrealized profits” means the fair market value of the gain to
such Person of replacing such Swap Agreement transactions as of the date of determination (assuming
such Swap Agreement transactions were to be terminated as of that date).

     “Net Proceeds” shall mean, if in connection with (a) an asset disposition, cash
proceeds received by the Borrower or any Guarantor net of (i) commissions, attorneys’ fees,
accountants’ fees, investment banking fees and other reasonable and customary transaction costs,
fees and expenses properly attributable to such transaction and payable by the Borrower or such
Guarantor in connection therewith (in each case, paid to non-Affiliates of the Borrower or such
Guarantor); (ii) taxes actually payable in respect thereof and reasonable estimates of taxes
actually payable with respect to such transaction in the tax year of such transaction or in the
following tax year; (iii) amounts payable to holders of senior Liens on such asset (to the extent
such Liens constitute Permitted Liens or other Liens permitted under Section 6.01
hereunder), if any; (iv) an appropriate reserve for income taxes in accordance with GAAP
established in connection therewith; and (v) amounts escrowed or reserved against indemnification,
obligations or purchase price adjustments; provided, however, that Net Proceeds
shall not include any such amounts so received by the Borrower or any Guarantor in respect of any
asset disposition made in any Fiscal Year until the aggregate amount of cash received by the
Borrower and all Guarantors in respect of asset dispositions during such Fiscal Year exceeds
$2,500,000 (excluding cash received in connection with any Excluded Asset Disposition), in which
case Net Proceeds shall constitute solely such amounts in excess thereof; or (b) the issuance or
incurrence

14

 

of Indebtedness, cash proceeds net of attorneys’ fees, investment banking fees, accountants’
fees, underwriting discounts and commissions and other customary fees and expenses actually
incurred in connection therewith, (c) an equity issuance, cash proceeds net of underwriting
discounts and commissions and other reasonable costs paid to non-Affiliates in connection
therewith, provided, however, that Net Proceeds shall not include any cash received
in connection with the exercise of stock options granted to employees or directors of the Borrower,
any Guarantor or any of their respective Subsidiaries, or (d) Extraordinary Receipts received by
the Borrower or any Guarantor, the amount of cash proceeds received (directly or indirectly) from
time to time by or on behalf of the Borrower or such Guarantor or any of their Subsidiaries after
deducting therefrom only (i) expenses related thereto incurred by such Person or such Subsidiary in
connection therewith, (ii) transfer taxes paid by such Person or such Subsidiary in connection
therewith, (iii) net income taxes to be paid in connection therewith (after taking into account any
tax credits or deductions and any tax sharing arrangements), and (iv) that portion of the cash
proceeds received which such Person or such Subsidiary is legally obligated pursuant to any
agreement binding on such Person or such Subsidiary entered into prior to the date hereof to pay to
another Person; provided, however, that Net Proceeds shall not include any such
amounts so received by any such Person or any Subsidiary in respect of any Extraordinary Receipt in
any Fiscal Year until the aggregate amount of cash received by the Borrower and all Guarantors,
collectively, in respect of Extraordinary Receipts during such Fiscal Year exceeds $2,500,000, in
which case Net Proceeds shall constitute solely such amounts in excess thereof.

     “Non-Consenting Lender” shall have the meaning specified in Section 9.02(e).

     “Non-Paying Guarantor” shall have the meaning specified in Section 10.10.

     “Notice of Borrowing” shall mean a Notice of Borrowing in the form of Annex B.

     “Obligated Party” shall have the meaning specified in Section 10.02.

     “Obligations” shall mean all unpaid principal of and accrued and unpaid interest on
the Term Loans, all accrued and unpaid fees and all expenses, reimbursements, indemnities and other
obligations of the Borrower and the Guarantors to the Lenders or to any Lender, any Agent, or any
Indemnitee arising under the Loan Documents. Nothing in this definition of Obligations shall
permit the Borrower, the Guarantors or their Significant Subsidiaries to incur or permit to exist
any Indebtedness not otherwise permitted pursuant to the terms hereof. The Obligations include
interest (including interest that accrues or that would accrue but for the filing of a bankruptcy
case by the Borrower or any Guarantor, whether or not such interest would be an allowable claim
under any applicable bankruptcy or other similar proceeding) and other obligations accruing or
arising after commencement of any case under any bankruptcy or similar laws by or against the
Borrower or any Guarantor (or that would accrue or arise but for the commencement of any such
case).

     “Off-Balance Sheet Liability” shall mean, with respect to any Person, (a) any
repurchase obligation or liability for the principal amount thereof of such Person with respect to
accounts or notes receivable sold by such Person; (b) any indebtedness, liability or obligation
under any sale and leaseback transaction which is not a Capital Lease Obligation and under which
such Person retains ownership of the Property so leased for Federal income tax purposes,

15

 

other than any lease under which such Person is the lessor; or (c) any indebtedness, liability
or obligation arising with respect to any other transaction which is the functional equivalent of
or takes the place of borrowing but which does not constitute a liability on the balance sheets of
such Person, but excluding from this clause (c) operating leases and Capital Lease
Obligations.

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

     “Parent” shall mean Kaiser Aluminum Corporation, a Delaware corporation.

     “Paying Guarantor” shall have the meaning specified in Section 10.10.

     “PBGC” shall mean the Pension Benefit Guaranty Corporation, or any successor agency or
entity performing substantially the same functions.

     “Permitted Acquisition” shall mean any acquisition by the Borrower or any Guarantor in
a transaction that satisfies each of the following requirements:

          (a) such acquisition is not a hostile or contested acquisition;

          (b) the business acquired in connection with such acquisition (i) is predominantly located in
the U.S. and the parent company and its material subsidiaries are organized under U.S. and
applicable state laws, and (ii) is not engaged, directly or indirectly, in any material line of
business other than the businesses in which the Borrower and the Guarantors are engaged on the
Closing Date and any business activities that are substantially similar, related, or incidental
thereto;

          (c) both before and after giving effect to such acquisition and the Term Loans (if any)
requested to be made in connection therewith, each of the representations and warranties in the
Loan Documents is true and correct in all material respects (except (i) any such representation or
warranty which relates to a specified prior date and (ii) to the extent the Lenders have been
notified in writing by the Borrower that any representation or warranty is not correct and the
Required Lenders have explicitly waived in writing compliance with such representation or
warranty);

          (d) as soon as available, but not less than thirty (30) days prior to such acquisition, the
Borrower or applicable Guarantor has provided the Administrative Agent (i) notice of such
acquisition and (ii) a copy of all business and financial information reasonably requested by the
Administrative Agent including pro forma financial statements, statements of cash flow, and
“Availability” (as defined in the Revolving Loan Documents) projections;

          (e) the sum of the cash consideration paid in connection with such acquisition plus the amount
of Disqualified Indebtedness assumed, acquired or issued in connection with such acquisition does
not exceed $50,000,000 in the aggregate for all acquisitions made during the term of this Agreement
(excluding, however, all acquisitions to which this clause (e) does not apply by operation
of the proviso below); provided that this clause 

16

 

(e) shall not apply if, after giving effect to the completion of such acquisition,
Availability (as defined in the Revolving Loan Documents) immediately after the completion of such
acquisition will not be less than $150,000,000 on a pro forma basis, which pro forma presentation
shall treat all cash consideration given, and the amount of Disqualified Indebtedness assumed,
acquired or issued, in connection with such acquisition as having been paid in cash at the time of
making such acquisition; provided, further, that if a “Facility Increase” under
(and as defined in) the Revolving Loan Documents occurs, such $150,000,000 minimum pro forma
Availability shall be increased on the “Facility Increase Effective Date” (as defined in the
Revolving Loan Documents) by 66.67% of the actual “Facility Increase Amount” (as defined in the
Revolving Loan Documents) occurring on such date, such that, in the event of a Facility Increase of
$75,000,000, such minimum pro forma Availability shall be $200,000,000;

          (f) if such acquisition is an acquisition of the Equity Interests of a Person or a merger or
consolidation with another Person, the acquisition, merger or consolidation is structured so that
the Person so acquired, merged or consolidated shall become a wholly-owned Subsidiary of the
Borrower or applicable Guarantor and, in accordance with Section 5.11(a), a Borrower or
Guarantor pursuant to the terms of this Agreement;

          (g) if such acquisition is an acquisition of assets, the acquisition is structured so that a
Borrower or a Guarantor shall acquire such assets;

          (h) if such acquisition is an acquisition of Equity Interests, such acquisition will not
result in any violation of Regulation U;

          (i) neither the Borrower nor any Guarantor shall, as a result of or in connection with any
such acquisition, assume or incur any direct or contingent liabilities (whether relating to
environmental, tax, litigation, or other matters) that at the time of such acquisition could be
reasonably expected to have a Material Adverse Effect;

          (j) in connection with an acquisition of the Equity Interests of any Person, all Liens on
property of such Person (other than liens in favor of the Collateral Agent securing the Obligations
and any Liens that would constitute Liens permitted under Section 6.01) shall be terminated
unless the Lenders in their sole discretion consent otherwise, and in connection with an
acquisition of the assets of any Person, all Liens on such assets (other than liens in favor of the
Collateral Agent securing the Obligations and any Liens that would constitute Liens permitted under
Section 6.01) shall be terminated;

          (k) the Borrower shall certify (and provide the Lenders with a pro forma calculation in form
and substance reasonably satisfactory to the Lenders) to the Lenders that, after giving effect to
the completion of such acquisition, “Availability” (as defined in the Revolving Loan Documents)
immediately after the completion of such acquisition will not be less than $75,000,000 on a pro
forma basis which pro forma presentation shall treat all cash consideration given, and the amount
of Disqualified Indebtedness assumed, acquired or issued, in connection with such acquisition as
having been paid in cash at the time of making such acquisition; provided, further,
that if a “Facility Increase” under (and as defined in) the Revolving Loan Documents occurs, such
$75,000,000 minimum pro forma Availability shall be increased on the “Facility Increase Effective
Date” (as defined in the Revolving Loan

17

 

Documents) by 33.33% of the actual “Facility Increase Amount” (as defined in the Revolving
Loan Documents) occurring on such date, such that, in the event of a Facility Increase of
$75,000,000, such minimum pro forma Availability shall be $100,000,000; and

          (l) no Default exists or would result therefrom.

     “Permitted Commodity Swap Agreement” shall mean any Commodity Swap Agreement that (i)
involves or is settled with respect to electricity, natural gas, alumina, bauxite or other mineral
or metal used in the business of the Borrower, the Guarantors or their Significant Subsidiaries,
and (ii) is entered into in the ordinary course of business to hedge against fluctuations in the
price of electricity, natural gas, alumina, bauxite or other minerals or metals used in the
business of the Borrower, the Guarantors or their Significant Subsidiaries and not for speculative
purposes.

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

     “Permitted Investments” shall mean:

          (a) direct obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent
such obligations are backed by the full faith and credit of the United States of America), in each
case maturing within twelve months from the date of acquisition thereof;

          (b) without limiting the provisions of clause (d) below, investments in commercial
paper maturing within six months from the date of acquisition thereof and having, at such date of
acquisition, a rating of at least “A-2” or the equivalent thereof from Standard & Poor’s, a
division of The McGraw-Hill Companies, Inc. or of at least “P-2” or the equivalent thereof from
Moody’s Investors Service, Inc.;

          (c) investments in certificates of deposit, bankers acceptances and time deposits (including
Eurodollar time deposits) maturing within six months from the date of acquisition thereof issued or
guaranteed by or placed with (i) any domestic office of the Administrative Agent or the bank with
whom the Borrower and the Guarantors maintain their cash management
system, provided that if such
bank is not a Lender hereunder, such bank shall have entered into an agreement with the Agents
pursuant to which such bank shall have waived all rights of setoff and confirmed that such bank
does not have, nor shall it claim, a security interest therein or (ii) any domestic office of any
other commercial bank of recognized standing organized under the laws of the United States of
America or any State thereof that has a combined capital and surplus and undivided profits of not
less than $250,000,000 and is the principal Banking Subsidiary of a bank holding company having a
long-term unsecured debt rating of at least “A-2” or the equivalent thereof from Standard & Poor’s,
a division of The McGraw-Hill Companies, Inc. or at least “P-2” or the equivalent thereof from
Moody’s Investors Service, Inc.;

          (d) investments in commercial paper issued by any Person organized under the laws of any state
of the United States and rated at least “P-1” (or the then equivalent

18

 

grade) by Moody’s Investors Service, Inc. or at least “A-1” (or the then equivalent grade) by
Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., in each case, with maturities of
not more than 360 days from the date of acquisition thereof;

          (e) investments in repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (a) above entered into with any
office of a bank or trust company meeting the qualifications specified in clause (c) above;
and

          (f) investments in money market funds substantially all the assets of which are comprised of
securities of the types described in clauses (a) through (e) above.

     “Permitted Liens” shall mean (i) Liens imposed by law (other than Environmental Liens
and any Lien imposed under ERISA) for Taxes not yet delinquent or which are being contested in
compliance with Section 5.04; (ii) Liens of landlords and Liens of carriers, warehousemen,
workmen, repairmen, vendors, consignors, mechanics, materialmen and other Liens (other than
Environmental Liens and any Lien imposed under ERISA) imposed by law and created in the ordinary
course of business; (iii) Liens (other than any Lien imposed under ERISA) incurred or deposits made
in the ordinary course of business (including, without limitation, surety bonds and appeal bonds)
in connection with workers’ compensation, unemployment insurance and other types of social security
benefits or governmental insurance or to secure the performance of tenders, bids, leases, contracts
(other than for the repayment of Indebtedness), statutory obligations and other similar obligations
or arising as a result of progress payments under government contracts; (iv) easements (including,
without limitation, reciprocal easement agreements and utility agreements), rights-of-way,
covenants, consents, reservations, mineral leases, encroachments, variations and zoning laws,
ordinances, other restrictions and rights reserved to or vested in any municipality or government
or proper authority to control or regulate any Property of the Borrower or the applicable
Guarantor, charges or encumbrances (whether or not recorded) and interest of ground lessors, minor
defects and irregularities in the title to any Property, which do not interfere materially with the
ordinary conduct of the business of the Borrower or any Guarantor, as the case may be, and which do
not materially detract from the value of the property to which they attach or materially impair the
use thereof to the Borrower or any Guarantor, as the case may be; (v) purchase money Liens
(including capital leases) upon or in any property acquired or held in the ordinary course of
business to secure the purchase price of such property solely for the purpose of financing the
acquisition of such property to the extent such purchase money Liens secure Indebtedness incurred
in accordance with Section 6.03(iii); (vi) pledges or deposits in the ordinary course to
secure leases entered into in the ordinary course of business; (vii) pledges and deposits of cash
and Permitted Investments with a commodity broker or dealer for the purpose of margining or
securing the obligations of the Borrower, any Guarantor or any Significant Subsidiary under a
Permitted Commodity Swap Agreement; (viii) any interest of a consignor in goods held by the
Borrower, any Guarantor or any Significant Subsidiary on consignment provided that such goods are
held on consignment in the ordinary course of business consistent with past practices; and (ix)
extensions, renewals, or replacements of any Lien referred to in clauses (i) through
(viii) above; provided that the principal amount of the obligation secured thereby is not
increased and that any such extension, renewal or replacement is limited to the property encumbered
thereby.

19

 

     “Person” shall mean any natural person, corporation, division of a corporation,
limited liability company, partnership, trust, joint venture, association, company, estate,
unincorporated organization, Governmental Authority or other entity.

     “PI Trust” shall have the meaning given to such term in the Reorganization Plan.

     “PI Trust Assets” shall have the meaning given to such term in the Reorganization
Plan.

     “Plan” shall mean a Single Employer Plan or a Multiple Employer Plan.

     “Prepayment Fee” shall have the meaning given to such term in Section 2.06(d).

     “Prime Rate” shall mean the rate of interest per annum publicly announced from time to
time by JPMorgan Chase as its prime rate; each change in the Prime Rate shall be effective from and
including the date such change is publicly announced as being effective.

     “Projections” shall have the meaning assigned such to term in clause (e) of
Section 5.01.

     “Property” shall mean any interest in any kind of property or asset, whether real,
personal or mixed, tangible or intangible.

     “Register” shall have the meaning set forth in Section 9.04.

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

     “Release” shall mean any release, spill, emission, leaking, pumping, pouring,
injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of
Hazardous Materials into the indoor or outdoor environment (including, without limitation, the
abandonment or disposal of any barrels, containers or other closed receptacles containing any
Hazardous Materials), or into or out of any property, including the movement of any Hazardous
Material through the air, soil, surface water, groundwater or property.

     “Reorganization Plan” shall mean a plan of reorganization attached as Exhibit
A-1 hereto.

     “Reorganized KACC” shall mean Kaiser Aluminum & Chemical Corporation, LLC, a Delaware
limited liability company.

     “Report” shall mean any report prepared by any Agent or another Person showing the
results of appraisals, field examinations or audits pertaining to the assets of the Borrower or any
Guarantor from information furnished by or on behalf of the Borrower and the Guarantors, which
Reports may be distributed to the Lenders by any Agent.

20

 

     “Required Lenders” shall mean, (i) from and after the Closing Date, but prior to
the Funding Date, Lenders holding Commitments representing not less than 51% of the aggregate
amount of all such Commitments, and (ii) from and after the Funding Date, Lenders holding Term
Loans representing not less than 51% of the aggregate principal amount of such Term Loans
outstanding.

     “Requirement of Law” shall mean, as to any Person, the certificate of incorporation
and by-laws or other organizational or governing documents of such Person, and any law, treaty,
rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to which such Person
or any of its property is subject.

     “Responsible Officer” shall mean, with respect to any Person, the president, chief
executive officer, chief financial officer, treasurer or controller of such Person, or any attorney
in the office of such Person’s general counsel.

     “Restructuring Transactions” shall mean the transactions scheduled to occur on or
prior to the effective date of the Reorganization Plan and which are listed on Schedule
1.01(b).

     “Revolving Loan Facility” shall mean that certain Senior Secured Revolving Credit
Agreement, dated as of the date hereof, among Borrower, Parent, Kaiser Aluminum Investments Company
and Kaiser Aluminium International, Inc., as Borrowers, the “Lenders” (as defined therein) party
thereto, and JPMorgan Chase, as administrative agent for the Lenders, and any other credit
agreement, loan agreement, note agreement, promissory note, indenture or other agreement or
instrument evidencing or governing the terms of any indebtedness or other financial accommodation
that has been incurred to extend, replace, refinance or refund in whole or in part the indebtedness
and other obligations outstanding under such Senior Secured Revolving Credit Agreement (regardless
of whether such replacement, refunding or refinancing is a “working capital” facility, asset-based
facility or otherwise), each as amended, modified, restated or supplemented from time to time in
accordance with the terms hereof.

     “Revolving Loan Documents” shall mean the Revolving Loan Facility and each other
document, instrument and agreement executed in connection therewith, each as amended, modified,
restated or supplemented from time to time in accordance with the terms hereof.

     “Revolving Loan Indebtedness” shall mean the Indebtedness and other obligations of the
Loan Parties under the Revolving Loan Documents.

     “SEC” shall mean the Securities and Exchange Commission.

     “Security and Pledge Agreement” shall have the meaning set forth in paragraph
(d) of Section 4.01.

     “Settlement Agreement” shall mean the agreement reached with the PBGC and approved by
the Bankruptcy Court on January 24, 2005, as amended (such amendment approved by the Bankruptcy
Court on October 26, 2005).

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     “Significant Subsidiary” shall mean (other than an Excluded Subsidiary) each
Subsidiary of Parent that

          (a) is listed on Schedule 3.17;

          (b) accounted for at least 5% of consolidated revenues of Parent and its Subsidiaries from
sales to third parties for the four Fiscal Quarters of Parent ending on the last day of the last
Fiscal Quarter of Parent immediately preceding the date as of which any such determination is made;
or

          (c) has assets (other than assets which are eliminated in consolidation) which represent at
least 5% of the consolidated assets of Parent and its Subsidiaries as of the last day of the last
Fiscal Quarter of Parent immediately preceding the date as of which any such determination is made,

all of which, with respect to clauses (b) and (c), shall be as included in the
consolidated financial statements of Parent for the period, or as of the date, in question.

     “Single Employer Plan” shall mean a single employer plan, as defined in Section
4001(a)(15) of ERISA, that (i) is maintained for employees of the Borrower, any Guarantor or an
ERISA Affiliate or (ii) was so maintained and in respect of which the Borrower, any Guarantor or an
ERISA Affiliate could have liability under Title IV of ERISA in the event such Plan has been or
were to be terminated.

     “Statutory Reserve Rate” shall mean a fraction (expressed as a decimal), the numerator
of which is the number one and the denominator of which is the number one minus the aggregate of
the maximum reserve percentages (including any marginal, special, emergency or supplemental
reserves) expressed as a decimal as in effect on any date of determination and established by the
Board to which the Administrative Agent is subject with respect to the Adjusted LIBO Rate, for
eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the
Board). Such reserve percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such
reserve requirements without benefit of or credit for proration, exemptions or offsets that may be
available from time to time to any Lender under such Regulation D or any comparable regulation.
The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage.

     “Subsidiary” shall mean, with respect to any Person (herein referred to as the
“parent”), any corporation, association or other business entity (whether now existing or
hereafter organized) of which at least a majority of the securities or other ownership interests
having ordinary voting power for the election of directors is, at the time as of which any
determination is being made, owned or controlled by the parent or one or more subsidiaries of the
parent or by the parent and one or more subsidiaries of the parent. Under no circumstances will an
Excluded Subsidiary be, or be deemed to be, a Significant Subsidiary or a Subsidiary hereunder.

     “Swap Agreement” shall mean any agreement with respect to any swap, forward, future or
derivative transaction or option or similar agreement involving, or settled by reference

22

 

to, one or more rates, currencies, commodities, equity or debt instruments or securities, or
economic, financial or pricing indices or measures of economic, financial or pricing risk or value
or any similar transaction or any combination of these transactions;
provided that no phantom stock
or similar plan providing for payments only on account of services provided by current or former
directors, officers, employees or consultants of the Borrower, any Guarantor or any of their
Subsidiaries shall be a Swap Agreement.

     “Swap Obligations” shall mean, with respect to any Person, any and all obligations of
such Person, whether absolute or contingent and howsoever and whensoever created, arising,
evidenced or acquired (including all renewals, extensions and modifications thereof and
substitutions therefor), under (a) any and all Swap Agreements, and (b) any and all cancellations,
buybacks, reversals, terminations or assignments of any Swap Agreement transaction.

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

     “Tax Related Person” shall mean any Person (including, without limitation, a
beneficial owner of an interest in a pass-through entity) whose income is realized through or
determined by reference to any Agent, or any Participant or any Tax Related Person of any of the
foregoing.

     “Terminated Plans” shall mean (i) the Kaiser Aluminum Salaried Employees Retirement
Plan, terminated by the PBGC effective December 17, 2003; (ii) the Kaiser Aluminum Pension Plan,
terminated by the PBGC effective April 30, 2004; and (iii) the Kaiser Aluminum Inactive Pension
Plan, terminated by the PBGC effective June 30, 2004.

     “Termination Date” shall mean the earlier to occur of (i) the Maturity Date and (ii)
the acceleration of the Term Loans or the termination of the Total Commitment in accordance with
the terms hereof.

