Document:

exv10w3

 

Exhibit 10.3

THIRD AMENDMENT TO

M.D.C. HOLDINGS, INC.

2001 EQUITY INCENTIVE PLAN

     The following Third Amendment to the M.D.C. Holdings, Inc. 2001 Equity Incentive Plan,
effective March 26, 2001 (the “Plan”), was adopted by the Compensation Committee of M.D.C.
Holdings, Inc. on April 23, 2008, conditioned upon and to became effective upon shareowner approval
of the Second Amendment to the Plan at the annual meeting on April 29, 2008. Capitalized terms
used herein shall have the meanings ascribed in the Plan, unless otherwise defined herein.

     The following Section 16.4 is added to Article XVI of the Plan:

ARTICLE XVI

PLAN AMENDMENT, MODIFICATION AND TERMINATION

     16.4 Repricing – Executive Officers. Notwithstanding the above, no repricing
shall be undertaken or effective for any Options held by any persons identified as
executive officers of the Company pursuant to Item 401 of Regulation S-K (or any
successor provision thereto) or as officers of the Company for purposes of Section
16 of the Securities Exchange Act of 1934, as amended (collectively, “Executive
Officers”).

	 	 	 	 	 	 	 
	 

	 	M.D.C.
	 	HOLDINGS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Paris G. Reece III	 	 
	 

	 	 	 	 

	 	 

Date:
April 29, 2008Exhibit 10.1

CREDIT AGREEMENT

 

dated as of

 

3 August 2006

 

among

 

SAFETY-KLEEN
HOLDCO., INC.,

as “Holdings,”

 

SAFETY-KLEEN SYSTEMS, INC.

 

 

 

as the borrower,

 

 

the lenders party
hereto

 

and

 

JPMORGAN CHASE
BANK, NATIONAL ASSOCIATION

as Administrative
Agent

 

CREDIT SUISSE

as syndication
agent

and

NEXBANK SSB and WACHOVIA
BANK, NATIONAL ASSOCIATION

as
co-documentation agents

 

 

J.P. MORGAN
SECURITIES INC.

and

CREDIT SUISSE
SECURITIES (USA) LLC,

as Joint
Bookrunners and Co-lead Arrangers

 

	
  

  	
   

  	
  

  

 

 

Table of Contents

 

	
   

  	
   

  	
   

  	
  Page#

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I.

  	
   

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1.01.

  	
   

  	
  DEFINED TERMS

  	
  1

  
	
  SECTION 1.02.

  	
   

  	
  CLASSIFICATION OF LOANS AND BORROWINGS

  	
  24

  
	
  SECTION 1.03.

  	
   

  	
  TERMS GENERALLY

  	
  24

  
	
  SECTION 1.04.

  	
   

  	
  ACCOUNTING TERMS; GAAP

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II.

  	
   

  	
  THE CREDITS

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.01.

  	
   

  	
  COMMITMENTS

  	
  25

  
	
  (a)

  	
   

  	
  Synthetic L/C Loans

  	
  25

  
	
  (b)

  	
   

  	
  Term B Loans

  	
  25

  
	
  (c)

  	
   

  	
  Revolving Loans

  	
  25

  
	
  SECTION 2.02.

  	
   

  	
  LOANS AND BORROWINGS

  	
  25

  
	
  (a)

  	
   

  	
  Loans Made Ratably

  	
  25

  
	
  (b)

  	
   

  	
  Initial Type of Loans

  	
  26

  
	
  (c)

  	
   

  	
  Minimum Amounts; Limitation on Eurodollar Borrowings

  	
  26

  
	
  (d)

  	
   

  	
  Limitation on Interest Periods

  	
  26

  
	
  SECTION 2.03.

  	
   

  	
  REQUESTS FOR BORROWINGS

  	
  26

  
	
  SECTION 2.04.

  	
   

  	
  SWINGLINE LOANS

  	
  27

  
	
  (a)

  	
   

  	
  Commitment

  	
  27

  
	
  (b)

  	
   

  	
  Borrowing Procedure

  	
  27

  
	
  (c)

  	
   

  	
  Revolving Lender Participation in Swingline Loans

  	
  27

  
	
  SECTION 2.05.

  	
   

  	
  LETTERS OF CREDIT

  	
  28

  
	
  (a)

  	
   

  	
  General

  	
  28

  
	
  (b)

  	
   

  	
  Determination of the Type of Letter of Credit

  	
  28

  
	
  (c)

  	
   

  	
  Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions

  	
  29

  
	
  (d)

  	
   

  	
  Expiration Date

  	
  29

  
	
  (e)

  	
   

  	
  Participations

  	
  29

  
	
   

  	
   

  	
  (i)

  	
  Synthetic Letters of Credit

  	
  29

  
	
   

  	
   

  	
   

  	
  (A)

  	
  Establishment of Credit Linked Accounts; Grant of Security Interest
  therein

  	
  29

  
	
   

  	
   

  	
   

  	
  (B)

  	
  Deposits into Credit Linked Accounts

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
  (1)

  	
  On the Effective Date

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
  (2)

  	
  Synthetic Loan Payments

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
  (3)

  	
  Synthetic Letter of Credit Reimbursement Payments

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
  (4)

  	
  Assignments of Synthetic L/C Commitment

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
  (5)

  	
  On the Effective Date of an Increased Commitment Supplement

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
  (6)

  	
  Deposit of Investment Return

  	
  31

  
	
   

  	
   

  	
   

  	
  (C)

  	
  Withdrawals from and Closing of Credit Linked Accounts

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
  (1)

  	
  Funding of Synthetic L/C Disbursements; Creation of Synthetic L/C Loans

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
  (2)

  	
  Reduction of the Synthetic L/C Commitments

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
  (3)

  	
  Assignment of a Synthetic L/C Commitment

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
  (4)

  	
  Settlement Date

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
  (5)

  	
  Withdrawal of Investment Return

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
  (6)

  	
  Final Distribution

  	
  32

  
	
   

  	
   

  	
   

  	
  (D)

  	
  Payment of Investment Return

  	
  32

  
	
   

  	
   

  	
  (ii)

  	
  Revolving Letters of Credit

  	
  33

  
	
  (f)

  	
   

  	
  Reimbursement

  	
  33

  
	
   

  	
   

  	
  (i)

  	
  Synthetic L/C Disbursement

  	
  34

  
	
   

  	
   

  	
  (ii)

  	
  Revolving L/C Disbursement

  	
  34

  
	
  (g)

  	
   

  	
  Obligations Absolute

  	
  34

  
	
  (h)

  	
   

  	
  Disbursement Procedures

  	
  35

  
	
  (i)

  	
   

  	
  Interim Interest

  	
  35

  
	
  (j)

  	
   

  	
  Replacement of the Issuing Bank

  	
  35

  
	
  (k)

  	
   

  	
  Cash Collateralization

  	
  36

  

 

i

 

	
  SECTION 2.06.

  	
   

  	
  FUNDING OF BORROWINGS

  	
  36

  
	
  (a)

  	
   

  	
  By Lenders

  	
  36

  
	
  (b)

  	
   

  	
  Fundings Assumed Made

  	
  37

  
	
  SECTION 2.07.

  	
   

  	
  INTEREST ELECTIONS

  	
  37

  
	
  (a)

  	
   

  	
  Conversion and Continuation

  	
  37

  
	
  (b)

  	
   

  	
  Delivery of Interest Election Request

  	
  37

  
	
  (c)

  	
   

  	
  Contents of Interest Election Request

  	
  37

  
	
  (d)

  	
   

  	
  Notice to the Lenders

  	
  38

  
	
  (e)

  	
   

  	
  Automatic Conversion

  	
  38

  
	
  (f)

  	
   

  	
  Limitations on Election

  	
  38

  
	
  SECTION 2.08.

  	
   

  	
  TERMINATION AND REDUCTION OF COMMITMENTS

  	
  38

  
	
  (a)

  	
   

  	
  Termination Date

  	
  38

  
	
  (b)

  	
   

  	
  Optional Termination or Reduction

  	
  38

  
	
  (c)

  	
   

  	
  Notice of Termination or Reduction

  	
  39

  
	
  SECTION 2.09.

  	
   

  	
  REPAYMENT OF LOANS; EVIDENCE OF DEBT

  	
  39

  
	
  (a)

  	
   

  	
  Promise to Pay

  	
  39

  
	
  (b)

  	
   

  	
  Lender Records

  	
  39

  
	
  (c)

  	
   

  	
  Administrative Agent Records

  	
  39

  
	
  (d)

  	
   

  	
  Prima Facie Evidence

  	
  39

  
	
  (e)

  	
   

  	
  Request for a Note

  	
  40

  
	
  SECTION 2.10.

  	
   

  	
  AMORTIZATION OF TERM B LOANS

  	
  40

  
	
  SECTION 2.11.

  	
   

  	
  PREPAYMENT OF LOANS

  	
  40

  
	
  (a)

  	
   

  	
  Optional Prepayment

  	
  40

  
	
  (b)

  	
   

  	
  Mandatory Prepayment of Revolving Loans

  	
  40

  
	
  (c)

  	
   

  	
  Prepayments Offer from Net Proceeds of Prepayment Event

  	
  40

  
	
  (d)

  	
   

  	
  Excess Cash Flow Prepayment Offer

  	
  41

  
	
  (e)

  	
   

  	
  Acceptance or Rejection of Prepayment Offer

  	
  41

  
	
  (f)

  	
   

  	
  Notice of Prepayment; Application of Prepayments

  	
  42

  
	
  SECTION 2.12.

  	
   

  	
  FEES

  	
  42

  
	
  (a)

  	
   

  	
  Commitment Fees

  	
  42

  
	
  (b)

  	
   

  	
  Letter of Credit Fees

  	
  43

  
	
  (c)

  	
   

  	
  Fixed Return Fee

  	
  43

  
	
  (d)

  	
   

  	
  Administrative Agent Fees

  	
  44

  
	
  (e)

  	
   

  	
  Payment of Fees

  	
  44

  
	
  SECTION 2.13.

  	
   

  	
  INTEREST

  	
  44

  
	
  (a)

  	
   

  	
  ABR Borrowings

  	
  44

  
	
  (b)

  	
   

  	
  Eurodollar Borrowing

  	
  44

  
	
  (c)

  	
   

  	
  Synthetic L/C Loans

  	
  44

  
	
  (d)

  	
   

  	
  Default Interest

  	
  44

  
	
  (e)

  	
   

  	
  Payment of Interest

  	
  44

  
	
  (f)

  	
   

  	
  Computation

  	
  45

  
	
  SECTION 2.14.

  	
   

  	
  ALTERNATE RATE OF INTEREST

  	
  45

  
	
  SECTION 2.15.

  	
   

  	
  INCREASED COSTS

  	
  45

  
	
  (a)

  	
   

  	
  Change In Law

  	
  45

  
	
  (b)

  	
   

  	
  Capital Adequacy

  	
  46

  
	
  (c)

  	
   

  	
  Delivery of Certificate

  	
  46

  
	
  (d)

  	
   

  	
  Limitation on Compensation

  	
  46

  
	
  SECTION 2.16.

  	
   

  	
  BREAK FUNDING PAYMENTS

  	
  46

  
	
  SECTION 2.17.

  	
   

  	
  TAXES.

  	
  47

  
	
  (a)

  	
   

  	
  Gross Up

  	
  47

  
	
  (b)

  	
   

  	
  Payment of Other Taxes

  	
  47

  
	
  (c)

  	
   

  	
  Tax Indemnification

  	
  47

  
	
  (d)

  	
   

  	
  Receipts

  	
  47

  
	
  (e)

  	
   

  	
  Withholding Forms

  	
  47

  
	
  (f)

  	
   

  	
  Refund

  	
  48

  

 

ii

 

	
  SECTION 2.18.

  	
   

  	
  PAYMENTS GENERALLY;
  PRO RATA TREATMENT; SHARING OF SET-OFFS; PROCEEDS OF COLLATERAL

  	
  48

  
	
  (a)

  	
   

  	
  Payments Generally

  	
  48

  
	
  (b)

  	
   

  	
  Pro Rata Application

  	
  48

  
	
  (c)

  	
   

  	
  Sharing of Set-offs

  	
  49

  
	
  (d)

  	
   

  	
  Payments from Borrower Assumed Made

  	
  49

  
	
  (e)

  	
   

  	
  Set-Off Against Amounts Owed Lenders

  	
  49

  
	
  (f)

  	
   

  	
  Application of Proceeds of Collateral and Guaranty

  	
  49

  
	
  (g)

  	
   

  	
  Noncash Proceeds

  	
  50

  
	
  (h)

  	
   

  	
  Return of Proceeds

  	
  50

  
	
  SECTION 2.19.

  	
   

  	
  MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS

  	
  50

  
	
  (a)

  	
   

  	
  Mitigation

  	
  50

  
	
  (b)

  	
   

  	
  Replacement

  	
  50

  
	
  SECTION 2.20.

  	
   

  	
  INCREASE OF COMMITMENTS

  	
  51

  
	
  (a)

  	
   

  	
  Notice

  	
  51

  
	
  (b)

  	
   

  	
  New Lenders

  	
  52

  
	
  (c)

  	
   

  	
  Increased Commitment Supplement

  	
  52

  
	
  (d)

  	
   

  	
  Increase of Revolving Commitment

  	
  52

  
	
  (e)

  	
   

  	
  Increase of Synthetic L/C Commitments

  	
  52

  
	
  (f)

  	
   

  	
  Incremental Term Loan

  	
  53

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III.

  	
   

  	
  REPRESENTATIONS AND WARRANTIES

  	
  53

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.01.

  	
   

  	
  ORGANIZATION; POWERS

  	
  53

  
	
  SECTION 3.02.

  	
   

  	
  AUTHORIZATION; ENFORCEABILITY

  	
  53

  
	
  SECTION 3.03.

  	
   

  	
  GOVERNMENTAL APPROVALS; NO CONFLICTS

  	
  54

  
	
  SECTION 3.04.

  	
   

  	
  FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE

  	
  54

  
	
  (a)

  	
   

  	
  Financial Statements

  	
  54

  
	
  (b)

  	
   

  	
  Pro Forma

  	
  54

  
	
  (c)

  	
   

  	
  Projections

  	
  54

  
	
  (d)

  	
   

  	
  No Undisclosed Liabilities

  	
  54

  
	
  (e)

  	
   

  	
  Material Adverse Change

  	
  55

  
	
  SECTION 3.05.

  	
   

  	
  PROPERTIES

  	
  55

  
	
  (a)

  	
   

  	
  Title; Liens

  	
  55

  
	
  (b)

  	
   

  	
  Intellectual Property

  	
  55

  
	
  (c)

  	
   

  	
  Notice of Condemnation

  	
  55

  
	
  SECTION 3.06.

  	
   

  	
  LITIGATION AND ENVIRONMENTAL MATTERS

  	
  55

  
	
  (a)

  	
   

  	
  Litigation

  	
  55

  
	
  (b)

  	
   

  	
  Environmental Matters

  	
  55

  
	
  SECTION 3.07.

  	
   

  	
  COMPLIANCE WITH LAWS AND AGREEMENTS

  	
  55

  
	
  SECTION 3.08.

  	
   

  	
  INVESTMENT COMPANY ACT STATUS

  	
  56

  
	
  SECTION 3.09.

  	
   

  	
  TAXES

  	
  56

  
	
  SECTION 3.10.

  	
   

  	
  ERISA

  	
  56

  
	
  SECTION 3.11.

  	
   

  	
  DISCLOSURE

  	
  56

  
	
  SECTION 3.12.

  	
   

  	
  CAPITALIZATION; SUBSIDIARIES

  	
  56

  
	
  (a)

  	
   

  	
  Holdings’ Equity Interests Holders

  	
  56

  
	
  (b)

  	
   

  	
  Subsidiaries; Capitalization

  	
  56

  
	
  (c)

  	
   

  	
  Extent of Business; Insignificant Subsidiaries

  	
  57

  
	
  SECTION 3.13.

  	
   

  	
  INSURANCE

  	
  57

  
	
  SECTION 3.14.

  	
   

  	
  LABOR MATTERS

  	
  57

  
	
  SECTION 3.15.

  	
   

  	
  SOLVENCY

  	
  57

  
	
  SECTION 3.16.

  	
   

  	
  MARGIN SECURITIES

  	
  57

  
	
  SECTION 3.17.

  	
   

  	
  COMMON ENTERPRISE

  	
  57

  

 

iii

 

	
  ARTICLE IV.

  	
   

  	
  CONDITIONS

  	
  58

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.01.

  	
   

  	
  EFFECTIVE DATE

  	
  58

  
	
  (a)

  	
   

  	
  Execution and Delivery of This
  Agreement

  	
  58

  
	
  (b)

  	
   

  	
  Legal Opinions

  	
  58

  
	
  (c)

  	
   

  	
  Corporate Authorization Documents

  	
  58

  
	
  (d)

  	
   

  	
  Closing Certificate

  	
  58

  
	
  (e)

  	
   

  	
  Fees

  	
  58

  
	
  (f)

  	
   

  	
  Guaranty Agreement

  	
  58

  
	
  (g)

  	
   

  	
  Personal Property Security

  	
  58

  
	
  (h)

  	
   

  	
  Real Property Security Documents

  	
  59

  
	
  (i)

  	
   

  	
  Insurance

  	
  59

  
	
  (j)

  	
   

  	
  Rights Offering

  	
  59

  
	
  (k)

  	
   

  	
  Payoff of Existing Indebtedness

  	
  60

  
	
  SECTION 4.02.

  	
   

  	
  EACH CREDIT EVENT

  	
  60

  
	
  (a)

  	
   

  	
  Representations and Warranties

  	
  60

  
	
  (b)

  	
   

  	
  No Default

  	
  60

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V.

  	
   

  	
  AFFIRMATIVE COVENANTS

  	
  60

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.01.

  	
   

  	
  FINANCIAL STATEMENTS AND OTHER INFORMATION

  	
  60

  
	
  (a)

  	
   

  	
  Annual Audit

  	
  61

  
	
  (b)

  	
   

  	
  Quarterly Financial Statements

  	
  61

  
	
  (c)

  	
   

  	
  Compliance Certificate

  	
  61

  
	
  (d)

  	
   

  	
  Accountant’s No Default Statement

  	
  61

  
	
  (e)

  	
   

  	
  Budget

  	
  61

  
	
  (f)

  	
   

  	
  Public Reports

  	
  61

  
	
  (g)

  	
   

  	
  Additional Information

  	
  61

  
	
  SECTION 5.02.

  	
   

  	
  NOTICES OF MATERIAL EVENTS

  	
  62

  
	
  (a)

  	
   

  	
  Default

  	
  62

  
	
  (b)

  	
   

  	
  Notice of Proceedings

  	
  62

  
	
  (c)

  	
   

  	
  ERISA Event

  	
  62

  
	
  (d)

  	
   

  	
  Material Adverse Effect

  	
  62

  
	
  SECTION 5.03.

  	
   

  	
  EXISTENCE; CONDUCT OF BUSINESS

  	
  62

  
	
  SECTION 5.04.

  	
   

  	
  PAYMENT OF TAX LIABILITIES

  	
  62

  
	
  SECTION 5.05.

  	
   

  	
  MAINTENANCE OF PROPERTIES

  	
  62

  
	
  SECTION 5.06.

  	
   

  	
  INSURANCE

  	
  62

  
	
  SECTION 5.07.

  	
   

  	
  CASUALTY AND CONDEMNATION

  	
  63

  
	
  SECTION 5.08.

  	
   

  	
  BOOKS AND RECORDS; INSPECTION RIGHTS

  	
  63

  
	
  SECTION 5.09.

  	
   

  	
  COMPLIANCE WITH LAWS

  	
  63

  
	
  SECTION 5.10.

  	
   

  	
  USE OF PROCEEDS, LETTERS OF CREDIT AND RIGHTS OFFERING
  PROCEEDS

  	
  63

  
	
  SECTION 5.11.

  	
   

  	
  ADDITIONAL SUBSIDIARIES

  	
  63

  
	
  SECTION 5.12.

  	
   

  	
  FURTHER ASSURANCES

  	
  64

  
	
  (a)

  	
   

  	
  General Further Assurances

  	
  64

  
	
  (b)

  	
   

  	
  Acquisition of Material Assets

  	
  64

  
	
  (c)

  	
   

  	
  Mortgaged Property

  	
  64

  
	
   

  	
   

  	
  (i)

  	
  Appraisals

  	
  64

  
	
   

  	
   

  	
  (ii)

  	
  Title Insurance Policies

  	
  64

  
	
   

  	
   

  	
  (iii)

  	
  Environmental Reports

  	
  65

  
	
   

  	
   

  	
  (iv)

  	
  Environmental Remediation

  	
  65

  
	
  (d)

  	
   

  	
  Holdings Shareholders

  	
  65

  
	
  SECTION 5.13.

  	
   

  	
  PERFORMANCE OF OBLIGATIONS

  	
  65

  

 

iv

 

	
  ARTICLE VI.

  	
   

  	
  NEGATIVE COVENANTS

  	
  65

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.01.

  	
   

  	
  INDEBTEDNESS

  	
  65

  
	
  SECTION 6.02.

  	
   

  	
  LIENS

  	
  67

  
	
  SECTION 6.03.

  	
   

  	
  FUNDAMENTAL CHANGES;
  LIMITATION ON BUSINESS

  	
  68

  
	
  (a)

  	
   

  	
  Fundamental Change

  	
  68

  
	
  (b)

  	
   

  	
  Limitation on Business

  	
  68

  
	
  SECTION 6.04.

  	
   

  	
  INVESTMENTS, LOANS, ADVANCES, GUARANTEES AND ACQUISITIONS

  	
  68

  
	
  SECTION 6.05.

  	
   

  	
  ASSET SALES

  	
  71

  
	
  SECTION 6.06.

  	
   

  	
  SALE AND LEASEBACK TRANSACTIONS

  	
  72

  
	
  SECTION 6.07.

  	
   

  	
  SWAP AGREEMENTS

  	
  72

  
	
  SECTION 6.08.

  	
   

  	
  RESTRICTED PAYMENTS; CERTAIN PAYMENTS OF INDEBTEDNESS.

  	
  73

  
	
  (a)

  	
   

  	
  Restricted Payments

  	
  73

  
	
  (b)

  	
   

  	
  Certain Payments of Indebtedness

  	
  73

  
	
  SECTION 6.09.

  	
   

  	
  TRANSACTIONS WITH AFFILIATES

  	
  74

  
	
  SECTION 6.10.

  	
   

  	
  RESTRICTIVE AGREEMENTS

  	
  75

  
	
  SECTION 6.11.

  	
   

  	
  AMENDMENT OF MATERIAL DOCUMENTS

  	
  75

  
	
  SECTION 6.12.

  	
   

  	
  CHANGE IN FISCAL YEAR

  	
  75

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII.

  	
   

  	
  FINANCIAL COVENANTS

  	
  75

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.01.

  	
   

  	
  LEVERAGE RATIO

  	
  75

  
	
  SECTION 7.02.

  	
   

  	
  INTEREST COVERAGE

  	
  76

  
	
  SECTION 7.03.

  	
   

  	
  CAPITAL EXPENDITURES

  	
  76

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII.

  	
   

  	
  EVENTS OF DEFAULT

  	
  77

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.01.

  	
   

  	
  EVENTS OF DEFAULT; REMEDIES

  	
  77

  
	
  SECTION 8.02.

  	
   

  	
  PERFORMANCE BY THE ADMINISTRATIVE AGENT

  	
  79

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX.

  	
   

  	
  THE ADMINISTRATIVE AGENT

  	
  79

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.01.

  	
   

  	
  APPOINTMENT

  	
  79

  
	
  SECTION 9.02.

  	
   

  	
  RIGHTS AS A LENDER

  	
  79

  
	
  SECTION 9.03.

  	
   

  	
  LIMITATION OF DUTIES AND IMMUNITIES

  	
  79

  
	
  SECTION 9.04.

  	
   

  	
  RELIANCE ON THIRD PARTIES

  	
  80

  
	
  SECTION 9.05.

  	
   

  	
  SUB-AGENTS

  	
  80

  
	
  SECTION 9.06.

  	
   

  	
  SUCCESSOR AGENT

  	
  80

  
	
  SECTION 9.07.

  	
   

  	
  INDEPENDENT CREDIT DECISIONS

  	
  81

  
	
  SECTION 9.08.

  	
   

  	
  OTHER AGENTS

  	
  81

  
	
  SECTION 9.09.

  	
   

  	
  POWERS AND IMMUNITIES OF ISSUING BANK AND SWINGLINE LENDER

  	
  81

  
	
  SECTION 9.10.

  	
   

  	
  PERMITTED RELEASE OF COLLATERAL AND SUBSIDIARY LOAN
  PARTIES

  	
  82

  
	
  (a)

  	
   

  	
  Automatic Release

  	
  82

  
	
  (b)

  	
   

  	
  Written Release

  	
  82

  
	
  (c)

  	
   

  	
  Other Authorized Release and Subordination

  	
  82

  
	
  (d)

  	
   

  	
  Authorized Release of Subsidiary Loan Party

  	
  82

  
	
  SECTION 9.11.

  	
   

  	
  LENDER AFFILIATES AND DEUTSCHE BANK AG RIGHTS AND
  OBLIGATIONS

  	
  83

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X.

  	
   

  	
  MISCELLANEOUS

  	
  83

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.01.

  	
   

  	
  NOTICES

  	
  83

  
	
  SECTION 10.02.

  	
   

  	
  WAIVERS; AMENDMENTS

  	
  84

  
	
  (a)

  	
   

  	
  No Waiver; Rights Cumulative

  	
  84

  
	
  (b)

  	
   

  	
  Amendments

  	
  84

  
	
  SECTION 10.03.

  	
   

  	
  EXPENSES; INDEMNITY; DAMAGE WAIVER

  	
  86

  
	
  (a)

  	
   

  	
  Expenses

  	
  86

  
	
  (b)

  	
   

  	
  Indemnity

  	
  86

  
	
  (c)

  	
   

  	
  Lender’s Agreement to Pay

  	
  87

  
	
  (d)

  	
   

  	
  Waiver of Damages

  	
  87

  
	
  (e)

  	
   

  	
  Payment

  	
  87

  

 

v

 

	
  SECTION 10.04.

  	
   

  	
  SUCCESSORS AND ASSIGNS

  	
  87

  
	
  (a)

  	
   

  	
  Successors and Assigns

  	
  87

  
	
  (b)

  	
   

  	
  Assignment

  	
  87

  
	
  (c)

  	
   

  	
  Participations

  	
  89

  
	
  (d)

  	
   

  	
  Pledge

  	
  90

  
	
  SECTION 10.05.

  	
   

  	
  SURVIVAL

  	
  90

  
	
  SECTION 10.06.

  	
   

  	
  COUNTERPARTS; INTEGRATION; EFFECTIVENESS

  	
  90

  
	
  SECTION 10.07.

  	
   

  	
  SEVERABILITY

  	
  91

  
	
  SECTION 10.08.

  	
   

  	
  RIGHT OF SETOFF

  	
  91

  
	
  SECTION 10.09.

  	
   

  	
  GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS

  	
  91

  
	
  (a)

  	
   

  	
  Governing Law

  	
  91

  
	
  (b)

  	
   

  	
  Jurisdiction

  	
  91

  
	
  (c)

  	
   

  	
  Venue

  	
  91

  
	
  (d)

  	
   

  	
  Service of Process

  	
  92

  
	
  SECTION 10.10.

  	
   

  	
  WAIVER OF JURY TRIAL

  	
  92

  
	
  SECTION 10.11.

  	
   

  	
  HEADINGS

  	
  92

  
	
  SECTION 10.12.

  	
   

  	
  CONFIDENTIALITY

  	
  92

  
	
  SECTION 10.13.

  	
   

  	
  MAXIMUM INTEREST RATE

  	
  93

  
	
  (a)

  	
   

  	
  Limitation to Maximum Rate; Recapture

  	
  93

  
	
  (b)

  	
   

  	
  Cure Provisions

  	
  93

  
	
  SECTION 10.14.

  	
   

  	
  NO DUTY

  	
  94

  
	
  SECTION 10.15.

  	
   

  	
  NO FIDUCIARY RELATIONSHIP

  	
  94

  
	
  SECTION 10.16.

  	
   

  	
  EQUITABLE RELIEF

  	
  94

  
	
  SECTION 10.17.

  	
   

  	
  CONSTRUCTION

  	
  94

  
	
  SECTION 10.18.

  	
   

  	
  INDEPENDENCE OF COVENANTS

  	
  94

  
	
  SECTION 10.19.

  	
   

  	
  USA PATRIOT ACT

  	
  94

  

 

vi

 

CREDIT AGREEMENT dated as of August 3, 2006 among
SAFETY-KLEEN HOLDCO., INC. (“Holdings”), SAFETY-KLEEN SYSTEMS, INC., (“Borrower”),
the LENDERS party hereto, and JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as
Administrative Agent.

 

The parties hereto 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”, when used in reference to any Loan or
Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing,
are bearing interest at a rate determined by reference to the Alternate Base
Rate.

 

“Act” has the meaning assigned to such term in Section 10.19.

 

“Actual Return” has the meaning assigned to
such term in Section 2.12(c).

 

“Adjusted Capital Expenditures” has the meaning
assigned to such term in Section 7.03.

 

“Adjusted LIBO Rate” means, with respect to any
Eurodollar Borrowing for any Interest Period, an interest rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the
LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve
Rate.

 

“Administrative Agent” means JPMCB in its
capacity as administrative agent for the Lenders hereunder.

 

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

 

“Affiliate” means, with respect to a specified
Person, another Person that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by or is under common Control with
the Person specified.

 

“Alternate Base Rate” means, for any day, a
rate per annum equal to the greatest of (a) the Prime Rate in effect on
such day and (b) the Federal Funds Effective Rate in effect on such day
plus 1/2 of 1%.  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 Percentage” means: (a), with
respect to any Revolving Lender, the percentage of the total Revolving
Commitments represented by such Lender’s Revolving Commitment and (b), with
respect to any Synthetic L/C Lender, the percentage of the total Synthetic L/C
Commitments represented by such Lender’s Synthetic L/C Commitment.  If the applicable Commitments have terminated
or expired, the Applicable Percentages shall be determined based upon the
applicable Commitments most recently in effect, giving effect to any
assignments.

 

“Applicable Rate” means, for any day:  (a) with respect to each Term Loan,
1.50% per annum, in the case of an ABR Loan and 2.50% per annum, in the case of
a Eurodollar Loan (provided that the foregoing percentages are subject to
adjustment as contemplated by Section 2.20(f) hereof), (b) in
the 

 

1

 

case of Synthetic L/C Loans, 2.50% (provided that the
foregoing percentage is subject to adjustment as contemplated by Section 2.20(f) hereof)
and (c) with respect to any ABR Loan or Eurodollar Loan that is a Revolving Loan,
or with respect to the commitment fees payable hereunder, as the case may be,
the applicable rate per annum set forth below under the caption “ABR Spread”,
“Eurodollar Spread” or “Commitment Fee Rate”, as the case may be, based upon
the Leverage Ratio as of the most recent determination date; provided
that until first adjusted under the terms of this definition below, the “Applicable
Rate” for purposes of clause (c) shall be the applicable rate per annum
set forth below in Category 2:

 

	
  Category

  	
   

  	
  Leverage Ratio

  	
   

  	
  Commitment Fee Rate

  	
   

  	
  Eurodollar Spread

  	
   

  	
  ABR Spread

  	
   

  
	
  1

  	
   

  	
  > 4.00 to 1.00

  	
   

  	
  0.500

  	
  %

  	
  2.50

  	
  %

  	
  1.50

  	
  %

  
	
  2

  	
   

  	
  < 4.00 to 1.00 

  and 

  > 3.00 to 1.00

  	
   

  	
  0.375

  	
  %

  	
  2.25

  	
  %

  	
  1.25

  	
  %

  
	
  3

  	
   

  	
  < 3.00 to 1.00 

  and 

  > 2.50 to 1.00

  	
   

  	
  0.250

  	
  %

  	
  2.00

  	
  %

  	
  1.00

  	
  %

  
	
  4

  	
   

  	
  < 2.50 to 1.00

  	
   

  	
  0.250

  	
  %

  	
  1.75

  	
  %

  	
  .75

  	
  %

  

 

For purposes of the foregoing, (i) the Leverage Ratio shall be
determined as of the end of each fiscal quarter of Holdings’ fiscal year
commencing with the third fiscal quarter of Holdings’ 2006 fiscal year, based
upon Holdings’ consolidated financial statements delivered pursuant to Section 5.01(a) or
(b) and (ii) each change in the Applicable Rate resulting from a
change in the Leverage Ratio shall be effective during the period commencing on
and including the date of delivery to the Administrative Agent of such
consolidated financial statements indicating such change and ending on the date
immediately preceding the effective date of the next such change; provided
that the Leverage Ratio shall be deemed to be in Category 1 at the option
of the Administrative Agent or at the request of the Required Lenders (A) if
at any time that an Event of Default exists or (B)  if Holdings fails to
deliver the consolidated financial statements required to be delivered by it
pursuant to Section 5.01(a) or (b), during the period from the
expiration of the time for delivery thereof until such consolidated financial
statements are delivered. 
Notwithstanding the foregoing provisions of this definition, if an Increased
Commitment Supplement provides for different Applicable Rates to apply to the
Incremental Term Loan that is the subject of such Increased Commitment
Supplement, the Applicable Rates for such Incremental Term Loan shall be as
provided in its Increased Commitment Supplement.

 

“Approved Fund” has the meaning assigned to
such term in Section 10.04.

 

“Assignment and Assumption” means an Assignment
and Assumption entered into by a Lender and an assignee (with the consent of
any party whose consent is required by Section 10.04), and accepted by the
Administrative Agent, in the form of Exhibit A or any other form approved
by the Administrative Agent.

 

“Assignment of Lien” means an Assignment of
Lien in form satisfactory to the Administrative Agent pursuant to which the
Existing Mortgages and other Liens securing the Existing Credit Facility are
assigned to the Administrative Agent.

 

“Benchmark LIBOR Rate” has the meaning assigned
to such term in Section 2.05(e)(i)(D).

 

“Board” means the Board of Governors of the
Federal Reserve System of the United States of America.

 

2

 

“Borrower” means Safety-Kleen Systems, Inc.,
a Wisconsin corporation.

 

“Borrowing” means (a) Loans of the same Class and
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, or (b) a
Swingline Loan.

 

“Borrowing Request” means a request by the
Borrower for a Borrowing in accordance with Section 2.03.

 

“Business Day” means 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 Benchmark LIBOR Rate or the One Month
Adjusted LIBO Rate, 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 Expenditure Limit” has the meaning
assigned to such term in Section 7.03.

 

“Capital Expenditures” means, for any period
and a Person, (a) the additions to property, plant and equipment and other
capital expenditures of such Person and its consolidated subsidiaries that are
(or would be) set forth in a consolidated statement of cash flows of such
Person for such period prepared in accordance with GAAP and (b) Capital
Lease Obligations incurred by such Person and its consolidated subsidiaries
during such period.

 

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

 

“Carryover Amount” has the meaning assigned to
such term in Section 7.03.

 

“Change in Control” means: (a) the
acquisition of ownership, directly or indirectly, beneficially or of record, by
any Person other than Holdings of any Equity Interest in SK Holding; (b) the
acquisition of ownership, directly or indirectly, beneficially or of record, by
any Person other than SK Holding of any Equity Interest in Borrower; (c) prior
to an initial public offering of the common stock of Holdings (an “IPO”),
the acquisition 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 Securities and Exchange
Commission thereunder as in effect on the date hereof) of Equity Interests
representing more than 45% (on a fully diluted basis) of either the aggregate
ordinary voting power or the aggregate equity value represented by the issued
and outstanding Equity Interests in Holdings; (d) after an IPO, the
acquisition 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 Securities and Exchange Commission thereunder as in
effect on the date hereof) of Equity Interests representing more than 35% (on a
fully diluted basis) of either the aggregate ordinary voting power or the
aggregate equity value represented by the issued and outstanding Equity
Interests in Holdings; or (e) the occupation of a majority of the seats
(other than vacant seats) on the board of directors of Holdings by Persons who
were neither (i) nominated by the board of directors of Holdings nor (ii) appointed
by directors so nominated.

 

“Change in Law” means (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 2.15(b), by any lending office of such Lender or by
such 

 

3

 

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.

 

“Class”, when used in reference to any Loan or
Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing,
are Revolving Loans, Synthetic L/C Loans, Term B Loans, Incremental Term
Loans or Swingline Loans and, when used in reference to any Commitment, refers
to whether such Commitment is a Revolving Commitment, Synthetic L/C Commitment,
Term B Commitment or an Incremental Term Commitment.

 

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

 

“Collateral” means the Mortgaged Property, the “Collateral”
as defined in the Security Agreement and any and all property in which Liens
have been granted to the Administrative Agent to secure the Obligations.

 

“Commitment” means a Revolving Commitment,
Synthetic L/C Commitment, Term B Commitment, or Incremental Term Loan
Commitment or any combination thereof (as the context requires).

 

“Consolidated Adjusted EBITDA” means, for any
period (the “Subject Period”), the total of the following calculated
without duplication for such period:  (a) Consolidated
EBITDA; plus (b), on a pro forma basis, the pro forma EBITDA of
each Prior Target or, as applicable, the EBITDA of a Prior Target attributable
to the assets acquired from such Prior Target, for any portion of such Subject
Period occurring prior to the date of the acquisition of such Prior Target or
the related assets but only to the extent such EBITDA for such Prior Target can
be established in a manner satisfactory to the Administrative Agent based on
financial statements of the Prior Target prepared in accordance with GAAP and
taking into account only factually supportable and identifiable cost savings
and expenses directly attributable to any such acquisition which would
otherwise be accounted for as an adjustment pursuant to Article 11 of
Regulation S-X under the Securities Act, as if such cost savings or expenses
were realized on the first day of the applicable period; minus (c) the
EBITDA of each Prior Company and, as applicable but without duplication, the
Consolidated EBITDA attributable to all Prior Assets, in each case for any
portion of such Subject Period occurring prior to the date of the disposal of
such Prior Companies or Prior Assets.  As
used in this definition, the following terms have the following meanings:

 

“EBITDA” means, for any period and any Person, the total of the
following each calculated without duplication on a consolidated basis for such
period:  (a) the consolidated
operating net income of such Person; plus (b) any provision for (or
less any benefit from) income or franchise taxes included in determining
such consolidated operating net income; plus (c) interest expense
(including the interest portion of Capital Lease Obligations) deducted in
determining such consolidated operating net income; plus (d) amortization
and depreciation expense deducted in determining such consolidated operating
net income.

 

“Prior Target” means all Targets acquired or whose assets have
been acquired in a transaction permitted by Section 6.04.

 

“Prior Company” means any Subsidiary whose capital stock or
other Equity Interests have been disposed of, or all or substantially all of
whose assets have been disposed of, in each case, in a transaction with an
unaffiliated third party permitted or approved in accordance with this
Agreement.

 

4

 

“Prior Assets” means assets that have been disposed of by a
division or branch of Holdings or a Subsidiary in a transaction with an
unaffiliated third party permitted or approved in accordance with this Agreement
which would not make the seller a “Prior Company” but constitute all or
substantially all of the assets of such division or branch.

 

“Consolidated Assets” means, at any time, all
amounts which in conformity with GAAP would be included as assets on a consolidated
balance sheet of Holdings at such time.

 

“Consolidated Cash Interest Expense” shall
mean, for any period, the sum of the total consolidated interest expense of
Holdings and the Subsidiaries for such period (for this purpose, excluding that
portion of interest expense which is capitalized and/or paid-in-kind through
the issuance of Indebtedness in the same form as the Indebtedness with respect
to which such interest is required to be paid in accordance with the terms
thereof, and so long as such interest shall not be paid in cash (until the
maturity of the respective Indebtedness and so long as same does not occur in
such period)) plus, without duplication: (i) that portion of Capital Lease
Obligations of Holdings and the Subsidiaries representing the interest factor
for such period, (ii) all fees accrued during such period pursuant to
Sections 2.12(a), (b) and (c), (iii) all interest expense during
such period accrued under the terms of Sections 2.05(i), (iv) the
interest component (or imputed interest) of any lease payment or other
off-balance sheet financing transactions of the type described in clause (n) of
the definition of the term “Indebtedness” paid by Holdings and the Subsidiaries
for such period, and (v) all expenses (or minus any income) arising in
connection with any Swap Agreement that is included as interest expense in
accordance with GAAP; provided that (i) the amortization or
write-off of deferred financing, legal and accounting costs with respect to the
Transactions in each case shall be excluded from Consolidated Cash Interest
Expense to the extent same would otherwise have been included therein and (ii) for
purposes of the calculations under Section 7.02, Consolidated Cash
Interest Expense for the quarter ended on: (a) October 8, 2005 shall
equal $5,140,000; (b) December 31, 2005 shall equal $5,140,000; (c) April 22,
2006 shall equal $6,850,000; and (d) July 15, 2006 shall equal
$5,140,000.

 

“Consolidated EBITDA” shall mean, for any
period, Consolidated Net Income for such period adjusted by:

 

(a)                                  adding thereto,
without duplication and to the extent deducted in arriving at Consolidated Net
Income for such period:

 

(i)                                     the total
consolidated interest expense of Holdings and the Subsidiaries for such period
(including all such interest expenses arising in connection with any Swap
Agreement) determined in accordance with GAAP;

 

(ii)                                  provision for
taxes based on income;

 

(iii)                               the amount of
all amortization of intangibles and depreciation;

 

(iv)                              non-cash
charges for the impairment of goodwill or other intangibles or the write-off of
goodwill, intangibles or other assets;

 

(v)                                 the
amortization or write-off of deferred financing, legal, accounting costs and
prepayment fees with respect to the Transactions;

 

(vi)                              the “Provision
for Environmental Liabilities” or substantially similar provision (however
designated) on Holdings’ financial statements prepared in a manner consistent
with the audited financial statements furnished prior to 

 

5

 

the
Effective Date and described in Section 3.04(a) (the “Provision
for Environmental Liabilities”);

 

(vii)                           the one-time
charges attributable to termination of any or all services provided under a
Master Service Agreement with Electronic Data Systems Corporation and EDS
Information Services L.L.C. dated April 26, 2002 to the extent taken in
the applicable period; provided that the aggregate amount of such charges added
back in determining Consolidated EBITDA shall not exceed $10,000,000 for all
such periods;

 

(viii)                        non-cash
vacation expenses;

 

(ix)                                non-cash
impairment losses and losses on the disposition of equipment at customers;

 

(x)                                   non-cash
expenses for stock option issuances, restricted stock issuances and other
equity issuances and exercises; and

 

(xi)                                non-cash losses
under Swap Agreements;

 

(xii)                             non-cash
amortization or write off of the discounts arising as a result of the original
issuance of the Take Back Notes; and

 

(b)           deducting therefrom, without duplication, (i) the
amount of all cash payments during such period that are associated with any
non-cash charges or non-cash losses that were added back to Consolidated Net
Income in a previous period pursuant to preceding clauses (a)(viii), (ix),
(x) and (xi); (ii) any cash payments made during such period that
reduce the Provision for Environmental Liabilities (as defined above in this
definition) for such period except to the extent that the same constitute
Environmental Liability Expenditures; and (iii) to the extent the same
increased Consolidated Net Income for such period, non-cash gains under Swap
Agreements;

 

and, in each case,
calculated without giving effect to (and excluding) (i) non-operating
income items referred to as “Other Income or Expense” (as such term is used and
reported on in the most recent audited financial statements described in Section 3.04(a)),
(ii) any extraordinary gains or losses and (iii) any gains or losses
from sales or other dispositions of assets other than from sales of inventory
in the ordinary course of business.