     “Termination Event” shall mean, except with respect to the Terminated Plans or Plans
actually terminated in accordance with the terms of the Settlement Agreement, (i) with respect to
any Plan sponsored or contributed to by the Borrower, any Guarantor or any ERISA Affiliate, a
“reportable event”, as such term is described in Section 4043(c) of ERISA (other than a “reportable
event” as to which the 30-day notice is waived) or an event described in Section 4068 of ERISA and
excluding events which would not be reasonably likely (as reasonably determined by the
Administrative Agent) to have a material adverse effect on the financial condition, operations,
business, properties or assets of the Borrower and the Guarantors taken as a whole; (ii) any
reportable event or other event related to the withdrawal of the Borrower or any ERISA Affiliate
from a Multiple Employer Plan during a plan year in which it was a “substantial employer,” as such
term is defined in Section 4001(a)(2) of ERISA, (iii) the incurrence of liability by the Borrower
or any ERISA Affiliate under Section 4064 of ERISA upon the termination of a Multiple Employer
Plan; (iv) the existence with respect to any Plan of an “accumulated funding deficiency” (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (v) the filing
pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of
the minimum funding standard with respect to

23

 

any Plan; (vi) the incurrence by the Borrower or any ERISA Affiliates of any liability under
Title IV of ERISA with respect to the termination of any Plan (other than a Terminated Plan); (vii)
the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any
notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to
administer any Plan (other than a Terminated Plan); (viii) the incurrence by the Borrower or any
ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal from any Plan
(other than a Terminated Plan) or Multiemployer Plan; or (ix) the receipt by the Borrower or any
ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination
that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the
meaning of Title IV of ERISA.

     “Term Loans” shall mean the loans made by the Lenders pursuant to this Agreement.

     “Total Commitment” shall mean, at any time, the sum of the Commitments at such time.

     “Trochus” shall mean Trochus Insurance Company, Ltd., a Bermuda entity.

     “Type” when used in respect of any Term Loan shall refer to the Rate of interest by
reference to which interest on such Term Loan is determined. For purposes hereof, “Rate” shall
mean the Adjusted LIBO Rate or the Alternate Base Rate, as applicable.

     “UCC” shall mean the Uniform Commercial Code as in effect from time to time in the
State of New York or any other state the laws of which are required to be applied in connection
with the issue of perfection of security interests.

     “United States” and “U.S.” shall mean the United States of America.

     “Unliquidated Obligations” shall mean, at any time, any Obligations (or portion
thereof) that are contingent in nature or unliquidated at such time, including any Obligation that
is an obligation (including any guarantee) that is contingent in nature at such time (including an
obligation to provide collateral to secure any of the foregoing types of obligations).

     “VEBA Trusts” shall mean the Union VEBA Trust (as defined in the Reorganization Plan)
and the Retired Salaried Employees VEBA Trust (as defined in the Reorganization Plan).

     “Withdrawal Liability” shall have the meaning given such term under Part I of Subtitle
E of Title IV of ERISA.

     Section 1.02 Classifications of Loans; Terms Generally.
For purposes of this Agreement, Term Loans may
be classified and referred to by Type (e.g., a “Eurodollar Loan”). The definitions in
Section 1.01 shall apply equally to both the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include,”
“includes” and “including” shall be deemed to be followed by the phrase “without limitation.” All references
herein to Sections,

24

 

Exhibits and Schedules shall be deemed references to Sections of, and Exhibits
and Schedules to, this Agreement unless the context shall otherwise require. The words “asset” and
“property” shall be construed to have the same meaning and effect and refer to any and all tangible
and intangible assets and properties. Except as otherwise expressly provided herein, all terms of
an accounting or financial nature shall be construed in accordance with GAAP, as in effect from
time to time; provided that, if the Borrower notifies the Administrative Agent that it requests an
amendment to any provision hereof to eliminate the effect of any change occurring after the date
hereof in GAAP or in the application thereof on the operation of such provision (or if the
Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any
provision hereof for such purpose), regardless of whether any such notice is given before or after
such change in GAAP or in the application thereof, then such provision shall be interpreted on the
basis of GAAP as in effect and applied immediately before such change shall have become effective
until such notice shall have been withdrawn or such provision amended in accordance herewith.
Terms that are defined in the Uniform Commercial Code as in effect in the State of New York from
time to time shall have the same meaning herein unless otherwise defined herein.

     Section 1.03 Obligations Not Affected.
The Obligations of the Borrower and the Guarantors shall not be
affected by (i) the failure of the Administrative Agent or a Lender to assert any claim or demand
or to enforce any right or remedy against the Borrower or any Guarantor under the provisions of
this Agreement or any other Loan Document or otherwise; (ii) any extension or renewal of any
provision hereof or thereof; (iii) any rescission, waiver, compromise, acceleration, amendment or
modification of any of the terms or provisions of any of the Loan Documents; (iv) the release,
exchange, waiver or foreclosure of any security held by the Collateral Agent for the Obligations or
any of them; (v) the failure of the Administrative Agent or a Lender to exercise any right or
remedy against the Borrower or any Guarantor; (vi) the release or substitution of the Borrower or
any Guarantor; or (vii) any other circumstance that might otherwise constitute a discharge of a
surety, other than, in each case, the payment in full in cash of the Obligations.

ARTICLE II

AMOUNT AND TERMS OF CREDIT

     Section 2.01 Commitments.
Subject to the terms and conditions set forth herein, each Lender agrees to
make a Term Loan to the Borrower on the Funding Date, in an amount equal to such Lender’s
Commitment. Amounts repaid in respect of Term Loans may not be reborrowed. Unless previously
terminated, the Commitments shall terminate on the earlier of (i) the Funding Date, or (ii) the
Final Funding Date.

     Section 2.02 Term Loans.

          (a) Each Term Loan shall be denominated in Dollars and comprised entirely of ABR Loans or
Eurodollar Loans as the Borrower may request from time to time in accordance herewith. Each Lender
at its option may make a Eurodollar Loan by causing any domestic or foreign branch or Affiliate of
such Lender to make such Eurodollar Loan; provided that any exercise of such option shall not
affect the obligation of the Borrower to repay such Eurodollar Loan in accordance with the terms of
this Agreement.

25

 

          (b) At the commencement of each Interest Period for any Eurodollar Loan, such Eurodollar Loan
shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than
$5,000,000. Term Loans of more than one Type may be outstanding at the same time; provided that
there shall not at any time be more than a total of eight (8) Eurodollar Loans outstanding.

          (c) Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled
to elect to convert or continue any Term Loan as a Eurodollar Loan if the Interest Period requested
with respect thereto would end after the Maturity Date.

     Section 2.03 Notice of Borrowing; Funding of Term Loans. By delivering a Notice of Borrowing to the
Administrative Agent not later than 1:00 p.m., Central time, on a Business Day, the Borrower may
irrevocably request, on not less than three (3) Business Days’ notice, that a Term Loan as a single
drawing be made on the Funding Date. Any such notice shall specify the date of such Borrowing,
which shall be a Business Day. Promptly following receipt of a Notice of Borrowing in accordance
with this Section, the Administrative Agent shall advise each Lender of the details
thereof. Each Lender shall make its Term Loan on the Funding Date by wire transfer of immediately
available funds by 11:00 a.m., Central time, to the account of the Administrative Agent designated
by it for such purpose by notice to the Lenders in an amount equal to such Lender’s Commitment.
The Administrative Agent will make such Term Loans available to the Borrower by promptly crediting
the amounts so received, in like funds, to a domestic account identified by the Borrower in writing
to the Administrative Agent.

     Section 2.04 Interest Elections.

          (a) The Term Loans shall initially be of the Type specified in the Notice of Borrowing and, in
the case of a Eurodollar Loan, shall have an initial Interest Period as specified in such Notice of
Borrowing. Thereafter, the Borrower may elect to convert such Term Loans to a different Type or to
continue such Eurodollar Loan, and, in the case of a Eurodollar Loan, may elect Interest Periods
therefor, all as provided in this Section 2.04. The Borrower may elect different options
with respect to different portions of the Term Loans, in which case each such portion shall be
allocated ratably among the Lenders.

          (b) To make an election pursuant to this Section 2.04, to borrow a Eurodollar Loan, to
convert an ABR Loan to a Eurodollar Loan or to continue a Eurodollar Loan as a Eurodollar Loan, the
Borrower shall notify the Administrative Agent of such election by telephone not later than 12:00
p.m., Central time, three (3) Business Days before the date of the
proposed conversion or continuation. The Notice of Borrowing and each such telephonic
Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or
facsimile to the Administrative Agent of a written Interest Election Request in a form approved by
the Administrative Agent and signed by the Borrower.

          (c) Each telephonic and written Interest Election Request or Notice of Borrowing shall specify
the following information:

               (i) the portion of the Term Loan to which such Interest Election Request
applies and, if different options are being elected with respect to

26

 

different
portions thereof, whether the resulting portions are to be ABR Loans or Eurodollar
Loans (if a portion or portions are to be Eurodollar Loans, the information required
to be specified pursuant to clause (iv) below shall be specified);

               (ii) the effective date of the election made pursuant to such Interest Election
Request, which shall be a Business Day;

               (iii) in the case of the Notice of Borrowing, whether the Term Loans are to be
ABR Loans or Eurodollar Loans; and

               (iv) if the Term Loans (or a portion thereof) are to be Eurodollar Loans, the
Interest Period to be applicable thereto after giving effect to such election, which
shall be a period contemplated by the definition of the term “Interest Period”.

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

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

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

     Section 2.05 Repayment and Amortization of Term Loans; Evidence of Debt.

          (a) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the
account of each Lender the then unpaid principal amount of each Term Loan on the Termination Date.
All unpaid Obligations shall be paid in full in cash by the Borrower on the Termination Date.

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

          (c) The Administrative Agent shall maintain accounts in which it shall record (i) the amount
of each Term Loan made hereunder, the Type thereof and the Interest Period applicable thereto, (ii)
the amount of any principal or interest due and payable or to

27

 

become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender’s share thereof.

          (d) The entries made in the accounts maintained pursuant to Sections 2.05(b) and
(c) shall be prima facie evidence of the existence and amounts of the obligations recorded
therein; provided that in the event of a conflict between an account maintained pursuant to
Section 2.05(b) and an account maintained pursuant to Section 2.05(c), the account
maintained under Section 2.05(c) shall control; provided further, that the failure of any
Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any
manner affect the obligation of the Borrower to repay the Term Loans in accordance with the terms
of this Agreement.

          (e) Any Lender may request that Term Loans made by it be evidenced by a promissory note. In
such event, the Borrower shall prepare, execute and deliver to such Lender a promissory note
payable to the order of such Lender (or, if requested by such Lender, to such Lender and its
registered and permitted assigns) and in a form approved by the Administrative Agent. Thereafter,
the Term Loans evidenced by such promissory note and interest thereon shall at all times (including
after assignment pursuant to Section 9.04) be represented by one or more promissory notes
in such form payable to the order of the payee named therein (or, if such promissory note is a
registered note, to such payee and its registered assigns) except to the extent that any such
Lender subsequently returns any such promissory note for cancellation and requests that such Term
Loans once again be evidenced as described in Sections 2.05(b) and (c) above.

     Section 2.06 Prepayment of Term Loans.

          (a) The Borrower shall have the right, at its option and then only to the extent permitted by
the Revolving Loan Documents, at any time and from time to time, to prepay the Term Loans in whole
or in part, subject to prior notice in accordance with Section 2.06(c). Any prepayment of
the Term Loans on or prior to July 5, 2007 shall be accompanied by the Prepayment Fee.

          (b) (i) Subject to Section 2.06(b)(vi) below, no later than the next Business Day
after receipt by the Borrower or any Guarantor of the Net Proceeds of any asset disposition (other
than an Excluded Asset Disposition) the Borrower shall prepay the Obligations in an amount equal to
100% of such Net Proceeds; provided, that (a) if the Borrower or such Guarantor, as
the case may be, intends to reinvest such proceeds thereof in accordance with this proviso, the
Borrower shall deliver written notice of such intention to the Administrative Agent on or prior to
the Business Day immediately following the date on which the Borrower or Guarantor, as the case may
be, receives such proceeds, (b) if Borrower shall have delivered such notice, the Borrower or such
Guarantor may reinvest the proceeds thereof so long as (i) such reinvestment is to restore, repair
or replace the assets or property or purchase other assets used or useful in the business of the
Borrower or such Guarantor and (ii) within 365 days after receipt of such proceeds such
restoration, repair or replacement or purchase shall have been consummated, (c) on the date the
Borrower or such Guarantor consummates such restoration, repair or replacement or purchase, it
shall deliver a certificate of a Responsible Officer to the

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Administrative Agent certifying that
all, or, subject to the immediately succeeding proviso, part of, such proceeds have been reinvested
in accordance with the proviso of this Section 2.06(b)(i), and (d) until such reinvestment
or the application of such proceeds pursuant to the proviso below, such proceeds (or any portion
thereof) shall be deposited in a deposit account subject to a control agreement reasonably
acceptable to the Administrative Agent or in an account under the control of the “Administrative
Agent” (under and as defined in the Revolving Loan Documents) or used to repay amounts outstanding
under the Revolving Loan Facility; provided, further that any proceeds not so
reinvested shall be immediately applied as set forth in this Section 2.06(b)(i).

               (ii) Subject to Section 2.06(b)(vi) below, if the Borrower or any
Guarantor issues Equity Interests or Indebtedness (other than Indebtedness permitted
by Section 6.03), the Borrower shall prepay the Obligations in an amount
equal to 100% of the Net Proceeds of such issuance no later than the Business Day
following the date of receipt of such Net Proceeds.

               (iii) Subject to Section 2.06(b)(vi) below, any insurance or
condemnation proceeds to be applied to the Obligations in accordance with
Section 5.03 shall be applied as set forth in paragraph (b)(v)
below, provided that, with respect to such proceeds of insurance and condemnation
awards (or payments in lieu thereof), (a) if the Borrower or such Guarantor, as the
case may be, intends to reinvest the proceeds thereof in accordance with this
proviso, the Borrower shall deliver written notice of such intention to the
Administrative Agent on or prior to the Business Day immediately following the date
on which the Borrower or Guarantor, as the case may be, receives such proceeds; (b)
if the Borrower shall have delivered such notice, the Borrower or the applicable
Guarantor, as the case may be, may reinvest the proceeds thereof so long as (i) such
reinvestment is to restore, repair or replace the assets or property or purchase
other assets used or useful in the business of the Borrower or such Guarantor, and
(ii) within 365 days after receipt of such proceeds such restoration, repair or
replacement or purchase shall have be consummated; (c) on the date that the Borrower
or such Guarantor consummates such restoration, repair or replacement or purchase,
it shall deliver a certificate of a Responsible Officer to the Administrative Agent
certifying that all, or, subject to the immediately succeeding
proviso, part of, such proceeds have been reinvested in accordance with the
proviso of this Section 2.06(b)(iii); and (d) until such reinvestment or the
application of such proceeds pursuant to the proviso below, such proceeds (or any
portion thereof) shall be deposited in a deposit account subject to a control
agreement reasonably acceptable to the Administrative Agent or in an account under
the control of the “Administrative Agent” (under and as defined in the Revolving
Loan Documents) or used to repay amounts outstanding under the Revolving Loan
Facility; provided, further that any proceeds not so reinvested
shall be immediately applied as set forth in this Section 2.06(b)(iii). If
the precise amount of insurance or condemnation proceeds allocable to Inventory as
compared to equipment, fixtures and real Property is not otherwise determined, the
allocation and application of those proceeds shall be determined by the
Administrative Agent, in its Permitted Discretion.

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               (iv) Subject to Section 2.06(b)(vi) below, promptly (and in any event,
no later than one (1) Business Day after the receipt thereof) upon receipt by the
Borrower or any Guarantor of the Net Proceeds of any Extraordinary Receipts, the
Borrower shall prepay the Obligations in an amount equal to 100% of such Net
Proceeds as set forth in paragraph (b)(v) below.

               (v) Without in any way limiting the foregoing but subject to paragraph
(b)(vi) below, immediately upon receipt by the Borrower or any Guarantor of
proceeds of any sale of any Collateral, the Borrower shall cause such Person to
deliver such proceeds to the Administrative Agent, or deposit such proceeds in a
deposit account subject to a control agreement reasonably acceptable to the
Administrative Agent or in an account under the control of the “Administrative
Agent” (under and as defined in the Revolving Loan Documents) or used to repay
amounts outstanding under the Revolving Loan Facility. All of such proceeds shall
be applied as provided in Section 2.13(b). Nothing in this Section
shall be construed to constitute Administrative Agent’s or any Lender’s consent to
any transaction that is not permitted by other provisions of this Agreement or the
other Loan Documents.

               (vi) Notwithstanding the foregoing provisions of this Section 2.06(b),
no prepayment of the Term Loans shall be made or required unless both prior to and
immediately after giving effect thereto, (a) no “Loans” (as defined in the Revolving
Loan Documents) are outstanding under the Revolving Loan Facility, (b)
“Availability” (as defined under the Revolving Loan Documents) is equal to or
greater than $100,000,000, (c) no Dominion Trigger Event (as defined in the
Revolving Loan Documents) is continuing and (d) no “Default” or “Event of Default”
(each as defined in the Revolving Loan Documents) has occurred and is continuing.

          (c) The Borrower shall notify the Administrative Agent by telephone (confirmed by facsimile)
of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Loan, not later than
12:00 noon, Central time, three (3) Business Days before the date of prepayment, and (ii) in the
case of prepayment of an ABR Loan, not later than 1:00 p.m.,
Central time, one (1) Business Day before the date of prepayment. Promptly following receipt
of any such notice, the Administrative Agent shall advise the Lenders of the contents thereof.
Each prepayment shall be applied ratably to the Term Loans. Prepayments shall be accompanied by
accrued interest.

          (d) If on or prior to July 5, 2007 any portion of the Term Loans is prepaid, then in addition
to any other amounts payable under this Agreement and any other Loan Document, the Borrower shall
pay, on the date of such prepayment, to the Administrative Agent for the ratable benefit of the
Lenders (in addition to the then outstanding principal, accrued interest and other charges then due
and payable under the terms of this Agreement and any other Loan Document), a nonrefundable
prepayment fee (the “Prepayment Fee”) equal to the amount so prepaid multiplied by 1.00%.

30

 

     Section 2.07 Fees. The Borrower agrees to pay the Agents and the Lenders (a) an unused line fee payable
to the Administrative Agent, for the ratable benefit of the Lenders, at the rate of 1.00% per annum
on the total amount of the Term Loan Facility for the period from the earlier of (i) the Closing
Date, and (ii) the “Closing Date” (as defined in the Revolving Credit Facility) through the earlier
of (i) the Funding Date, and (ii) the Final Funding Date, and (b) all other fees payable in the
amounts and at the times separately agreed upon between the Borrower, the Agents and the Lenders,
as the case may be. All fees payable hereunder shall be paid on the dates due, in immediately
available funds, to the Agents or the Lenders, as applicable. Fees paid shall not be refundable
under any circumstances.

     Section 2.08 Interest.

          (a) The Term Loans comprising each ABR Loan shall bear interest at the Alternate Base Rate
plus the Applicable Margin.

          (b) The Term Loans comprising each Eurodollar Loan shall bear interest at the Adjusted LIBO
Rate for the Interest Period in effect for such Eurodollar Loan plus the Applicable Margin.

          (c) Notwithstanding the foregoing, during the occurrence and continuance of an Event of
Default, the Administrative Agent or the Required Lenders may, at their option, by notice to the
Borrower (which notice may be revoked at the option of the Required Lenders notwithstanding any
provision of Section 9.02 requiring the consent of each Lender affected thereby for
reductions in interest rates), declare that (i) all Term Loans shall bear interest at 2% plus the
rate otherwise applicable to such Term Loans as provided in the preceding paragraphs of this
Section or (ii) in the case of any other amount outstanding hereunder, such amount shall
accrue at 2% plus the rate applicable to such fee or other obligation as provided hereunder.

          (d) Accrued interest on each Term Loan shall be payable in arrears on each Interest Payment
Date for such Term Loan and upon the Termination Date; provided that (i)
interest accrued pursuant to Section 2.08(c) shall be payable on demand; (ii) in the
event of any repayment or prepayment of any Term Loan, accrued interest on the principal amount
repaid or prepaid shall be payable on the date of such repayment or prepayment; and (iii) in the
event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period
therefor, accrued interest on such Term Loan shall be payable on the effective date of such
conversion.

          (e) All interest hereunder shall be computed on the basis of a year of 360 days, and shall be
payable for the actual number of days elapsed (including the first day but excluding the last day).
The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest error.

     Section 2.09 Alternate Rate of Interest. If prior to the commencement of any Interest Period for a
Eurodollar Loan:

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          (a) the Administrative Agent determines (which determination shall be conclusive absent
manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO
Rate or the LIBO Rate, as applicable, for such Interest Period; or

          (b) the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate or
the LIBO Rate, as applicable, for such Interest Period will not adequately and fairly reflect the
cost to such Lenders (or Lender) of making or maintaining their Term Loans (or its Term Loan)
included in such Eurodollar Loan for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by
telephone or facsimile as promptly as practicable thereafter and, until the Administrative Agent
notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer
exist, any Interest Election Request that requests the conversion of any ABR Loan to, or
continuation of any Eurodollar Loan as, a Eurodollar Loan shall be ineffective.

     Section 2.10 Increased Costs.

          (a) If any Change in Law shall:

               (i) impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Lender (except any such reserve requirement reflected in the
Adjusted LIBO Rate); or

               (ii) impose on any Lender or the London interbank market any other condition
affecting this Agreement or Eurodollar Loans made by such Lender;

and the result of any of the foregoing shall be to increase the cost to such Lender of making or
maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Term Loan)
or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of
principal, interest or otherwise), then the Borrower will pay to such Lender such additional amount
or amounts as will compensate such Lender for such additional costs incurred or reduction suffered.

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

          (c) A certificate of a Lender setting forth the amount or amounts necessary to compensate such
Lender or its holding company, as the case may be, as specified in Section 2.10(a) or
(b) shall be delivered to the Borrower and shall be conclusive absent manifest

32

 

error. The
Borrower shall pay such Lender the amount shown as due on any such certificate within fourteen (14)
days after receipt thereof.

          (d) Failure or delay on the part of any Lender to demand compensation pursuant to this
Section shall not constitute a waiver of such Lender’s right to demand such compensation;
provided that the Borrower shall not be required to compensate a Lender pursuant to this
Section for any increased costs or reductions incurred more than 180 days prior to the date
that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or
reductions and of such Lender’s intention to claim compensation therefor; provided  further that, if
the Change in Law giving rise to such increased costs or reductions is retroactive, then the
180-day period referred to above shall be extended to include the period of retroactive effect
thereof.

     Section 2.11 Breakfunding Payments. In the event of (a) the payment of any principal of any Eurodollar
Loan other than on the last day of an Interest Period applicable thereto (including as a result of
an Event of Default); (b) the conversion of any Eurodollar Loan other than on the last day of the
Interest Period applicable thereto; (c) the failure to convert, continue or prepay any Eurodollar
Loan on the date specified in any notice delivered pursuant hereto; or (d) the assignment of any
Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of
a request by the Borrower pursuant to Section 2.14, then, in any such event, the Borrower
shall compensate each Lender for the loss, cost and expense attributable to such event. In the
case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to include an
amount determined by such Lender to be the excess, if any, of (i) the amount of interest which
would have accrued on the principal amount of such Eurodollar Loan had such event not occurred, at
the Adjusted LIBO Rate (without including the Applicable Margin in such calculation) that would
have been applicable to such Eurodollar Loan, for the period from the date of such event to the
last day of the then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the
period that would have been the Interest Period for such Eurodollar Loan), over (ii) the amount of
interest which would accrue on such principal amount for such period at the interest rate which
such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a
comparable amount and period from other banks in the eurodollar market. A certificate of any
Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this
Section shall be delivered to the Borrower and shall be conclusive absent manifest error.
The Borrower shall pay such Lender the amount shown as due on any such certificate within fourteen
(14) days after receipt thereof.

     Section 2.12 Taxes.

          (a) Any and all payments by or on account of any obligation of the Borrower or the Guarantors
hereunder shall be made free and clear of and without deduction for any Indemnified Taxes; provided
that if the Borrower, any Guarantor or any Agent shall be required by law to deduct any Indemnified
Taxes from such payments, then (i) the Borrower or such Guarantor, as the case may be, shall
increase the sum payable as necessary so that after all required deductions and payments of
Indemnified Taxes (including deductions and payments of Indemnified Taxes applicable to additional
sums payable under this Section) any Agent or Lender (as the case may be) receives an
amount equal to the sum it would have received had no

33

 

such deductions been made or such Indemnified
Taxes been payable; (ii) the Borrower and/or the applicable Agent shall make such deductions of
Taxes which they are required by law to deduct; and (iii) the Borrower and/or the applicable Agent
shall pay the full amount deducted to the relevant Governmental Authority in accordance with
applicable law.

          (b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority
in accordance with applicable law.

          (c) The Borrower and the Guarantors shall indemnify each Agent and each Lender for the full
amount of any Indemnified Taxes paid by such Agent or such Lender and each of their Tax Related
Persons, as the case may be, on or with respect to any payment by or on account of any obligation
of the Borrower hereunder (including Indemnified Taxes imposed or asserted on or attributable to
amounts payable under this Section) and any penalties, interest and reasonable expenses
arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority, but excluding penalties,
interest and other expenses to the extent solely and directly attributable to the gross negligence
or willful misconduct of the Person claiming such indemnity. Payment under this Section
2.12(c) shall be made within fourteen (14) days after the applicable Agent or Lender makes
written demand therefor. A certificate as to the amount of such payment or liability delivered to
the Borrower by a Lender or by the applicable Agent on its own behalf or on behalf of a Lender or
their respective Tax Related Persons, shall be conclusive absent manifest error.

          (d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the
Borrower or a Guarantor to a Governmental Authority, to the extent such Indemnified Taxes or Other
Taxes are imposed with respect to any payment by or on account of
any obligation of the Borrower or any Guarantor hereunder or with respect to any Loan
Documents, the Borrower or such Guarantor shall deliver to the Administrative Agent the original or
a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy
of the return reporting such payment or other evidence of such payment reasonably satisfactory to
the Administrative Agent.

          (e) Any Lender that is entitled to an exemption from or reduction of withholding tax under the
law of the jurisdiction in which the Borrower or any Guarantor is located, or any treaty to which
such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the
Borrower and the Administrative Agent, at the time or times prescribed by applicable law, the
appropriate properly completed and executed Internal Revenue Service Form W-8 (including, without
limitation, Form W-8ECI, W-8BEN or W-8IMY) or Form W-9 or any successor form thereto or such other
evidence satisfactory to the Borrower and the Administrative Agent as will permit such payments to
be made without withholding or at a reduced rate. “United States persons” (within the meaning of
Code Section 7701(a)(30)) that are “exempt recipients” (within the meaning of Treasury Regulations
Section 1.6049-4(c)(1)(ii) (without regard to the third sentence thereof)) shall not be required to
furnish an Internal Revenue Service Form W-9 unless (i) the Borrower reasonably believes that such
person is, in fact, not an “exempt recipient,” and (ii) the Borrower timely and reasonably requests
a Form W-9 from such Person (provided, however, that if a United States person is
not legally entitled to

34

 

deliver a Form W-9 as a result of a change in law occurring after the date
hereof, such Person shall not be required to deliver such Form W-9).

          (f) If an Agent or a Lender determines, in its sole discretion, that it has received a refund
of or credit against any Taxes paid by the Borrower or any Guarantor or as to which it has been
indemnified by the Borrower or any Guarantor or with respect to which the Borrower or any Guarantor
has paid additional amounts pursuant to this Section 2.12, it shall pay over such refund or
the amount of such credit to the Borrower or such Guarantor (but only to the extent of indemnity
payments made, or additional amounts paid, by the Borrower or such Guarantor under this Section
2.12 with respect to the Taxes giving rise to such refund or credit), net of all out-of-pocket
expenses and Taxes of such Agent or such Lender and without interest (other than any interest paid
by the relevant Governmental Authority with respect to such refund) within thirty (30) days of the
receipt of such amount; provided, that the Borrower or such Guarantor upon the
request of such Agent or such Lender, agrees to repay the amount paid over to the Borrower or such
Guarantor (plus any penalties, interest or other charges imposed by the relevant Governmental
Authority) to such Agent or such Lender in the event such Agent or such Lender is required to repay
such refund to such Governmental Authority. Nothing in this Section 2.12(f) shall be
construed to require any Agent or any Lender (or any of their Tax Related Persons) to make
available its Tax returns (or any other information which it deems confidential) to the Borrower,
any Guarantor or any other Person.

     Section 2.13 Payments Generally; Allocation of Proceeds; Sharing of Set-offs.

          (a) The Borrower shall make each payment required to be made by it hereunder (whether of
principal, interest, or fees or of amounts payable under Section 2.10, 2.11
or 2.12 or otherwise) prior to 1:00 p.m., Central time, on the date when due, in
immediately available funds, without set-off or counterclaim. Any amounts received after such time
on any date may, in the discretion of the Administrative Agent, be deemed to have been received on
the next succeeding Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at 120 South LaSalle Street, Chicago,
Illinois, except that payments pursuant to Sections 2.10, 2.11, 2.12 and
9.03 shall be made directly to the Persons entitled thereto. The Administrative Agent
shall distribute any such payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on
a day that is not a Business Day, the date for payment shall be extended to the next succeeding
Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable
for the period of such extension. All payments hereunder shall be made in Dollars.

          (b) Any proceeds of Collateral received by an Agent (i) not constituting either (A) a specific
payment of principal, interest, fees or other sum payable under the Loan Documents (which shall be
applied as specified by the Borrower) or (B) a mandatory prepayment (which shall be applied in
accordance with Section 2.06), or (ii) after an Event of Default has occurred and is
continuing and the Administrative Agent so elects or the Required Lenders so direct, such funds
shall be applied ratably first, to pay any fees, indemnities, or expense reimbursements
including amounts then due to any Agent from the Borrower, second, to pay any fees or
expense reimbursements then due to the Lenders from the Borrower, third, to pay interest
due in respect of the Term Loans, fourth, to pay the principal of the Term Loans; and

35

 

fifth, to the payment of any other Obligation due to any Agent or any Lender by the
Borrower. Notwithstanding anything to the contrary contained in this Agreement, unless so directed
by the Borrower, or unless a Default is in existence, neither the Administrative Agent, the
Collateral Agent nor any Lender shall apply any payment which it receives to any Eurodollar Loan,
except (a) on the expiration date of the Interest Period applicable to any such Eurodollar Loan or
(b) in the event, and only to the extent, that there are no outstanding ABR Loans and, in such
case, the Borrower shall pay the breakfunding payment required in accordance with Section
2.11. The Agents and the Lenders shall have the continuing and exclusive right to apply and
reverse and reapply any and all such proceeds and payments to any portion of the Obligations.

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

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

          (e) If any Lender shall fail to make any payment required to be made by it pursuant to this
Agreement, then the Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the

36

 

Administrative Agent for the
account of such Lender to satisfy such Lender’s obligations hereunder until all such unsatisfied
obligations are fully paid.

     Section 2.14 Mitigation Obligations; Replacement of Lenders. If any Lender requests compensation under
Section 2.10, or if the Borrower is required to pay any additional amount to any Lender or
any Governmental Authority for the account of any Lender pursuant to Section 2.12, then:

          (a) such Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Term Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the judgment of such Lender, such
designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section
2.10 or 2.12, as the case may be, in the future and (ii) would not subject such Lender
to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender (and
the Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment); and

          (b) the Borrower may, at its sole expense and effort, require such Lender (a “Departing
Lender”), upon notice by the Borrower to the Departing Lender and the Administrative Agent, to
assign and delegate, without recourse (in accordance with and subject to the restrictions contained
in Section 9.04), all its interests, rights and obligations under this Agreement to an
assignee that shall assume such obligations (which assignee may be another Lender, if a Lender
accepts such assignment); provided that (i) the Borrower shall have received the prior written
consent of the Administrative Agent, which consent shall not unreasonably be withheld, conditioned
or delayed; (ii) the Departing Lender shall have received payment of an
amount equal to the outstanding principal of its Term Loans accrued interest thereon, accrued
fees and all other amounts payable to it hereunder, from the assignee (to the extent of such
outstanding principal and accrued interest and fees) or the Borrower (in the case of all other
amounts); and (iii) in the case of any such assignment resulting from a claim for compensation
under Section 2.10 or payments required to be made pursuant to Section 2.12, such
assignment will result in a reduction in such compensation or payments. A Departing Lender shall
not be required to make any such assignment and delegation if, prior thereto, as a result of a
waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such
assignment and delegation cease to apply.

     Section 2.15 Indemnity for Returned Payments. If after receipt of any payment which is applied to the
payment of all or any part of the Obligations, any Agent or Lender is for any reason compelled to
surrender such payment or proceeds to any Person because such payment or application of proceeds is
invalidated, declared fraudulent, set aside, determined to be void or voidable as a preference,
impermissible setoff, or a diversion of trust funds, or for any other reason, then the Obligations
or part thereof intended to be satisfied shall be revived and continued and this Agreement shall
continue in full force as if such payment or proceeds had not been received by such Agent or such
Lender and the Borrower shall be liable to pay to such Agent or such Lender, and the Borrower
hereby indemnifies such Agent or such Lender and holds such Agent or such Lender harmless for the
amount of such payment or proceeds surrendered. The provisions of this Section 2.15 shall
be and remain effective notwithstanding any contrary action which may have been taken by any Agent
or any Lender in reliance upon

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such payment or application of proceeds, and any such contrary
action so taken shall be without prejudice to the Agents’ and the Lenders’ rights under this
Agreement and the other Loan Documents and shall be deemed to have been conditioned upon such
payment or application of proceeds having become final and irrevocable. The provisions of this
Section 2.15 shall survive the termination of this Agreement.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

     In order to induce the Lenders to make Term Loans hereunder and the Agents to enter into this
Agreement, the Borrower and each of the Guarantors jointly and severally represent and warrant, as
of the date hereof, as of the Closing Date and as of the Funding Date, as follows:

     Section 3.01 Organization and Authority. The Borrower, each of the Guarantors and each of the
Significant Subsidiaries (i) is duly organized and validly existing under the laws of the
jurisdiction of its organization and is duly qualified as a foreign organization and is in good
standing in each jurisdiction in which the failure to so qualify would reasonably be expected to
have a Material Adverse Effect, (ii) has the requisite corporate power and authority to effect the
transactions contemplated hereby, and by the other Loan Documents to which it is a party, and (iii)
has all requisite organizational power and authority and the legal right to own, pledge, mortgage
and operate its properties, and to conduct its business as now or currently proposed to be
conducted.

     Section 3.02 Due Execution. The execution, delivery and performance by each of the Borrower and the
Guarantors of each of the Loan Documents to which such Person is a party (i) are within its
organizational powers, have been duly authorized by all necessary organizational action including
the consent of equity holders where required, and do not (A) contravene its charter or by-laws or
other constituent documents, (B) violate any law (including, without limitation, the Securities
Exchange Act of 1934) or regulation (including, without limitation, Regulations T, U or X of the
Board of Governors of the Federal Reserve System), or any order or decree of any court or
Governmental Authority, (C) conflict with or result in a breach of, or constitute a default under,
any material indenture, mortgage or deed of trust or any material lease, agreement or other
instrument binding on it or any of its respective properties, or (D) result in or require the
creation or imposition of any Lien upon any of its property other than the Liens granted pursuant
to this Agreement or the other Loan Documents; and (ii) do not require the consent, authorization
by or approval of or notice to or filing or registration with any Governmental Authority, other
than (x) any actions required outside of the United States (with respect to Collateral located
outside of the United States or Collateral consisting of stock of foreign issuers) and (y) actions
required under the Federal Assignment of Claims Act of 1940 in order to perfect the security
interests of the Collateral Agent in the Collateral. This Agreement has been duly executed and
delivered by the Borrower and each of the Guarantors. This Agreement is, and each of the other
Loan Documents to which the Borrower and each of the Guarantors is or will be a party, when
delivered hereunder or thereunder, will be, a legal, valid and binding obligation of the Borrower
and each Guarantor, as the case may be, enforceable against the Borrower and the Guarantors, as the
case may be, in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting

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creditors’ rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding in equity or at law.

     Section 3.03 Statements Made. The information that has been delivered in writing by the Borrower or any
of the Guarantors to the Administrative Agent in connection with any Loan Document, and any
financial statement delivered pursuant hereto or thereto (other than to the extent that any such
statements constitute Projections), taken as a whole and in light of the circumstances in which
made, as of the date of delivery of such information or financial statement (other than
Projections), contains no untrue statement of a material fact and does not omit to state a material
fact necessary to make such statements not misleading (for the purpose of clarification, any
financial statements that have been delivered, other than financial statements filed with the SEC
and the annual financial statements delivered or to be delivered pursuant to Section
5.01(a), do not contain notes that would otherwise be required by GAAP); and, to the extent
that any such information constitutes Projections, such Projections were prepared in good faith on
the basis of assumptions, methods, data, tests and information believed by the Borrower or such
Guarantor to be reasonable at the time such Projections were furnished. It is understood by the
Administrative Agent and the Lenders that all the Projections may not prove to be correct, that
actual future financial performance may vary from the Projections and that nothing contained in
this Section 3.03 shall be construed as a warranty or guarantee of future financial
performance.

     Section 3.04 Financial Statements. The Borrower has furnished the Administrative Agent with copies of, or has provided the
Administrative Agent with an electronic link to the copies that have been made available through
its website or that have been filed with the SEC via EDGAR, the unaudited consolidated financial
statements of Parent and its Subsidiaries for the most recent Fiscal Quarter ended at least fifty
(50) days prior to the Closing Date (unless such Fiscal Quarter is the fourth Fiscal Quarter, in
which case the Borrower shall have delivered such financial statements for the Fiscal Quarter ended
immediately prior thereto) and the audited consolidated financial statements of Parent and its
Subsidiaries for the most recent Fiscal Year ended at least one hundred and five (105) days prior
to the Closing Date. Subject to any qualifications set forth therein, (i) such financial
statements present fairly the financial condition and results of operations of Parent and its
Subsidiaries on a consolidated basis as of such date and for such period, (ii) such balance sheets
and any notes thereto disclose all liabilities, direct or contingent, of Parent and its
Subsidiaries as of the dates thereof required to be disclosed by GAAP and (iii) such financial
statements were prepared in a manner consistent with GAAP. No event that had a Material Adverse
Effect has occurred since December 31, 2005.

     Section 3.05 Real Property. As of the Closing Date, Schedule 3.05 sets forth a correct and
complete list of all material real Property owned or leased by the Borrower or any Guarantor. No
material default by Borrower or any Guarantor under any lease or sublease related to any leased or
subleased real Property set forth on Schedule 3.05 exists and, to the knowledge of the
Borrower and the Guarantors, no material default by any other party to any such lease or sublease
exists. Except as set forth on Schedule 3.05, the Borrower and each Guarantor has good and
indefeasible title to, or valid leasehold interests in, all of its material real and personal
Property, free of all Liens other than those permitted by Section 6.01.

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     Section 3.06 Liens. Except for Liens existing on the Closing Date as reflected on Schedule
3.06, there are no Liens of any nature whatsoever on any assets of the Borrower or any of the
Guarantors other than: (i) Permitted Liens; (ii) other Liens permitted pursuant to Section
6.01; and (iii) Liens in favor of the Collateral Agent. Neither the Borrower nor any Guarantor
is a party to any contract, agreement, lease or instrument the performance of which, either
unconditionally or upon the happening of an event, will result in or require the creation of a Lien
on any assets of the Borrower or any Guarantor or otherwise result in a violation of this Agreement
other than (x) the Liens granted to the Collateral Agent and the Lenders as provided for in this
Agreement and (y) the Liens granted to the “Administrative Agent” (as defined in the Revolving Loan
Documents) and the “Lenders” (as defined in the Revolving Loan Documents) as provided for in the
Revolving Loan Documents.

     Section 3.07 Compliance with Law. Except as set forth on Schedule 3.07, neither the Borrower
nor any Guarantor is, to the best of their knowledge, in violation of any law (except those
relating to Environmental Laws set forth on Schedule 3.21), rule or regulation, or in
default with respect to any judgment, writ, injunction
or decree of any Governmental Authority the violation of which, or a default with respect to which,
would have a Material Adverse Effect.

     Section 3.08 Insurance. All policies of insurance of any kind or nature owned by or issued to the
Borrower and the Guarantors, including, without limitation, policies of life, fire, theft, product
liability, public liability, property damage, other casualty, employee fidelity, workers’
compensation, employee health and welfare, title, property and liability insurance, are in full
force and effect and are of a nature and provide such coverage as is customarily carried by
companies of the size and character of the Borrower and the Guarantors.

     Section 3.09 Use of Proceeds. The proceeds of the Term Loans will be used by the Borrower in accordance
with, and in a manner and subject to the limitations described in, Section 5.10.

     Section 3.10 Litigation. Other than as set forth on Schedule 3.10, there are no actions, suits,
proceedings or investigations pending or, to the actual knowledge of the Borrower or any of the
Guarantors, threatened against or affecting the Borrower or any Guarantor or any of their
respective properties, before any court or governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, which would be reasonably likely to have a Material
Adverse Effect.

     Section 3.11 Investment and Holding Company Status. None of the Borrower, the Guarantors nor any of
their respective Subsidiaries is (a) an “investment company” as defined in, or subject to
regulation under, the Investment Company Act of 1940 or (b) a “holding company” as defined in, or
subject to regulation under, the Public Utility Holding Company Act of 1935.

     Section 3.12 Taxes. Except as set forth on Schedule 3.12, the Borrower and each of the
Guarantors have timely filed or caused to be filed all federal and all state and other material Tax
returns and reports required by law to have been filed by each such Person and has paid or caused
to be paid all federal and all state and other material Taxes required by law to

40

 

have been paid by
each such Person, except Taxes that are being contested in good faith by appropriate proceedings
and for which the Borrower or such Guarantor, as applicable, has set aside on its books adequate
reserves. Except as set forth on Schedule 3.12, no Tax liens have been filed, and no
claims are being asserted with respect to any such Taxes except claims that are being contested in
accordance with Section 5.04.

     Section 3.13
ERISA. No Termination Event has occurred that, when taken together with all other such Termination
Events for which liability is reasonably expected to occur, could reasonably be expected to result
in a Material Adverse Effect. The present value of all accumulated benefit obligations under each
Plan (excluding the Terminated Plans) as of December 31, 2004, or the date of the most recent
audited financial statements reflecting such amounts (based on the assumptions used for purposes of
Statement of Financial Accounting Standards No. 87) did not exceed by more than $20,000,000 the
fair market value of the assets of such Plan, and the present value of all accumulated benefit
obligations of all underfunded Plans did not exceed by more than $20,000,000 the fair market value
of the assets of all such underfunded Plans.

     Section 3.14 Disclosure. Except as disclosed in the Form 10-Q filed with the SEC by Parent and KACC on
May 10, 2006, or in other periodic reports filed with the SEC after May 10, 2006, and prior to July
6, 2006, the Borrower and the Guarantors have disclosed to the Administrative Agent all agreements,
instruments and corporate or other restrictions to which the Borrower, the Guarantors or any of
their respective Subsidiaries is subject, and all other matters known to it, that, individually or
in the aggregate, could reasonably be expected to result in a Material Adverse Effect. No Lien has
arisen with respect to any Plan.

     Section 3.15 Material Agreements. All material agreements and contracts to which the Borrower or any
Guarantor is a party or is bound and which, under applicable law would be required to be filed with
the SEC are either: (a) filed as exhibits to, or incorporated by reference in, the last Form 10-K
or Form 10-Q prior to the Closing Date, or any Form 10-K, Form 10-Q or 8-K thereafter, in each case
filed with the SEC by Parent and/or KACC or (b) are listed on Schedule 3.15. Neither the
Borrower nor any Guarantor is in default in the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in (x) any material agreement to which such
Person is a party or (y) any agreement or instrument evidencing or governing Indebtedness.

     Section 3.16 Reportable Transaction. The Borrower does not intend to treat the advances of Term Loans
and related transactions as being a “reportable transaction” (within the meaning of Treasury
Regulation Section 1.6011-4). In the event the Borrower determines to take any action inconsistent
with such intention, the Borrower will promptly notify the Administrative Agent thereof.

     Section 3.17 Capitalization and Subsidiaries. Schedule 3.17 sets forth (a) a correct and
complete list of the name and relationship to the Borrower of each and all of the Guarantors and
their Significant Subsidiaries, (b) a true and complete listing of each class of each of the
authorized Equity Interests of the Borrower, of which all of such issued shares are validly issued,
outstanding, fully paid and non-assessable, and owned beneficially and of record by the Persons
identified on Schedule 3.17, and (c) the type of entity of the Borrower and each of

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the
Guarantors and each of their respective Significant Subsidiaries. All of the issued and
outstanding Equity Interests owned by the Borrower or by any Guarantor has been (to the extent such
concepts are relevant with respect to such ownership
interests) duly authorized and issued and is fully paid and nonassessable. The Borrower may amend
from time to time Schedule 3.17 (by delivery of a revised Schedule 3.17 to the
Administrative Agent) upon the sale of any Significant Subsidiary which is permitted in this
Agreement.

     Section 3.18 Common Enterprise. The Borrower and each Guarantor expect to derive benefit (and its board
of directors or other governing body has determined that it may reasonably be expected to derive
benefit), directly and indirectly, from (i) successful operations of the Borrower and Guarantors
and (ii) the credit extended by the Lenders to the Borrower hereunder. The Borrower and each of
the Guarantors has determined that execution, delivery, and performance of this Agreement and any
other Loan Documents to be executed by the Borrower or such Guarantor is within its purpose, will
be of direct and indirect benefit to the Borrower or such Guarantor and is in its best interest.

     Section 3.19 [Intentionally omitted.]

     Section 3.20 Labor Disputes. Except as set forth on Schedule 3.20, (a) there is no collective
bargaining agreement or other labor contract covering employees of the Borrower or any Guarantor,
(b) no such collective bargaining agreement or other labor contract is scheduled to expire during
the term of this Agreement, (c) to the knowledge of the Borrower or any Guarantor, no union or
other labor organization is seeking to organize, or to be recognized as, a collective bargaining
unit of employees of the Borrower, any of the Guarantors or any of their respective Subsidiaries or
for any similar purpose, and (d) there is no pending or to the knowledge of the Borrower or any
Guarantor, threatened, strike, work stoppage, material unfair labor practice claim, or other
material labor dispute against or affecting the Borrower, any Guarantor or their respective
Subsidiaries or their employees.