 

“Consolidated Indebtedness” shall mean, at any
time, the remainder of the sum of, without duplication: (i) all
Indebtedness of Holdings and the Subsidiaries (on a consolidated basis) as
would be required to be reflected as debt or Capital Lease Obligations on the liability
side of a consolidated balance sheet of Holdings and the Subsidiaries in
accordance with GAAP, (ii) all Indebtedness of Holdings and the
Subsidiaries of the type described in clause (n) of the definition thereof
and (iii) all obligations in respect of the Guarantees of Holdings and the
Subsidiaries in respect of Indebtedness of any third Person of the type
referred to in preceding clauses (i) and (ii).

 

“Consolidated Net Income” shall mean, for any
period, the net income (or loss) of Holdings and the Subsidiaries for such
period, determined on a consolidated basis (after any deduction for minority
interests) and in accordance with GAAP, provided that:

 

(a)                                  in determining
Consolidated Net Income, the net income of any other Person which is not a subsidiary
of Holdings or that is accounted for by Holdings by the 

 

6

 

equity
method of accounting shall be included only to the extent of the payment of
cash dividends or cash distributions by such other Person to Holdings or a
Subsidiary during such period; provided further that the net income of The
ArmaKleen Company (“ArmaKleen”) may be included therein so long as (i) Holdings
owns directly or indirectly, through one or more of the Subsidiaries, at least
50% of the Equity Interests of ArmaKleen and (ii) Holdings accounts for
the net income of ArmaKleen in the same manner as such net income is accounted
for by Holdings on the Effective Date as shown in the most recent audited
financial statements described in Section 3.04(a); and

 

(b)                                 the net income
of any Subsidiary shall be excluded to the extent that the declaration or
payment of cash dividends or similar cash distributions by that Subsidiary of
that net income is not at the date of determination permitted by operation of
its charter or any agreement, instrument or law applicable to such Subsidiary;

 

provided that any net income excluded under
clause (a) or (b) above in any period (to the extent that such
net income otherwise would have been included in the Consolidated Net Income of
Holdings in such period) shall be included in any subsequent period to the
extent of any cash dividend or cash distribution of such net income in such
subsequent period made by such Person to Holdings or a subsidiary thereof (provided
the net income of such Subsidiary is not restricted as set forth in
clause (b) above).

 

“Contract Rate” has the meaning assigned to
such term in Section 10.13(a).

 

“Control” means 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.

 

“Credit Linked Account” with respect to each
Synthetic L/C Lender, the account established by the Administrative Agent at
JPMCB in the name of such Lender pursuant to Section 2.05(e)(i)(A).

 

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

 

“Departing Agent” has the meaning assigned to
such term in the definition of the term Loan Documents.

 

“Deposit Obligations” means all obligations,
indebtedness, and liabilities of Holdings and the Subsidiaries, or any one of
them, to any Lender or any Affiliate of any Lender arising pursuant to any
deposit, lock box, automated clearing house or cash management arrangements
entered into by any Lender or any Affiliate of any Lender with Holdings or any
Subsidiary, whether now existing or hereafter arising, whether direct,
indirect, related, unrelated, fixed, contingent, liquidated, unliquidated,
joint, several, or joint and several, including, without limitation, the
obligation, indebtedness, and liabilities of Holdings or any Subsidiary to
repay any credit extended in connection with such arrangements, interest
thereon, and all fees, costs, and expenses (including attorneys’ fees and
expenses) provided for in the documentation executed in connection therewith.

 

“dollars” or “$” refers to lawful money
of the United States of America.

 

“Dollar Equivalent” of any amount means, at the
time of determination thereof: (a) if such amount is expressed in dollars,
such amount and (b) if such amount is expressed in a currency other than
dollars, the equivalent of such amount in dollars determined using the rate of
exchange quoted by JPMCB in New York, New York at 11:00 a.m. (New York,
New York time) on the date of determination (or, if such date is not a Business
Day, the last Business Day prior thereto) to prime banks in New York for the 

 

7

 

spot purchase in the New York foreign exchange market
of such amount of dollars with such other currency.

 

“Domestic Subsidiary” means any Subsidiary that
is organized under the laws of the United States of America, any state thereof
or the District of Columbia.

 

“Effective Date” means the date on which the
conditions specified in Section 4.01 are satisfied (or waived in accordance
with Section 10.02).

 

“Environmental Laws” means all laws, rules,
regulations, codes, ordinances, orders, decrees, judgments, injunctions,
notices or binding agreements issued, promulgated or entered into by any
Governmental Authority, relating in any way to the environment, preservation or
reclamation of natural resources, the management, release or threatened release
of any Hazardous Material or to health and safety matters.

 

“Environmental Liability” means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of Holdings or any Subsidiary
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 Liability Expenditures” means
all expenditures associated with the performance of Remedial Actions.

 

“Equity Interests” means shares of the capital
stock, partnership interests, membership interests in a limited liability
company, beneficial interests in a trust or other equity interests in any
Person or any warrants, options or other rights to acquire such interests.

 

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

 

“ERISA Affiliate” means any trade or business
(whether or not incorporated) that, together with the Borrower, is treated as a
single employer under Section 414(b) or (c) of the Code or,
solely for purposes of Section 302 of ERISA and Section 412 of the
Code, is treated as a single employer under Section 414 of the Code.

 

“ERISA Event” means (a) any “reportable
event”, as defined in Section 4043 of ERISA or the regulations issued
thereunder with respect to a Plan (other than an event for which the 30-day
notice period is waived); (b) 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; (c) 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; (d) the incurrence by Holdings or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any
Plan; (e) the receipt by Holdings 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; (f) the
incurrence by Holdings or any of its ERISA Affiliates of any liability with
respect to the withdrawal or partial withdrawal from any Plan or Multiemployer
Plan; or (g) the receipt by Holdings or any ERISA Affiliate of any notice,
or the receipt by any Multiemployer Plan from Holdings 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.

 

8

 

 

“Eurodollar”, when used in reference to any
Loan or Borrowing, refers to whether such Loan, or the Loans comprising such
Borrowing, are bearing interest at a rate determined by reference to the
Adjusted LIBO Rate but not the One Month Adjusted LIBO Rate.  Synthetic L/C Loans are not be Eurodollar
Loans.

 

“Event of Default” has the meaning assigned to
such term in Section 8.01.

 

“Excess Cash Flow “ means, for any period, the
remainder of:

 

(a)           Consolidated EBITDA for such period minus

 

(b)           the sum of, without duplication:

 

(i)            the aggregate amount of all Capital Expenditures made by
Holdings and the Subsidiaries during such period (other than Capital
Expenditures to the extent financed with proceeds from the issuance of Equity
Interests, asset sale proceeds, insurance proceeds or Indebtedness (other than
Revolving Loans));

 

(ii)           the aggregate amount of permanent principal payments of
Indebtedness for borrowed money of Holdings and the Subsidiaries and the
permanent repayment of the principal component of Capital Lease Obligations of
Holdings and the Subsidiaries during such period (other than (A) repayments
made with the proceeds of asset sales, equity issuances and issuance of
Indebtedness (other than Revolving Loans) and (B) re-payments of Loans
and/or other Loan Obligations, provided that repayments of Loans shall
be deducted in determining Excess Cash Flow to the extent such repayments were (1) required
as a result of a scheduled repayment pursuant to Section 2.10 or with
respect to an Incremental Term Loan, its Increased Commitment Supplement, or (2) made
as a voluntary prepayment pursuant to Section 2.11(a) with internally
generated funds (but in the case of a voluntary prepayment of Revolving Loans
and Swingline Loans, only to the extent accompanied by a voluntary reduction to
the aggregate amount of the Revolving Commitments in an amount equal to such
prepayment and in the case of a voluntary prepayment of the Synthetic L/C
Loans, only to the extent accompanied by a voluntary reduction to the aggregate
amount of the Synthetic L/C Commitments in an amount equal to such
prepayment));

 

(c)           Consolidated Cash Interest Expense for such period;

 

(d)           payments of taxes based on income (excluding income from
asset sales, the receipt of insurance proceeds and similar events) paid in cash
during such period;

 

(e)           payments made pursuant to Section 10.03 hereof during
such period, in each case, to the extent not already deducted in the
calculation of Consolidated EBITDA;

 

(f)            Environmental Liability Expenditures paid in cash during
such period, to the extent same did not already reduce Consolidated EBITDA;

 

(g)           the one-time charges attributable to the termination of any or all
services provided under a Master Service Agreement with Electronic Data Systems
Corporation and EDS Information Services L.L.C. dated April 26, 2002 to the extent
same did not already reduce Consolidated EBITDA; and

 

9

 

(h)           the aggregate amount of all cash payments made in respect
of all acquisitions permitted by Section 6.04 consummated by the Borrower
and the Subsidiaries during such period (other than any such payments to the
extent financed with equity proceeds, asset sale proceeds, insurance proceeds
or Indebtedness (other than Revolving Loans)).

 

“Excluded Foreign Subsidiary” means (i) a
Foreign Subsidiary, or (ii) an entity treated as disregarded for U.S.
federal income tax purposes that owns more than 65% of the voting stock of a
Subsidiary described in clauses (i) or (ii) of this definition.

 

“Excluded Taxes” means, 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 Borrower
hereunder, (a) income or franchise taxes imposed on (or measured by) its
net income by the United States of America, or by the jurisdiction under the
laws of which such recipient is organized or in which its principal office is
located or in which it is otherwise treated as doing business (other than a
jurisdiction in which it would not have been treated as doing business but for
and solely as a result of its participation in the transactions governed by the
Loan Documents), or in the case of any Lender, in which its applicable lending
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
the Borrower is located, (c) in the case of any Lender (other than an
assignee pursuant to a request by the Borrower under Section 2.19(b)), 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 2.17(e),
except to the extent that such Lender (or its assignor, if any) was entitled,
at the time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrower with respect to such withholding tax
pursuant to Section 2.17(a), (d) taxes imposed by the United States
of America that arise as a result of the failure of the recipient of the
applicable payment to comply with Section 2.17(e), (e) backup
withholding taxes imposed by the Unties States of America and (f) any
taxes (including interest and penalties) that are attributable to a Lender’s or
the Administrative Agent’s gross negligence or willful misconduct.

 

“Existing Credit Facility” means the credit
facility provided under the terms of that certain Credit Agreement dated as of April 7,
2005 among Holdings, certain of the Subsidiaries, the lenders named therein,
Deutsche Bank Trust Company Americas, as administrative agent and Credit Suisse
First Boston, as syndication agent.

 

“Existing Mortgages” means the mortgages and
deeds of trust described on Schedule 1.01(b).

 

“fair value” has the meaning assigned to such
term in Section 3.15.

 

“Federal Funds Effective Rate” means, 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.

 

“Financial Officer” means the chief financial
officer, principal accounting officer, treasurer or controller of the Borrower.

 

“Fixed Return” has the meaning assigned to such
term in Section 2.12(c).

 

10

 

“Foreign Lender” means 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.

 

“Foreign Subsidiary” means any Subsidiary that
is organized under the laws of a jurisdiction other than the United States of
America or any State thereof or the District of Columbia.

 

“Fully Satisfied” or “Full Satisfaction”
means, as of any date, that on or before such date:

 

(a)           with respect to the Loan Obligations:  (i) the principal of and interest
accrued to such date on the Loan Obligations (other than the contingent L/C
Exposure) shall have been paid in full in cash, (ii) all fees, expenses
and other amounts then due and payable which constitute Loan Obligations (other
than the contingent L/C Exposure and other contingent amounts not then
liquidated) shall have been paid in full in cash, (iii) the Commitments
shall have expired or irrevocably been terminated, and (iv) the contingent
L/C Exposure shall have been secured by: (A) the grant of a first
priority, perfected Lien on cash or cash equivalents in an amount at least
equal to 102% of the amount of such L/C Exposure or other collateral which is
reasonably acceptable to the Issuing Bank or (B) the issuance of a “back-to-back”
letter of credit in form and substance reasonably acceptable to the Issuing
Bank with an original face amount at least equal to 102% of the amount of such
L/C Exposure;

 

(b)           with respect to the Swap Obligations (i) all
termination payments, fees, expenses and other amounts then due and payable
under the related Swap Agreements which constitute Swap Obligations shall have
been paid in full in cash; and (ii) all contingent amounts which could be
payable under the related Swap Agreements shall have been secured by: (A) the
grant of a first priority, perfected Lien on cash or cash equivalents in an
amount at least equal to 102% of the amount of such contingent Swap Obligations
or other collateral which is reasonably acceptable to the Person holding the
applicable Swap Obligations or (B) the issuance of a letter of credit in
form and substance reasonably acceptable to the Person holding the applicable
Swap Obligations and in an amount at least equal to 102% of the amount of such
contingent Swap Obligations; and

 

(c)           with respect to the Deposit Obligations:  (i) all fees, expenses and other amounts
then due and payable which constitute Deposit Obligations shall have been paid
in full in cash, (ii) any further commitments to extend credit in
connection with such Deposit Obligations shall have expired or irrevocably been
terminated or reasonably satisfactory arrangements to secure the same shall be
made with the depository bank, and (iii) all contingent amounts which
could be payable in connection with the Deposit Obligations shall have been
secured by: (A) the grant of a first priority, perfected Lien on cash or
cash equivalents in an amount at least equal to 102% of the amount of such
contingent Deposit Obligations or other collateral which is acceptable to the
Lender or Affiliate of a Lender holding the applicable Deposit Obligations or (B) the
issuance of a letter of credit in form and substance reasonably acceptable to
the Lender or Affiliate of a Lender holding the applicable Deposit Obligations
and in an amount at least equal to 102% of the amount of such contingent
Deposit Obligations.

 

“GAAP” means generally accepted accounting
principles in the United States of America.

 

“Governmental Authority” means the government
of the United States of America, any other nation or any political subdivision
thereof, whether state or local, and any agency, authority, 

 

11

 

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” of or by any Person (the “guarantor”)
means any obligation, contingent or otherwise, of the guarantor guaranteeing or
having the economic effect of guaranteeing any Indebtedness or other obligation
(including any obligations under an operating lease) of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any
obligation of the guarantor, direct or indirect, (a) 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, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation (including any obligations under an
operating lease) of the payment thereof, (c) 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 (d) 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.

 

“Guaranty Agreement” means the guaranty of
Holdings and the Subsidiary Loan Parties in the form of Exhibit C hereto.

 

“Hazardous Materials” means all explosive or
radioactive substances or wastes and all hazardous or toxic substances, wastes
or other pollutants, including petroleum or petroleum distillates, asbestos or
asbestos containing materials, polychlorinated biphenyls, radon gas, infectious
or medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.

 

“Holdings” means Safety-Kleen HoldCo., Inc.,
a Delaware corporation.

 

“Increased Amount” has the meaning assigned to
such term in Section 2.20(b).

 

“Increased Commitment Supplement” means the
Increased Commitment Supplement in the form attached hereto as Exhibit D.

 

“Incremental Term Lender” means, with respect
to an Incremental Term Loan, a Lender who has agree to make such Loan under the
terms of the related Increased Commitment Supplement.

 

“Incremental Term Loan” means a term loan made
to Borrower pursuant to an Increased Commitment Supplement.

 

“Incremental Term Loan Commitment” means, with
respect to each Lender, the commitment of such Lender, if any, to make an
Incremental Term Loan in the amount set forth in the applicable Increased
Commitment Supplement.

 

“Indebtedness” of any Person means, without
duplication, (a) all obligations of such Person for borrowed money; (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments; (c) all obligations of such Person upon which interest
charges are customarily paid; (d) all obligations of such Person under
conditional sale or other title retention agreements relating to property
acquired by such Person; (e) all obligations of such Person in respect of
the deferred purchase price of property or services (excluding current accounts
payable incurred in the ordinary course of business); (f) all Indebtedness
of others secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien on property
owned or acquired by such Person, whether or not the Indebtedness secured
thereby has been assumed (provided that if the Person has not assumed or
otherwise become liable in respect of such Indebtedness, such Indebtedness
shall be deemed 

 

12

 

to be in an amount equal
to the fair market value of the property to which such Lien relates as
determined in good faith by such Person); (g) all Guarantees by such
Person; (h) all Capital Lease Obligations of such Person; (i) all
obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty; (j) all obligations,
contingent or otherwise, of such Person in respect of bankers’ acceptances; (k) all
obligations of such Person in respect of mandatory redemption or mandatory
dividend rights on Equity Interests but excluding dividends payable solely in
additional Equity Interests; (1) all obligations of such Person,
contingent or otherwise, for the payment of money under any noncompete,
consulting or similar agreement entered into with the seller of a Target or any
other similar arrangements providing for the deferred payment of the purchase
price for an acquisition permitted hereby or an acquisition consummated prior
to the date hereof; (m) all obligations of such Person under any Swap
Agreement; (n) all obligations of such Person to pay rent or other amounts
under any lease of (or other arrangement conveying the right to use) real or
personal property, or a combination thereof, which lease is required or is
permitted to be classified and accounted for as an operating lease under GAAP
but which is intended by the parties thereto for tax, bankruptcy, regulatory,
commercial law, real estate law and all other purposes as a financing
arrangement; and (o) all other amounts (other than accruals, deferred
revenue and deferred taxes) which are required by GAAP to be included as
liabilities on a consolidated balance sheet of such Person.  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.  The
amount of the obligations of Holding or any Subsidiary in respect of any Swap Agreement
shall, at any time of determination and for all purposes under this Agreement,
be the maximum aggregate amount (giving effect to any netting agreements) that
Holding or such Subsidiary would be required to pay if such Swap Agreement were
terminated at such time giving effect to current market conditions
notwithstanding any contrary treatment in accordance with GAAP.

 

“Indemnified Taxes” means Taxes other than
Excluded Taxes.

 

“Indemnitee” has the meaning assigned to such
term in Section 10.03(b).

 

“Information” has the meaning assigned to such
term in Section 10.12.

 

“Information Memorandum” means the Confidential
Information Memorandum dated June 2006 relating to the Borrower and the
Transactions.

 

“Interest Election Request” means a request by
the Borrower to convert or continue a Revolving Borrowing or Term Borrowing in
accordance with Section 2.07.

 

“Interest Payment Date” means (a) with
respect to any ABR Loan (other than a Swingline Loan) and any Synthetic
L/C Loan, the first Business Day of each January, April, July and October,
(b) with respect to any Eurodollar Loan, the last day of the Interest
Period applicable to the Borrowing of which such Loan is a part and, in the
case of a Eurodollar Borrowing with an Interest Period of more than three
months’ duration, each day prior to the last day of such Interest Period that
occurs at intervals of three months’ duration after the first day of such
Interest Period, and (c) with respect to any Swingline Loan, the day that
such Loan is required to be repaid.

 

“Interest Period” means:

 

(a)           with
respect to any Eurodollar Borrowing, the period commencing on the date of such
Borrowing and ending on the numerically corresponding day in the calendar month
that is one, two, three or six months thereafter, as the Borrower may
elect; and

 

13

 

(b)           with
respect to any Synthetic L/C Borrowing, the period commencing on the first day
of a calendar month and ending on the last day of a calendar month;

 

provided, that (i) if any Interest Period
would end on a day other than 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 next preceding Business Day and (ii) any Interest
Period that commences on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the last calendar month
of such Interest Period) shall end on the last Business Day of the last
calendar month of such Interest Period. 
For purposes hereof, the date of a Borrowing initially shall be the date
on which such Borrowing is made and thereafter shall be the effective date of
the most recent conversion or continuation of such Borrowing.

 

“Issuing Bank” means JPMCB, in its capacity as
the issuer of Letters of Credit hereunder, and its successors in such capacity
as provided in Section 2.05(i).  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 and the terms and provisions hereof applicable to any such
Letter of Credit issued by such Affiliate shall be binding upon such Affiliate.

 

“JPMCB” means JPMorgan Chase Bank, National
Association in its individual capacity and not as Administrative Agent.

 

“L/C Disbursement” means either a Revolving L/C
Disbursement or a Synthetic L/C Disbursement.

 

“L/C Exposure” means the Revolving L/C Exposure
and the Synthetic L/C Exposure.

 

“Lenders” means (a) for all purposes, the
Persons listed on Schedule 2.01 and any other Person that shall have
become a party hereto pursuant to an Increased Commitment Supplement or an
Assignment and Assumption, other than any such Person that ceases to be a party
hereto pursuant to an Assignment and Assumption or otherwise and (b) for
purposes of the definitions of “Swap Obligations” and “Secured Parties” only,
shall include any Person who was a Lender at the time a Swap Agreement was
entered into by one or more of the Loan Parties, even though, at a later time
of determination, such Person no longer holds any Commitments or Loans
hereunder.  Unless the context otherwise
requires, the term “Lenders” includes the Swingline Lender and the Incremental
Term Lenders.  As a result of clause (b) of
this definition, the Swap Obligations owed to a Lender or its Affiliates shall
continue to be “Swap Obligations”, entitled to share in the benefits of the
Collateral as herein provided, even though such Lender ceases to be a party
hereto pursuant to an Assignment and Assumption or otherwise.

 

“Letter of Credit” means any Revolving Letter
of Credit or any Synthetic Letter of Credit.

 

“Leverage Ratio” means, on any date, the ratio
of Consolidated Indebtedness outstanding as of such date to the Consolidated
Adjusted EBITDA as calculated for the four fiscal quarters then most recently
ended for which financial statements are available.

 

“LIBO Rate” means, with respect to any
Eurodollar Borrowing for any Interest Period and with respect to the One Month
Adjusted LIBO Rate, the rate appearing on Page 3750 of the Dow Jones
Market Service (or on any successor or substitute page of such Service, or
any successor to 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
Business Days prior to the commencement of the applicable Interest Period, as
the rate 

 

14

 

for dollar deposits with
a maturity comparable to the applicable Interest Period.  In the event that such rate is not available
at such time for any reason, then the “LIBO Rate” with respect to the
applicable Interest Period shall be the rate at which dollar deposits of
$5,000,000 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 Business Days prior to the commencement of such Interest
Period.

 

“Lien” means, with respect to any asset, (a) any
mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or
security interest 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 lease 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 Documents” means this Agreement, the
Guaranty Agreement, the Security Agreement, the Mortgages and all other
certificates, agreements and other documents or instruments now or hereafter
executed and/or delivered pursuant to or in connection with the foregoing.  For purposes of 10.03 only, the term “Loan
Document” includes the payoff letter executed by Deutsche Bank Trust Company
Americas, as administrative agent and collateral agent under the Existing
Credit Facility (the “Departing Agent”), which payoff letter has been
agreed to by the Borrower, certain of the Guarantors and certain other
Affiliates of the Borrower and the Administrative Agent and provides for the
payoff of the obligations outstanding thereunder, the assignment to the
Administrative Agent of the Existing Mortgages and the indemnification by the
Administrative Agent of the Departing Agent, each of the other agents under the
Existing Credit Facility and each of the lenders under the Existing Credit
Facility for matters relating to the payoff and such assignment.

 

“Loan Obligations” means all obligations,
indebtedness, and liabilities of Holdings and the  Subsidiaries, or any one of them, to the
Administrative Agent and the Lenders arising pursuant to any of the Loan
Documents, whether now existing or hereafter arising, whether direct, indirect,
related, unrelated, fixed, contingent, liquidated, unliquidated, joint,
several, or joint and several, including, without limitation, the obligation of
Holdings or any Subsidiary to repay the Loans, the L/C Disbursements, interest
on the Loans and L/C Disbursements, and all fees, costs, and expenses
(including attorneys’ fees and expenses) provided for in the Loan Documents.

 

“Loan Parties” means Holdings, the Borrower and
the Subsidiary Loan Parties.

 

“Loans” means the loans made by the Lenders to
the Borrower pursuant to this Agreement.

 

“Material Adverse Effect” means a material
adverse effect on (a) the business, assets, prospects or condition,
financial or otherwise, of Holdings and the Subsidiary Loan Parties taken as a
whole, (b) the validity or enforceability of any Loan Document or (c) the
rights of or remedies available to the Lenders under any Loan Document.

 

“Material Indebtedness” means Indebtedness
(other than the Loans and Letters of Credit but including, without limitation,
obligations in respect of one or more Swap Agreements) of any one or more of
Holdings and the Subsidiaries in an aggregate principal amount exceeding
$10,000,000.

 

“Material Real Property” shall mean any real
property owned by any of the Loan Parties the fair market value of which (as
determined in good faith by Borrower) is greater than $1,000,000.

 

“Maximum Rate” has the meaning assigned to such
term in Section 10.13(a).

 

15

 

“Moody’s” means Moody’s Investors Service, Inc.

 

“Mortgage” means a mortgage, deed of trust,
assignment of leases and rents, leasehold mortgage or other security document
granting a Lien on any Mortgaged Property to secure the Obligations.  Each Mortgage shall be satisfactory in form
and substance to the Administrative Agent. 
The term “Mortgage” shall include the Existing Mortgages as the
same have been assigned to the Administrative Agent pursuant to the Assignment
of Lien.

 

“Mortgaged Property” means, initially, each
parcel of real property and the improvements thereto owned by a Loan Party and
identified on Schedule 1.01(a), and includes each other parcel of real
property and improvements thereto with respect to which a Mortgage is granted
pursuant to Section 5.12.

 

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

 

“Net Proceeds” means, with respect to any event
(a) the cash proceeds received in respect of such event including (i) any
cash received in respect of any non-cash proceeds, but only as and when
received, (ii) in the case of a casualty, insurance proceeds, and (iii) in
the case of a condemnation or similar event, condemnation awards and similar
payments, net of (b) the sum of (i) all reasonable fees and
out-of-pocket expenses paid by Holdings and the Subsidiaries to third parties
(other than Affiliates) in connection with such event, (ii) in the case of
a sale, transfer or other disposition of an asset (including pursuant to a sale
and leaseback transaction or a casualty or a condemnation or similar
proceeding), the amount of all payments required to be made by Holdings and the
Subsidiaries as a result of such event to repay Indebtedness (other than Loans)
secured by such asset or otherwise subject to mandatory prepayment as a result
of such event, and (iii) the amount of all taxes paid (or reasonably
estimated to be payable) by Holdings and the Subsidiaries, and the amount of
any reserves established by Holdings and the Subsidiaries to fund contingent
liabilities reasonably estimated to be payable, in each case during the year
that such event occurred or the next succeeding year and that are directly attributable
to such event or any transaction occurring or deemed to occur as a result of
making a prepayment hereunder (as determined reasonably and in good faith by
the chief financial officer of Holdings).

 

“New Lender” has the meaning assigned to such
term in Section 2.20(b).

 

“New Total Return” has the meaning assigned to
such term in Section 2.20(f).

 

“Non-consenting Lender” has the meaning
assigned to such term in Section 2.19(b).

 

“Note” means a promissory note executed by the
Borrower pursuant to Section 2.09(e).

 

“Obligations” means all Loan Obligations, the
Swap Obligations and all Deposit Obligations.

 

“One Month Adjusted LIBO Rate” means for any
calendar month, an interest rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to (a) the LIBO Rate for an Interest Period of
one month commencing on the first day of such calendar month multiplied by (b) the
Statutory Reserve Rate; subject however, to the terms of Section 2.14.

 

“Other Taxes” means 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 under any Loan Document
or from the execution, delivery or enforcement of, or otherwise with respect
to, any Loan Document; excluding, however, such taxes that are
imposed as a result of an assignment or designation of a new applicable lending
office (other than assignment or new designation that occurs as a result of
Borrower’s request pursuant to Section 2.19).

 

16

 

“Participant” has the meaning set forth in Section 10.04(c).

 

“PBGC” means the Pension Benefit Guaranty
Corporation referred to and defined in ERISA and any successor entity
performing similar functions.

 

“Permitted Encumbrances” means:

 

(a)           Liens
imposed by law for taxes that are not yet due or are being contested in
compliance with Section 5.04;

 

(b)           carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens
imposed by law, arising in the ordinary course of business and securing
obligations that (i) are not overdue by more than 30 days, (ii) are
being contested in compliance with Section 5.04 or (iii) do not at
any time exceed $500,000 in the aggregate for all such Liens and for Holdings
and all the Subsidiaries;

 

(c)           pledges
and deposits made in the ordinary course of business in compliance with workers’
compensation, unemployment insurance and other social security laws or
regulations;

 

(d)           deposits
to secure the performance of bids, trade contracts (including customer
contracts), leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature, in each case in the ordinary
course of business;

 

(e)           judgment
liens in respect of judgments that do not constitute an Event of Default under
clause (k) of Section 8.01;

 

(f)            easements,
zoning restrictions, rights-of-way and similar encumbrances on real property
imposed by law or arising in the ordinary course of business that do not secure
any monetary obligations and do not materially detract from the value of the
affected property or interfere with the ordinary conduct of business of the
Borrower or any Subsidiary;

 

(g)           liens
arising from filing UCC financing statements regarding leases permitted by this
Agreement;

 

(h)           leasing
or licensing of real or personal property (including subleases or sublicenses)
permitted by Section 6.05;

 

(i)            with
respect to each parcel of Mortgaged Property, encumbrances thereon reflected as
exceptions to title in the mortgage title insurance policy (or binding
commitment) relating to such parcel and approved by the Administrative Agent;

 

(j)            statutory
and common law landlords’ liens under leases to which Holdings or one of the
Subsidiaries is a party;

 

(k)           customary
Liens (including the right of set-off) in favor of institutions at which
deposit, commodity and security accounts are held encumbering such accounts and
the assets held therein incurred in the ordinary course of business; and

 

(l)            liens
incurred by Borrower or any subsidiary of Borrower with the consent of the
Required Lenders.

 

17

 

provided that the term “Permitted Encumbrances”
shall not include any Lien securing Indebtedness.

 

“Permitted Investments” means:

 

(a)           securities
issued or directly and fully guaranteed or insured by the United States of
America or any agency, instrumentality or sponsored corporation thereof and
backed by the full faith and credit of the United States of America, and in
each case having maturities of not more than one year from the date of
acquisition;

 

(b)           dollar
denominated time deposits, certificates of deposit, overnight bank deposits and
bankers’ acceptances with any Lender or any commercial bank of recognized
standing, having capital and surplus in excess of $250,000,000 and the
commercial paper of the holding company of which, at the time of acquisition
thereof, is rated at least A-2 or the equivalent thereof by S&P or at least
P-2 or the equivalent thereof by Moody’s (or if at such time neither is issuing
ratings, then a comparable rating of another nationally recognized rating
agency), or, if no such commercial paper rating is available, a long-term debt
rating, at the time of acquisition thereof, of at least A or the equivalent
thereof by S&P or at least A-2 or the equivalent thereof by Moody’s (or if
at such time neither is issuing ratings, then a comparable rating of another
nationally recognized rating agency);

 

(c)           repurchase
obligations with a term of not more than 92 days for underlying securities of
the types described in clause (a) above and entered into with any
commercial bank meeting the qualifications specified in clause (b) above;

 

(d)           other
investment instruments offered or sponsored by financial institutions having
capital and surplus in excess of $250,000,000 and the commercial paper of the
holding company of which, at the time of acquisition thereof, is rated at least
A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent
thereof by Moody’s (or if at such time neither is issuing ratings, then a
comparable rating of another nationally recognized rating agency), or, if no
such commercial paper rating is available, a long-term debt rating, at the time
of acquisition thereof, of at least A+ or the equivalent thereof by S&P or
at least A-1 or the equivalent thereof by Moody’s (or if at such time neither
is issuing ratings, then a comparable rating of another nationally recognized
rating agency);

 

(e)           readily
marketable direct obligations issued by any state of the United States of
America or any political subdivision thereof having, at the time of acquisition
thereof, one of the two highest rating categories obtainable from either Moody’s
or S&P (or if at such time neither is issuing ratings, then a comparable
rating of another nationally recognized rating agency)

 

(f)            commercial
paper rated, at the time of acquisition thereof, at least A-1 or the equivalent
thereof by S&P or at least P-1 or the equivalent thereof by Moody’s (or if
at such time neither is issuing ratings, then a comparable rating of another
nationally recognized rating agency), in each case maturing within one year
after the date of acquisition;

 

(g)           investments
in money market funds which invest substantially all their assets in securities
of the types described in clauses (a) through (f) above; and

 

(h)           in
the case of any Foreign Subsidiary: (i) certificates of deposit (or
comparable instruments) of any bank with which such Foreign Subsidiary
regularly

 

18

 

 

transacts business and
with maturities of not more than six months from the date of acquisition by
such Foreign Subsidiary, (ii) overnight deposits and demand deposit
accounts maintained with any bank that such Foreign Subsidiary regularly
transacts business and (iii) securities of the type and maturity described
in clause (a) above but issued by the principal governmental authority in
which such Foreign Subsidiary is organized so long as such security has the
highest rating available from either S&P or Moody’s.

 

“Person” means any natural person, corporation,
limited liability company, trust, joint venture, association, company,
partnership, Governmental Authority or other entity.

 

“Plan” means any employee pension benefit plan
(other than a Multiemployer Plan) subject to the provisions of Title IV of
ERISA or Section 412 of the Code or Section 302 of ERISA, and in
respect of which the Holdings or any ERISA Affiliate is (or, if such plan were
terminated, would under Section 4069 of ERISA be deemed to be) an “employer”
as defined in Section 3(5) of ERISA.

 

“Prepayment Event” means:

 

(a)           a Permitted Asset Disposition but only if as of the date
of a Permitted Asset Disposition, the aggregate book value of all of the assets
disposed of in Permitted Asset Dispositions during the period from the
Effective Date to the date of determination (including the book value of the
Permitted Asset Disposition in question) equal or exceed 5% of Holding’s
Consolidated Assets as determined as of such date, with the term “Permitted
Asset Disposition” meaning:

 

(i)            any sale, transfer or other disposition (including
pursuant to a sale and leaseback transaction) of any asset of Holdings or any
Subsidiary, other than dispositions described in paragraphs clauses (a),
(b), (c) and (d) of Section 6.05; and

 

(ii)           any casualty or other insured damage to, or any taking
under power of eminent domain or by condemnation or similar proceeding of, any
asset of Holdings or any Subsidiary; or

 

(b)           the incurrence by Holdings or any Subsidiary of any
Indebtedness, other than Indebtedness permitted by Section 6.01

 

“present fair saleable value” has the meaning
assigned to such term in Section 3.15.

 

“Prime Rate” means the rate of interest per
annum publicly announced from time to time by JPMCB as its prime rate in effect
at its principal office in New York City; each change in the Prime Rate shall
be effective from and including the date such change is publicly announced as
being effective.

 

“Prior Lender Affiliate” has the meaning
assigned to such term in Section 9.11.

 

“Purchase Price” has the meaning assigned to
such term in Section 6.04(k)(ii).

 

“Register” has the meaning set forth in Section 10.04(b)(iv).

 

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

 

19

 

“Remedial Action” means all costs and actions
to (a) clean up, remove, remediate, contain, treat, monitor, investigate,
or in any way address Hazardous Materials in the indoor or outdoor environment,
(b) prevent or minimize a release or threatened release of Hazardous
Materials so they do not migrate or endanger or threaten to endanger public
health or welfare of the indoor or outdoor environment, (c) restore or
reclaim natural resources or the environment, or (d) perform any
pre-remedial, restoration or reclamation studies, investigations, or
post-remedial, restoration or reclamation operation and maintenance activities.

 

“Required Lenders” means, at any time, Lenders
having Revolving Exposures, Term Loans, Synthetic L/C Loans and unused
Commitments representing more than 50% of the sum of the total Revolving
Exposures, outstanding Term Loans, outstanding Synthetic L/C Loans and unused
Commitments at such time.

 

“Required Percentage” has the meaning assigned
to such term in Section 2.11(d)

 

“Restricted Indebtedness” means Indebtedness of
Holdings or any Subsidiary, the payment, prepayment, redemption, repurchase or
defeasance of which is restricted under Section 6.08(b).

 

“Restricted Payment” means any dividend or
other distribution (whether in cash, securities or other property) with respect
to any Equity Interests, or any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any Equity Interests.

 

“Revolving Availability Period” means the period
from and including the Effective Date to but excluding the earlier of the
Revolving Maturity Date and the date of termination of the Revolving
Commitments.

 

“Revolving Commitment” means, with respect to
each Lender, the commitment, if any, of such Lender to make Revolving Loans and
to acquire participations in Letters of Credit and Swingline Loans hereunder,
expressed as an amount representing the maximum aggregate amount of such Lender’s
Revolving Exposure hereunder, as such commitment may be (a) reduced from
time to time pursuant to Section 2.08, (b) increased from time to
time pursuant to an Increased Commitment Supplement, and (c) reduced or
increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 10.04.  The
initial amount of each Lender’s Revolving Commitment is set forth on
Schedule 2.01, or in the Assignment and Assumption pursuant to which such
Lender shall have assumed its Revolving Commitment or in the Increased
Commitment Supplement pursuant to which such Lender shall have become a Lender
or increased its Revolving Commitment, as applicable.  The initial aggregate amount of the Lenders’
Revolving Commitments on the Effective Date is $90,000,000; provided that,
in addition to the increases permitted by Section 2.20, the Borrower may,
by written notice delivered to the Administrative Agent, increase the Revolving
Commitments by an aggregate amount up to $10,000,000 (increasing the initial
aggregate Revolving Commitments up to an aggregate amount not to exceed $100,000,000)
by joining one or two additional financial institutions or other lenders
approved by the Administrative Agent (which approval will not be unreasonably
withheld or delayed) as Revolving Lenders hereunder, each with a Revolving
Commitment in an amount not less than $5,000,000 (each such additional
financial institution herein a “New Revolving Lender”).  Upon receipt of notice from the Borrower that
one or more New Revolving Lenders have agreed to provide Revolving Commitments
in an aggregate amount up to $10,000,000, then, provided that no Default exists at such time or after
giving effect to the requested increase, Holdings, the Borrower, the
Administrative Agent, and the New Revolving Lender or Lenders shall execute and
deliver an Increased Commitment Supplement (herein so called) in the form
attached hereto as Exhibit D.  As a
result of the fact that all the existing Revolving Lenders shall not have
provided their pro rata portion of the requested increase of the Revolving
Commitments, then after giving effect to the increase, the outstanding
Revolving Loans will not be held 

 

20

 

pro rata in accordance
with the new Revolving Commitments.  In
order to remedy the foregoing, on the effective date of the Increased
Commitment Supplement delivered under this definition, the Revolving Lenders
shall make advances among themselves (either directly or through the
Administrative Agent) so that after giving effect thereto the Revolving Loans
will be held by the Revolving Lenders pro rata in accordance with their
respective Applicable Percentages.  Any
advances made under the provisions of this definition by a Revolving Lender
shall be deemed to be a purchase of a corresponding amount of the Revolving
Loans of the Revolving Lender or Lenders who shall receive such advances.

 

“Revolving Exposure” means, with respect to any
Lender at any time, the sum of the outstanding principal amount of such Lender’s
Revolving Loans and its Revolving L/C Exposure and Swingline Exposure at
such time.

 

“Revolving L/C Disbursements” means a payment
made by the Issuing Bank pursuant to a Revolving Letter of Credit.

 

“Revolving L/C Exposure” means, at any time,
the Dollar Equivalent amount of the sum of (a) the aggregate undrawn
amount of all outstanding Revolving Letters of Credit at such time plus (b) the
aggregate amount of all Revolving L/C Disbursements that have not yet been
reimbursed by or on behalf of the Borrower at such time.  The Revolving L/C Exposure of any Revolving
Lender at any time shall be its Applicable Percentage of the total Revolving
L/C Exposure at such time.

 

“Revolving Lender” means a Lender with a
Revolving Commitment or, if the Revolving Commitments have terminated or
expired, a Lender with Revolving Exposure.

 

“Revolving Letters of Credit” means any letter
of credit issued under Section 2.05 and determined to be a “Revolving
Letter of Credit” under the terms of Section 2.05(b).

 

“Revolving Loan” means a loan made pursuant to
clause (c) of Section 2.01.

 

“Revolving Maturity Date” means August 3,
2012.

 

“Rights Offering” means the offer made by
Holdings to its existing Equity Interest holders to purchase additional shares
of Holdings’ common stock for cash or in exchange for the cancellation of Take
Back Notes as described in Holdings’ Offering Memorandum relating thereto.

 

“S&P” means Standard & Poor’s
Rating Services, a division of the McGraw Hill Companies.

 

“Secured Parties” means the Administrative
Agent, the Lenders, each Affiliate of a Lender who is owed any portion of the
Obligations and Deutsche Bank AG as long as it is owed any Swap Obligations.

 

“Security Agreement” means the Security
Agreement among the Borrower, Holdings, and the Subsidiary Loan Parties in
substantially the form attached hereto as Exhibit E.

 

“Security Documents” means the Guaranty
Agreement, the Security Agreement, the Mortgages and each other security
agreement or other instrument or document executed and delivered pursuant to Section 5.12
or 5.13 to secure any of the Obligations.

 

“SK Holding” means SK Holding Company, Inc.,
a Delaware corporation.

 

“SK Preferred Stock” means SK Holding’s Series A
preferred stock.

 

“Statutory Reserve Rate” means 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 

 

21

 

reserve percentages
(including any marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the Board to which the Administrative Agent is
subject 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 and Synthetic L/C 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” means, with respect to any Person
(the “parent”) at any date, any corporation, limited liability company,
partnership, association or other entity the accounts of which would be
consolidated with those of the parent in the parent’s consolidated financial
statements if such financial statements were prepared in accordance with GAAP
as of such date, as well as any other corporation, limited liability company,
partnership, association or other entity  of which securities or other
ownership interests representing more than 50% of the equity or more than 50%
of the ordinary voting power or, in the case of a partnership, more than 50% of
the general partnership interests are, as of such date, owned, controlled or
held.

 

“Subsidiary” means any subsidiary of Holdings.

 

“Subsidiary Loan Party” means all the
Subsidiaries other than The ArmaKleen Company, Elgint Corp, SK Europe, Inc.
and the Excluded Foreign Subsidiaries.

 

“Swap Agreement” means 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 Holdings or
the Subsidiaries shall be a Swap Agreement.

 

“Swap Obligations” means (a) all
obligations, indebtedness, and liabilities of Holdings and the Subsidiaries, or
any one of them, to any Lender or any Affiliate of any Lender, arising pursuant
to any Swap Agreements entered into by such Lender or Affiliate with Holdings
or any Subsidiary, whether now existing or hereafter arising, whether direct,
indirect, related, unrelated, fixed, contingent, liquidated, unliquidated,
joint, several, or joint and several, including, without limitation, all fees,
costs, and expenses (including attorneys’ fees and expenses) provided for in
such Swap Agreements and (b) all obligations, indebtedness, and
liabilities of Borrower to Deutsche Bank AG arising pursuant to the interest
rate swap transactions governed by that certain Confirmation dated April 22,
2005 between Borrower and Deutsche Bank AG (as the same exist on the Effective
Date, without giving effect to any amendment or other modification thereto for
purposes of this definition unless amended with the consent of the Administrative
Agent, which consent will not be unreasonably withheld or delayed), whether
such obligations, indebtedness, and liabilities are now existing or hereafter
arising, whether direct, indirect, related, unrelated, fixed, contingent,
liquidated, unliquidated, joint, several, or joint and several, including,
without limitation, all fees, costs, and expenses (including attorneys’ fees
and expenses) provided for in such Confirmation and Master Agreement.