     Section 3.21 Environmental Matters. (a) Except as set forth on Schedule 3.21(a):

               (i) all facilities and Property (including underlying groundwater) owned,
operated, or leased by the Borrower, any Guarantor, or any of their Subsidiaries
have been, and continue to be, in material compliance with all Environmental Laws;

               (ii) there are no pending or, to the knowledge of the Borrower or any
Guarantor, after due inquiry, threatened

               (A) claims, complaints, notices, or requests for information
received by the Borrower, any of the Guarantors, or any of their
Subsidiaries, from any Governmental Authority, or from any Person
which has commenced a legal proceeding against the Borrower, any of
the Guarantors, or any of
their respective Subsidiaries, with respect to any alleged
violation of any Environmental Law, or

42

 

               (B) complaints, notices, or inquiries to the Borrower, any
Guarantors, or any of their Subsidiaries, from any Governmental
Authority, or from any Person which has commenced a legal proceeding
against the Borrower, any of the Guarantors, or any of their
Subsidiaries, regarding potential liability under any Environmental
Law;

               (iii) there have been no Releases of Hazardous Materials at, on, into or under
any Property now or previously owned, operated, or leased by the Borrower, any of
the Guarantors, or any of their Subsidiaries that, singly, or in the aggregate,
could reasonably be expected to have a Material Adverse Effect;

               (iv) the Borrower, the Guarantors, and their Subsidiaries have been issued and
are in material compliance with all permits, certificates, approvals, licenses, and
other authorizations required by any applicable Environmental Law relating to any
environmental matters and necessary for their businesses;

               (v) no Property now or previously owned, operated, or leased by the Borrower,
any of the Guarantors, or any of their Subsidiaries is listed or, to the knowledge
of the Borrower or any of the Guarantors proposed for listing (with respect to owned
Property only) on the National Priorities List pursuant to CERCLA or in the CERCLIS,
or, to the knowledge of the Borrower or any of the Guarantors, on any similar state
list of sites requiring investigation or clean-up;

               (vi) there are no underground storage tanks (as defined in 40 C.F.R. §280.1, as
the same may be amended, modified, supplemented, or replaced from time to time),
active or abandoned, including petroleum storage tanks, on or under any Property now
or previously owned or leased by the Borrower, any of the Guarantors, or any of
their Subsidiaries that, singly or in the aggregate, could reasonably be expected to
have a Material Adverse Effect;

               (vii) neither the Borrower, any Guarantor, nor any of their Subsidiaries has,
to the knowledge of the Borrower or any Guarantor, transported or arranged for the
transportation of any Hazardous Material to any location which is listed or proposed
for listing on the National Priorities List pursuant to CERCLA, on the CERCLIS or
any similar state list or which is the subject of federal, state, or local
enforcement actions or other investigations that could reasonably be expected to
result in material claims against the Borrower, any Guarantor or any of their
Subsidiaries for any remedial work, damage to natural resources, or personal injury,
including claims under CERCLA; and

               (viii) there are no polychlorinated biphenyls or friable asbestos present at
any real Property now or previously owned or leased by the Borrower, any of the
Guarantors or any of their Subsidiaries that singly or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.

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          (b) Schedule 3.21(b) identifies all sites at which the Borrower, any of the Guarantors
or any of their Subsidiaries are currently conducting cleanup or remediation or an investigation as
to whether such cleanup or remediation is warranted or required.

     Section 3.22 Confirmation Order; District Court Order. The Confirmation Order has been entered by the
Bankruptcy Court, is in full force and effect and has been affirmed by the District Court Order.
The District Court has entered the District Court Order, such District Court Order is in full force
and effect and the time to appeal such District Court Order or to seek review, rehearing or
certiorari with respect to such District Court Order has expired, and no appeal or petition for
review, rehearing or certiorari with respect to such order of the District Court is pending other
than the Insurer Appeals and the McNeil Appeal, none of which will adversely affect the
transactions contemplated hereby or have a Material Adverse Effect.

     Section 3.23 Consummation Date. All conditions to the occurrence of the Consummation Date have occurred
or have been waived with the consent of the Administrative Agent and otherwise in accordance with
the terms of the Reorganization Plan, and the Consummation Date has occurred or shall occur
concurrently with the closing of this Agreement.

     Section 3.24 Solvency. (a) Immediately after the consummation of the transactions to occur on the date
hereof, including the Restructuring Transactions and all distributions to be made on or about the
Consummation Date in accordance with the Reorganization Plan and the incurrence of Indebtedness
under the Revolving Loan Facility, and immediately following the making of the Term Loans and after
giving effect to the application of the proceeds of the Term Loans, (i) the fair value of the
assets of the Borrower and each Guarantor, at a fair valuation, will exceed the debts and
liabilities, subordinated, contingent or otherwise, of the Borrower and each Guarantor, (ii) the
present fair saleable value of the Property of the Borrower and each Guarantor is not less than the
amount that will be required to pay the probable liability of the Borrower and each Guarantor on
its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other
liabilities become absolute and matured; (iii) each of the Borrower and the Guarantors will be able
to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (iv) each of the Borrower and the Guarantors will not
have unreasonably small capital with which to conduct the businesses in which such Person is
engaged as such businesses are now conducted and are proposed to be conducted after the date
hereof. The amount of contingent liabilities at any time shall be computed as the amount that, in
light of all facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.

          (b) The Borrower and the Guarantors do not intend to, or believe that any of them or any of
their Subsidiaries will, incur debts beyond its ability to pay such debts as they mature, taking
into account the timing of and amounts of cash to be received by such Person or any such Subsidiary
and the timing of the amounts of cash to be payable on or in respect of such Person’s Indebtedness
or the Indebtedness of any such Subsidiary.

     Section 3.25 Security Interest in Collateral. The provisions of the Security and Pledge Agreement and
the other Loan Documents create legal and valid Liens on all the Collateral in favor of the
Collateral Agent, for the benefit of the Collateral Agent, the

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Administrative Agent and the
Lenders, and such Liens constitute perfected and continuing Liens on the Collateral, securing the
Obligations, enforceable against the Borrower and the Guarantors and having priority over all other
Liens on the Collateral except in the case of (a) Liens securing the “Secured Obligations” (as
defined in the Revolving Loan Documents); (b) Liens permitted under Section 6.01, to the
extent any such Permitted Liens would have priority over the Liens in favor of the Collateral Agent
pursuant to any applicable law or any applicable agreement that is permitted hereunder; (c) Liens
perfected only by possession (including possession of any certificate of title) to the extent the
Collateral Agent has not obtained or does not maintain possession of such Collateral; and (d) Liens
on real Property perfected only by recordation of a mortgage or deed of trust to the extent the
Collateral Agent does not elect to require such a recorded instrument pursuant to clause
(e) of Section 4.01.

ARTICLE IV

CONDITIONS OF LENDING

     Section 4.01 Conditions Precedent to Closing Date. The effectiveness of this Agreement is subject to
the satisfaction (or waiver in accordance with Section 9.02) of the following conditions
precedent:

          (a) Supporting Documents. The Administrative Agent shall have received from the
Borrower and each of the Guarantors:

               (i) a copy of such entity’s certificate of incorporation or formation, as
amended, certified as of a recent date by the Secretary of State of the state of its
incorporation or formation;

               (ii) a certificate of such Secretary of State, dated as of a recent date, as to
the good standing of and payment of taxes by that entity and as to the charter
documents on file in the office of such Secretary of State;

               (iii) a certificate of the Secretary or an Assistant Secretary of that entity
dated the Closing Date and certifying (A) that attached thereto is a true and
complete copy of the by-laws or limited liability company agreement of that entity
as in effect on the date of such certification, (B) that attached thereto is a true
and complete copy of resolutions adopted by the Board of Directors or managers of
that entity authorizing the Term Loans hereunder, the execution, delivery and
performance in accordance with their respective terms of
this Agreement, the Loan Documents and any other documents required or
contemplated hereunder or thereunder and the granting of the Liens contemplated
hereby, (C) that the certificate of incorporation or formation of that entity has
not been amended since the date of the last amendment thereto indicated on the
certificate of the Secretary of State furnished pursuant to clause (i) above
and (D) as to the incumbency and specimen signature of each officer or manager of
that entity executing this Agreement and the Loan Documents or any other document
delivered by it in connection herewith or therewith (such certificate to contain a
certification by another officer or manager of that entity as to the incumbency and
signature of the officer signing the certificate referred to in this clause
(iii));

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               (iv) (A) a copy of the Reorganization Plan, substantially in the form of
Exhibit A-1 and which is in all respects in form and substance satisfactory
to the Administrative Agent and the Lenders, and (B) all orders of the Bankruptcy
Court approving the Reorganization Plan, this Agreement, the Commitment Letter and
the Fee Letter each in form and substance acceptable to the Agents and the Lenders;

               (v) a copy of the Confirmation Order, substantially in the form of Exhibit
A-2, entered by the Bankruptcy Court and which is in all respects in form and
substance satisfactory to the Administrative Agent and the Lenders and which is in
full force and effect and has been affirmed by the District Court Order; and

               (vi) a copy of the District Court Order, substantially in the form of
Exhibit A-3, entered by the District Court which affirms the Confirmation
Order and which is in all respects in form and substance satisfactory to the
Administrative Agent and the Lenders and which is in full force and effect and the
time to appeal the District Court Order or to seek review, rehearing or certiorari
with respect to the District Court Order shall have expired and no appeal or
petition for review, rehearing or certiorari with respect to the Confirmation Order
shall be pending other than the Insurer Appeals and the McNeil Appeal.

          (b) Consummation Date. All conditions to the occurrence of the effective date of the
Reorganization Plan shall have occurred or shall have been waived in accordance with the terms of
the Reorganization Plan, and the Consummation Date shall have occurred or shall occur concurrently
with the closing of this Agreement.

          (c) Terms of Restructuring. The Administrative Agent and the Lenders shall be
satisfied with, to the extent not specifically described in the Reorganization Plan, the material
terms of the restructuring of the Borrower and the Guarantors (including, without limitation,
changes to the current composition of the Board of Directors and of senior management and the
capital and tax structure of the Borrower, each Guarantor and each of their respective Significant
Subsidiaries).

          (d) Security and Pledge Agreement. The Borrower and each of the Guarantors shall have
duly executed and delivered to the Collateral Agent a Security and Pledge
Agreement in substantially the form of Exhibit B (the “Security and Pledge
Agreement”), pursuant to which the Borrower and each of the Guarantors shall have granted to
the Collateral Agent, for the benefit of the Agents and the Lenders, a second priority, perfected
security interest in the Collateral (free and clear of all Liens, other than Permitted Liens and
other Liens permitted under the Loan Documents), and shall have filed appropriately completed and
duly executed Uniform Commercial Code financing statements.

          (e) Mortgages. The Borrower and each of the Guarantors shall have duly executed and
delivered to the Collateral Agent a Mortgage, substantially in the form of Exhibit F, duly
executed by the Borrower or the applicable Guarantor, in or to any real Property listed on
Schedule 4.01(e).

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          (f) Intercreditor Agreement. Pursuant to the Intercreditor Agreement, the “Lenders”
(as defined in the Revolving Loan Documents) shall have agreed to terms and conditions acceptable
to the Administrative Agent and the Lenders.

          (g) Intellectual Property. The Borrower and each of the Guarantors shall have made
arrangements satisfactory to the Administrative Agent to duly record all appropriate documents in
the U.S. Patent and Trademark Office, the United States Copyright Office, and any applicable domain
name registry, as applicable.

          (h) Repayment of Existing Indebtedness. The Existing Credit Agreement and all
commitments thereunder to lend shall have been terminated, all amounts outstanding thereunder
(other than in respect of existing letters of credit issued thereunder which shall become “Letters
of Credit” (under and as defined in the Revolving Loan Documents)) shall have been paid in full or
cash collateralized and all Liens on the assets of the Borrower, Guarantors or any of their
Subsidiaries securing any obligations thereunder or under any related agreement shall have been
permanently released and the Administrative Agent shall have received evidence satisfactory in form
and substance to it demonstrating such termination, payment and release.

          (i) Opinion of Counsel. The Administrative Agent and the Lenders shall have received
the favorable written opinion of counsel to the Borrower and the Guarantors reasonably acceptable
to the Administrative Agent, dated the Closing Date substantially in the form of Exhibit C.

          (j) Fees and Expenses. Parent or the Borrower shall have paid (i) to the
Administrative Agent , the then unpaid balance of all accrued and unpaid Fees due under and
pursuant to this Agreement and the Fee Letter, and (ii) to the Administrative Agent and the
Collateral Agent, as applicable, all accrued and unpaid legal fees and expenses of the
Administrative Agent and the Collateral Agent that the Borrower and the Guarantors are not
otherwise prohibited from paying by an order of the Bankruptcy Court. The Administrative Agent
shall also have received a duly executed and delivered Second Amended and Restated Fee Letter,
substantially in the form of Exhibit H.

          (k) Certificates of Insurance. The Borrower and the Guarantors shall have delivered
to the Administrative Agent certificates of insurance reasonably satisfactory to
the Administrative Agent in all respects evidencing the existence of all insurance required to
be maintained by the Borrower and the Guarantors pursuant to Section 5.03 of this
Agreement.

          (l) Material Consents. The Borrower and the Guarantors shall have delivered to the
Administrative Agent all material consents listed on Schedule 4.01(l).

          (m) Corporate and Judicial Proceedings. All corporate and judicial proceedings and
all instruments and agreements in connection with the transactions among the Borrower, the
Guarantors, the Agents and the Lenders contemplated by this Agreement shall be reasonably
satisfactory in form and substance to the Administrative Agent, and the Administrative Agent shall
have received all information and copies of all material documents and papers which the
Administrative Agent may have reasonably requested in connection

47

 

therewith, such documents and
papers where appropriate to be certified by proper corporate, governmental or judicial authorities.

          (n) Information. The Administrative Agent shall have received such information
(financial or otherwise) as may be reasonably requested by the Administrative Agent.

          (o) Projections. The Administrative Agent and the Lenders shall have received a copy
of the initial Projections of Parent, which Projections shall cover a period commencing on or prior
to the Closing Date and ending December 31, 2008, such Projections to be satisfactory in form and
substance to the Administrative Agent.

          (p) Compliance with Material Laws and Regulations. The Borrower and the Guarantors
shall have granted the Administrative Agent access to and the right to inspect all reports, audits
and other internal information of the Borrower and the Guarantors relating to environmental
matters, and any third party verification of certain matters relating to compliance with
Environmental Laws reasonably requested by the Administrative Agent, and the Administrative Agent
shall be reasonably satisfied (x) that the Borrower and the Guarantors are in compliance in all
material respects with all applicable material laws and regulations (including but not limited to
ERISA (except for such violations as set forth on Schedule 3.07), margin regulations, bank
regulatory limitations and Environmental Laws) and (y) that the Borrower and Guarantors have made
adequate provision for the costs of maintaining such compliance.

          (q) UCC Searches. The Administrative Agent shall have received UCC searches
(including tax liens and judgments) and patent and trademark searches conducted in the
jurisdictions in which the Borrower and the Guarantors conduct business (dated as of a date
reasonably satisfactory to the Agent), reflecting the absence of Liens and encumbrances on the
assets of the Borrower and the Guarantors other than such Liens permitted under the Loan Documents
and other Liens as may be satisfactory to the Administrative Agent.

          (r) Closing Documents. The Administrative Agent shall have received all documents
required by this Section 4.01 and each item listed on the closing checklist, in each case,
each reasonably satisfactory in form and substance to the Administrative Agent.

          (s) Representations and Warranties. All representations and warranties contained in
this Agreement and the other Loan Documents shall be true and correct on and as of the Closing Date
with the same effect as if made on and as of such date except to the extent such
representations and warranties expressly relate to an earlier date, in which case they shall
be true and correct as of such earlier date.

          (t) No Default. At the time of and immediately after giving effect to the execution
and delivery of this Agreement, no Default shall have occurred and be continuing.

The execution and delivery by the Borrower of this Agreement on the Closing Date shall be deemed to
be a representation and warranty by the Borrower that the conditions specified in this Section
4.01 have been satisfied or waived at that time.

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     Section 4.02 Conditions Precedent to Funding Date. The obligation of the Lenders to make the Term Loans
on the Funding Date is subject to the satisfaction (or waiver in accordance with Section
9.02) of the following conditions precedent:

          (a) Notice. The Administrative Agent shall have received a notice with respect to
such borrowing as required by Article II.

          (b) Representations and Warranties. All representations and warranties contained in
this Agreement and the other Loan Documents shall be true and correct on and as of the Funding Date
with the same effect as if made on and as of such date except to the extent such representations
and warranties expressly relate to an earlier date, in which case they shall be true and correct as
of such earlier date.

          (c) No Default. At the time of and immediately after giving effect to the making of
the Term Loans, no Default shall have occurred and be continuing.

          (d) Payment of Fees. Parent or the Borrower shall have paid to the Administrative
Agent the then unpaid balance of all accrued and unpaid Fees then due under and pursuant to this
Agreement and the Fee Letter.

The acceptance by the Borrower of the proceeds of the Term Loans on the Funding Date shall be
deemed to be a representation and warranty by the Borrower that the conditions specified in this
Section 4.02 have been satisfied or waived at that time. The Administrative Agent may (but
shall not be obligated to) require a duly completed compliance certificate with respect to the
foregoing as a condition to making the Term Loans.

ARTICLE V

AFFIRMATIVE COVENANTS

     From the date hereof and for so long as any Commitment shall be in effect or any Term Loan
shall remain outstanding or any amount shall remain outstanding or unpaid under this Agreement or
any other Loan Document, the Borrower and each of the Guarantors agree, jointly and severally with
the Borrower and each other Guarantor, that the Borrower and each of the Guarantors will:

     Section 5.01 Financial Statements, Reports, etc.
In the case of the Borrower and the Guarantors, deliver to the Administrative Agent:

          (a) on or before the date upon which Parent’s annual report on Form 10-K is required to be
filed with the SEC (and in any event within one hundred five (105) days after the end of each
Fiscal Year), Parent’s (i) audited consolidated balance sheet and related statements of income,
stockholders’ equity and cash flows, showing the financial condition of Parent and its Subsidiaries
on a consolidated basis as of the close of such Fiscal Year and the results of their operations
during such year, such consolidated financial statements to be audited for Parent and its
Subsidiaries by Deloitte & Touche LLP or other independent public accountants of recognized
national standing and accompanied by an audit opinion of such accountants (without (i) in the case
of Fiscal Years ending on or after December 31, 2006, a “going concern” or like qualification,
exception, or explanatory paragraph and (ii) in the case of

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any Fiscal Year, without any
qualification or exception as to the scope of such audit) and to be certified by a Financial
Officer of Parent to the effect that such consolidated financial statements fairly present the
financial condition and results of operations of Parent and its Subsidiaries on a consolidated
basis in accordance with GAAP and (ii) unaudited consolidating balance sheet and related unaudited
consolidating statements of income as of the close of the fourth Fiscal Quarter and as of the close
of such Fiscal Year, all such consolidating financial statements showing separately the financial
condition of Parent and its Significant Subsidiaries; provided, however, that any
document required to be delivered pursuant to this Section 5.01(a) shall be deemed to have been
furnished to the Administrative Agent if the Borrower or Parent has provided the Administrative
Agent with a link to such documents that have been made available through its website or that have
been filed with the SEC via EDGAR;

          (b) on or before the date upon which Parent’s quarterly report on Form 10-Q is required to be
filed with the SEC (and in any event, within fifty (50) days after the end of each of the first
three Fiscal Quarters of Parent), Parent’s (i) unaudited consolidated balance sheets and related
unaudited statements of income, stockholders’ equity and cash flows, showing the financial
condition of Parent and its Subsidiaries on a consolidated basis as of the close of such Fiscal
Quarter and the results of their operations during such Fiscal Quarter and the then elapsed portion
of the Fiscal Year, certified by a Financial Officer of Parent as fairly presenting the financial
condition and results of operations of Parent and its Subsidiaries on a consolidated basis in
accordance with GAAP, subject to normal year-end audit adjustments and the absence of footnotes and
(ii) unaudited consolidating balance sheet and related unaudited consolidating statements of income
as of the close of the such Fiscal Quarter, all such consolidating financial statements showing
separately the financial condition of Parent and its Significant Subsidiaries; provided,
however, that any document required to be delivered pursuant to this Section 5.01(b) shall
be deemed to have been furnished to the Administrative Agent if the Borrower or Parent has provided
the Administrative Agent with a link to such documents that have been made available through its
website or that have been filed with the SEC via EDGAR;

          (c) commencing with the first Fiscal Month following the Closing Date as soon as available,
but no more than 30 days after the end of each month, the unaudited consolidated balance sheet as
of the close of such Fiscal Month and related unaudited consolidated statements of income and cash
flow of Parent and its Subsidiaries during such month and the year to date period;

          (d) (i) concurrently with any delivery of financial statements under paragraphs (a),
(b) and (c) above, a certificate of a Financial Officer of Parent certifying that
such financial statements fairly present the financial condition and results of operations of
Parent and its Subsidiaries in accordance with GAAP, subject to normal year-end audit adjustments
and the absence of footnotes; and (ii) concurrently with any delivery of financial statements under
paragraph (a) above, a certificate in accordance with prevailing professional standards
(which certificate may be limited to accounting matters and disclaim responsibility for legal
interpretations) of the accountants auditing the consolidated financial statements delivered under
paragraph (a) above certifying that, in the course of the regular audit of the business of
Parent and its Subsidiaries, such accountants have obtained no
knowledge that a Default or Event of
Default has occurred and is continuing or if, in the opinion of such accountants, a Default or

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Event of Default has occurred and is continuing, specifying the nature thereof and all relevant
facts with respect thereto;

          (e) as soon as available, but not more than sixty (60) days after the end of each Fiscal Year,
commencing with the Fiscal Year ending December 31, 2006, a copy of the plan and forecast
(including a projected consolidated balance sheet, income statement and funds flow statement) of
Parent on a consolidated basis for each month of the then current Fiscal Year (the
“Projections”) in form reasonably satisfactory to the Administrative Agent;

          (f) such other information respecting the Borrower, any Guarantor or any of their Subsidiaries
as the Administrative Agent may from time to time reasonably request;

          (g) promptly after the same become publicly available, copies of all periodic and other
reports, proxy statements and other materials filed by the Borrower, any Guarantor or any of their
Subsidiaries with the SEC (provided that any such documents shall be deemed delivered on the date
the Borrower or Parent provides to Administrative Agent a link to where such documents were filed
electronically via EDGAR or such documents have been made publicly available on Parent’s website),
or any governmental authority succeeding to any of or all the functions of said commission, or with
any national securities exchange, as the case may be;

          (h) as soon as available and in any event within thirty (30) days after the Borrower or any
ERISA Affiliate knows that any Termination Event has occurred with respect to any Plan, a statement
of a Financial Officer of Parent describing the full details of such Termination Event and the
action, if any, which the Borrower or such ERISA Affiliate is required or proposes to take with
respect thereto, together with any notices required or proposed to be given to or filed with or by
the Borrower, such ERISA Affiliate, the PBGC, a Plan participant or the Plan administrator with
respect thereto;

          (i) promptly and in any event within ten (10) days after receipt thereof by the Borrower or
any ERISA Affiliate from a Multiemployer Plan sponsor, a copy of each notice received by the
Borrower or any ERISA Affiliate concerning (A) the imposition of Withdrawal Liability by a
Multiemployer Plan, (B) the determination that a Multiemployer Plan is, or is expected to be, in
reorganization within the meaning of Title IV of ERISA, (C) the termination of a Multiemployer Plan
within the meaning of Title IV of ERISA, or (D) the amount of liability incurred, or which may be
incurred, by the Borrower or any ERISA Affiliate in connection with any event described in clause
(A), (B) or (C) above;

          (j) promptly and in any event within ten (10) days after receipt thereof by the Borrower or
any ERISA Affiliate from the PBGC copies of each notice received by the Borrower or any such ERISA
Affiliate of the PBGC’s intention to terminate any Single Employer Plan of the Borrower or such
ERISA Affiliate other than the Terminated Plans or to have a trustee appointed to administer any
such Plan;

          (k) within 10 days after notice is given or required to be given to the PBGC under Section
302(f)(4)(A) of ERISA of the failure of the Borrower or any ERISA Affiliate to make timely payments
to a Plan other than such payments as are required to be made within 31 days after the effective
date of the Settlement Agreement, a copy of any such notice

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filed and a statement of a Financial
Officer of Parent setting forth (A) sufficient information necessary to determine the amount of any
lien under Section 302(f)(3), (B) the reason for the failure to make the required payments and (C)
the action, if any, which the Borrower or any ERISA Affiliate proposed to take with respect
thereto;

          (l) promptly upon obtaining knowledge thereof, notice by the holder of any Equity Interests of
the Borrower or any Guarantor or the holder of any Indebtedness of the Borrower or any Guarantor in
excess of $20,000,000 that any default exists with respect thereto or that the Borrower or any
Guarantor is not in compliance therewith;

          (m) promptly upon receipt thereof, any notice of any governmental investigation or any
litigation commenced or threatened against the Borrower or any Guarantor that could reasonably be
expected to have a Material Adverse Effect;

          (n) promptly upon the Borrower or any Guarantor obtaining knowledge thereof, notice of any
Lien (other than Permitted Liens and other Liens permitted under the Loan Documents) or any claim
made or asserted against the Collateral having a value in excess of $5,000,000;

          (o) promptly upon the commencement thereof, notice of any proceedings with respect to any Tax,
fee, assessment, or other governmental charge in excess of $5,000,000;

          (p) promptly upon obtaining knowledge thereof, notice of any loss, damage, or destruction to
Collateral having a book value of $5,000,000 or more, whether or not covered by insurance;

          (q) immediately after the Borrower or any Guarantor obtaining knowledge thereof, notice of any
pending strike, work stoppage, unfair labor practice claim, or other labor dispute affecting the
Borrower, any Guarantor or any of their respective Subsidiaries in a manner which could reasonably
be expected to have a Material Adverse Effect; and

          (r) promptly upon obtaining knowledge thereof, notice of any other development that results
in, or could reasonably be expected to result in, a Material Adverse Effect.

With respect to any report, balance sheet, statement, certificate, plan, forecast, schedule,
summary or other document delivered by Parent or the Borrower to the Administrative Agent
pursuant to clauses (a) through (f) of this Section, the Administrative
Agent shall deliver each such document to the Lenders by complying with the requirements contained
in Section 9.01 or by posting such document to Intralinks or an equivalent means of
electronic delivery to which the Lenders have access. Each notice delivered under clauses
(j) through (r) of this Section shall be accompanied by a statement of a
Financial Officer or other executive officer of Parent or the Borrower setting forth the details of
the event or development requiring such notice and any action taken or proposed to be taken with
respect thereto.

     Section 5.02 Corporate Existence. Preserve and maintain in full force and effect all governmental
rights, privileges, qualifications, permits, licenses and franchises necessary or

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desirable in the
normal conduct of its business except (i) if (A) in the reasonable business judgment of Parent, it
is in the best economic interest of the Borrower and the Guarantors taken as a whole not to
preserve and maintain such rights, privileges, qualifications, permits, licenses and franchises,
and (B) such failure to preserve the same could not, in the aggregate, reasonably be expected to
have a Material Adverse Effect on the operations, business, properties, assets, prospects or
financial condition (of the Borrower and the Guarantors, taken as a whole, and (ii) as otherwise
permitted in connection with sales of assets permitted by Section 6.10.

     Section 5.03 Insurance. Maintain with financially sound and reputable carriers acceptable to the
Administrative Agent in its Permitted Discretion (including, consistent with past practice,
insurance companies affiliated with Parent), insurance with respect to their Properties and
business (including business interruption insurance, fire insurance and public liability insurance)
in such amounts, of such character and against such risks acceptable to the Administrative Agent in
its Permitted Discretion and as are usually maintained by companies engaged in the same or similar
business or having comparable properties, and in any case having a coverage which is not materially
less than the insurance of such type maintained by the Borrower and the Guarantors on the date of
this Agreement, provided that neither the Borrower nor any Guarantor will use or permit any
property to be used in any manner which might render inapplicable any insurance coverage;
provided, however, that all such proceeds shall be applied in accordance with
Section 2.06. Upon repayment in full of all obligations outstanding under the Revolving
Loan Facility and termination of the commitments thereunder, all property insurance covering
Collateral maintained by the Borrower and the Guarantors shall name the Collateral Agent as sole
loss payee. All liability insurance maintained by the Borrower and the Guarantors with respect to
occurrences arising out of or relating to the Collateral shall name the Administrative Agent, the
Collateral Agent and the Lenders as additional insured. All such property and liability insurance
shall further provide for at least thirty (30) days’ prior written notice (ten (10) days’ prior
written notice with respect to cancellation for non-payment of premium or at the request of the
insured) to the Administrative Agent of the cancellation or substantial modification thereof.

     Section 5.04 Obligations and Taxes. With respect to the Borrower and each Guarantor, pay all its
material obligations promptly and in accordance with their terms and pay and discharge promptly all
material Taxes imposed upon
it or upon its income or profits or in respect of its property, before the same shall become
delinquent, as well as all material lawful claims for labor, materials and supplies or otherwise
which, if unpaid, would become a Lien or charge upon such properties or any part thereof (other
than a Permitted Lien); provided, however, that neither the Borrower nor any
Guarantor shall be required to pay and discharge or to cause to be paid and discharged any such
obligation, Tax or claim to the extent that (i) it is being contested in good faith by appropriate
proceedings, (ii) adequate reserves for it have been set aside on the books of the Borrower and the
Guarantors, and (iii) the failure to make payment pending such contest could not reasonably be
expected to result in a Material Adverse Effect.

     Section 5.05 Notice of Event of Default, etc. Promptly but no later than five (5) Business Days after
the Borrower has knowledge of a Default or an Event of Default, give to the Administrative Agent
notice in writing of such Default or Event of Default.

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     Section 5.06 Access to Books and Records. Maintain or cause to be maintained at all times true and
complete books and records in accordance with GAAP of the financial operations of the Borrower and
the Guarantors; and provide the Agents and their representatives and advisors access to all such
books and records during regular business hours, in order that the Agents may upon reasonable prior
notice examine and make abstracts from such books, accounts, records, appraisals and other papers
for the purpose of verifying the accuracy of the various reports delivered by the Borrower or the
Guarantors to the Agents or the Lenders pursuant to this Agreement or for otherwise ascertaining
compliance with this Agreement; and at any reasonable time and from time to time during regular
business hours, upon reasonable notice and with reasonable frequency, permit the Agents and any
agents or representatives (including, without limitation, appraisers) thereof to visit the
properties of the Borrower and the Guarantors and to conduct examinations of and to monitor the
Collateral held by the Collateral Agent, in each case at the expense of the Borrower.

     Section 5.07 Projections. Make the Financial Officers of Parent available to discuss the Projections
(copies of which have heretofore been delivered to the Administrative Agent and the Lenders
pursuant to clause (o) of Section 4.01 or Section 5.01(e) (as applicable))
with the Administrative Agent and/or the Lenders upon the Administrative Agent’s reasonable
request.

     Section 5.08 Maintenance of Properties and Intellectual Property Rights. (a) Keep and maintain all
property material to the conduct of its business in good working order and condition, ordinary wear
and tear excepted, and (b) obtain and maintain in effect at all times all material intellectual
property rights, licenses and permits, which are necessary for it to own its property or conduct
its business as currently conducted and not dispose of, grant, or permit to lapse any rights to any
material intellectual property except as otherwise expressly permitted hereunder.

     Section 5.09 Compliance with Laws. Comply in all material respects with all laws (except those relating to Environmental Laws,
which compliance is subject to Section 5.12), rules, regulations and orders of any
Governmental Authority applicable to it or its property.

     Section 5.10 Use of Proceeds. Use the proceeds of the Term Loans only for (i) refinancing of the
amounts outstanding under the Existing Credit Agreement, (ii) financing of administrative expenses
incurred in connection with emerging from bankruptcy, (iii) payment of the Claims contemplated by
the Reorganization Plan, (iv) working capital and capital expenditures, including Permitted
Acquisitions, (v) other general corporate purposes of the Borrower and the Guarantors and (vi)
payment of any related transaction costs, fees and expenses. Such proceeds may not be used (a) in
connection with the investigation (including discovery proceedings), initiation or prosecution of
any claims, causes of action, adversary proceedings or other litigation against the Lenders or the
Agents in their capacities as such and (b) for any purpose that would violate any of the
Regulations of the Board, including Regulations T, U and X.

     Section 5.11 Additional Collateral; Further Assurances. (a) Unless the Required Lenders otherwise
consent and subject to the requirements of applicable law, cause each of its wholly owned
Subsidiaries (excluding any foreign Subsidiary and all Excluded Subsidiaries)

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formed or acquired
after the Closing Date in accordance with the terms of this Agreement to (i) become a Guarantor by
executing a Joinder Agreement substantially in the form of Exhibit E hereto (the
“Joinder Agreement”) and (ii) grant Liens to the Collateral Agent, for the benefit of the
Administrative Agent, the Collateral Agent and the Lenders, in any Property of such new Guarantor,
as the case may be, which constitutes Collateral.

          (b) Cause (i) 100% of the issued and outstanding Equity Interests of (A) each of the
Borrower’s and each Guarantor’s domestic Subsidiaries and (B) Reorganized KACC (provided however
that neither this provision nor any such pledge of Reorganized KACC shall effect, nor shall either
be construed as effecting, a pledge of the Equity Interests of any Subsidiary of Reorganized KACC)
and Kaiser Bauxite, and (ii) 65% of the issued and outstanding Equity Interests in (A) each foreign
Subsidiary directly owned by the Borrower or any Guarantor and (B) Trochus, to be subject at all
times to a first priority Lien in favor of the Collateral Agent (second priority so long as the
Revolving Loan Facility is in existence) pursuant to the terms and conditions of the Loan Documents
or other security documents as the Agents shall reasonably request; provided, that,
with respect to (y) any Subsidiary that is organized outside of the United States, Canada, or
Bermuda, and is not a Significant Subsidiary, and (z) Trochus, no Borrower or Guarantor shall be
required to take any action under the laws of the jurisdiction of organization of such Person to
perfect or register the pledge of such shares and that the Borrower and the Guarantors shall have
until the date that is the 30th day after the Closing Date to perfect the pledge of shares of (i)
KACL under the laws of Canada or Ontario and (ii) Trochus under the laws of Bermuda.

          (c) Execute and deliver, or cause to be executed and delivered, to the Agents such documents
and agreements, and take or cause to be taken such actions as the Agents may, from time to time,
reasonably request to carry out the terms and conditions of this
Agreement and the other Loan Documents, including but not limited to all items of the type
required by Article IV (as applicable).

          (d) If any material assets (including any real Property or improvements thereto or any
interest therein) are acquired by the Borrower or any Guarantor after the Closing Date (other than
assets constituting Collateral under the Security and Pledge Agreement that become subject to a
Lien in favor of the Collateral Agent upon acquisition thereof), notify the Agents and the Lenders
thereof, and, if requested by any Agent or the Required Lenders after consultation with the
Borrower, the Borrower will cause such assets to be subjected to a Lien securing the Obligations
and will take, or cause the Guarantors to take, such actions as shall be necessary or reasonably
requested by any Agent, to grant and perfect such Lien, including actions described in Section
5.11(c) and, in the case of acquired owned real Property, a Mortgage, all at the expense of the
Borrower.

          (e) If the Borrower or any Guarantor delivers to the “Administrative Agent” or the “Lenders”
under, and as defined in, the Revolving Loan Documents, any environmental reports, surveys,
documentation regarding flood insurance, title insurance policies or commitments, appraisals,
opinions of local counsel, UCC fixture financing statements, or other documentation pursuant to the
terms of the Revolving Loan Documents with respect to any real Property (i) listed on Schedule
4.01(e) or (ii) with respect to which a mortgage has been delivered pursuant to Section
5.11(c), such Borrower or Guarantor shall simultaneously deliver

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to the Administrative Agent
comparable documents, mutatis mutandis, for the benefit of the Administrative Agent, the Collateral
Agent and/or the Lenders, as applicable.

     Section 5.12 Environmental Covenant. The Borrower and the Guarantors will, and will cause each of their
Subsidiaries to:

          (a) use and operate all of their respective facilities and properties in material compliance
with all Environmental Laws, keep all necessary permits, approvals, certificates, licenses, and
other authorizations required by applicable Environmental Laws relating to environmental matters in
effect and remain in material compliance therewith, and handle all Hazardous Materials in material
compliance with all applicable Environmental Laws;

          (b) (i) as soon as possible and in any event not later than fifteen (15) Business Days after
the Borrower becomes aware of the receipt thereof, notify the Administrative Agent and provide
copies of all written claims, complaints, notices, or inquiries by a Governmental Authority, or any
Person which has commenced a legal proceeding against the Borrower, any of the Guarantors, or any
of their Subsidiaries, relating to compliance by the Borrower, any of the Guarantors or any of
their Subsidiaries with, or potential liability of the Borrower, any of the Guarantors or any of
their Subsidiaries under, Environmental Laws; and

               (ii) with reasonable diligence cure all environmental defects and conditions
which are the subject of any actions and proceedings against the Borrower, any of
the Guarantors or any of their Subsidiaries relating to compliance with
Environmental Laws, except to the extent such actions and proceedings (or the
obligation of the Borrower, any of the Guarantors or any of
their Subsidiaries to cure such defects and conditions) are stayed or are being
contested by the Borrower, any of the Guarantors or any of their Subsidiaries in
good faith by appropriate proceedings; and

          (c) provide such information, access, and certifications which the Administrative Agent may
reasonably request form time to time to evidence compliance with this Section 5.12.

ARTICLE VI

NEGATIVE COVENANTS

     From the date hereof and for so long as any Commitment shall be in effect or any amount shall
remain outstanding or unpaid under this Agreement, the Borrower and each Guarantor covenants and
agrees that it will not, nor will it permit any of their respective Significant Subsidiaries to
(provided that nothing in this Article VI shall prohibit (x) the
consummation of the Restructuring Transactions on or about the Consummation Date or (y) the
creation or funding of the PI Trusts with the PI Trust Assets, in each case, pursuant to, and in
accordance with, the Reorganization Plan):

     Section 6.01 Liens. Incur, create, assume or suffer to exist any Lien on any asset of the Borrower or
any Guarantor, now owned or hereafter acquired by the Borrower or any Guarantor, other than (i)
Liens described in Schedule 3.06; (ii) Permitted Liens; (iii) Liens in favor of the
Collateral Agent and the Lenders securing the Obligations; (iv) Liens securing the

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“Secured
Obligations” (as defined in the Revolving Loan Documents) granted pursuant to the Revolving Loan
Documents; (v) Liens securing purchase money Indebtedness or Capital Leases permitted by
Section 6.03(iii); provided that (y) such security interests and the Indebtedness secured
thereby are incurred prior to or within ninety (90) days after acquisition of the financed Property
or assets; and (z) such security interests shall not apply to any property or assets of the
Borrower, any Guarantor or any of their Subsidiaries other than assets or property financed by such
Indebtedness or subject to such Capital Leases; (vi) Liens securing judgment for the payment of
money not constituting an Event of Default under Section 7.01(k); (vii) Liens on property
of a Person existing at the time such Person is merged into or consolidated with a Borrower or
Guarantor or Significant Subsidiary or becomes a Borrower or Guarantor or a Significant Subsidiary
or on any acquired property, in each case, in connection with an Investment or acquisition
permitted under Section 6.07; provided that (x) such Liens were not created in
contemplation of or in connection with such acquisition or such Person becoming a Borrower or
Guarantor or a Significant Subsidiary, as the case may be, (y) such Lien shall not apply to any
other property or assets of such Person, and (z) such Lien shall secure only those obligations
which it secures on the date of such acquisition or the date such Person becomes a Borrower or
Guarantor or a Significant Subsidiary, as the case may be, and extensions, renewals and
replacements thereof that do not increase the outstanding principal amount of the obligations
secured by such Lien and that are otherwise permitted hereunder; and (viii) precautionary UCC
filings by lessors under operating leases covering the Property subject to such leases and UCC
filings in respect of Liens permitted under this Section 6.01.

     Section 6.02 Merger, etc. Consolidate or merge with or into another Person; provided that (i) any
Guarantor, other than Parent, may dissolve, merge or liquidate with or into the Borrower so long as
the Borrower is the entity surviving such merger; (ii) any Guarantor may dissolve, merge or
liquidate with or into any other Guarantor, so long as, in the case of a merger with Parent, Parent
is the entity surviving such merger; (iii) any Subsidiary of the Borrower or a Guarantor may
dissolve, merge or liquidate with or into the Borrower or a Guarantor so long as the Borrower or
Guarantor is the entity surviving any such dissolution, merger or liquidation; (iv) any Subsidiary
of the Borrower or a Guarantor that is not the Borrower or a Guarantor may dissolve, merge or
liquidate with or into any other Subsidiary of the Borrower or a Guarantor other than an Excluded
Subsidiary; and (v) in connection with any Permitted Acquisition under Section 6.07(vi),
any subsidiary of the Borrower or Guarantor may merge or consolidate with another Person or permit
any other Person to merge into or consolidate with it (subject to clause (f) of the
definition of the term “Permitted Acquisition”).

     Section 6.03 Indebtedness. Contract, create, incur, assume or suffer to exist any Indebtedness, except
for (i) the Obligations; (ii) Revolving Loan Indebtedness and extensions, refinancings, refundings,
replacements or renewals of such Indebtedness, provided that the sum of (x) the
aggregate principal amount of all “Loans” (as defined in the Revolving Loan Documents),
plus (y) without duplication of amounts included in clause (x), the aggregate amount of
“Letter of Credit Exposure” (as defined in the Revolving Loan Documents) shall not exceed
$275,000,000; (iii) Indebtedness with respect to existing Capital Lease Obligations and purchase
money Indebtedness for fixed or capital assets and extensions, refinancings, replacements or
renewals of such Indebtedness permitted by clause (xii) below; (iv) intercompany
Indebtedness of the Borrower or any Guarantor to the Borrower or any Guarantor; provided
such intercompany Indebtedness is subordinated to the Obligations pursuant to an

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Intercompany
Subordination Agreement substantially in the form of Exhibit G hereto (the “Intercompany
Subordination Agreement”) or otherwise in a manner satisfactory to the Administrative Agent;
(v) Indebtedness arising from Investments (other than Permitted Acquisitions) permitted by
Section 6.07 and Indebtedness of a Person existing at the time such Person is merged into
or consolidated with a Borrower or Guarantor or Significant Subsidiary or becomes a Borrower or
Guarantor or a Significant Subsidiary, in each case, in connection with an Investment or
acquisition permitted under Section 6.07; provided that such Indebtedness was not incurred
in contemplation of or in connection with such Investment or Permitted Acquisition; (vi)
Indebtedness in respect of obligations pursuant to any Permitted Commodity Swap Agreement; (vii)
Indebtedness incurred by the Borrower or any Guarantor under Swap Agreements entered into in the
ordinary course of financial management and not for speculative purposes; provided
that, except to the extent any such Indebtedness is a “Secured Obligation” under (and as
defined in) the Revolving Loan Documents, all such obligations shall be unsecured; (viii)
Indebtedness in respect of performance, surety and appeal bonds arising in the ordinary course of
business; (ix) Indebtedness existing on the Closing Date and described on Schedule 6.03 and
extensions, refinancings, replacements or renewals of such Indebtedness permitted by clause
(xii) below; (x) Guarantees by the Borrower or any Guarantor of Indebtedness of Parent or any
Subsidiary and by Parent or any Subsidiary of Indebtedness of the Borrower or any Guarantor or any
other Subsidiary, provided that (1) the
Indebtedness so Guaranteed is permitted by this Section 6.03, (2) Guarantees by the
Borrower or any Guarantor of Indebtedness of any Subsidiary that is not a Borrower or Guarantor
shall be subject to Section 6.07, and (3) Guarantees permitted under this clause
(x) shall be subordinated to the Obligations of the Borrower or applicable Guarantor on the
same terms as the Indebtedness so Guaranteed is subordinated to the Obligations; (xi) Indebtedness
in respect of advanced payments by customers under purchase contracts in the ordinary course of
business of the Borrower or applicable Guarantor; (xii) Indebtedness incurred that represents an
extension, refinancing, or renewal of any of the Indebtedness described in clauses (iii)
and (ix) hereof; provided that (1) the principal amount of such Indebtedness is not
increased, (2) any Liens securing such Indebtedness are not extended to any additional property of
the Borrower or any Guarantor, except to the extent that the Lien of the Collateral Agent extends
to (and is a perfected, first priority Lien in) such additional property, (3) the Borrower or
Guarantor that is obligated with respect to repayment of such Indebtedness at the time of such
refinancing is not required to become obligated with respect thereto, (4) such extension,
refinancing, replacement or renewal does not result in a shortening of the average weighted
maturity of the Indebtedness so extended, refinanced, replaced or renewed, (5) the terms of any
such extension, refinancing, replacement or renewal are not less favorable to the obligor
thereunder than the original terms of such Indebtedness, and (6) the terms and conditions of the
refinancing, renewal, replacement or extension Indebtedness include subordination terms and
conditions that are at least as favorable to the Administrative Agent and the Lenders as those that
were applicable to the refinanced, renewed, replaced or extended Indebtedness; (xiv) Indebtedness
owed to JPMorgan Chase or any Affiliate of the “Administrative Agent” (under and as defined in the
Revolving Loan Documents) in respect
 of any “Banking Services Obligations” (as defined in the
Revolving Loan Documents), and (xv) other unsecured Indebtedness not to exceed $20,000,000 in the
aggregate at any time outstanding.

     Section 6.04 Guarantees and Other Liabilities. Purchase or repurchase (or agree, contingently or
otherwise, so to do) the Indebtedness of, or assume, Guarantee (directly or indirectly or by an
instrument having the effect of assuring another’s payment or performance of

58

 

any obligation or
capability of so doing, or otherwise), endorse or otherwise become liable, directly or indirectly,
in connection with the obligations, stock or dividends of any Person, except (i) for any guaranty
of Indebtedness or other obligations of the Borrower or any Guarantor if such Person could have
incurred such Indebtedness or obligations under this Agreement; (ii) by endorsement of negotiable
instruments for deposit or collection in the ordinary course of business; and (iii) with respect to
Guarantees of Indebtedness pursuant to clause (ii), (viii) or (x) of
Section 6.03.