 

“Swingline Exposure” means, at any time, the
aggregate principal amount of all Swingline Loans outstanding at such
time.  The Swingline Exposure of any
Lender at any time shall be its Applicable Percentage of the total Swingline
Exposure at such time.

 

22

 

“Swingline Lender” means JPMCB, in its capacity
as the lender of Swingline Loans hereunder.

 

“Swingline Loan” means a loan made pursuant to Section 2.04.

 

“Synthetic Exposure”
means, with respect to any Synthetic L/C Lender at any time, the sum of the
outstanding principal amount of such Lender’s Synthetic L/C Loans and its
Synthetic L/C Exposure at such time.  The
Synthetic Exposure of any Synthetic Lender at any time shall be its Applicable
Percentage of the total Synthetic Exposure at such time.

 

“Synthetic L/C Loans” means a loan made
pursuant to clause (a) of Section 2.01.

 

“Synthetic L/C Commitment” means, with respect
to each Lender, the commitment, if any, of such Lender to make Synthetic L/C
Loans hereunder, expressed as an amount representing the maximum principal
amount of the Synthetic L/C Loans to be made by such Lender hereunder, as such
commitment may be (a) reduced from time to time pursuant to Section 2.08,
(b) increased or established from time to time pursuant to an Increased
Commitment Supplement, and (c) reduced or increased from time to time
pursuant to assignments by or to such Lender pursuant to Section 10.04.  The initial amount of each Lender’s Synthetic
L/C Commitment is set forth on Schedule 2.01, or in the Assignment and
Assumption pursuant to which such Lender shall have assumed its Synthetic L/C
Commitment or in the Increased Commitment Supplement pursuant to which such
Lender became a Synthetic L/C Lender, as applicable.  The initial aggregate amount of the Lenders’
Synthetic L/C Commitments on the Effective Date is $65,000,000.

 

“Synthetic L/C Disbursements” means a payment
made by the Issuing Bank pursuant to a Synthetic Letter of Credit.

 

“Synthetic L/C Exposure” means, at any time,
the Dollar Equivalent amount of the sum of (a) the aggregate undrawn
amount of all outstanding Synthetic Letters of Credit at such time plus (b) the
aggregate amount of all Synthetic L/C Disbursements that have not yet been
reimbursed by or on behalf of the Borrower at such time.  The Synthetic L/C Exposure of any Synthetic
L/C Lender at any time shall be its Applicable Percentage of the total
Synthetic L/C Exposure at such time.

 

“Synthetic L/C Lender” means a Lender with a
Synthetic L/C Commitment or, if the Synthetic  L/C Commitments have
terminated or expired, a Lender with Synthetic Exposure.

 

“Synthetic Letters of Credit” means any letter
of credit issued under Section 2.05 and determined to be a “Synthetic
Letter of Credit” under the terms of Section 2.05(b).

 

“Take Back Notes” means the notes issued by
Borrower and Safety-Kleen Oil Recovery Company pursuant to that certain Term
Note Agreement dated as of December 24, 2003 among Holdings, SK Holding,
certain other Subsidiaries and BNY Asset Solutions LLC as agent.

 

“Target” means a Person who is to be acquired
or whose assets are to be acquired in a transaction permitted by Section 6.04.

 

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

 

“Term B Commitment” means, with respect to
each Lender, the commitment, if any, of such Lender to make a Term B Loan
hereunder on the Effective Date, expressed as an amount representing the
maximum principal amount of the Term B Loan to be made by such Lender
hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.08, (b) increased or established 

 

23

 

from time to time
pursuant to an Increased Commitment Supplement, and (c) reduced or increased
from time to time pursuant to assignments by or to such Lender pursuant to Section 10.04.  The initial amount of each Lender’s Term B
Commitment is set forth on Schedule 2.01, or in the Assignment and
Assumption pursuant to which such Lender shall have assumed its Term B
Commitment or in the Increased Commitment Supplement pursuant to which such
Lender became a Lender, as applicable. 
The initial aggregate amount of the Lenders’ Term B Commitments on the
Effective Date is $230,000,000.

 

“Term B Lender” means a Lender with a Term
B Commitment or an outstanding Term B Loan.

 

“Term B Loan” means a loan made pursuant
to clause (b) of Section 2.01.

 

“Term Loan Maturity Date” means August 2,
2013.

 

“Term Loans” means Term B Loans and the
Incremental Term Loans.

 

“Total Return” has the meaning assigned to such
term in Section 2.20(f).

 

“Transactions” means the consummation of the
Rights Offering on the Effective Date, the repayment in full of the Take Back
Notes and the Existing Credit Facility on the Effective Date, the redemption in
full of all SK Preferred Stock and the execution, delivery and performance by
each Loan Party of the Loan Documents to which it is to be a party, the
borrowing of Loans, the use of the proceeds thereof and the issuance of Letters
of Credit hereunder.

 

“Type”, when used in reference to any Loan or
Borrowing, refers to whether the rate of interest on such Loan, or on the Loans
comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate
or the Alternate Base Rate.

 

“Withdrawal Liability” means liability to a
Multiemployer Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan, as such terms are defined in Part I of Subtitle E
of Title IV of ERISA.

 

“Wholly-Owned Subsidiary” shall mean, as to any
Person, (i) any corporation 100% of whose capital stock (other than
director’s qualifying shares and/or other nominal amounts of shares required by
applicable law to be held by Persons other than such Person) is at the time
owned by such Person and/or one or more Wholly-Owned Subsidiaries of such
Person and (ii) any partnership, association, joint venture or other
entity in which such Person and/or one or more Wholly-Owned Subsidiaries of
such Person has a 100% Equity Interest at such time.

 

Section 1.02.                             Classification of Loans and Borrowings. 
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”).

 

Section 1.03.                             Terms Generally. 
The definitions of terms herein shall apply equally to 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”.  The word “will” shall be construed to have
the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document
herein shall be construed as referring to such agreement, instrument or other
document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or 

 

24

 

modifications set forth herein), (b) any reference herein to any
Person shall be construed to include such Person’s successors and assigns, (c) the
words “herein”, “hereof” and “hereunder”, and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular
provision hereof, (d) all references herein to Articles, Sections,
Exhibits and Schedules shall be construed to refer to Articles and Sections of,
and Exhibits and Schedules to, this Agreement and (e) the words “asset”
and “property” shall be construed to have the same meaning and effect and to
refer to any and all tangible and intangible assets and properties, including
cash, securities, accounts and contract rights.

 

Section 1.04.                             Accounting Terms; GAAP. 
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 the Borrower 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.

 

ARTICLE II.

 

The Credits

 

Section 2.01.                             Commitments. 
Subject to the terms and conditions set forth herein, each Lender
agrees:

 

(a)                                  Synthetic L/C Loans. 
To make loans to the Borrower at any time and from time to time during
the period commencing on the date hereof and ending on the Term Loan Maturity
Date in an aggregate principal amount that will not result in such Lender’s
Synthetic Exposure exceeding such Lender’s Synthetic L/C Commitment; provided
that each Synthetic L/C Loan of a Lender shall be funded solely from amounts on
deposit in its Credit Linked Account as provided in Section 2.05(e)(i)(C)(1);

 

(b)                                 Term B Loans. 
To make a loan to the Borrower on the Effective Date in a principal
amount not exceeding its Term B Commitment; and

 

(c)                                  Revolving Loans. 
To make loans to the Borrower from time to time during the Revolving
Availability Period in an aggregate principal amount that will not result in
such Lender’s Revolving Exposure exceeding such Lender’s Revolving Commitment.

 

Within the
foregoing limits and subject to the terms and conditions set forth herein, the
Borrower may borrow, prepay and reborrow Revolving Loans and Synthetic L/C
Loans.  Amounts repaid in respect of Term
Loans may not be reborrowed.

 

Section 2.02.                             Loans and Borrowings.

 

(a)                                  Loans Made Ratably. 
Each Loan (other than a Swingline Loan) shall be made as part of a
Borrowing consisting of Loans of the same Class and Type made by the
Lenders ratably in accordance with their respective Commitments of the
applicable Class.  The failure of any
Lender to make any Loan required to be made by it shall not relieve any other
Lender of its obligations hereunder; provided that the Commitments of the
Lenders are several and no Lender shall be responsible for any other Lender’s
failure to make Loans as required.

 

25

 

(b)                                 Initial Type of Loans. 
Subject to Section 2.14, each Revolving Borrowing and Term
Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans or any
combination thereof as the Borrower may request in accordance herewith or, with
respect to Incremental Term borrowings, in accordance with the terms of the
applicable Increased Commitment Supplement; provided that all Borrowings
made on the Effective Date must be made as ABR Borrowings and an Increased
Commitment Supplement may provide that the Incremental Term Borrowings governed
thereby will accrue interest on the basis set forth therein.  Each Swingline Loan shall be an ABR Loan and
each Synthetic L/C Loan shall bear interest as provided in Section 2.13(c).  Each Lender at its option may make any
Eurodollar Loan or Synthetic L/C 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 Borrower to
repay such Loan in accordance with the terms of this Agreement.

 

(c)                                  Minimum Amounts; Limitation on Eurodollar
Borrowings.  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 $100,000 and not less than $1,000,000.  At the time that each ABR Revolving Borrowing
is made, such Borrowing shall be in an aggregate amount that is an integral
multiple of $100,000 and not less than $1,000,000; provided that an ABR
Revolving Borrowing may be in an aggregate amount that is equal to the entire
unused balance of the total Revolving Commitments or that is required to
finance the reimbursement of a Revolving L/C Disbursement as contemplated by Section 2.05(f)(ii).  Each Synthetic L/C Borrowing will be in an
aggregate amount that is required to finance the reimbursement of a Synthetic
L/C Disbursement as contemplated by Section 2.05(f)(i).  Each Swingline Loan shall be in an amount
that is an integral multiple of $50,000 and not less than $100,000 or in an
amount that is required to finance the reimbursement of a Revolving L/C
Disbursement as contemplated by Section 2.05(f)(ii).  Borrowings of more than one Type and Class may
be outstanding at the same time; provided that there shall not at any
time be more than a total of ten Eurodollar Borrowings outstanding.

 

(d)                                 Limitation on Interest Periods. 
Notwithstanding any other provision of this Agreement, the Borrower
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
Revolving Maturity Date or Term Loan Maturity Date, as applicable.

 

Section 2.03.                             Requests for Borrowings. 
To request a Revolving Borrowing or Term B Borrowing, the Borrower shall
notify the Administrative Agent of such request by telephone (a) in the
case of a Eurodollar Borrowing, not later than noon, Houston, Texas time, three
Business Days before the date of the proposed Borrowing or (b) in the case
of an ABR Borrowing, not later than noon, Houston, Texas time, one Business Day
before the date of the proposed Borrowing; provided that the Borrower is not
required to give notice of an automatic ABR Revolving Borrowing that is
used to finance the reimbursement of a Revolving L/C Disbursement under
the terms of Section 2.05(f)(ii). 
Each such telephonic Borrowing Request shall be irrevocable and shall be
confirmed promptly by delivery to the Administrative Agent of a written
Borrowing Request in a form attached hereto as Exhibit  F and signed by
the Borrower which may be delivered by hand, by telecopy or by electronic
communication pursuant to procedures approved by the Administrative Agent.  Each such telephonic and written Borrowing
Request shall specify the following information in compliance with Section 2.02:

 

(i)                                     the aggregate amount of such 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;

 

26

 

(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”; and

 

(v)                                 the location and number of the Borrower’s
account to which funds are to be disbursed, which shall comply with the
requirements of Section 2.06.

 

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 Borrower 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 and promptly after a Revolving L/C
Disbursement is made which is to be financed with an automatic ABR Revolving
Borrowing under Section 2.05(f)(ii), the Administrative Agent shall advise
each Lender of the details of the applicable Borrowing and of the amount of
such Lender’s Loan to be made as part of the applicable Borrowing.  Synthetic L/C Loans shall be made pursuant to
the provisions of Section 2.05(e)(i)(C)(1).  Incremental Term Loans shall be made pursuant
to the terms of the applicable Increased Commitment Supplement.

 

Section 2.04.                             Swingline Loans.

 

(a)                                  Commitment.  Subject to
the terms and conditions set forth herein, the Swingline Lender agrees to make
loans to the Borrower from time to time during the Revolving Availability
Period, in an aggregate principal amount at any time outstanding that will not
result in (i) the aggregate principal amount of outstanding Swingline
Loans exceeding $15,000,000 or (ii) the sum of the total Revolving
Exposures exceeding the total Revolving Commitments; provided that the
Swingline Lender shall not be required to make a Swingline Loan to refinance an
outstanding Swingline Loan.  Within the
foregoing limits and subject to the terms and conditions set forth herein, the
Borrower may borrow, prepay and reborrow Swingline Loans.

 

(b)                                 Borrowing Procedure. 
To request a Swingline Loan, the Borrower shall notify the
Administrative Agent of such request by telephone (confirmed by telecopy), not
later than noon, Houston, Texas time, on the day of a proposed Swingline Loan.  Each such notice shall be irrevocable and
shall specify the requested date (which shall be a Business Day) and amount of
the requested Swingline Loan.  The
Administrative Agent will promptly advise the Swingline Lender of any such
notice received from the Borrower. 
Swingline Loans may be made automatically under the provisions of Section 2.05(f)(ii) to
finance a Revolving L/C Disbursement as provided therein.  The Swingline Lender shall make each
Swingline Loan available to the Borrower by means of a credit to the general
deposit account of the Borrower with the Swingline Lender or by wire transfer,
automated clearing house debit or interbank transfer to such other account,
accounts or Person designated by the Borrower (or, in the case of a Swingline
Loan made to finance the reimbursement of a Revolving L/C Disbursement as
provided in Section 2.05(f)(ii), by remittance to the Issuing Bank) by
3:00 p.m., Houston, Texas time, on the requested date of such Swingline
Loan.

 

(c)                                  Revolving Lender Participation in
Swingline Loans.  The Swingline Lender may by written notice
given to the Administrative Agent not later than 10:00 a.m., Houston,
Texas time, on any Business Day require the Revolving Lenders to acquire
participations on such Business Day in all or a portion of the Swingline Loans
outstanding.  Such notice shall specify
the aggregate amount of Swingline Loans in which Revolving Lenders will
participate.  Promptly upon receipt of
such notice, the Administrative Agent will give notice thereof to each
Revolving Lender, specifying in such notice such Lender’s Applicable Percentage
of such Swingline Loan or Loans.  Each
Revolving Lender hereby absolutely and unconditionally agrees, upon receipt of
notice as provided above, to pay to the Administrative Agent, for the account
of the Swingline Lender, such Lender’s Applicable Percentage of 

 

27

 

such Swingline Loan or Loans.  Each Revolving Lender acknowledges and agrees
that its obligation to acquire participations in Swingline Loans pursuant to
this paragraph is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or reduction or termination of the Commitments, and that each such payment
shall be made without any offset, abatement, withholding or reduction
whatsoever.  Each Revolving Lender shall
comply with its obligation under this paragraph by wire transfer of immediately
available funds, in the same manner as provided in Section 2.06 with
respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis
mutandis, to the payment obligations of the Revolving Lenders), and the
Administrative Agent shall promptly pay to the Swingline Lender the amounts so
received by it from the Revolving Lenders.  The Administrative Agent shall notify the
Borrower of any participations in any Swingline Loan acquired pursuant to this
paragraph, and thereafter payments in respect of such Swingline Loan shall be
made to the Administrative Agent and not to the Swingline Lender.  Any amounts received by the Swingline Lender
from the Borrower (or other party on behalf of the Borrower) in respect of a
Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale
of participations therein shall be promptly remitted to the Administrative
Agent; any such amounts received by the Administrative Agent shall be promptly
remitted by the Administrative Agent to the Revolving Lenders that shall have
made their payments pursuant to this paragraph and to the Swingline Lender, as
their interests may appear; provided that any such payment so remitted shall be
repaid to the Swingline Lender or to the Administrative Agent, as applicable,
if and to the extent such payment is required to be refunded to the Borrower
for any reason.  The purchase of
participations in a Swingline Loan pursuant to this paragraph shall not relieve
the Borrower of any default in the payment thereof.

 

Section 2.05.                             Letters of Credit.

 

(a)                                  General.  Subject to
the terms and conditions set forth herein, the Issuing Bank agrees to issue
letters of credit for the account of the Borrower for use by Holdings or one or
more of the Subsidiaries, payable in dollars, Canadian dollars or in such other
currency that is acceptable to the Issuing Bank at any time and from time to
time until the Term Loan Maturity Date; provided that:  (i) each such letter of credit is in a
form reasonably acceptable to the Administrative Agent and the Issuing Bank; (ii) the
Revolving L/C Exposure shall not exceed $30,000,000; (iii) the total
Revolving Exposures shall not exceed the total Revolving Commitments; (iv) the
Synthetic Exposure shall not exceed the total Synthetic L/C Commitments; and (v) no
Revolving Letter of Credit may be issued hereunder after the Revolving Maturity
Date.

 

(b)                                 Determination of the Type of Letter of
Credit.  Letters
of Credit issued under the terms of Section 2.05(a) shall be
Synthetic Letters of Credit unless after giving effect thereto the Synthetic
Exposure would exceed the total Synthetic L/C Commitments.  Letters of Credit issued under the terms of Section 2.05(a) shall
be Revolving Letters of Credit only to the extent, and in an amount by
which, the aggregate amount of the Synthetic Exposure exceeds the total
Synthetic L/C Commitments.  Drawings under
any Letter of Credit shall be deemed to have been made first under Synthetic
Letters of Credit for so long as, and to the extent that, there are any undrawn
Synthetic Letters of Credit outstanding and thereafter shall be deemed to have
been made under Revolving Letters of Credit. 
Any Letter of Credit that expires or terminates will be deemed to be
first a Revolving Letter of Credit, for so long as, and to the extent that,
there are outstanding Revolving Letters of Credit immediately prior to such
expiration or termination.  To the extent necessary to implement the
foregoing, the identification of a Letter of Credit as a Revolving Letter of
Credit or a Synthetic Letter of Credit may change from time to time and a
portion of a Letter of Credit may be deemed to be a Synthetic Letter of Credit
and the remainder be deemed to be a Revolving Letter of Credit.  Notwithstanding the foregoing, the entire
face amount of any Letter of Credit with an expiration date after the Revolving
Maturity Date shall at all times be deemed to be a Synthetic Letter of Credit.

 

28

 

 

(c)                                  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 Borrower shall hand deliver, telecopy 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
(reasonably in advance of 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 (d) of this Section), the amount of such
Letter of Credit, the currency in which such Letter of Credit is payable, 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
Borrower also shall submit a letter of credit application on the Issuing Bank’s
standard form in connection with any request for a Letter of Credit.  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 Borrower
to, or entered into by the Borrower with, the Issuing Bank relating to any
Letter of Credit, the terms and conditions of this Agreement shall control.

 

(d)                                 Expiration Date. 
Each Letter of Credit shall expire at or prior to the close of business
on the earlier of (i) 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 any Letter of Credit with
a one-year term may provide for the renewal thereof for additional one-year
periods not to extend past the date in clause (ii) below) and (ii) with
respect to Revolving Letters of Credit, the date that is five Business Days
prior to the Revolving Maturity Date and with respect to Synthetic Letters of
Credit, the date that is five Business Days prior to the Term Loan Maturity
Date.

 

(e)                                  Participations.

 

(i)                                     Synthetic Letters of Credit. 
By the issuance of a Synthetic Letter of Credit (or an amendment to a
Synthetic 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 Synthetic L/C Lender, and each Synthetic L/C Lender
hereby acquires from the Issuing Bank, a participation in such Synthetic Letter
of Credit equal to such Lender’s Applicable Percentage of the aggregate Dollar
Equivalent amount available to be drawn under such Synthetic Letter of
Credit.  In consideration and in
furtherance of the foregoing, each Synthetic L/C Lender hereby absolutely and
unconditionally agrees to pay to the Administrative Agent in dollars, for the
account of the Issuing Bank, such Lender’s Applicable Percentage of the Dollar
Equivalent amount of each Synthetic L/C Disbursement made by the
Issuing Bank and not reimbursed by the Borrower on the date due as provided in
paragraph (f)(i) of this Section, or of any reimbursement payment
required to be refunded to the Borrower for any reason; provided that each such
payment obligations of a Synthetic Lender shall be funded solely from
amounts on deposit in its Credit Linked Account as provided in subparagraph (e)(i)(C)(1) of
this Section.  Each Synthetic L/C Lender
acknowledges and agrees that its obligation to acquire participations pursuant
to this paragraph in respect of Synthetic Letters of Credit is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including any amendment, renewal or extension of any Synthetic Letter of Credit
or the occurrence and continuance of a Default or reduction or termination of
the Synthetic L/C Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.

 

(A)                              Establishment of Credit Linked Accounts;
Grant of Security Interest therein.  On or prior
to the Effective Date, the Administrative Agent shall establish an account at
JPMCB in the name of each Synthetic L/C Lender. 
The Administrative Agent shall establish additional Credit Linked
Accounts at JPMCB at such times and in the names of the applicable Synthetic L/C
Lender 

 

29

 

as shall be required pursuant to Section 2.20 or Section 10.04.  Amounts on deposit in each Credit Linked
Account shall be invested, or caused to be invested, by the Administrative
Agent as set forth in subparagraph (e)(i)(D) below, and no Person
(other than the Administrative Agent or any of its sub-agents) shall have the
right to make any withdrawals from any Credit Linked Account or exercise any
other right or power with respect thereto, except as expressly provided in
subparagraph (e)(i)(C) below. 
Without limiting the generality of the foregoing, each party hereto
acknowledges and agrees that no amount on deposit at any time in any Credit
Linked Account shall be the property of any Loan Party, shall constitute “Collateral”
under the Loan Documents, or shall otherwise be available in any manner to
satisfy any Obligation of any Loan Party under the Loan Documents.  However, the Credit Linked Account of a
Synthetic L/C Lender and all moneys and other investment property held therein
is provided to secure the funding obligation of such Synthetic L/C Lender to
the Issuing Bank under Section 2.05(e)(i) and in furtherance of the
foregoing, each Synthetic L/C Lender hereby grants to the Administrative Agent
a security interest in its Credit Linked Account and all moneys and investment
property held therein or pursuant thereto to secure its obligations under Section 2.05(e)(i).  Such security interests are perfected by
control.  Each Synthetic L/C Lender
represents and warrants to the Issuing Lender and the Administrative Agent that
its Credit Linked Account and all moneys and investment property held therein
or pursuant thereto are not subject to any Lien.  Each Synthetic L/C Lender agrees that it will
not grant any Lien in its Credit Linked Account nor in any moneys and
investment property held therein or pursuant thereto except as provided in this
Section and it will not transfer or assign any of its right, title and
interest in or to such property except in accordance with the terms of Section 10.04.

 

(B)                                Deposits into
Credit Linked Accounts.  The following amounts will be
deposited in each Credit Linked Account at the following times:

 

(1)                                  On the Effective Date. 
On the Effective Date, each Synthetic L/C Lender shall deposit in its
Credit Linked Account an amount in dollars equal to such Synthetic L/C Lender’s
Synthetic L/C Commitment.  All funding
obligations of a Synthetic L/C Lender with respect to any Synthetic L/C Loans
and all obligations of a Synthetic L/C Lender to repay the Issuing Bank with
respect to any Synthetic L/C Disbursement not reimbursed by the Borrower, shall
be satisfied upon such Synthetic L/C Lender’s making such deposit in its Credit
Linked Account;

 

(2)                                  Synthetic Loan Payments. 
On any date on which the Administrative Agent receives any payment for
the account of any Synthetic L/C Lender with respect to the principal amount of any of
its Synthetic L/C Loans prior to the date that the Credit Linked Accounts are
closed under subparagraph (e)(i)(C)(6) of this Section, the Administrative
Agent shall deposit such amount in the Credit Linked Account of such Synthetic
L/C Lender;

 

(3)                                  Synthetic Letter of Credit Reimbursement
Payments.  On any date on which the Administrative Agent
or the Issuing Bank receives any reimbursement payment from the Borrower with
respect to amounts withdrawn from any Credit Linked Account to reimburse the
Issuing Bank with respect to any payment made by it under any Synthetic Letter
of Credit prior to the date that the Credit Linked Accounts are closed under
subparagraph (e)(i)(C)(6) of this Section, the Administrative Agent
or the Issuing Bank shall deposit in each Credit Linked Account the portion of
such reimbursement payment to be deposited therein, in accordance with Section 2.05(f);

 

(4)                                  Assignments of Synthetic L/C Commitment. 
Concurrently with the effectiveness of any assignment by any Synthetic
L/C Lender of all or any portion of its Synthetic L/C Commitment, the
Administrative Agent shall transfer 

 

30

 

into
the Credit Linked Account of the assignee Synthetic L/C Lender the
corresponding portion of the amount on deposit in the assignor’s Credit Linked
Account in accordance with Section 10.4;

 

(5)                                  On the Effective Date of an Increased
Commitment Supplement.  On the effective date of an
Increased Commitment Supplement that increases a Synthetic L/C Commitment of a
Lender, each Lender that shall then be increasing its Synthetic L/C Commitment
or providing a new Synthetic L/C Commitment shall deposit in its Credit Linked
Account an amount in dollars equal to the amount by which such Synthetic L/C
Lender’s Synthetic L/C Commitment has increased or been established.  All funding obligations of a Synthetic L/C
Lender arising under such increase or new Synthetic L/C Commitment with respect
to any Synthetic L/C Loan and all obligations of a Synthetic L/C Lender arising
under such increase or new Synthetic L/C Commitment to repay the Issuing Bank
with respect to any draw paid by it under any Synthetic Letter of Credit and
not reimbursed by the Borrower, shall be satisfied upon such Synthetic L/C
Lender’s making such deposit in its Credit Linked Account; and

 

(6)                                  Deposit of Investment Return. 
The return earned under Section 2.05(e)(i)(D) for the first
two months of each calendar quarter by a Synthetic L/C Lender shall be deposited by
the Administrative Agent in the Credit Linked Account of the applicable
Synthetic L/C Lender as provided for in such Section.

 

(C)                                Withdrawals
from and Closing of Credit Linked Accounts.  Amounts on deposit in each Credit Linked Account
shall be withdrawn and distributed (or transferred, in the case of clause (3) below)
as follows:

 

(1)                                  Funding of Synthetic L/C Disbursements;
Creation of Synthetic L/C Loans.  On any date
on which the Issuing Bank is to be reimbursed by the Synthetic L/C Lenders for
any payment made by the Issuing Bank with respect to a Synthetic L/C Letter of
Credit under Section 2.05(f)(i), the Administrative Agent shall withdraw
from each Credit Linked Account an amount equal to the relevant Synthetic L/C
Lender’s Applicable Percentage of the Dollar Equivalent amount of such
unreimbursed payment, and make such amount available to the Issuing Bank in
accordance with Section 2.05(f), and the amount so withdrawn shall be
deemed to be a Synthetic L/C Loan made on such date;

 

(2)                                  Reduction of the Synthetic L/C
Commitments.  Concurrently with each optional or mandatory
reduction or termination of the total Synthetic L/C Commitments pursuant to Section 2.08
or Section 2.11(e)(ii), the Administrative Agent shall withdraw from each
Credit Linked Account, and pay to the relevant Synthetic L/C Lender, an amount
equal to such Synthetic L/C Lender’s Applicable Percentage of the amount of the
optional or mandatory reduction of the total Synthetic L/C Commitments;

 

(3)                                  Assignment of a Synthetic L/C Commitment. 
Concurrently with the effectiveness of any assignment by any Synthetic
L/C Lender of all or any portion of its Synthetic L/C Commitment, the
corresponding portion of the amount on deposit in the assignor’s Credit Linked
Account shall be transferred from the assignor’s Credit Linked Account to the
assignee’s Credit Linked Account in accordance with 

 

31

 

Section 10.04
and, if required by Section 10.04, the Administrative Agent shall close
such assignor’s Credit Linked Account;

 

(4)                                  Settlement Date. 
Promptly following the earlier to occur of the Term Loan Maturity Date
or the date of the acceleration of the Loan Obligations in accordance with Section 8.01,
the Administrative Agent shall withdraw from each Credit Linked Account and pay
to such Synthetic L/C Lender an amount equal to the applicable Synthetic L/C
Lender’s Applicable Percentage of the amount by which aggregate amounts then on
deposit in the Credit Linked Accounts exceed the sum of the Synthetic L/C
Exposure that is denominated in dollars plus 102% of the Synthetic L/C Exposure
which is denominated in currencies other than dollars;

 

(5)                                  Withdrawal of Investment Return. 
The return deposited in the Credit Linked Account of a Synthetic L/C
Lender monthly under Section 2.05(e)(i)(D), shall be withdrawn quarterly
and paid to the applicable Synthetic L/C Lender as provide for in Section 2.05(e)(i)(D);
and

 

(6)                                  Final Distribution. 
Upon the reduction of the total Synthetic L/C Commitments to $0 and the
expiration or cancellation of all outstanding Synthetic Letters of Credit, the
Administrative Agent shall withdraw from each Credit Linked Account, and pay to
the relevant Synthetic L/C Lender, the aggregate amount then on deposit
therein, and shall close each such Credit Linked Account.

 

(D)                               Payment of
Investment Return. 
The Administrative Agent shall pay to each Synthetic L/C Lender a rate
per annum on the amount on deposit in the Credit Linked Account of such
Synthetic L/C Lender equal to:

 

(i)                                     either:

 

(x)                                   the one month London interbank offered rate as determined by the
Administrative Agent on such day (or if such day was not a Business Day, the
first Business Day immediately preceding such day) based on rates for deposits
in dollars as set forth on the Bloomberg L.P. page BTMM (or on any
successor or substitute page of Bloomberg
L.P. or any successor to or substitute for Bloomberg L.P. providing rate quotations comparable to those
currently provided on such page, 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) or

 

(y)                                 if the
circumstances giving rise to the notice delivered under Section 2.14 are
in effect with respect to the one month LIBO Rate, the rate determined pursuant
to Section 2.14 (the rate determined pursuant to this clause (i),
herein the “Benchmark LIBOR Rate”) minus

 

(ii)                                  0.15% (based on
a 365 or 366 day year, as the case may be).

 

The Benchmark
LIBOR Rate will be reset on each Business Day. 
Such return accrued during any of the first two months of any calendar
quarter will be deposited in each Synthetic L/C Lender’s Credit Linked Account
by the Administrative Agent on the first Business Day of the following calendar
month.  With respect to each calendar
quarter, the amount of such return as calculated for the first two months of
such calendar quarter which is on deposit in the Credit Linked Account of each
Synthetic L/C Lender shall be 

 

32

 

withdrawn
therefrom and paid to each applicable Synthetic L/C Lender and the amount of
such return accrued for the last month of such calendar quarter shall be paid
to the applicable Synthetic L/C Lender in arrears, in each case, on the third
Business Day following the last day of each calendar quarter.  The amount of all returns accrued and unpaid
under this Section shall also be payable by the Administrative Agent to
each Synthetic L/C Lender entitled thereto on the Term Loan Maturity Date and
the date that the Credit Linked Accounts are closed under
subparagraphs (e)(i)(C)(3) and (6) of this Section.  No Loan Party shall have any obligation under
or in respect of the provisions of this Section 2.05(e)(i)(D) and
without limiting the generality of the foregoing, the Borrower shall not be
liable for any losses due to or misappropriation of any (i) return due to
the Administrative Agent’s failure to achieve the return thereon pursuant to
this Section or to pay all or any portion of such return to any Synthetic
L/C Lender or (ii) amount on deposit in any Credit Linked Account (it
being understood and agreed for greater certainty that this provision shall not
limit any obligation of the Borrower hereunder to repay any Synthetic L/C
Loan).  The Administrative Agent may
perform any and all its duties and exercise its rights and powers contemplated
by this Section 2.05(e) by or through one or more sub-agents appointed
by it (which may include any of its Affiliates), and any such sub-agent shall
be entitled to the benefit of all the provisions of Article IX of this
Agreement.  The parties hereto
acknowledge that on or prior to the Effective Date, the Administrative Agent
has engaged JPMorgan Chase Institutional Services to act as its sub-agent for
purposes of this Section 2.05(e), and that in such capacity JPMorgan Chase
Institutional Services shall be entitled to the benefit of all the provisions
of Article IX of this Agreement.

 

(ii)                                  Revolving Letters of Credit. 
By the issuance of a Revolving Letter of Credit (or an amendment to a
Revolving 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 Revolving Lender, and each Revolving Lender hereby
acquires from the Issuing Bank, a participation in such Revolving Letter of
Credit equal to such Lender’s Applicable Percentage of the aggregate Dollar
Equivalent amount available to be drawn under such Revolving Letter of
Credit.  In consideration and in
furtherance of the foregoing, each Revolving Lender hereby absolutely and
unconditionally agrees to pay to the Administrative Agent in dollars, for the
account of the Issuing Bank, such Lender’s Applicable Percentage of the Dollar
Equivalent amount of each Revolving L/C Disbursement made by the Issuing Bank
and not reimbursed by the Borrower on the date due as provided in
paragraph (f) of this Section, or the Dollar Equivalent amount of any
reimbursement payment required to be refunded to the Borrower for any
reason.  Each Revolving Lender
acknowledges and agrees that its obligation to acquire participations pursuant
to this paragraph in respect of Revolving Letters of Credit is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including any amendment, renewal or extension of any Revolving 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.

 

(f)                                    Reimbursement. 
If the Issuing Bank shall make any L/C Disbursement in respect of a
Letter of Credit, the Issuing Bank shall give the Borrower notice thereof and
the Borrower shall reimburse such L/C Disbursement by paying to the
Administrative Agent in dollars an amount equal to the Dollar Equivalent amount
of such L/C Disbursement not later than 12:00 noon, Houston, Texas
time, on the date that such L/C Disbursement is made, if the Borrower
shall have received notice of such L/C Disbursement prior to 10:00 a.m.,
Houston, Texas time, on such date, or, if such notice has not been received by
the Borrower prior to such time on such date, then not later than
12:00 noon, Houston, Texas time, on (i) the Business Day that the
Borrower receives such notice, if such notice is received prior to 10:00 a.m.,
Houston, Texas time, on the day of receipt, or (ii) the Business Day
immediately following the day that the Borrower receives such notice, if such
notice is not received prior to such time on the day of receipt; provided
that:

 

33

 

(i)                                     Synthetic L/C Disbursement. 
if such L/C Disbursement is a Synthetic L/C Disbursement and the
Borrower has not reimbursed such L/C Disbursement by the applicable date and
time as determined above, such payment shall be financed with an Synthetic L/C
Borrowing in an equivalent amount pursuant to Section 2.05(e)(i)(C)(1) and,
to the extent so financed, the Borrower’s obligation to make such payment shall
be discharged and replaced by the resulting Synthetic L/C Loan; and

 

(ii)                                  Revolving L/C Disbursement. 
if such L/C Disbursement is a Revolving L/C Disbursement then,
provided that no Default then exists and subject to compliance with the
conditions to borrowing set forth herein, such payment shall, without the need
for a request from the Borrower, be financed with a Swingline Loan in an
equivalent amount or, if there is not sufficient availability under Section 2.04(a)(i) to
make such Swingline Loan, financed with an ABR Revolving Borrowing in an
equivalent amount without the need for a request from the Borrower.  To the extent so financed, the Borrower’s
obligation to make such payment shall be discharged and replaced by the
resulting ABR Revolving Borrowing or Swingline Loan.

 

If the Borrower
fails to make a payment to reimburse a Revolving L/C Disbursement when due and
such amount is not automatically financed pursuant to the foregoing clause
(ii), the Administrative Agent shall notify each Revolving Lender of the
applicable Revolving L/C Disbursement, the payment then due from the
Borrower in respect thereof and such Lender’s Applicable Percentage of the
Dollar Equivalent amount thereof. 
Promptly following receipt of such notice, each Revolving Lender shall
pay to the Administrative Agent its Applicable Percentage of the payment then
due from the Borrower, in the same manner as provided in Section 2.06 with
respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis
mutandis, to the payment obligations of the Revolving Lenders), and the
Administrative Agent shall promptly pay to the Issuing Bank the amounts so
received by it from the Revolving Lenders. Any payment made by a Revolving
Lender pursuant to this paragraph to reimburse the Issuing Bank for any
Revolving L/C 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 Borrower of its obligation to reimburse such
Revolving L/C Disbursement. 
Promptly following receipt by the Administrative Agent of any payment
from the Borrower 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 and if to any
Synthetic L/C Lender, to such Lender’s Credit Linked Account in accordance with
Section 2.05(e)(i)(B)(3).  A
reimbursement or participation obligations with respect to a Letter of Credit
issued in a currency other than dollars shall be discharged by the payment in
dollars of the Dollar Equivalent amount thereof only to the extent that
following receipt by the Issuing Bank of the payment in dollars, the Issuing
Bank may in accordance with normal banking procedures purchase the applicable
amount of the other currency with the dollars so received.  The Borrower, as a separate obligation,
agrees to indemnify the Issuing Bank against, and to pay the Issuing Bank on
demand in dollars, the amount (if any) by which the sum originally due to the
Issuing Bank in a currency other than dollars exceeds the amount of such
currency so purchased.

 

(g)                                 Obligations Absolute. 
The Borrower’s obligation to reimburse L/C Disbursements as provided in
paragraph (f) 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, 

 

34

 

that might, but for the provisions of this Section,
constitute a legal or equitable discharge of, or provide a right of setoff
against, the Borrower’s 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 Borrower to the extent of any
direct damages (as opposed to consequential damages, claims in respect of which
are hereby waived by the Borrower to the extent permitted by applicable law)
suffered by the Borrower that are caused by the Issuing Bank’s gross negligence
or willful misconduct (as finally determined by a court of competent
jurisdiction).  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 make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.

 

(h)                                 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 Borrower by telephone (confirmed by
telecopy) of such demand for payment and whether the Issuing Bank has made or
will make an L/C Disbursement thereunder; provided that any failure
to give or delay in giving such notice shall not relieve the Borrower of its
obligation to reimburse the Issuing Bank and the applicable Lenders with
respect to any such L/C Disbursement.

 

(i)                                     Interim Interest. 
If the Issuing Bank shall make any L/C Disbursement, then, unless
the Borrower shall reimburse such L/C Disbursement in full on the date
such L/C Disbursement is made (including through the making of Loans), the
unpaid amount thereof shall bear interest, for each day from and including the
date such L/C Disbursement is made to but excluding the date that the
Borrower reimburses such L/C Disbursement, at the rate per annum then
applicable to ABR Revolving Loans; provided that, if the Borrower
fails to reimburse such L/C Disbursement when due pursuant to
paragraph (f) of this Section, then Section 2.13(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 Revolving Lender pursuant to
paragraph (f) of this Section to reimburse the Issuing Bank
shall be for the account of such Lender to the extent of such payment.

 

(j)                                     Replacement of the Issuing Bank. 
The Issuing Bank may be replaced at any time by written agreement among
the Borrower, the Administrative Agent, the replaced Issuing Bank and the
successor Issuing Bank.  In addition, if
the Borrower is required to pay any additional amount to the Issuing Bank
pursuant to Sections 2.15 or 2.17, or if the Issuing Bank defaults in its
obligation hereunder or if the Issuing Bank has become insolvent and its assets
become subject to a receiver, liquidator, trustee, custodian or other officer
having similar powers, then the Borrower may, at its sole expense and effort,
upon notice to such Issuing Bank and the Administrative Agent, require the
replacement of the Issuing Bank; provided that (i) the Borrower
shall have received the prior written consent of the Administrative Agent,
which consent shall not unreasonably be withheld and (ii) in the case of
any replacement resulting from a claim for compensation under Section 2.15
or payments required to be made pursuant to Section 2.17, such replacement
would result in a reduction in such compensation or payments in the
future.  The Issuing Bank shall not be
required to be replaced if, prior thereto, as a result of a waiver or 

 

35

 

otherwise, the circumstances entitling the Borrower to
require such replacement cease to apply. 
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 Borrower shall pay all
unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.12(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.

 

(k)                                  Cash Collateralization. 
If any Event of Default shall occur and be continuing, on the Business
Day that the Borrower receives notice from the Administrative Agent or the
Required Lenders (or, if the maturity of the Loans has been accelerated,
Lenders with L/C Exposure representing greater than 50% of the total
L/C Exposure) demanding the deposit of cash collateral pursuant to this
paragraph, the Borrower shall deposit dollars in an account with the
Administrative Agent, in the name of the Administrative Agent and for the
benefit of the Lenders, an amount in cash equal to the sum of the L/C Exposure
as of such date that is denominated in dollars plus 102% of the L/C Exposure as
of such date which is denominated in currencies other than dollars plus any
accrued and unpaid interest thereon; 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 Borrower described in clause (h) or (i) of Section 8.01.  Each such deposit shall be held by the
Administrative Agent as collateral for the payment and performance of the
Obligations.  The Administrative Agent
shall have exclusive dominion and control, including the exclusive right of
withdrawal, over such account.  Other than
any interest earned on the investment of such deposits, which investments shall
be made at the option and sole discretion of the Administrative Agent and at
the Borrower’s risk and expense, such deposits shall not bear interest.  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 L/C 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 Borrower for the
L/C Exposure at such time or, if the maturity of the Loans has been
accelerated (but subject to the consent of Lenders with L/C Exposure  representing greater than 50% of the total
L/C Exposure), be applied to satisfy other Obligations.  If the Borrower is 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, together with
the investment returns thereon) shall be returned to the Borrower within three
Business Days after all Events of Default have been cured or waived, as
determined by the Administrative Agent.

 

Section 2.06.                             Funding of Borrowings.

 

(a)                                  By Lenders.  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 12:00 noon, Houston, Texas
time, to the account of the Administrative Agent most recently designated by it
for such purpose by notice to the Lenders; provided that Swingline Loans
shall be made as provided in Section 2.04 and Synthetic L/C Loans shall be
made as provided in Section 2.05(e)(i)(C)(1).  The Administrative Agent will make such Loans
available to the Borrower by promptly crediting the amounts so received, in
like funds, to an account of the Borrower maintained with the Administrative
Agent or by wire transfer, automated clearing house debit or interbank transfer
to such other account, accounts or Persons designated by the Borrower in the
applicable Borrowing Request; provided that ABR Revolving Loans
made to finance the 

 

36

 

reimbursement of an L/C Disbursement as provided
in Section 2.05(e) shall be remitted by the Administrative Agent to
the Issuing Bank and Synthetic L/C Loans shall be remitted by the
Administrative Agent to the Issuing Bank as provided in Section 2.05(e)(i)(C)(1).

 

(b)                                 Fundings Assumed Made. 
Unless the Administrative Agent shall have received notice from a Lender
prior to 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 and
may, in reliance upon such assumption, make available to the Borrower 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, then the applicable Lender and the Borrower
severally agree to pay to the Administrative Agent forthwith on demand such
corresponding amount with interest thereon, for each day from and including the
date such amount is made available to the Borrower 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 Borrower, 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 and the Borrower’s
repayment obligation under the previous sentence shall cease.

 

Section 2.07.                             Interest Elections.

 

(a)                                  Conversion and Continuation. 
Each Revolving Borrowing and Term 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
Borrower 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.  The Borrower 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 holding the Loans
comprising such Borrowing, and the Loans comprising each such portion shall be
considered a separate Borrowing.  This Section shall
not apply to Swingline Borrowings or to Synthetic L/C Borrowings, which may not
be converted or continued.