     Section 6.05 Dividends; Capital Stock. Declare or pay, directly or indirectly, any dividends or make
any other distribution or payment, whether in cash, property, securities or a combination thereof,
with respect to (whether by reduction of capital or otherwise) any shares of capital stock or
membership interests (or any options, warrants, rights or other equity securities or agreements
relating to any capital stock or membership interests), or set apart any sum for the aforesaid
purposes (all of the foregoing, “Restricted Payments”); provided that (i) any Guarantor may
pay dividends to the Borrower and to any other Guarantor that is its direct parent; (ii) the
Borrower or any Guarantor may declare
and pay dividends ratably with respect to their Equity Interests; (iii) the Borrower may pay
dividends to any Guarantor that is its direct parent, and (iv) Parent may make Restricted Payments,
so long as at the time of and after giving effect to such Restricted Payment, (A) no Default is
continuing or would result therefrom and (B) the amount of such Restricted Payment, together with
the aggregate amount of all other Restricted Payments made by Parent after the Closing Date, is
less than the sum of (1) 50% of the Net Income of Parent and its Subsidiaries for the period, taken
as one accounting period, from the “Closing Date” (under and as defined in the Revolving Loan
Documents) to the end of Parent’s most recently ended Fiscal Quarter for which financial statements
complying with Section 5.01(a) or 5.01(b) (as applicable) have been delivered at
the time of such Restricted Payment, or, if such Net Income for such period is a deficit, less 100%
of such deficit, plus (2) up to 100% of the proceeds (such proceeds to be determined in
accordance with clause (c) of the definition of Net Proceeds without giving effect to the
proviso therein) from the sale or issuance by Parent of any of its Equity Interest remaining after
making any mandatory prepayment of Net Proceeds that may be required at such time, if any, pursuant
to Section 2.06(b) and not used to make any Investments or other Restricted Payments,
plus (3) $2,000,000.

     Section 6.06 Transactions with Affiliates. Sell or transfer any property or assets to, or otherwise
engage in any other material transactions with, any of its Affiliates (other than the Borrower and
the Guarantors), other than (i) any transaction (or, in the case of a series of related
transactions, any series of related transactions taken as a whole) in the ordinary course of
business at prices and on terms and conditions not less favorable to the Borrower or such Guarantor
than could be obtained on an arm’s-length basis from unrelated third parties; (ii) dividends,
distributions or payments permitted under Section 6.05; (iii) issuances of securities
pursuant to employee stock benefit plans approved by the board of directors of such person; (iv)
granting of stock options to employees or directors pursuant to a plan approved by the board of
directors of such person; (v) loans or advances to employees permitted pursuant to Section
6.07; and (vi) reasonable fees to directors of the Borrower, any Guarantor or any Significant
Subsidiary who are not employees of the Borrower, any Guarantor or any Significant Subsidiary.

     Section 6.07 Investments, Loans, Advances, Guaranties and Acquisitions. Purchase, hold or acquire
(including pursuant to a merger with any Person that was not the

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Borrower, a Guarantor or a
wholly-owned subsidiary of the Borrower or a Guarantor prior to such merger) any capital stock,
evidences of indebtedness or other securities of (including any option, warrant or other right to
acquire any of the foregoing), make or permit to exist any loans or advances to Guarantee any
obligations of, or make or permit to exist any investment in, any other Person or purchase or
otherwise acquire (in one transaction or series of transactions) any assets of any other Person
constituting a business unit (whether through purchase of assets, merger or otherwise) (all of the
foregoing, “Investments”), except for (i) ownership by the Borrower and the Guarantors of
the capital stock or membership interests of each of their Subsidiaries; provided that no further
equity investments may be made in any such Person that is not the Borrower or a Guarantor; (ii)
Investments of the Borrower in any Guarantor; (iii) Investments of any Guarantor in the Borrower or
another Guarantor; (iv) Investments by Subsidiaries that are not a Guarantor in the Borrower, a
Guarantor or a Significant Subsidiary,
provided that any such Investment which is a loan, advance, guaranty or other debt Investment shall
be subordinated to the Obligations pursuant to the Intercompany Subordination Agreement, or such
other form acceptable to the Administrative Agent; (v) Permitted Investments; (vi) Permitted
Acquisitions; (vii) advances and loans to KACL in the ordinary course of business consistent with
past practices, provided that no Event of Default has occurred and is continuing, and
provided further that in no event shall the aggregate principal amount of advances
or loans made after the Closing Date be greater than $20,000,000 at any one time outstanding;
(viii) advances and loans to, and Investments in, Trochus in the ordinary course of business
consistent with past practices; provided that no Event of Default has occurred and is continuing,
and provided further that in no event shall the sum of (A) the aggregate principal
amount of such advances or loans made after the Closing Date at any one time outstanding
plus (B) the amount of such Investments (other than such advances and loans under
clause (A) above) made after the Closing Date in the aggregate be greater than $10,000,000;
(ix) Investments in the form of advance payments in connection with any Permitted Commodity Swap
Agreement; (x) Investments in respect of, including by way of contributions to, voluntary employee
beneficiary associations established for the benefit of certain hourly retirees and for the benefit
of certain salaried retirees pursuant to agreements, as amended and/or modified, that KACC and
Kaiser Bellwood negotiated with the United Steelworkers of America, the International Association
of Machinists and Aerospace Workers, the Official Committee of Retired Employees in the Cases, the
International Union, United Automobile, Aerospace and Agricultural Implement Workers of America
and/or its Local Union No. 1186, the Paper, Allied-Industrial, Chemical and Energy Workers
International Union, AFL-CIO, CLC and the International Chemical Workers Union Council-United Food
& Commercial Workers and approved by orders of the Bankruptcy Court entered on March 22, 2004,
March 25, 2004, June 1, 2004, February 1, 2005, October 21, 2005 and January 9, 2006; (xi) loans or
advances made by the Borrower or a Guarantor to its employees in the ordinary course of business
for travel and entertainment expenses, relocation costs and similar purposes (up to a maximum of
$2,000,000 in the aggregate at any one time outstanding), and loans or advances to directors,
officers or employees of the Borrower or any Guarantor the proceeds of which are concurrently used
to purchase Equity Interests in the Borrower or a Guarantor; (xii) Investments described on
Schedule 6.07 hereto and modifications, extensions, and renewals of such Investments;
(xiii) other Investments not to exceed $20,000,000 in the aggregate at any time outstanding; and
(xiv) advances and loans to Reorganized KACC from time to time in accordance with the
Reorganization Plan, provided that in no event shall the

60

 

aggregate principal amount of such
advances or loans made after the Closing Date be greater than $10,000,000 at any one time
outstanding.

     Section 6.08 Creation of Subsidiaries. Create or acquire any Subsidiary of the Borrower or any
Guarantor after the Closing Date except for Subsidiaries created or acquired in accordance with the
terms of Section 5.11.

     Section 6.09 Disposition of Assets. Sell or otherwise dispose of any assets (including, without
limitation, the Equity Interests of any Subsidiary), except for (i) sales of Permitted Investments;
(ii) sales of inventory in the ordinary course of business; (iii) dispositions of surplus, obsolete
or damaged assets no longer used in the business of Parent and its Subsidiaries; (iv) sales of
assets set forth on Schedule 
1.01(a) or Schedule 6.09 hereto (v) the disposition of assets by Parent or any of
its Subsidiaries in any single transaction or series of related transactions with an aggregate fair
market value of less than $500,000; (vi) the disposition of assets by Parent or its Subsidiaries
not otherwise permitted under this Section 6.09 having a fair market value not exceeding
$10,000,000 (excluding the fair market value of any asset sold or disposed of in an Excluded Asset
Sale) in the aggregate in each Fiscal Year; provided that at least 75% of the consideration
received by Parent or a Subsidiary of Parent in connection with such disposition shall be cash or
assets that can be readily converted to cash without discount within ninety (90) days; (vii)
dispositions of property by (A) the Borrower to any Guarantor, (B) Parent or any Subsidiary to the
Borrower or any other Guarantor, and (C) any Subsidiary (other than Borrower) that is not a
Guarantor to any other Subsidiary (other than Borrower) that is not a Guarantor; (ix) the grant of
any Liens permitted under Section 6.01; (ix) non-exclusive licenses of intellectual
property in the ordinary course of business; and (x) sale-leaseback transactions with respect to
fixed or capital assets, provided that any such sale is made for cash consideration
in an amount not less than the fair market value of such asset and is consummated within ninety
(90) days of the acquisition or completion of construction of such asset by such Person.

     Section 6.10 Nature of Business. Modify or alter in any material manner the nature and type of its
business as conducted on the Closing Date or the manner in which such business is conducted (except
such activities as may be incidental or related thereto or reasonably related extensions thereof),
it being understood that dispositions of assets permitted by Section 6.09 shall not
constitute such a material modification or alteration.

     Section 6.11 Restrictive Agreements. Enter into, incur or permit to exist any agreement or other
arrangement that prohibits, restricts or imposes any condition upon (a) the ability of the Borrower
or any Guarantor or any of their Significant Subsidiaries to create, incur or permit to exist any
Lien upon any of its property or assets, or (b) the ability of any Subsidiary of the Borrower or
any Guarantor to pay dividends or other distributions with respect to any shares of its capital
stock or to make or repay loans or advances to Parent or any Subsidiary of Parent or to guarantee
Indebtedness of Parent or any Subsidiary of Parent; provided that (i) the foregoing shall not apply
to restrictions and conditions imposed by law or by this Agreement or the Revolving Loan Documents,
(ii) the foregoing shall not apply to restrictions and conditions existing on the Closing Date
which are identified on Schedule 6.11 (but shall apply to any extension or renewal of, or
any amendment or modification expanding the scope of, any such restriction or condition); (iii) the
foregoing shall not apply to customary restrictions and

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conditions contained in agreements relating
to the sale of a Subsidiary pending such sale, provided such restrictions and conditions apply only
to the Subsidiary that is to be sold and such sale is permitted hereunder; (iv) clause (a)
of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to
secured Indebtedness permitted by this Agreement; and (v) clause (a) of the foregoing shall
not apply to customary provisions in leases and other contracts restricting the assignment thereof.

     Section 6.12 Prepayment of Indebtedness; Subordinated Indebtedness. (a)Directly or indirectly, voluntarily purchase, redeem, defease or prepay any principal of,
premium, if any, interest on or other amount payable in respect of any Indebtedness prior to its
scheduled maturity, other than (i) the “Secured Obligations” (as defined in the Revolving Loan
Documents); (ii) the Obligations; (iii) Capital Lease Obligations permitted by Section
6.03(iii) not to exceed $10,000,000 in the aggregate in any Fiscal Year; (iv) prepayment of
Indebtedness in connection with the cancellation, termination or unwinding of Permitted Commodity
Swap Agreements; (v) prepayment of Indebtedness in connection with the cancellation, termination or
unwinding of Swap Obligations described in Section 6.03(vii); and (vi) prepayments in
respect of Indebtedness in respect of advanced payments permitted by Section 6.03(xi).

          (b) (i) Make any amendment or modification to any indenture, note or other agreement
evidencing or governing any Indebtedness of such Person the payment of which is subordinated to
payment of the Obligations, which amendment or modification has the effect of (v) shortening the
maturity thereof, (w) accelerating the date of any payment of principal or interest thereunder, (x)
increasing the interest rate or fees payable thereunder or converting any interest payable in kind
to current cash pay interest, (y) amending, modifying, supplementing or otherwise modifying any of
the subordination provisions of such indenture, note or other agreement or (z) making any provision
of such indenture, note or other agreement more restrictive or burdensome on the Borrower, any
Guarantor or any Subsidiary of the Borrower or any Guarantor or (ii) directly or indirectly
voluntarily prepay, defease or in substance defease, purchase, redeem, retire or otherwise acquire,
any such Indebtedness.

     Section 6.13 Fixed Charge Coverage. Permit the Fixed Charge Coverage Ratio as of the last day of any
trailing fiscal period of Parent set forth below to be less than the ratio set forth opposite such
period:

	 	 	 	 	 
	Period Ending	 	Fixed Charge Coverage Ratio
	the Fiscal Quarter ending
September 30, 2006
	 	 	1.00:1.00	 
	 
	 	 	 	 
	the last two Fiscal Quarters ending December
31, 2006
	 	 	1.00:1.00	 
	 
	 	 	 	 
	the last three Fiscal Quarters ending
March 31, 2007
	 	 	1.00:1.00	 
	 
	 	 	 	 
	the last four Fiscal Quarters ending
June 30, 2007
	 	 	1.00:1.00	 
	 
	 	 	 	 
	the last four Fiscal Quarters ending the last
day of each Fiscal Quarter thereafter
	 	 	1.10:1.00	 
	 
	 	 	 	 

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provided that neither the Borrower nor the Guarantors shall be required to comply with this
covenant as of the last day of any Fiscal Quarter so long as (i) no Covenant Trigger Event has
occurred and is continuing on the last day of such Fiscal Quarter and (ii) no Covenant Trigger
Event occurs after the last day of such Fiscal Quarter and on or prior to the last day of the next
succeeding Fiscal Quarter.

     Section 6.14 Amendments to Orders. Directly or indirectly consent to, or file any motion or pleading in
any court supporting or seeking, any amendment, supplement, modification or stay of the
Confirmation Order or the District Court Order.

ARTICLE VII

EVENTS OF DEFAULT

     Section 7.01 Events of Default. If any of the following events (“Events of Default”) shall
occur:

          (a) the Borrower shall fail to pay any principal of any Term Loan when and as the same shall
become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof
or otherwise; or

          (b) the Borrower shall fail to pay any interest on any Term Loan or any fee or any other
amount (other than an amount referred to in clause (a) of this Section 7.01)
payable under this Agreement, when and as the same shall become due and payable, and such failure
shall continue unremedied for a period of three (3) Business Days after the date due; or

          (c) any representation or warranty made or deemed made by or on behalf of the Borrower or any
Guarantor in or in connection with this Agreement or any other Loan Document or any amendment or
modification thereof or waiver thereunder, or in any report, certificate, financial statement or
other document furnished pursuant to or in connection with this Agreement or any other Loan
Document or any amendment or modification thereof or waiver thereunder, shall prove to have been
incorrect in any material respect when made or deemed made; or

          (d) the Borrower or any Guarantor shall fail to observe or perform any covenant, condition or
agreement contained in Section 5.02 (with respect to the Borrower’s or any Guarantor’s
existence), 5.05, 5.10 or in Article VI; or

          (e) the Borrower or any Guarantor shall fail to observe or perform any covenant, condition or
agreement contained in this Agreement or any other Loan Document (other than those which constitute
a default under another clause of this Section), and such failure shall continue unremedied
for a period of (i) five (5) Business Days after the earlier of such breach or notice thereof from
the Administrative Agent (which notice will be given at the request of any Lender) if such breach
relates to terms or provisions of Section 5.01 and Article X of this Agreement or
(ii) thirty (30) days after the earlier of such breach or notice thereof from

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any Agent (which
notice will be given at the request of any Lender) if such breach relates to terms or provisions of
any other section of this Agreement or any other Loan Document; or

               (f) (i) the Borrower or any Guarantor shall fail to make any payment (whether of principal or
interest and regardless of amount) in respect of any Material Indebtedness, when and as the same
shall become due and payable or (ii) any event or condition occurs (other than a payment default
which is addressed in clause (i)) under the Revolving Loan Documents that results in the
“Obligations” (as defined in the Revolving Loan Documents) becoming due prior to their
scheduled maturity; or

               (g) any event or condition (other than a payment default or a default under the Revolving Loan
Documents, each of which is addressed in clause (f) above) occurs that results in any
Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (with
or without the giving of notice, the lapse of time or both) the holder or holders of any Material
Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to
become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to
its scheduled maturity; provided that this clause (g) shall not apply to secured
Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or
assets securing such Indebtedness; or

               (h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed
seeking (i) liquidation, reorganization or other relief in respect of the Borrower, any Guarantor
or any Significant Subsidiary or its debts, or of a substantial part of its assets, under any
Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in
effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower, any Guarantor or any Significant Subsidiary or for a substantial
part of its assets, and, in any such case, such proceeding or petition shall
continue undismissed for sixty (60) days or an order or decree approving or ordering any of
the foregoing shall be entered; or

               (i) the Borrower, any Guarantor or any Significant Subsidiary shall (i) voluntarily commence
any proceeding or file any petition seeking liquidation, reorganization or other relief under any
Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in
effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner,
any proceeding or petition described in clause (h) of this Section 7.01, (iii)
apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower, any Guarantor or any Significant Subsidiary or
for a substantial part of its assets, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general assignment for the benefit of
creditors or (vi) take any action for the purpose of effecting any of the foregoing; or

               (j) the Borrower, any Guarantor or any Significant Subsidiary shall become unable, admit in
writing its inability or fail generally to pay its debts as they become due; or

               (k) one or more judgments for the payment of money in an aggregate amount in excess of
$10,000,000 shall be rendered against the Borrower, any Guarantor, any

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Significant Subsidiary or
any combination thereof (to the extent not covered by insurance as to which the relevant insurance
company does not dispute coverage) and the same shall remain undischarged for a period of thirty
(30) consecutive days during which execution shall not be
effectively stayed, or any action shall be legally taken by a judgment creditor to attach or
levy upon any assets of the Borrower, any Guarantor or any Significant Subsidiary to enforce any
such judgment or the Borrower, any Guarantor or any Significant Subsidiary shall fail within 30
days to discharge one or more non-monetary judgments or orders which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect, which judgments or
orders, in any such case, are not stayed on appeal or otherwise being appropriately contested in
good faith by proper proceedings diligently pursued; or

               (l) a Change of Control shall occur; or

               (m) any material provision of any Loan Document shall, for any reason, cease to be valid and
binding on the Borrower or any Guarantor, or the Borrower, any Guarantor, or any Affiliate of the
Borrower or any Guarantor shall so assert in any pleading filed in any court or any material
portion of any Lien (as determined by the Administrative Agent) intended to be created by the Loan
Documents shall cease to be or shall not be a valid and perfected Lien having the priorities
contemplated hereby or thereby; or

               (n) (i) any Termination Event shall have occurred and shall continue unremedied (if
applicable) for more than ten (10) days and the sum (determined as of the date of occurrence of
such Termination Event) of the Insufficiency of the Plan in respect of which such Termination Event
shall have occurred and be continuing and the Insufficiency of any and all other Plans with respect
to which such a Termination Event shall have occurred and then exist is equal to or greater than
$10,000,000, or (ii) there exists any fact or circumstance that reasonably could be expected to
result in the imposition of a Lien or security interest under Section
401(a)(29) or 412(n) of the Code or under ERISA with respect to any Plan of the Borrower, any
Guarantor or any ERISA Affiliate; or

               (o) (i) the Borrower or any ERISA Affiliate shall have been notified by the sponsor or trustee
of a Multiemployer Plan that it has incurred Withdrawal Liability to such Multiemployer Plan, (ii)
the Borrower or such ERISA Affiliate does not have reasonable grounds, in the opinion of the
Administrative Agent, to contest such Withdrawal Liability or is not in fact contesting such
Withdrawal Liability in a timely and appropriate manner, and (iii) the amount of such Withdrawal
Liability specified in such notice, when aggregated with all other amounts required to be paid to
Multiemployer Plans in connection with Withdrawal Liabilities (determined as of the date of such
notification), exceeds $10,000,000 allocable to obligations or requires payments exceeding
$1,000,000 per annum in excess of the annual payments made with respect to such Multiemployer Plans
by the Borrower or such ERISA Affiliate for the plan year immediately preceding the plan year in
which such notification is received; or

               (p) the Borrower or any ERISA Affiliate shall have been notified by the sponsor of a
Multiemployer Plan that such Multiemployer Plan is in reorganization or is being terminated, within
the meaning of Title IV of ERISA, if as a result of such reorganization or termination the
aggregate annual contributions of the Borrower and its ERISA Affiliates to all Multiemployer Plans
that are then in reorganization or being terminated have been or will be

65

 

increased over the amounts
contributed to such Multiemployer Plans for the plan years that include the date hereof by an
amount exceeding $10,000,000; or

               (q) a material breach by the Borrower or any ERISA Affiliate of the Settlement Agreement shall
have occurred; or

               (r) the Borrower or any Guarantor is criminally indicted or convicted under any law that may
reasonably be expected to lead to a forfeiture of any property of such party having a fair market
value in excess of $10,000,000; or

               (s) an order of any court of competent jurisdiction is entered amending, supplementing,
staying for any period, vacating or otherwise modifying the Confirmation Order, the District Court
Order or the PI Trust or the Borrower or any of the Guarantors shall apply for authority to do so;
provided, however, no Default shall occur under this subsection so long as (x) neither the District
Court Order nor the Confirmation Order is stayed or vacated and (y) any such amendment, supplement
or other modification is not adverse to the rights and interests of the Lenders under this
Agreement and the other Loan Documents and could not reasonably be expected to have a Material
Adverse Effect;

then, and in every such event (other than an event with respect to the Borrower described in
clause (h) or (i) of this Section 7.01), and at any time thereafter during
the continuance of such event, at the same or different times: (i) the Administrative Agent may,
and at the request of the Required Lenders shall, terminate the Commitments, and thereupon the
Commitments shall terminate immediately, and (ii) the Administrative Agent may, and at the request
of the Required Lenders shall, by notice to the Borrower declare the Term Loans then outstanding to
be due and payable in whole (or in part, in which case any principal not so declared to be due and
payable may thereafter be declared to be due and payable), and thereupon the principal of the
Term Loans so declared to be due and payable, together with accrued and unpaid interest thereon and
all fees and other obligations of the Borrower accrued hereunder, shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower; and in case of any event with respect to the Borrower described in
clause (h) or (i) of this Section 7.01, the Commitments shall automatically
terminate and the unpaid principal of the Term Loans then outstanding, together with accrued and
unpaid interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall
automatically become due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower. Upon the occurrence and the continuance of
an Event of Default, the Administrative Agent may, and at the request of the Required Lenders
shall, increase the rate of interest applicable to the Term Loans and other Obligations as set
forth in Section 2.08(c) and exercise any rights and remedies provided to the
Administrative Agent or Collateral Agent under the Loan Documents or at law or equity, including
all remedies provided under the UCC.

ARTICLE VIII

THE AGENTS

          Each of the Lenders hereby irrevocably appoints the Administrative Agent as its agent and
authorizes the Administrative Agent to take such actions on its behalf, including

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execution of the
other Loan Documents, and to exercise such powers as are delegated to the Administrative Agent by
the terms of the Loan Documents, together with such actions and powers as are reasonably incidental
thereto. Each of the Lenders hereby irrevocably appoints the
Collateral Agent as its agent and authorizes the Collateral Agent to take such actions on its
behalf, including execution of the other Loan Documents, and to exercise such powers as are
delegated to the Collateral Agent by the terms of the Loan Documents, together with such actions
and powers as are reasonably incidental thereto. In addition, each of the Lenders and the
Administrative Agent irrevocably appoints the Collateral Agent to act as “Term Loan Representative”
under the Intercreditor Agreement and authorizes the Collateral Agent, acting as “Term Loan
Representative”, to execute the Intercreditor Agreement and agrees to be bound by the terms
thereof.