 

(b)                                 Delivery of Interest Election Request. 
To make an election pursuant to this Section, the Borrower shall notify
the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower
were requesting a Revolving 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 delivery to the
Administrative Agent of a written Interest Election Request in the form of Exhibit G
hereto and signed by the Borrower which may be delivered by hand, by telecopy
or by electronic communication pursuant to procedures approved by the
Administrative Agent.

 

(c)                                  Contents of Interest Election Request. 
Each telephonic and written Interest Election Request shall specify the
following information in compliance with Section 2.02 and paragraph (f) of
this Section:

 

(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);

 

37

 

(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 Borrower shall be deemed to have selected an
Interest Period of one month’s duration.

 

(d)                                 Notice to the Lenders. 
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)                                  Automatic Conversion. 
If the Borrower 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.

 

(f)                                    Limitations on Election. 
Notwithstanding any contrary provision hereof, if an Event of Default
exists and the Administrative Agent, at the request of the Required Lenders, so
notifies the Borrower, then, so long as an Event of Default is continuing (i) no
outstanding borrowing may be converted to or continued as a Eurodollar
Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be
converted to an ABR Borrowing at the end of the Interest Period applicable
thereto.  A Borrowing of any Class may
not be converted to or continued as a Eurodollar Borrowing if after giving
effect thereto (i) the Interest Period therefor would commence before and
end after a date on which any principal of the Loans of such Class is
scheduled to be repaid and (ii) the sum of the aggregate principal amount
of outstanding Eurodollar Borrowings of such Class with Interest Periods
ending on or prior to such scheduled repayment date plus the aggregate
principal amount of outstanding ABR Borrowings of such Class would be
less than the aggregate principal amount of Loans of such Class required
to be repaid on such scheduled repayment date.

 

Section 2.08.                             Termination and Reduction of Commitments.

 

(a)                                  Termination Date. 
Unless previously terminated, (i) the Synthetic L/C Commitments
shall terminate on the Term Loan Maturity Date (provided that all funding
obligations of each Synthetic L/C Lender under its Synthetic L/C Commitment
shall be satisfied upon such Synthetic L/C Lender’s making its deposit in its
Credit Linked Account in accordance with the terms of Section 2.05(e)(i)(b)(1)),
(ii) the Term B Commitments shall terminate upon the funding of the Term B
Loans on the Effective Date, (iii) the Revolving Commitments shall
terminate on the Revolving Maturity Date and (iv) each Incremental Term
Loan Commitment shall terminate upon the funding of the related Incremental
Term Loan.

 

(b)                                 Optional Termination or Reduction. 
The Borrower may at any time terminate, or from time to time reduce, the
Commitments of any Class; provided that (i) each reduction of the
Commitments of any Class shall be in an amount that is an integral
multiple of $500,000 and not less than $5,000,000, (ii) the Borrower shall
not terminate or reduce the Revolving Commitments if, after giving effect to any
concurrent prepayment of the Revolving Loans in accordance with Section 2.11,
the sum of the Revolving Exposures would exceed the total Revolving Commitments
and (iii) the Borrower shall not

 

38

 

 

terminate or reduce the Synthetic L/C Commitments if
the sum of the Synthetic Exposures would exceed the total Synthetic L/C
Commitments.

 

(c)                                  Notice of Termination or Reduction. 
The Borrower shall notify the Administrative Agent of any election to
terminate or reduce the Commitments under paragraph (b) of this Section at
least three Business Days prior to the effective date of such termination or
reduction, 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 Borrower
pursuant to this Section shall be irrevocable; provided that a
notice of termination of the Revolving Commitments and Synthetic L/C Commitments
delivered by the Borrower may state that such notice is conditioned upon the
effectiveness of other credit facilities, in which case such notice may be
revoked by the Borrower (by notice to the Administrative Agent on or prior to
the specified effective date) if such condition is not satisfied.  Any termination or reduction of the
Commitments of any Class shall be permanent.  Each reduction of the Commitments of any Class shall
be made ratably among the Lenders in accordance with their respective Commitments
of such Class.

 

Section 2.09.                             Repayment of Loans; Evidence of Debt.

 

(a)                                  Promise to Pay. 
The Borrower hereby unconditionally promises to pay (i) to the
Administrative Agent for the account of each Lender the then unpaid principal
amount of each Revolving Loan of such Lender on the Revolving Maturity Date, (ii) to
the Administrative Agent for the account of each Term Lender the then unpaid
principal amount of each Term Loan of such Lender as provided in Section 2.10,
(iii) to the Administrative Agent for the account of each Synthetic L/C
Lender the then unpaid principal amount of each Synthetic L/C Loan on the Term
Loan Maturity Date, (iv) to pay to the Administrative Agent for the
account of each applicable Incremental Term Lender, the unpaid principal amount
of each Incremental Term Loan made to it in installments on the dates and in
the amounts indicated for the applicable Incremental Term Loan in the
applicable Increased Commitment Supplement and (iv) to the Swingline
Lender the then unpaid principal amount of each Swingline Loan on the earlier
of the Revolving Maturity Date and the first date after such Swingline Loan is
made that is the 15th or last day of a calendar month and is at least two
Business Days after such Swingline Loan is made; provided that on each
date that a Revolving Borrowing is made, the Borrower shall repay all Swingline
Loans then outstanding.

 

(b)                                 Lender Records. 
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 Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.

 

(c)                                  Administrative Agent Records. 
The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Class and Type
thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to 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)                                 Prima Facie Evidence. 
The entries made in the accounts maintained pursuant to paragraph (b) or (c) of
this Section shall be prima  facie evidence of the existence
and amounts of the obligations recorded therein; provided 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 Loans in accordance with the terms of this Agreement.

 

39

 

(e)                                  Request for a Note. 
Any Lender may request that Loans of any Class 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 such Lender (or, if requested by such Lender, to
such Lender or its registered 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 10.04) 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).

 

Section 2.10.                             Amortization of Term B Loans.  
The Borrower shall repay Term B Borrowings in installments as follows:

 

(i)                                     Quarterly installments due and payable on
the first Business Day of each January, April, July and October commencing
on January 2, 2007, in an amount equal to $575,000 each; and

 

(ii)                                  A final installment due on the Term Loan
Maturity Date in an amount equal to the then outstanding principal amount of
all Term B Loans.

 

Prior to any
repayment of any Term B Borrowings, the Borrower shall select the
Borrowing or Borrowings to be repaid and shall notify the Administrative Agent
by telephone (confirmed by telecopy) of such selection not later than noon,
Houston, Texas time, three Business Days before the scheduled date of such
repayment.  Each repayment of a
Term B Borrowing shall be applied ratably to the Term B Loans
included in the repaid Borrowing.

 

Section 2.11.                             Prepayment of Loans.

 

(a)                                  Optional Prepayment. 
The Borrower shall have the right at any time and from time to time to
prepay any Borrowing in whole or in part, subject to the requirements of this Section and
Section 2.16.

 

(b)                                 Mandatory Prepayment of Revolving Loans. 
In the event and on such occasion that the sum of the Revolving
Exposures exceeds the total Revolving Commitments, the Borrower shall prepay
Revolving Borrowings or Swingline Borrowings (or, if no such Borrowings are
outstanding, deposit cash collateral in an account with the Administrative
Agent pursuant to Section 2.05(k)) in an aggregate amount equal to such
excess.

 

(c)                                  Prepayments Offer from Net Proceeds of
Prepayment Event.  In the event and on each occasion that any
Net Proceeds are received by or on behalf of Holdings or any Subsidiary in
respect of any Prepayment Event, the Borrower shall, within three Business Days
after such Net Proceeds are received, make an offer to the Lenders to prepay
Borrowings in an aggregate amount equal to such Net Proceeds on the date
specified in such offer which date shall be no later than thirty days after the
date of such offer; provided that, in the case of any event described in
clause (a) of the definition of the term Prepayment Event, if the Borrower
shall deliver to the Administrative Agent a certificate of a Financial Officer
to the effect that the Holdings and the Subsidiaries intend to apply the Net
Proceeds from such event, within 365 days after receipt of such Net Proceeds,
to acquire real property, equipment or other tangible assets to be used in the
business of the Borrower and the Subsidiaries or to pay the purchase price of
an acquisition permitted by Section 6.04, and certifying that no Default
has occurred and is continuing, then no offer to make a prepayment shall be
required pursuant to this paragraph in respect of such event except to the
extent of any Net Proceeds therefrom that have not been so applied by the end
of such 365-day period, at which time an offer to make a prepayment shall be
required in an amount equal to the Net Proceeds that have not been so
applied.  Any offer delivered under this
paragraph (c) shall constitute 

 

40

 

an irrevocable offer to prepay the Borrowings on the
date specified in such offer in accordance with the application of proceeds
provisions of paragraph (e) of this Section and shall include a
reasonably detailed calculation of the amount of prepayment offered.

 

(d)                                 Excess Cash Flow Prepayment Offer. 
Following the end of each fiscal year of the Borrower, commencing with
the fiscal year ending on or about December 31, 2007, the Borrower shall
make an offer to the Lenders to prepay Borrowings in an aggregate amount equal
to the Required Percentage of Excess Cash Flow for such fiscal year on the date
specified in such offer which date shall be no later than thirty days after the
date of such offer; provided  that no offer of prepayment will be
required to be made with respect to a fiscal year if the Required Percentage of
Excess Cash Flow as calculated for such fiscal year is less than
$1,000,000.  Each offer of prepayment
pursuant to this paragraph shall be made on or before the date on which
financial statements are delivered pursuant to Section 5.01 with respect
to the fiscal year for which Excess Cash Flow is being calculated.  Any offer delivered under this paragraph
shall constitute an irrevocable offer to prepay the Borrowings on the date
specified in such offer in accordance with the application of proceeds
provisions of paragraph (e) of this Section and shall include a
reasonably detailed calculation of the amount of prepayment offered.  As used in this paragraph, the term “Required
Percentage” means with respect to a fiscal year, the applicable percentage
set forth below under the caption “Required Percentage”, based upon the
Leverage Ratio as calculated for such fiscal year:

 

	
  Category

  	
   

  	
  Leverage Ratio

  	
   

  	
  Required Percentage

  	
   

  
	
  1

  	
   

  	
  > 4.00 to 1.00

  	
   

  	
  75

  	
  %

  
	
  2

  	
   

  	
  < 4.00 to 1.00 

  and 

  > 3.00 to 1.00

  	
   

  	
  50

  	
  %

  
	
  3

  	
   

  	
  < 3.00 to 1.00 

  and 

  > 2.50 to 1.00

  	
   

  	
  25

  	
  %

  
	
  4

  	
   

  	
  < 2.50 to 1.00

  	
   

  	
  0

  	
  %

  

 

For purposes of the foregoing, the Leverage Ratio shall be determined
as of the end of such fiscal year based upon Holdings’ consolidated financial
statements delivered pursuant to Section 5.01(a); provided that the
Leverage Ratio shall be deemed to be in Category 1 at the option of the
Required Lenders:  (A) if at any
time that an Event of Default exists or (B)  if Holdings fails to deliver
the consolidated financial statements required to be delivered by it pursuant
to Section 5.01(a).

 

(e)                                  Acceptance or Rejection of Prepayment
Offer.  A Lender may accept or reject the offer to
prepay pursuant to paragraphs (c) and (d) of this Section by
causing a notice of such acceptance or rejection to be delivered to the
Borrower within ten days after such Lender’s receipt of the offer.  A failure of a Lender to respond to an offer
to prepay under paragraphs (c) and (d) of this Section shall
constitute a rejection of such offer by such Lender.  If no Lender accepts an offer of prepayment
made under this Section, the Borrower shall have no obligation to make the
prepayment offer thereby.  If an offer is
accepted by one or more Lenders, then the amount of the offered prepayment
shall be applied to the Borrowings in the following order:

 

(i)                                     First, to the Term Borrowings held by the
Lenders who have accepted such offer, pro rata based on the principal amount of
the Term Borrowings held by each;

 

(ii)                                  Second, to the extent funds are available
after the application required by clause (i), to the Synthetic L/C Borrowings held by the
Lenders who have accepted such offer, pro rata based on the principal amount of
the Synthetic L/C Borrowings held by each and on the date that such 

 

41

 

prepayment is applied, the Synthetic L/C Commitment of
such Lenders shall be reduced by an aggregate amount equal to the amount of the
required prepayment; and

 

(iii)                               Third, to the extent funds are available
after the applications required by clauses (i) and (ii), to the
Revolving Borrowings
held by the Lenders who have accepted such offer, pro rata based on the
principal amount of the Revolving Borrowings held by each and on the date that
such prepayment is applied, the Revolving Commitment of such Lenders shall be
reduced by an aggregate amount equal to the amount of the required prepayment.

 

(f)                                    Notice of Prepayment; Application of
Prepayments.  The Borrower shall notify the Administrative
Agent (and, in the case of prepayment of a Swingline Loan, the Swingline
Lender) by telephone (confirmed by telecopy) of any optional prepayment
hereunder (i) in the case of prepayment of a Eurodollar Borrowing, a
Synthetic L/C Borrowing or any other Term Borrowing, not later than 11:00 a.m.,
Houston, Texas time, three Business Days before the date of prepayment, (ii) in
the case of prepayment of an ABR Borrowing, not later than 11:00 a.m.,
Houston, Texas time, one Business Day before the date of prepayment or (iii) in
the case of prepayment of a Swingline Loan, not later than 12:00 noon,
Houston, Texas time, on the date of prepayment. 
Each such notice shall be irrevocable and shall specify the prepayment
date, the principal amount of each Borrowing or portion thereof to be prepaid; provided
that, if a notice of optional prepayment of any Loan is given in connection
with a conditional notice of termination of the Revolving Commitments and the
Synthetic L/C Commitments as contemplated by Section 2.08, then such
notice of prepayment may be revoked if such notice of termination is revoked in
accordance with Section 2.08. 
Promptly following receipt of any such notice (other than a notice
relating solely to Swingline Loans), the Administrative Agent shall advise the
Lenders of the contents thereof.  Each
partial optional 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 2.02.  Each
optional prepayment of a Borrowing shall be applied ratably to the Loans
included in the prepaid Borrowing. 
Prepayments shall be accompanied by accrued interest to the extent
required by Section 2.13.  Optional
prepayments of the Term Loans will be applied to all the remaining installments
due thereunder, each installment to be reduced by its pro rata portion of the
amount of the prepayment, with an installment’s pro rata portion determined
based on the principal amount of the installment.  Mandatory prepayments of the Term Loans of a
Lender who has accepted the offer of prepayment will be applied to all the
remaining installments due to such Lender thereunder, each installment to be
reduced by its pro rata portion of the amount of the prepayment, with an
installment’s pro rata portion determined based on the principal amount of the
installment.

 

Section 2.12.                             Fees.

 

(a)                                  Commitment Fees. 
The Borrower agrees to pay to the Administrative Agent for the account
of each Revolving Lender a commitment fee, which shall accrue at the Applicable
Rate on the average daily unused amount of each Revolving Commitment of such
Lender during the period from and including the Effective Date to but excluding
the date on which such Revolving Commitment terminates.  Accrued commitment fees shall be payable in
arrears, on the date which is three Business Days following the last day of
each March, June, September and December of each year and on the date
on which the Revolving 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).  A Revolving
Commitment of a Lender shall be deemed to be used to the extent of the
outstanding Revolving Loans and Revolving L/C Exposure of such Lender (and
the Swingline Exposure of such Lender shall be disregarded for such purpose).

 

42

 

(b)                                 Letter of Credit Fees. 
The Borrower agrees to pay (i) to the Administrative Agent for the
account of each Revolving Lender a participation fee with respect to its
participations in Revolving Letters of Credit, which shall accrue at the same
Applicable Rate as interest on Eurodollar Revolving Loans on the average daily
amount of such Lender’s Revolving L/C  Exposure (excluding any portion
thereof attributable to unreimbursed Revolving L/C Disbursements) during
the period from and including the Effective Date to but excluding the later of
the date on which such Lender’s Revolving Commitment terminates and the date on
which such Lender ceases to have any Revolving L/C Exposure, (ii) to
the Administrative Agent for the account of each Synthetic L/C Lender a
participation fee with respect to its participations in Synthetic Letters of
Credit, which shall accrue at the per annum rate equal to 2.50% on the average
daily amount of such Lender’s Synthetic L/C  Exposure (excluding any
portion thereof attributable to unreimbursed Synthetic L/C Disbursements)
during the period from and including the Effective Date to but excluding the
later of the date on which such Lender’s Synthetic L/C Commitment terminates
and the date on which such Lender ceases to have any Synthetic
L/C Exposure, and (iii) 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
L/C Exposure (excluding any portion thereof attributable to unreimbursed
L/C Disbursements) during the period from and including the Effective Date to
but excluding the later of the date of termination of both the Revolving
Commitments and the Synthetic L/C Commitments and the date on which there
ceases to be any L/C 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 December, March, June and September of each year shall be
payable on the third Business Day following such last day, commencing on the
first such date to occur after the Effective Date; provided that all
such fees applicable to Revolving Letters of Credit shall be payable on the
date on which the Revolving Commitments terminate, all such fees applicable to
Synthetic Letters of Credit shall be payable on the date on which the Synthetic
Commitments terminate and any such fees accruing after the date on which the
applicable Commitments terminate shall be payable on demand.  Any other fees payable to the Issuing Bank
pursuant to this paragraph shall be payable within 10 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)                                  Fixed Return
Fee.  The Borrower shall pay a fee to the
Administrative Agent, for the account of each Synthetic L/C Lender, quarterly
in arrears for each calendar quarter (or portion thereof), an amount equal to
the excess of (i) the Fixed Return over (ii) the Actual Return, in
each case with respect to such Synthetic L/C Lender for such calendar quarter
(or portion thereof) (but only if such amount constituting the difference
between the amounts provided for in items (i) and (ii) above is
greater than $0).  Each such amount
accrued through and including the last day of March, June, September and December of
each year shall be payable on the third Business Day following such last day
commencing on the first such date to occur after the Effective Date and on the
date that the Credit Linked Accounts are closed under
subparagraph (e)(i)(C)(6) of Section 2.05.  For purposes of this Agreement, the following
defined terms shall have the following meanings:

 

“Actual Return” means
for any calendar quarter (or portion thereof) referred to in subparagraph (c) above
and, with respect to any Synthetic L/C Lender, an amount equal to (i) the
aggregate amount of return due to such Synthetic L/C Lender from the
Administrative Agent pursuant to Section 2.05(e)(i)(D) plus (ii) the
aggregate amount of interest payments received by such Synthetic L/C Lender
from the Borrower pursuant to Section 2.13 in respect of Synthetic L/C
Loans plus (iii) the aggregate amount of letter of credit fees received by
such Synthetic L/C Lender from the Borrower pursuant to Section 2.12(b),
in each case with respect to such calendar quarter (or portion thereof).

 

43

 

“Fixed Return” means
for any calendar quarter (or portion thereof) referred to in subparagraph (c) above
and, with respect to any Synthetic L/C Lender, an amount equal to the interest
that would have accrued on the amount of such Lender’s Synthetic L/C Commitment
during such quarterly period (or portion thereof) if such interest were
calculated at a rate per annum equal to (i) the One Month Adjusted LIBO
Rate (as calculated for each month during such quarter) plus (ii) either
2.50% or, if applicable, the percentage determined in accordance with Section 2.20(f) hereof
(on the basis of the actual number of days elapsed over a year of 360 days).

 

(d)                                 Administrative Agent Fees. 
The Borrower agrees to pay to the Administrative Agent, for its own
account, fees payable in the amounts and at the times separately agreed upon
between the Borrower and the Administrative Agent.

 

(e)                                  Payment of Fees. 
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 fees payable to it) for distribution, in the case of
commitment fees and participation fees, to the Lenders entitled thereto.  Fees paid shall not be refundable under any
circumstances.

 

Section 2.13.                             Interest.  Except as may
otherwise be provided with respect to an Incremental Term Loan in its Increased
Commitment Supplement:

 

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

 

(b)                                 Eurodollar Borrowing. 
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 Rate.

 

(c)                                  Synthetic L/C Loans. 
Synthetic L/C Loans shall bear interest at the One Month Adjusted LIBO
Rate plus the Applicable Rate; provided that if any Event of Default
exists and the Administrative Agent provides the Borrower notice thereof, the
Synthetic L/C Loans shall bear interest at the Alternate Base Rate plus the
Applicable Rate applicable to ABR Term Loans.

 

(d)                                 Default Interest. 
Notwithstanding the foregoing, if any principal of or interest on any
Loan or any fee or other amount payable by the Borrower hereunder is not paid
when due, whether at stated maturity, upon acceleration or otherwise, such overdue
amount shall bear interest, after as well as before judgment, at a rate per
annum equal to (i) in the case of overdue principal of any Loan, 2% plus
the rate otherwise applicable to such Loan as provided in the preceding
paragraphs of this Section or (ii) in the case of any other amount,
2% plus the rate applicable to ABR Revolving Loans as provided in
paragraph (a) of this Section.

 

(e)                                  Payment of Interest. 
Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan and, in the case of Revolving Loans, upon
termination of the Revolving 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 Revolving 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 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.

 

44

 

(f)                                    Computation.  All
interest hereunder shall be computed on the basis of a year of 360 days,
except that interest computed by reference to the Alternate Base Rate at times
when the Alternate Base Rate is based on the Prime Rate shall be computed on
the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed (including the
first day but excluding the last day). 
The applicable Alternate Base Rate or Adjusted LIBO Rate shall be
determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error.