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

          No Agent shall have any duties or obligations except those expressly set forth in the Loan
Documents. Without limiting the generality of the foregoing, (a) no Agent shall be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing,
(b) no Agent shall have any duty to take any discretionary action or exercise any discretionary
powers, except discretionary rights and powers expressly contemplated by the Loan Documents that
such Agent is required to exercise in writing as directed by the Required Lenders (or such other
number or percentage of the Lenders as shall be necessary under the circumstances as provided in
Section 9.02) and (c) except as expressly set forth in the Loan
Documents, no Agent shall have any duty to disclose, and shall not be liable for the failure
to disclose, any information relating to the Borrower or any Guarantor or any of their respective
Subsidiaries that is communicated to or obtained by the Person serving as an Agent or any of its
Affiliates in any capacity. No Agent nor any of such Agent’s Related Parties shall be liable for
any action taken or not taken by it with the consent or at the request of the Required Lenders (or
such other number or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 9.02) or in the absence of its own gross negligence or willful
misconduct, or, in the case of the Collateral Agent, at the request of the Administrative Agent.
No Agent nor any Related Party of such Agent shall be deemed to have knowledge of any Default
unless and until written notice thereof is given to such Agent or Related Party of such Agent by
the Borrower or a Lender, and no Agent nor any Related Party of such Agent shall be responsible for
or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with any Loan Document, (ii) the contents of any certificate, report or other
document delivered hereunder or in connection with any Loan Document, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set forth in any Loan
Document, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or
any other agreement, instrument or document, (v) the creation, perfection or priority of Liens on
the Collateral or the existence of the Collateral (including, without limitation, the filing of any
UCC financing statement or continuation statement) or (vi) the satisfaction of

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any condition set
forth in Article IV or elsewhere in any Loan Document, other than to confirm receipt of
items expressly required to be delivered to such Agent.

          The Collateral Agent is authorized on behalf of all the Lenders, without the necessity of any
notice to or further consent from the Lenders, from time to time to take any action with respect to
any Collateral or the Loan Documents that may be necessary to perfect and maintain a perfected
security interest in and Liens upon the Collateral granted pursuant to the Loan Documents. Except
for the safe custody of any Collateral in its possession and the accounting for moneys actually
received by it hereunder or under any of the other Loan Documents, the Collateral Agent shall have
no duty as to any Collateral to ascertain or take action with respect to calls, conversions
exchanges, maturities, trades or other matters relative to any Collateral, whether or not the
Collateral Agent is deemed to have knowledge of such matters, or to take any necessary steps to
preserve rights against any parties or any other rights pertaining to any Collateral (including the
filing of UCC continuation statements). The Collateral Agent shall be deemed to have exercised
appropriate and due care in the custody and preservation of any Collateral in its possession if
such Collateral is accorded treatment substantially equal to that which other collateral agents
accord similar property.

          Each Agent and the Related Parties of such Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent, statement,
instrument, document or other writing believed by it to be genuine and to have been signed or sent
by the proper Person. Each Agent also may rely upon any statement made to it orally or by
telephone and believed by it to be made by the proper Person, and shall not incur any liability for
relying thereon. Each Agent may consult with legal counsel (who may be counsel for the Borrower),
independent accountants and other experts selected by it, and shall not be liable for any action
taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.
Without limiting the foregoing, each Agent shall have the right at any time to seek instructions
concerning the administration of this Agreement and the other Loan
Documents, from the Required Lenders, a court of competent jurisdiction or, in the case of the
Collateral Agent, the Administrative Agent. No Agent nor the Related Parties of such Agent shall
incur any liability for failing or refusing to take any action under this Agreement or any other
Loan Document unless it shall first receive such instruction from the Required Lenders (or, in the
case of the Collateral Agent, instruction from the Administrative Agent) as it deems appropriate or
it shall first be indemnified to its satisfaction by the Lenders against any and all liability and
expense that may be incurred by it by reason of taking or continuing to take any such action.

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

          Subject to the appointment and acceptance of a successor Agent as provided in this paragraph,
an Agent may resign at any time by notifying the Lenders and the Borrower.

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Upon any such
resignation, the Required Lenders shall have the right, with the consent of the Borrower, to
appoint a successor. If no successor shall have been so appointed by the Required Lenders and
shall have accepted such appointment within thirty (30) days after the retiring Agent
gives notice of its resignation, then the retiring Agent may, on behalf of the Lenders,
appoint a successor Agent which shall be a commercial bank or an Affiliate of any such commercial
bank, with the consent of the Borrower, such consent not to be unreasonably withheld or delayed;
provided that no such consent of the Borrower shall be required if an Event of Default has
occurred and is continuing. Upon the acceptance of its appointment as an Agent hereunder by a
successor, such successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations hereunder. The fees payable by the Borrower to a successor Agent shall be
the same as those payable to its predecessor unless otherwise agreed between the Borrower and such
successor. After such Agent’s resignation hereunder, the provisions of this Article and
Section 9.03 shall continue in effect for the benefit of such retiring Agent, its sub
agents and their respective Related Parties in respect of any actions taken or omitted to be taken
by any of them while it was acting as Agent.

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

          Each Lender hereby agrees that (a) it has requested a copy of each Report prepared by or on
behalf of any Agent; (b) no Agent (i) makes any representation or warranty,
express or implied, as to the completeness or accuracy of any Report or any of the information
contained therein or any inaccuracy or omission contained in or relating to a Report, and (ii)
shall be liable for any information contained in any Report; (c) the Reports are not comprehensive
audits or examinations, and that any Person performing any field examination will inspect only
specific information regarding the Borrower and the Guarantors and will rely significantly upon the
Borrower’s and the Guarantors’ books and records, as well as on representations of the Borrower’s
and the Guarantors’ personnel and that no Agent undertakes obligation to update, correct or
supplement the Reports; (d) it will keep all Reports confidential and strictly for its internal
use, not share the Report with the Borrower or any Guarantor or any other Person except as
otherwise permitted pursuant to this Agreement; and (e) without limiting the generality of any
other indemnification provision contained in this Agreement, it will pay and protect, and
indemnify, defend, and hold each Agent and any such other Person preparing a Report harmless from
and against, the claims, actions, proceedings, damages, costs, expenses, and other amounts
(including reasonable attorney fees) incurred as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.

          The Borrower, each Guarantor and the Administrative Agent will furnish such information
reasonably known to it (and subject to applicable confidentiality restrictions) about the
Collateral and any other information the Collateral Agent deems necessary to exercise any of

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the
rights and powers vested in it by the Loan Documents as the Collateral Agent may reasonably request
from time to time.

          The Lenders hereby empower, authorize and direct each of the Administrative Agent and the
Collateral Agent, on behalf of the Lenders, to execute and deliver this Agreement, the other Loan
Documents, the Intercreditor Agreement and all related agreements, certificates, documents, or
instruments as shall be necessary or appropriate to effect the purposes of the Loan Documents.
Each Lender agrees that any action taken by the Administrative Agent or the Collateral Agent or the
Required Lenders in accordance with the terms of this Agreement, the Intercreditor Agreement or the
other Loan Documents, and the exercise by the Administrative Agent or the Collateral Agent or the
Required Lenders of their respective powers set forth therein or herein, together with such other
powers that are reasonably incidental thereto, shall be binding upon all of the Lenders.

          The documentation agent, lead arranger, sole bookrunner, syndication agent and co-arranger,
each in its capacity as such, shall not have any right, power, obligation, liability,
responsibility or duty under this Agreement other than those applicable to all Lenders as such.

ARTICLE IX

MISCELLANEOUS

          Section 9.01 Notices. (a) Except in the case of notices and other communications expressly permitted to be given by
telephone or by other electronic communication (and subject to Section 9.01(b)), all
notices and other communications provided for herein shall be in writing and shall be delivered by
hand or overnight courier service, mailed by certified or registered mail or sent by facsimile, as
follows:

(i) if to the Borrower or any Guarantor, c/o Parent at:

Kaiser Aluminum Corporation

27422 Portola Parkway, Suite 350

Foothill Ranch, CA 92610-2831

Attention: Office of the Chief Financial Officer

Facsimile No: (949) 636-1930

with a copy to:

Jones Day

77 West Wacker

Chicago, IL 60601-1692

Attention: Robert J. Graves

Facsimile No.: (312) 782-8585

(ii) if to the Administrative Agent, to JPMorgan Chase at:

JPMorgan Chase Bank, N.A.

2200 Ross Avenue, 6th Floor

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Mail Code: TX1-2921

Dallas, TX 75201

Attention: Portfolio Manager

Facsimile No: (214) 965-2594

with a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP

333 West Wacker Drive

Chicago, IL 60606

Attention: Seth Jacobson

Facsimile No: (312) 407-0411

(iii) if to the Collateral Agent, to Wilmington Trust Company at:

Wilmington Trust Company

Rodney Square North

1100 North Market Street

Wilmington, DE 19890-0001

Attention: Corporate Trust Administrator

Facsimile No: (302) 636-4140

(iv) if to any other Lender, to it at its address or facsimile number set forth
in its Administrative Questionnaire.

All such notices and other communications (i) sent by hand or overnight courier service, or mailed
by certified or registered mail, shall be deemed to have been given when received or (ii) sent by
facsimile shall be deemed to have been given when sent, provided that if not given during
normal business hours for the recipient, shall be deemed to have been given at the opening of
business on the next Business Day for the recipient.

               (b) Notices and other communications to the Lenders hereunder may be delivered or furnished by
electronic communications (including e-mail and internet or intranet websites) pursuant to
procedures approved by the Administrative Agent; provided that the foregoing shall not apply to
notices pursuant to Article II or to compliance and no Event of Default certificates
delivered pursuant to Section 5.01 unless expressly provided for therein or otherwise
agreed by the Administrative Agent and the applicable Lender. The Administrative Agent and the
Borrower (on behalf of the Borrower and each Guarantor) may, in their discretion, agree to accept
notices and other communications hereunder by electronic communications pursuant to procedures
approved by them; provided that approval of such procedures may be limited to particular notices or
communications. All such notices and other communications (i) sent to an e-mail address shall be
deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such
as by the “return receipt requested” function, as available, return e-mail or other written
acknowledgement), provided that if not given during the normal business hours of the recipient,
such notice or communication shall be deemed to have been given at the opening of business on the
next Business Day for the recipient, and (ii)

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posted to an Internet or intranet website shall be
deemed received upon the deemed receipt by the intended recipient at its e-mail address as
described in the foregoing clause of this Section 9.01(b)
of notification that such notice or communication is available and identifying the website
address therefor.

               (c) Any party hereto may change its address or facsimile number for notices and other
communications hereunder by notice to the other parties hereto.

          Section 9.02 Waivers; Amendments. (a) No failure or delay by any Agent or any Lender in exercising any right or power hereunder or
under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such
a right or power, preclude any other or further exercise thereof or the exercise of any other right
or power. The rights and remedies of the Agents and the Lenders hereunder and under any other Loan
Document are cumulative and are not exclusive of any rights or remedies that they would otherwise
have. No waiver of any provision of any Loan Document or consent to any departure by the Borrower
or any Guarantor therefrom shall in any event be effective unless the same shall be permitted by
Section 9.02(b), and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. Without limiting the generality of the foregoing,
the making of a Term Loan shall not be construed as a waiver of any Default, regardless of whether
any Agent or any Lender may have had notice or knowledge of such Default at the time.

               (b) Neither this Agreement nor any other Loan Document nor any provision hereof or thereof may
be waived, amended or modified except (i) in the case of this
Agreement, pursuant to an agreement or agreements in writing entered into by the Borrower and
each Guarantor and the Required Lenders or, (ii) in the case of any other Loan Document, pursuant
to an agreement or agreements in writing entered into by the applicable Agent and the Borrower
and/or Guarantor(s) that are parties thereto, with the consent of the Required Lenders;
provided, however, that no such waiver, modification or amendment shall, without
the written consent of (1) 100% of Lenders, (A) except as provided in Section 9.02(d),
release all or substantially all of the Collateral, (B) change Section 2.13(b) or
(c) in a manner that would alter the manner in which payments are shared, (C) modify any of
the voting percentages, (D) release the Borrower or any Guarantor as a party to, or from all of its
obligations under, this Agreement (except as permitted under Section 6.02), or (E) amend
this Section 9.02(b) to change the percentage of Lenders required to approve any waiver,
amendment or modification, and (2) the Lender directly affected thereby, (A) increase the
Commitment of a Lender (it being understood that a waiver of an Event of Default shall not
constitute an increase in the Commitment of a Lender) or extend the expiry date of such Lender’s
Commitment, or (B) reduce or forgive the principal amount of any Term Loan or reduce the rate of
interest thereon, or reduce or forgive any interest or fees payable hereunder, or postpone any
scheduled date of payment of the principal amount of any Term Loan, or any date for the payment of
any interest, fees or other Obligations payable hereunder, or reduce the amount of, waive or excuse
any such payment, or postpone the scheduled date of expiration of any Commitment; provided further
that no such agreement shall amend, modify or otherwise affect the rights or duties of an Agent
hereunder without the prior written consent of such Agent.

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               (c) The Administrative Agent may (i) amend the Commitment Schedule to reflect
assignments entered into pursuant to Section 9.04, and (ii) waive payment of the fee
required under Section 9.04(b)(ii)(C) without obtaining the consent of any other party to
this Agreement.

               (d) The Lenders hereby irrevocably authorize the Collateral Agent, at its option and in its
sole discretion, to release any Liens granted to the Collateral Agent by the Borrower or any
Guarantor on any Collateral (i) upon the termination of the Commitment, payment and satisfaction in
full in cash of all Obligations (other than Unliquidated Obligations), and the cash
collateralization of all Unliquidated Obligations in a manner satisfactory to each affected Lender,
(ii) constituting property being sold, assigned, transferred or otherwise disposed of if the
Borrower or Guarantor disposing of such property certifies to the Collateral Agent that such sale,
assignment, transfer or disposition is made in compliance with the terms of this Agreement (and the
Collateral Agent may rely conclusively on any such certificate, without further inquiry), (iii)
constituting property leased to the Borrower or a Guarantor under a lease which has expired or been
terminated in a transaction permitted under this Agreement with respect to which the Collateral
Agent has received a certification from the Borrower (and the Collateral Agent may rely
conclusively on such certification without further inquiry) or (iv) as required to effect any sale
or other disposition of such Collateral in connection with any exercise of remedies of the
Collateral Agent or the Lenders pursuant to Section 7.01. Except as provided in the
preceding sentence, the Collateral Agent will not release any Liens on Collateral without the prior
written authorization of the Required Lenders; provided that the Administrative Agent may,
in its discretion, instruct the Collateral Agent to release its Liens on Collateral valued in the
aggregate not in excess of $2,000,000 during any calendar year without the prior written
authorization of the Required Lenders, and the Collateral Agent shall comply with such an
instruction upon receipt. Any such release shall not in any manner discharge, affect, or
impair the Obligations or any Liens (other than those expressly being released) upon (or
obligations of the Borrower and Guarantors in respect of) all interests retained by the Borrower
and Guarantors, including the proceeds of any sale, all of which shall continue to constitute part
of the Collateral.

               (e) If, in connection with any proposed amendment, waiver or consent requiring the consent of
“100% of Lenders” or “the Lender directly affected thereby,” the consent of the Required Lenders is
obtained, but the consent of other necessary Lenders is not obtained (any such Lender whose consent
is necessary but not obtained being referred to herein as a “Non-Consenting Lender”), then,
so long as the Administrative Agent is not a Non-Consenting Lender, the Borrower may elect to
replace a Non-Consenting Lender as a Lender party to this Agreement, provided that, concurrently
with such replacement, (i) another bank or other entity which is reasonably satisfactory to the
Borrower and the Administrative Agent shall agree, as of such date, to purchase for cash the Term
Loans and other Obligations due to the Non-Consenting Lender pursuant to an Assignment and
Assumption and, to the extent any such assignee is not already a Lender, to become a Lender for all
purposes under this Agreement and to assume all obligations of the Non-Consenting Lender to be
terminated as of such date and to comply with the requirements of Section 9.04(b), and (ii)
the Borrower shall pay to such Non-Consenting Lender in same day funds on the day of such
replacement (1) all interest, fees and other amounts then accrued but unpaid to such Non-Consenting
Lender by the Borrower hereunder to and including the date of termination, including without
limitation payments due to such Non-Consenting Lender under Sections 2.10 and 2.12,
and (2) an amount, if any, equal to

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the payment which would have been due to such Lender on the day of such replacement under
Section 2.11 had the Term Loans of such Non-Consenting Lender been prepaid on such date
rather than sold to the replacement Lender.

          Section 9.03 Expenses; Indemnity; Damage Waiver. (a) The Borrower shall pay (i) all reasonable out of pocket expenses incurred by each Agent and
its Affiliates and sub-agents, including the reasonable fees, charges and disbursements of counsel
for each Agent, in connection with the syndication and distribution (including, without limitation,
via the internet or through a service such as Intralinks) of the credit facilities provided for
herein, the preparation and administration of the Loan Documents or any amendments, modifications
or waivers of the provisions of the Loan Documents (whether or not the transactions contemplated
hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by any
Agent or any Lender, including the fees, charges and disbursements of any counsel for any Agent or
any Lender, in connection with the enforcement, collection or protection of its rights in
connection with the Loan Documents, including its rights under this Section 9.03, or in
connection with the Term Loans made hereunder, including all such out-of pocket expenses incurred
during any workout, restructuring or negotiations in respect of such Term Loans. Expenses being
reimbursed by the Borrower under this Section 9.03 include, without limiting the generality
of the foregoing, costs and expenses incurred in connection with:

               (i) appraisals of all or any portion of the Collateral (including reasonable
travel, lodging, meals and other out of pocket expenses of the appraisers);

               (ii) lien and title searches and title insurance;

               (iii) taxes, fees and other charges, if any, for recording the Mortgages,
filing financing statements and continuations, and other actions to perfect,
protect, and continue the Collateral Agent’s Liens; and

               (iv) sums paid or incurred to take any action required of the Borrower or any
Guarantor under the Loan Documents that the Borrower or such Guarantor fails to pay
or take.

               (b) The Borrower shall indemnify each Agent, each Lender, and each Related Party of any of the
foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, penalties, liabilities and related
expenses, including the fees, charges and disbursements of any counsel for any Indemnitee, incurred
by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of the Loan Documents or any agreement or instrument contemplated thereby,
the performance by the parties hereto of their respective obligations thereunder or the
consummation of the Transactions or any other transactions contemplated hereby, (ii) any Term Loan
or the use of proceeds thereof, (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property owned or operated by Parent or any of its Subsidiaries, or any
Environmental Liability related in any way to Parent
or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation
or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory

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and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall
not, as to any Indemnitee, be available to the extent that such losses, claims, damages, penalties,
liabilities or related expenses are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or willful misconduct of such
Indemnitee.

               (c) To the extent that the Borrower fails to pay any amount required to be paid by the
Borrower to any Agent or Related Party under Section 9.03(a) or (b), each Lender
severally agrees to pay to such Agent or Related Party such Lender’s Commitment Percentage
(determined as of the time that the applicable unreimbursed expense or indemnity payment is sought)
of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage,
penalty, liability or related expense, as the case may be, was incurred by or asserted against such
Agent or Related Party in its capacity as such.

               (d) To the extent permitted by applicable law, neither the Borrower nor any Guarantor shall
assert, and the Borrower and each Guarantor hereby waives, any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct
or actual damages) arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby, the Transactions, any Term Loan or the use of the
proceeds thereof.

               (e) All amounts due under this Section 9.03 shall be payable promptly after written
demand therefor.

          Section 9.04 Successors and Assigns. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns permitted hereby except that (i) neither
the Borrower nor any Guarantor may assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted assignment or
transfer by the Borrower or any Guarantor without such consent shall be null and void) and (ii) no
Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance
with this Section 9.04 (and any other attempted assignment or transfer by any party hereto
shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective successors and assigns
permitted hereby, Participants (to the extent provided in Section 9.04(c)) and, to the
extent expressly contemplated hereby, the Related Parties of each of the Agents and the Lenders)
any legal or equitable right, remedy or claim under or by reason of this Agreement.

               (b) (i) Subject to the conditions set forth in Section 9.04(b)(ii), any Lender may
assign to one or more assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Term Loans at the time owing to it) with the
prior written consent (such consent not to be unreasonably withheld or delayed) of:

               (A) the Administrative Agent;

 
               (B) the Borrower; provided that no consent of the Borrower
shall be required for an Assignment to a

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               Lender, an Affiliate of a
Lender, an Approved Fund, or if an Event of Default has occurred,
any other assignee.

               (ii) Assignments shall be subject to the following additional conditions:

               (A) except in the case of an assignment to a Lender or an
Affiliate of a Lender or an assignment of the entire remaining
amount of the assigning Lender’s Commitment and Term Loans at the
time owing to it, the amount of the Commitment or Term Loans of the
assigning Lender subject to each such assignment (determined as of
the date the Assignment and Assumption with respect to such
assignment is delivered to the Agent) shall not be less than
$5,000,000 unless each of the Administrative Agent and the Borrower
otherwise consents, provided that no such consent of the Borrower
shall be required if an Event of Default has occurred and is
continuing;

               (B) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loan or
Commitment so assigned;

               (C) the parties to each assignment shall execute and deliver to
the Administrative Agent an Assignment and Assumption, together with
a processing and recordation fee of $3,500; and

               (D) the assignee, if it shall not be a Lender, shall deliver to
the Administrative Agent an Administrative Questionnaire.

               (iii) Subject to acceptance and recording thereof pursuant to Section 9.04
(b)(iv), from and after the effective date specified in each Assignment and
Assumption, the assignee thereunder shall be a party hereto and, to the extent of
the interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender thereunder
shall, to the extent of the interest assigned by such Assignment and Assumption, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Assumption covering all of the assigning Lender’s rights and
obligations under this Agreement, such Lender shall cease to be a party hereto but
shall continue to be entitled to the benefits of Sections 2.10,
2.11, 2.12 and 9.03). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with this
Section 9.04 shall be treated for
purposes of this Agreement as a sale by such Lender of a participation in such
rights and obligations in accordance with Section 9.04(c).

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               (iv) The Administrative Agent, acting solely for this purpose as an agent of
the Borrower, shall maintain at one of its offices in the United States of America a
copy of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of, and
principal amount of and accrued interest on the Term Loans, each Lender pursuant to
the terms hereof from time to time (the “Register”). The entries in the
Register shall be conclusive, and the Borrower, the Agents, and the Lenders shall
treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding
notice to the contrary. The Register shall be available for inspection by the
Borrower and any Lender, at any reasonable time and from time to time upon
reasonable prior notice.

               (v) Upon its receipt of a duly completed Assignment and Assumption executed by
an assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in Section 9.04(b) and any
written consent to such assignment required by Section 9.04(b), the
Administrative Agent shall accept such Assignment and Assumption and record the
information contained therein in the Register; provided that if either the assigning
Lender or the assignee shall have failed to make any payment required to be made by
it pursuant to Section 2.13(c) or 9.03(c), the Administrative Agent
shall have no obligation to accept such Assignment and Assumption and record
the information therein in the Register unless and until such payment shall
have been made in full, together with all accrued interest thereon. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in the
Register as provided in this paragraph.

For the purposes of this Section 9.04(b), the term “Approved Fund” has the
following meaning: “Approved Fund” means any Person (other than a natural person) that is engaged
in making, purchasing, holding or investing in bank loans and similar extensions of credit in the
ordinary course of business and that is administered or managed by (a) a Lender, (b) an Affiliate
of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

               (c) (i) Any Lender may, without the consent of the Borrower or the Administrative Agent sell
participations to one or more banks or other entities (a “Participant”) in all or a portion
of such Lender’s rights and obligations under this Agreement (including all or a portion of its
Commitment and the Term Loans owing to it); provided that (A) such Lender’s obligations under this
Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (C) the Borrower, the Agents, and the
other Lenders shall continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to
which a Lender sells such a participation shall provide that such Lender shall retain the sole
right to enforce the Loan Documents and to approve any
amendment, modification or waiver of any provision of any Loan Document; provided that such
agreement or instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, modification or waiver described in the first proviso to

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Section 9.02(b) that affects such Participant. Subject to paragraph (c)(ii) of
this Section, the Borrower agrees that each Participant shall be entitled to the benefits
of Sections 2.10, 2.11 and 2.12 to the same extent as if it were a Lender
and had acquired its interest by assignment pursuant to paragraph (b) of this
Section. To the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 9.08 as though it were a Lender, provided such Participant agrees to be
subject to Section 2.13(c) as though it were a Lender.

               (ii) A Participant shall not be entitled to receive any greater payment under
Section 2.10 or 2.12 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the prior
written consent of the Borrower. A Participant that would be a Foreign Lender or
other Lender that would be required to furnish documentation pursuant to Section
2.12(e) if it were a Lender shall not be entitled to the benefits of Section
2.12 unless the Borrower is notified of the participation sold to such
Participant and such Participant complies with Section 2.12(e) as though it
were a Lender. In addition, by acquiring its participation, any Participant shall
be deemed to have agreed to comply with Section 2.12(f) as if it were a
Lender.

               (d) Any Lender may at any time pledge or assign a security interest in all or any portion of
its rights under this Agreement to secure obligations of such Lender, including without limitation
any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section
shall not apply to any such pledge or assignment of a security interest;
provided that no such pledge or assignment of a security interest shall release a Lender from
any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a
party hereto.

          Section 9.05 Survival. All covenants, agreements, representations and warranties made by the Borrower, any Guarantor or
any of their Subsidiaries party thereto in the Loan Documents and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement or any other Loan Document
shall be considered to have been relied upon by the other parties hereto and shall survive the
execution and delivery of the Loan Documents and the making of any Term Loans, regardless of any
investigation made by any such other party or on its behalf and notwithstanding that any Agent or
any Lender may have had notice or knowledge of any Default or incorrect representation or warranty
at the time any credit is extended hereunder, and shall continue in full force and effect as long
as the principal of or any accrued interest on any Term Loan or any fee or any other amount payable
under this Agreement is outstanding and unpaid and so long as the Commitments have not expired or
terminated. The provisions of Sections 2.10, 2.11, 2.12 and 9.03
and Article VIII shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the Term Loans, the
expiration or termination of the Commitments or the termination of this Agreement or any provision
hereof.

          Section 9.06 Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement, the other Loan Documents and any separate
letter agreements with respect to

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fees payable to the Administrative Agent constitute the entire
contract among the parties relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter hereof. Except as
provided in Section 4.01, this Agreement shall become effective when it shall have been
executed by the Agents and when the Administrative Agent shall have received counterparts hereof
which, when taken together, bear the signatures of each of the other parties hereto, and thereafter
shall be binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement
by facsimile shall be effective as delivery of a manually executed counterpart of this Agreement.

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

          Section 9.08 Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender, each Agent and each
of their respective Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other obligations at any time owing by
such Person to or for the credit or the account of the Borrower or any Guarantor against any of and
all the Obligations held by such Lender, irrespective of whether or not such Person shall have made
any demand under the Loan Documents and although such obligations may be unmatured. The applicable
Lender or Agent shall notify the Borrower and the Administrative Agent of such set-off or
application, provided that any failure to give or delay in giving such notice shall not effect the
validity of any such set-off or application under this Section 9.08. The rights of each
Lender and Agent under this Section are in addition to other rights and remedies (including
other rights of setoff) which such Lender may have. NOTWITHSTANDING THE FOREGOING, AT ANY TIME
THAT ANY OF THE OBLIGATIONS SHALL BE SECURED BY REAL PROPERTY LOCATED IN CALIFORNIA, NO LENDER
SHALL EXERCISE A RIGHT OF SETOFF, LENDER’S LIEN OR COUNTERCLAIM OR TAKE ANY COURT OR ADMINISTRATIVE
ACTION OR INSTITUTE ANY PROCEEDING TO ENFORCE ANY PROVISION OF THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT UNLESS IT IS TAKEN WITH THE CONSENT OF THE LENDERS REQUIRED BY SECTION 9.02 OF
THIS AGREEMENT, IF SUCH SETOFF OR ACTION OR PROCEEDING WOULD OR MIGHT (PURSUANT TO SECTIONS 580a,
580b, 580d AND 726 OF THE CALIFORNIA CODE OF CIVIL PROCEDURE OR SECTION 2924 OF THE CALIFORNIA
CIVIL CODE, IF APPLICABLE,
OR OTHERWISE) AFFECT OR IMPAIR THE VALIDITY, PRIORITY, OR ENFORCEABILITY OF THE LIENS GRANTED TO
THE ADMINISTRATIVE AGENT PURSUANT TO THE COLLATERAL DOCUMENTS OR THE ENFORCEABILITY OF THE
OBLIGATIONS HEREUNDER, AND ANY ATTEMPTED EXERCISE BY ANY LENDER OR ANY SUCH RIGHT WITHOUT OBTAINING
SUCH CONSENT OF THE PARTIES AS REQUIRED ABOVE, SHALL BE NULL AND VOID. THIS PARAGRAPH SHALL BE
SOLELY FOR THE BENEFIT OF EACH OF THE LENDERS.

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          Section 9.09 Governing Law; Jurisdiction; Consent to Service of Process. (a) The Loan Documents (other than those containing a contrary express choice of law provision)
shall be governed by and construed in accordance with the laws of the State of New York, but giving
effect to federal laws applicable to national banks.

               (b) The Borrower and each Guarantor hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of any U.S. Federal or New York State court
sitting New York, New York in any action or proceeding arising out of or relating to any Loan
Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding
may be heard and determined in such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. Nothing in this Agreement or any other Loan Document shall
affect any right that any Agent or any Lender may otherwise have to bring any action or proceeding
relating to this Agreement or
any other Loan Document against the Borrower or any Guarantor or its properties in the courts
of any jurisdiction.

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

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

          Section 9.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY (INCLUDING,
WITHOUT LIMITATION, THE ADMINISTRATIVE AGENT) HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

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

          Section 9.12 Confidentiality. The Agents and the Lenders each agree to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors,
officers, employees and agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information confidential), (b) to the extent
requested by any regulatory authority, (c) to the extent required by Requirement of Law or by any
subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with
the exercise of any remedies hereunder or any suit, action or proceeding relating
to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder,
(f) subject to an agreement containing provisions substantially the same as those of this
Section, to (i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or (ii) any actual or
prospective counterparty (or its advisors) to any swap or derivative transaction relating to the
Borrower or any Guarantor and any of their obligations, so long as such counterparty agrees to be
bound by the provisions of this Section 9.12, (g) with the consent of the Borrower, or (h)
to the extent such Information (i) becomes publicly available other than as a result of a breach of
this Section or (ii) becomes available to any Agent or any Lender on a nonconfidential
basis from a source other than the Borrower or any Guarantor. For the purposes of this
Section, “Information” means all information received from the Borrower or the
Guarantors relating to the Borrower, the Guarantors or their business, operations, assets,
liabilities, financial condition or position, results or operations, or prospects, other than any
such information that is available to the Agents or any Lender on a nonconfidential basis prior to
disclosure by the Borrower or the Guarantors. Any Person required to maintain the confidentiality
of Information as provided in this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own confidential
information.

          Section 9.13 Several Obligations; Nonreliance; Violation of Law. The respective obligations of the Lenders hereunder are several and not joint and the failure of
any Lender to make any Term Loan or perform any of its obligations hereunder shall not relieve any
other Lender from any of its obligations hereunder. Each Lender hereby represents that it is not
relying on or looking to any margin stock for the repayment of the Term Loans provided for herein.
Anything contained in this Agreement to the contrary notwithstanding, no Lender shall be obligated
to extend credit to the Borrower in violation of any Requirement of Law.

          Section 9.14 USA PATRIOT Act. Each Lender that is subject to the requirements of the USA Patriot Act (Title III of Pub. L.
107-56 (signed into law October 26, 2001)) (the “Act”) hereby notifies the Borrower and the
Guarantors that pursuant to the requirements of the Act, it is required to obtain, verify and
record information that identifies the Borrower and the Guarantors, which information includes the
name and address of the Borrower and the Guarantors and other information that will allow such
Lender to identify the Borrower and the Guarantors in accordance with the Act.

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          Section 9.15 Disclosure. The Borrower, each Guarantor and each Lender hereby acknowledges and agrees that any Agent
and/or its Affiliates from time to time may hold investments in, make other loans to or have other
relationships with the Borrower or any of the Guarantors and their respective Affiliates.

          Section 9.16 Appointment for Perfection. Each Lender hereby appoints each other Lender as its agent for the purpose of perfecting Liens,
for the benefit of the Collateral Agent and the Lenders, in assets which, in accordance
with Article 9 of the UCC or any other applicable law can be perfected only by possession. Should
any Lender (other than the Collateral Agent) obtain possession of any such Collateral, such Lender
shall notify the Collateral Agent thereof, and, promptly upon the Collateral Agent’s request
therefor shall deliver such Collateral to the Collateral Agent or otherwise deal with such
Collateral in accordance with the Collateral Agent’s instructions.

          Section 9.17 Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to
any Term Loan, together with all fees, charges and other amounts which are treated as interest on
such Term Loan under applicable law (collectively the “Charges”), shall exceed the maximum
lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or
reserved by the Lender holding such Term Loan in accordance with applicable law, the rate of
interest payable in respect of such Term Loan hereunder, together with all Charges payable in
respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and
Charges that would have been payable in respect of such Term Loan but were not payable as a result
of the operation of this Section shall be cumulated and the interest and Charges payable to
such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate
therefor) until such cumulated amount, together with interest thereon at the Federal Funds
Effective Rate to the date of repayment, shall have been received by such Lender.

ARTICLE X

LOAN GUARANTY

          Section 10.01 Guaranty. Each Guarantor hereby agrees that it is jointly and severally liable for, and, as primary
obligor and not merely as surety, absolutely and unconditionally guarantees to the Lenders and
Agents the prompt payment when due, whether at stated maturity, upon acceleration or otherwise, and
at all times thereafter, of the Obligations and all costs and expenses including, without
limitation, all court costs and reasonable attorneys’ and paralegals’ fees and expenses paid or
incurred by any Agent and any Lender in endeavoring to collect all or any part of the Obligations
from, or in prosecuting any action against, the Borrower, any Guarantor or any other guarantor of
all or any part of the Obligations (such costs and expenses, together with the Obligations,
collectively the “Guaranteed Obligations”). Each Guarantor further agrees that the
Guaranteed Obligations may be extended or renewed in whole or in part without notice to or further
assent from it, and that it remains bound upon its guarantee notwithstanding any such extension or
renewal. All terms of this Guaranty apply to and may be enforced by or on behalf of any domestic or
foreign branch or Affiliate of any Lender that extended any portion of the Guaranteed Obligations.

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          Section 10.02 Guaranty of Payment. This Guaranty is a guaranty of payment and not of collection. Each Guarantor waives any right to
require any Agent or any Lender to sue the Borrower, any Guarantor, any other guarantor, or any
other person obligated for all or any part of the Guaranteed Obligations (each, an “Obligated
Party”), or otherwise to enforce its payment against any Collateral securing all or any part of
the Guaranteed Obligations.

          Section 10.03 No Discharge or Diminishment of Guaranty. (a) Except as otherwise provided for herein, the obligations of each Guarantor hereunder are
unconditional and absolute and not subject to any reduction, limitation, impairment or termination
for any reason (other than the indefeasible payment in full in cash of the Guaranteed Obligations),
including: (i) any claim of waiver, release, extension, renewal, settlement, surrender,
alteration, or compromise of any of the Guaranteed Obligations, by operation of law or otherwise;
(ii) any change in the corporate existence, structure or ownership of the Borrower, any Guarantor
or any other guarantor of or other person liable for any of the Guaranteed Obligations; (iii) any
insolvency, bankruptcy, reorganization or other similar proceeding affecting any Obligated Party,
or their assets or any resulting release or discharge of any obligation of any Obligated Party; or
(iv) the existence of any claim, setoff or other rights which any Guarantor may have at any time
against any Obligated Party, any Agent, any Lender, or any other person, whether in connection
herewith or in any unrelated transactions.

               (b) The obligations of each Guarantor hereunder are not subject to any defense or setoff,
counterclaim, recoupment, or termination whatsoever by reason of the invalidity, illegality, or
unenforceability of any of the Guaranteed Obligations or otherwise, or any provision of applicable
law or regulation purporting to prohibit payment by any Obligated Party, of the Guaranteed
Obligations or any part thereof.

               (c) Further, the obligations of any Guarantor hereunder are not discharged or impaired or
otherwise affected by: (i) the failure of any Agent or any Lender to assert any claim or demand or
to enforce any remedy with respect to all or any part of the Guaranteed Obligations; (ii) any
waiver or modification of or supplement to any provision of any agreement relating to the
Guaranteed Obligations; (iii) any release, non-perfection, or invalidity of any indirect or direct
security for the obligations of the Borrower for all or any part of the Guaranteed Obligations or
any obligations of any other guarantor of or other person liable for any of the Guaranteed
Obligations; (iv) any action or failure to act by any Agent or any Lender with respect to any
Collateral securing any part of the Guaranteed Obligations; or (v) any default, failure or delay,
willful or otherwise, in the payment or performance of any of the Guaranteed Obligations, or any
other circumstance, act, omission or delay that might in any manner or to any extent vary the risk
of such Guarantor or that would otherwise operate as a discharge of any Guarantor as a matter of
law or equity (other than the indefeasible payment in full in cash of the Guaranteed Obligations).

          Section 10.04 Defenses Waived. To the fullest extent permitted by applicable law, each Guarantor hereby waives any defense
based on or arising out of any defense of the Borrower or any Guarantor or the unenforceability of
all or any part of the Guaranteed Obligations from any cause, or the cessation from any cause of
the liability of the Borrower or any Guarantor, other than the indefeasible payment in full in cash
of the Guaranteed Obligations. Without limiting the generality of the foregoing, each Guarantor
irrevocably waives acceptance

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hereof, presentment, demand, protest and, to the fullest extent
permitted by law, any notice not provided for herein, as well as any requirement that at any time
any action be taken by any person against any Obligated Party, or any other Person. The Collateral
Agent may, at its election, foreclose on any Collateral held by it by one or more
judicial or nonjudicial sales, accept an assignment of any such Collateral in lieu of foreclosure
or otherwise act or fail to act with respect to any Collateral securing all or a part of the
Guaranteed Obligations, compromise or adjust any part of the Guaranteed Obligations, make any other
accommodation with any Obligated Party or exercise any other right or remedy available to it
against any Obligated Party, without affecting or impairing in any way the liability of such
Guarantor under this Guaranty except to the extent the Guaranteed Obligations have been fully and
indefeasibly paid in cash. To the fullest extent permitted by applicable law, each Guarantor
waives any defense arising out of any such election even though that election may operate, pursuant
to applicable law, to impair or extinguish any right of reimbursement or subrogation or other right
or remedy of any Guarantor against any Obligated Party or any security.

          Section 10.05 Rights of Subrogation. No Guarantor will assert any right, claim or cause of action, including, without limitation, a
claim of subrogation, contribution or indemnification that it has against any Obligated Party, or
any Collateral, until the Borrower and the Guarantors have fully performed all their obligations to
the Agents and the Lenders.

          Section 10.06 Reinstatement; Stay of Acceleration. If at any time any payment of any portion of the Guaranteed Obligations is rescinded or must
otherwise be restored or returned upon the insolvency, bankruptcy or reorganization of the Borrower
or otherwise, each Guarantor’s obligations under this Guaranty with respect to that payment shall
be reinstated at such time as though the payment had not been made and whether or not the Agents
and the Lenders are in possession of this Guaranty. If acceleration of the time for payment of any
of the Guaranteed Obligations is stayed upon the insolvency, bankruptcy or reorganization of the
Borrower, all such amounts otherwise subject to acceleration under the terms of any agreement
relating to the Guaranteed Obligations shall nonetheless be payable by the Guarantors forthwith on
demand by the Lenders.

          Section 10.07 Information. Each Guarantor assumes all responsibility for being and keeping itself informed of the
Borrower’s financial condition and assets, and of all other circumstances bearing upon the risk of
nonpayment of the Guaranteed Obligations and the nature, scope and extent of the risks that each
Guarantor assumes and incurs under this Guaranty, and agrees that none of the Administrative Agent,
the Collateral Agent or any Lender shall have any duty to advise any Guarantor of information known
to it regarding those circumstances or risks.

          Section 10.08 Termination. The Lenders may continue to make loans or extend credit to the Borrower based on this Guaranty
until five days after it receives written notice of termination from any Guarantor.
Notwithstanding receipt of any such notice, each Guarantor will continue to be liable to the
Lenders for any Guaranteed Obligations created, assumed or committed to prior to the fifth day
after receipt of the notice, and all subsequent renewals, extensions, modifications and amendments
with respect to, or substitutions for, all or any part of that Guaranteed Obligations.

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          Section 10.09 Maximum Liability. The provisions of this Guaranty are severable, and in any action or proceeding involving any
state corporate law, or any state, federal or foreign bankruptcy, insolvency, reorganization or
other law affecting the rights of creditors generally, if the obligations of any Guarantor under
this Guaranty would otherwise be held or determined to be avoidable, invalid or unenforceable on
account of the amount of such Guarantor’s liability under this Guaranty, then, notwithstanding any
other provision of this Guaranty to the contrary, the amount of such liability shall, without any
further action by the Guarantors or the Lenders, be automatically limited and reduced to the
highest amount that is valid and enforceable as determined in such action or proceeding (such
highest amount determined hereunder being the relevant Guarantor’s “Maximum Liability”).
This Section with respect to the Maximum Liability of each Guarantor is intended solely to
preserve the rights of the Lenders to the maximum extent not subject to avoidance under applicable
law, and no Guarantor nor any other person or entity shall have any right or claim under this
Section with respect to such Maximum Liability, except to the extent necessary so that the
obligations of any Guarantor hereunder shall not be rendered voidable under applicable law. Each
Guarantor agrees that the Guaranteed Obligations may at any time and from time to time exceed the
Maximum Liability of each Guarantor without impairing this Guaranty or affecting
the rights and remedies of the Lenders hereunder, provided that, nothing in this sentence shall be
construed to increase any Guarantor’s obligations hereunder beyond its Maximum Liability.

          Section 10.10 Contribution. In the event any Guarantor (a “Paying Guarantor”) shall make any payment or payments
under this Guaranty or shall suffer any loss as a result of any realization upon any collateral
granted by it to secure its obligations under this Guaranty, each other Guarantor (each a
“Non-Paying Guarantor”) shall contribute to such Paying Guarantor an amount equal to such
Non-Paying Guarantor’s “Applicable Percentage” of such payment or payments made, or losses
suffered, by such Paying Guarantor. For purposes of this Article X, each Non-Paying
Guarantor’s “Applicable Percentage” with respect to any such payment or loss by a Paying
Guarantor shall be determined as of the date on which such payment or loss was made by reference to
the ratio of (i) such Non-Paying Guarantor’s Maximum Liability as of such date (without giving
effect to any right to receive, or obligation to make, any contribution hereunder) or, if such
Non-Paying Guarantor’s Maximum Liability has not been determined, the aggregate amount of all
monies received by such Non-Paying Guarantor from the Borrower after the date hereof (whether by
loan, capital infusion or by other means) to (ii) the aggregate Maximum Liability of all Guarantors
hereunder (including such Paying Guarantor) as of such date (without giving effect to any right to
receive, or obligation to make, any contribution hereunder), or to the extent that a Maximum
Liability has not been determined for any Guarantor, the aggregate amount of all monies received by
such Guarantors from the Borrower after the date hereof (whether by loan, capital infusion or by
other means). Nothing in this provision shall affect any Guarantor’s several liability for the
entire amount of the Guaranteed Obligations (up to such Guarantor’s Maximum Liability). Each of
the Guarantors covenants and agrees that its right to receive any contribution under this Guaranty
from a Non-Paying Guarantor shall be subordinate and junior in right of payment to the payment in
full in cash of the Guaranteed Obligations. This provision is for the benefit of the Agents, the
Lenders and the Guarantors and may be enforced by any one, or more, or all of them in accordance
with the terms hereof.

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          Section 10.11 Liability Cumulative. The liability of each Guarantor as a Guarantor under this Article X is in addition to
and shall be cumulative with all liabilities of each Guarantor to the Agents and the Lenders under
this Agreement and the other Loan Documents to such Guarantor is a party or in respect of any
obligations or liabilities of the Borrower and the other Guarantors, without any limitation as to
amount, unless the instrument or agreement evidencing or creating such other liability specifically
provides to the contrary.

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          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the day and the year first written.

	 	 	 	 	 	 	 
	 	 	BORROWER:
	 
	 	 	 	 	 	 
	 	 	KAISER ALUMINUM FABRICATED PRODUCTS, LLC
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Daniel J. Rinkenberger	 	 
	 

	 	 	 	 

Name: Daniel J. Rinkenberger
	 	 
	 

	 	 	 	Title: Vice President and Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	GUARANTORS:
	 
	 	 	 	 	 	 
	 	 	KAISER ALUMINUM CORPORATION
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Daniel J. Rinkenberger 	 	 
	 

	 	 	 	 

Name: Daniel J. Rinkenberger
	 	 
	 

	 	 	 	Title: Vice President and Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	KAISER ALUMINUM INVESTMENTS COMPANY
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Daniel J. Rinkenberger	 	 
	 

	 	 	 	 

Name: Daniel J. Rinkenberger
	 	 
	 

	 	 	 	Title: Vice President and Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	KAISER ALUMINIUM INTERNATIONAL, INC.
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Daniel J. Rinkenberger 	 	 
	 

	 	 	 	 

Name: Daniel J. Rinkenberger
	 	 
	 

	 	 	 	Title: Vice President and Treasurer	 	 

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	 	 	JPMORGAN CHASE BANK, N.A., as
	 	 	Administrative Agent
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ J. Devin Mock 	 	 
	 

	 	 	 	 

Name: J. Devin Mock
	 	 
	 

	 	 	 	Title: Vice President	 	 

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	 	 	WILMINGTON TRUST COMPANY, as
	 	 	Collateral Agent
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ James A. Hanby 	 	 
	 

	 	 	 	 

Name: James A. Hanby
	 	 
	 

	 	 	 	Title: Senior Financial Services Officer

89

 

	 	 	 	 	 	 	 
	 	 	LENDER:
	 
	 	 	 	 	 	 
	 	 	J.P. MORGAN SECURITIES INC.
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Matt J. Downs 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:	 	Matt J. Downs 	 	 
	 
	 

	 	Title:	 	Vice President 	 	 

90

 

ANNEX A

COMMITMENT SCHEDULE

	 	 	 	 	 
	Lender	 	Commitment	 
	J.P. Morgan Securities Inc.
	 	$	50,000,000	 
	Total
	 	$	50,000,000	 
	 
	 	 	 

91

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