 

Section 2.14.                             Alternate Rate of Interest. 
If prior to the commencement of any Interest Period for a Eurodollar
Borrowing or on or prior to the date of the determination of any One Month
Adjusted LIBO Rate or one month London interbank offered rate under Section 2.05(e)(i)(D):

 

(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 for
such Interest Period, the One Month Adjusted LIBO Rate or the one month London
interbank offered rate; or

 

(b)                                 the Administrative Agent is advised by
the Required Lenders that the Adjusted LIBO Rate for such Interest Period or
the One Month Adjusted LIBO Rate will not adequately and fairly reflect the
cost to the Lenders of making or maintaining their Loans included in the
applicable Borrowing as a result of the failure of the Lenders participating in
such Borrowing to have access to the London interbank market or as a result of
any other circumstance affecting the London interbank market or the position in
such market of the Lenders participating in such Borrowing;

 

then the
Administrative Agent shall give notice thereof to the Borrower and the Lenders
by telephone or telecopy 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: (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; (ii) if
any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be
made as an ABR Borrowing; and (iii) the One Month Adjusted LIBO Rate
and/or the one month London interbank offered rate under Section 2.05(e)(i)(D) that
is subject to the circumstances giving rise to the notice under this Section shall
be equal to the greater of the Federal Funds Effective Rate or a rate
determined by the Administrative Agent in accordance with banking industry rules on
interbank compensation.

 

Section 2.15.                             Increased Costs.

 

(a)                                  Change In Law. 
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 One Month
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,
the Synthetic L/C Commitments of such Lender or the Eurodollar Loans or
Synthetic L/C Loans made by such Lender or any Letter of Credit or
participation therein (other than with respect to taxes, which shall be
governed solely and exclusively by Section 2.17);

 

and the result of
any of the foregoing shall be to increase the cost to such Lender of making or maintaining
its Synthetic L/C Commitments, any Eurodollar Loan or Synthetic L/C Loan (or of
maintaining its obligation to make any such Loan) or to increase the cost to
such Lender or the Issuing

 

45

 

 

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 Borrower 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)                                 Capital Adequacy. 
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 Borrower
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
or such Lender’s or the Issuing Bank’s holding company for any such reduction
suffered.

 

(c)                                  Delivery of Certificate. 
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 Borrower and shall be
conclusive absent manifest error.  The
Borrower shall pay such Lender or the Issuing Bank, as the case may be, the
amount shown as due on any such certificate within 10 days after receipt
thereof.

 

(d)                                 Limitation on Compensation. 
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 Borrower 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 180 days prior to the date that such Lender or the
Issuing Bank, as the case may be, notifies the Borrower 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 2.16.                             Break Funding 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
Revolving Loan or Term Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice may be revoked under Section 2.11(f) and
is revoked in accordance therewith), (d) the assignment of any Eurodollar
Loan or Synthetic L/C Commitment or Synthetic L/C 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 2.19(b), 2.20(d) or the definition of
the term “Revolving Commitment”, or (e) the payment of any principal of
any Synthetic L/C Loan other than on the last day of an Interest Period
applicable thereto (including as a result of an Event of Default), then, in any
such event, the Borrower shall compensate each Lender for the actual loss, cost
and expense attributable to such event. 
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 or, as applicable,
One Month Adjusted LIBO Rate 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 

 

46

 

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 Borrower and shall be
conclusive absent manifest error.  The
Borrower shall pay such Lender the amount shown as due on any such certificate
within 10 days after receipt thereof.

 

Section 2.17.                             Taxes.

 

(a)                                  Gross Up.  Any and all
payments by or on account of any obligation of the Loan Parties hereunder or
under any other Loan Document shall be made free and clear of and without
deduction for any Indemnified Taxes; provided that if any Loan Party
shall be required by law to deduct any Indemnified Taxes from such payments,
then (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions 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, (ii) the Borrower shall make
such deductions and (iii) the Borrower shall pay the full amount deducted
to the relevant Governmental Authority in accordance with applicable law.

 

(b)                                 Payment of Other Taxes. 
In addition (but without duplication of Section 2.17(a)), the
Borrower shall pay any Other Taxes to the relevant Governmental Authority in
accordance with applicable law.

 

(c)                                  Tax Indemnification. 
The Borrower shall indemnify the Administrative Agent, each Lender and
the Issuing Bank, within 10 days after written demand therefor, for the
full amount of any Indemnified Taxes paid by the Administrative Agent, such
Lender or the Issuing Bank, as the case may be, on or with respect to any
payment by or on account of any obligation of the Borrower hereunder or under
any other Loan Document (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.  A
certificate as to the amount of such payment or liability delivered to the Borrower
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, setting forth in
reasonable detail the basis and calculation of such amounts, shall be
conclusive absent manifest error.

 

(d)                                 Receipts.  As soon as
practicable after any payment of Indemnified Taxes by the Borrower to a
Governmental Authority, the Borrower 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)                                  Withholding Forms. 
If the Administrative Agent, any Lender or the Issuing Bank that is
entitled to an exemption from or reduction of withholding tax under the law of
the jurisdiction in which the Borrower is located, or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement, such
Person shall deliver to the Borrower (with a copy to the Administrative Agent),
at the time or times prescribed by applicable law or as reasonably requested by
the Borrower or the Administrative Agent, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the Borrower
as will permit such payments to be made without withholding or at a reduced
rate; provided, however, that a Person that the Borrower may treat as 

 

47

 

an “exempt recipient” (within the meaning of Treasury
Regulations Section 1.6049-4(c), without regard to the third sentence
thereof) shall not be required to deliver an IRS Form W-9.

 

(f)                                    Refund.  If the
Administrative Agent, a Lender or the Issuing Bank determines, in its sole
discretion, that it has received a refund of any Taxes or Other Taxes as to
which it has been indemnified by the Borrower or with respect to which the
Borrower has paid additional amounts pursuant to this Section 2.17, it
shall pay over such refund to the Borrower (but only to the extent of indemnity
payments made, or additional amounts paid, by the Borrower under this Section 2.17
with respect to the Taxes or Other Taxes giving rise to such refund), net of
all out-of-pocket expenses of the Administrative Agent or such Lender and
without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund); provided, that the Borrower, upon the
request of the Administrative Agent or such Lender, agrees to repay the amount
paid over to the Borrower (plus any penalties, interest or other charges
imposed by the relevant Governmental Authority) to the Administrative Agent or
such Lender in the event the Administrative Agent or such Lender is required to
repay such refund to such Governmental Authority.  This Section 2.17 shall not be construed
to require the Administrative Agent or any Lender to make available its tax
returns (or any other information relating to its taxes which it deems
confidential, other than information required by any U.S. Federal withholding
tax form as of the date hereof) to the Borrower or any other Person.

 

Section 2.18.                             Payments Generally; Pro Rata Treatment;
Sharing of Set-Offs; Proceeds of Collateral.

 

(a)                                  Payments Generally. 
The Borrower shall make each payment required to be made by it hereunder
or under any other Loan Document (whether of principal, interest, fees or
reimbursement of L/C Disbursements, or of amounts payable under Section 2.15,
2.16 or 2.17, or otherwise) prior to the time expressly required hereunder or
under such other Loan Document for such payment (or, if no such time is
expressly required, prior to 12:00 noon, Houston, Texas 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 1111 Fannin, 9th
Floor, Houston, Texas  77002, except
payments to be made directly to the Issuing Bank or Swingline Lender as
expressly provided herein and except that payments pursuant to
Sections 2.15, 2.16, 2.17 and 10.03 shall be made directly to the Persons
entitled thereto and payments pursuant to other Loan Documents shall be made to
the Persons specified therein.  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 under
any Loan Document 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
under each Loan Document shall be made in dollars.

 

(b)                                 Pro Rata Application. 
If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, unreimbursed
L/C Disbursements, interest and fees then due hereunder, such funds shall
be applied (i) first, towards payment of interest and fees then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of interest and fees then due to such parties, and (ii) second,
towards payment of principal and unreimbursed L/C Disbursements then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of principal and unreimbursed L/C Disbursements then due to such
parties.

 

48

 

(c)                                  Sharing of Set-offs. 
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 Revolving Loans, Term Loans, Synthetic L/C Loans or participations in
L/C Disbursements or Swingline Loans resulting in such Lender receiving
payment of a greater proportion of the aggregate amount of its Revolving Loans,
Term Loans, Synthetic L/C Loans and participations in L/C Disbursements
and Swingline 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 Revolving Loans, Term
Loans, Synthetic L/C Loans and participations in L/C Disbursements and
Swingline 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
Revolving Loans, Term Loans, Synthetic L/C Loans and participations in
L/C Disbursements and Swingline 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
Loans or participations in L/C Disbursements 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)                                 Payments from Borrower Assumed Made. 
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 or the Issuing Bank 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 or the Issuing
Bank, as the case may be, the amount due. 
In such event, if the Borrower has 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.

 

(e)                                  Set-Off Against Amounts Owed Lenders. 
If any Lender shall fail to make any payment required to be made by it
under this Agreement, then the 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 this Agreement until all such unsatisfied
obligations are fully paid.

 

(f)                                    Application of Proceeds of Collateral and
Guaranty.  All amounts received under the Guaranty
Agreement and all proceeds received by the Administrative Agent from the sale
or other liquidation of the Collateral when an Event of Default exists shall
first be applied as payment of the accrued and unpaid fees of the
Administrative Agent hereunder and then to all other unpaid or unreimbursed
Obligations (including reasonable attorneys’ fees and expenses) owing to the
Administrative Agent in its capacity as Administrative Agent only and then any
remaining amount of such proceeds shall be distributed:

 

49

 

(i)                                     first, to the Secured Parties, pro rata in accordance
with the respective unpaid amounts of Loan Obligations (including L/C Exposure)
and Swap Obligations, until all the Loan Obligations and Swap Obligations have
been Fully Satisfied ;

 

(ii)                                  second, to the Secured Parties, pro rata in accordance
with the respective unpaid amounts of the Deposit Obligations, until all
Deposit Obligations have been Fully Satisfied; and

 

(iii)                               third, to the Secured Parties, pro rata in accordance with
the respective unpaid amounts of the remaining Obligations.

 

After all the
Obligations have been Fully Satisfied, any proceeds of Collateral shall be
delivered to the Person entitled thereto as directed by the Borrower or as
otherwise determined by applicable law or applicable court order.

 

(g)                                 Noncash Proceeds. 
Notwithstanding anything contained herein to the contrary, if the
Administrative Agent shall ever acquire any Collateral through foreclosure or
by a conveyance in lieu of foreclosure or by retaining any of the Collateral in
satisfaction of all or part of the Obligations or if any proceeds of Collateral
received by the Administrative Agent to be distributed and shared pursuant to
this Section 2.18 are in a form other than immediately available funds,
the Administrative Agent shall not be required to remit any share thereof under
the terms hereof and the Secured Parties shall only be entitled to their
undivided interests in the Collateral or noncash proceeds as determined by
paragraph (f) of this Section 2.18.  The Secured Parties shall receive the
applicable portions (in accordance with the foregoing paragraph (f)) of
any immediately available funds consisting of proceeds from such Collateral or
proceeds of such noncash proceeds so acquired only if and when received by the
Administrative Agent in connection with the subsequent disposition
thereof.  While any Collateral or other
property to be shared pursuant to this Section is held by the
Administrative Agent pursuant to this paragraph (g), the Administrative
Agent shall hold such Collateral or other property for the benefit of the
Secured Parties and all matters relating to the management, operation, further
disposition or any other aspect of such Collateral or other property shall be
resolved by the agreement of the Required Lenders.

 

(h)                                 Return of Proceeds. 
If at any time payment, in whole or in part, of any amount distributed
by the Administrative Agent hereunder is rescinded or must otherwise be
restored or returned by the Administrative Agent as a preference, fraudulent
conveyance, or otherwise under any bankruptcy, insolvency, or similar law, then
each Person receiving any portion of such amount agrees, upon demand, to return
the portion of such amount it has received to the Administrative Agent.

 

Section 2.19.                             Mitigation Obligations; Replacement of
Lenders.

 

(a)                                  Mitigation.  If any Lender
requests compensation under Section 2.15, or if the Borrower is required
to pay any additional amount to or for the benefit of the Issuing Bank or any
Lender or any Governmental Authority pursuant to Section 2.17, then such
Lender or Issuing Bank 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 or Issuing Bank, such
designation or assignment (i) would eliminate or reduce amounts payable
pursuant to Section 2.15 or 2.17, as the case may be, in the future and (ii) would
not subject such Lender or Issuing Bank to any unreimbursed cost or expense and
would not otherwise be disadvantageous to such Lender or Issuing Bank.

 

(b)                                 Replacement. 
If a Lender requests compensation under Section 2.15, or if the
Borrower is required to pay any additional amount to a Lender or any
Governmental Authority for the account of a Lender pursuant to Section 2.17,
or if a Lender defaults in its obligation to fund Loans hereunder, or if a
Lender has become insolvent and its assets become subject to a receiver,
liquidator, 

 

50

 

trustee, custodian or other officer having similar
powers or if a Lender shall become a Non-consenting Lender (as defined below),
then the Borrower may, at its sole expense and effort, upon notice to such
Lender and the Administrative Agent, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions
contained in Section 10.04), 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 to the extent required by Section 10.04, which
consent shall not unreasonably be withheld, (ii) such Lender shall have
received payment of an amount equal to the outstanding principal of its Loans
and participations in LC 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 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 2.15
or payments required to be made pursuant to Section 2.17, such assignment
would result in a reduction in such compensation or payments in the
future.  A 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.  In the event that (i) the Borrower or
the Administrative Agent have requested the Lenders to consent to a departure
or waiver of any provisions of the Loan Documents or to agree to any other
modification thereto, (ii) the consent, waiver or other modification in
question requires the agreement of all Lenders (or all affected Lenders) in
accordance with the terms of Section 10.02 and (iii) the Required
Lenders (or, in the case of any Class voting, the holders of a majority of
the outstanding Loans and unused Commitments in respect of such Class) have
agreed to such consent, waiver or other modification, then any Lender who does
not agree to such consent, waiver or other modification shall be deemed a “Non-consenting
Lender”.

 

Section 2.20.                             Increase of Commitments.

 

(a)                                  Notice.  In addition
to the increase of the Revolving Commitments permitted by the definition of the
term “Revolving Commitment”, by written notice sent to the Lenders, the
Borrower may provide notice of an increase of the Revolving Commitments,
Synthetic L/C Commitments or the Term Loans or an increase in any combination
thereof: (i) by an aggregate amount equal to any integral multiple of
$5,000,000 and not less than $25,000,000 for each such increase and (ii) by
an aggregate amount not to exceed $100,000,000 for all such increases; provided
that, as of the effective date of the increase:

 

(A)                              no Default shall have occurred and be
continuing,

 

(B)                                the Commitments being increased shall not
have been reduced on more than one occasion, nor shall the Borrower have given
notice of any such reduction under Section 2.08 on more than one occasion
(for avoidance of doubt, repayments of the Loans shall not be considered
reductions of Commitments),

 

(C)                                the Borrower may not utilize this Section 2.20
to increase any Commitments or the Term Loans on more than 4 occasions (not
including the increase of the Revolving Commitments contemplated by the
definition thereof);

 

(D)                               prior to the effectiveness of the
increase, the Borrower shall deliver to the Administrative Agent and the
Lenders (A) projected income and cash flow statements for the Borrower for
the period through the Term Loan Maturity Date, prepared on a basis acceptable
to the Administrative Agent giving pro forma effect to the Indebtedness to be
incurred in connection with such increase and (B) a certificate signed by
a Financial Officer certifying and providing evidence of the 

 

51

 

calculations demonstrating: (1) that the Borrower shall be in
compliance with the covenants in Article VII on a pro forma basis for the
four fiscal quarter periods then most recently ending for which financial
statements are available and on a projected basis through the Term Loan
Maturity Date (assuming, in each case, that the incurrence of the Indebtedness
occurred on the first day of the applicable period and to the extent such
Indebtedness bears interest at a floating rate, using the rate in effect at the
time of calculation for the entire period of calculation); (2) no Default
exists or will result after giving effect to the incurrence of the
Indebtedness; and (3) the representations and warranties of each Loan
Party set forth in the Loan Documents are true and correct on and as of the
date of such certificate in all material respects, with the same force and effect
as if such representations and warranties had been made on and as of such date
except to the extent such representations and warranties relate specifically to
another date; and

 

(E)                                 no Lender shall be obligated to
participate in any increase of the Commitments or Loans, any decision to do so
to be made in the sole discretion of each Lender.

 

(b)                                 New Lenders. 
If one or more of the Lenders holding a Commitment of the type being
increased is not increasing such Commitment, then another one or more financial
institutions or other lenders, each as approved by the Administrative Agent
(which approval will not be unreasonably withheld or delayed and each such
financial institution or other lender, herein a “New Lender”), may
commit to provide an amount equal to the aggregate amount of the requested
increase that will not be provided by the applicable existing Lenders (the “Increased
Amount”); provided, any Revolving Commitment of a New Lender shall
be at least $5,000,000 and any Synthetic L/C Commitment and any Incremental
Term Loan Commitment of a New Lender shall be at least $1,000,000.

 

(c)                                  Increased Commitment Supplement. 
Upon receipt of notice from the Borrower under this Section 2.20
that the Lenders, or sufficient Lenders and New Lenders, have agreed to commit
to an aggregate amount equal to the Increased Amount, then: provided that no Default exists at such time or after
giving effect to the requested increase, Holdings, the Borrower, the
Administrative Agent, and the Lenders willing to increase their respective
Commitments and the New Lenders (if any) shall execute and deliver an Increased
Commitment Supplement (herein so called) in the form attached hereto as Exhibit D.

 

(d)                                 Increase of Revolving Commitment. 
If all existing Lenders shall not have provided their pro rata portion
of the requested increase of the Revolving Commitment under this Section 2.20,
then after giving effect to the increase, the outstanding Revolving Loans may
not be held pro rata in accordance with the new Revolving Commitments.  In order to remedy the foregoing, on the
effective date of the Increased Commitment Supplement, the Revolving Lenders
shall make advances among themselves (either directly or through the
Administrative Agent) so that after giving effect thereto the Revolving Loans
will be held by the Revolving Lenders pro rata in accordance with their
respective Applicable Percentages.  Any
advances made under this Section 2.20(d) by a Revolving Lender shall
be deemed to be a purchase of a corresponding amount of the Revolving Loans of
the Revolving Lender or Lenders who shall receive such advances.  The Revolving Commitments of the Revolving
Lenders who do not agree to increase their Revolving Commitments cannot be
reduced or otherwise changed pursuant to this Section 2.20.

 

(e)                                  Increase of Synthetic L/C Commitments. 
On or prior to the effective date of any Increased Commitment Supplement
increasing the total Synthetic L/C Commitments, the Administrative Agent shall
establish additional Credit Linked Accounts at JPMCB in the names of each New
Lender that becomes a Synthetic L/C Lender pursuant thereto.  Each such New Lender and each Synthetic L/C
Lender that is increasing its Synthetic L/C Commitment, shall make the deposits
in its Credit Linked Account required by Section 2.05(e)(i)(B)(5).

 

52

 

(f)                                    Incremental Term Loan. 
Each Increased Commitment Supplement that increases the Term Loans shall
set forth the following information, with respect to the additional Term Loan
requested:  (i) the aggregate amount
thereof; (ii) the Lenders or New Lenders who will be providing such
additional Term Loan and the amount of each of their commitments therefore; (iii) the
final maturity and amortization schedule for such additional Term Loan; (iv) the
date the additional Term Loan is to be made; (v) whether such additional
Term Loan shall be an ABR Loan or a Eurodollar Loan, and if a Eurodollar Loan,
the Interest Periods to be initially applicable thereto; and (vi) if
different than the Applicable Rates set forth herein, the Applicable Rates to
be applicable thereto; provided that:

 

(A)                              an Increased Commitment Supplement may
provide that the Incremental Term Loan to be made pursuant thereto will accrue
interest at an alternative rate or alternative rates of interest other than as
provided herein; and

 

(B)                                if the Total Return (as defined below in
this paragraph) payable to the Lenders providing such additional Term Loan
(such Total Return, herein the “New Total Return”) exceeds by more than
0.50% the Total Return payable to the Lenders who hold Term Loans and Synthetic
L/C Loans as of the date such additional Term Loan is made, then the Applicable
Rate used to calculate the interest on the then existing Term Loans and the
Fixed Return rate used to calculate the fee then payable under Section 2.12(c) shall
each be adjusted by an amount determined by the Administrative Agent to be
necessary so the Total Return payable to the Lenders who hold Term Loans and
Synthetic L/C Loans as of the date such additional Term Loan is made equals the
New Total Return minus 0.50% (as used in this paragraph (B), the term “Total
Return” means, with respect to a Loan, the projected rate of return
expressed as a percentage to be earned on such Loan over its life calculated by
the Administrative Agent in a manner to include the interest rate payable
thereunder, all upfront or similar fees payable in connection therewith and any
original issue discounts.  If the
interest rate for any Loan is based on a variable rate, the rate in effect as
of the date of the calculation of the Total Return shall be deemed to be the
rate in effect throughout its life).

 

No Incremental
Term Loan shall have a final maturity date earlier than the Term Loan Maturity
Date and no Incremental Term Loan shall have a weighted average life to
maturity that is shorter than the then-remaining weighted average life to
maturity of the Term B Loans.

 

ARTICLE III.

 

Representations
and Warranties

 

Holdings represents and warrants to the Lenders that:

 

Section 3.01.                             Organization; Powers. 
Each of Holdings and each Subsidiary is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization,
has all requisite power and authority to carry on its business as now conducted
and, except where the failure to do so, individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Effect, is qualified
to do business in, and is in good standing in, every jurisdiction where such
qualification is required.

 

Section 3.02.                             Authorization; Enforceability. 
The Transactions to be entered into by each Loan Party are within such
Loan Party’s corporate or other powers and have been duly authorized by all
necessary corporate (or other) and, if required, stockholder action.  This Agreement has been duly executed and
delivered by each of Holdings and the Borrower and constitutes, and each other
Loan Document to which any Loan Party is to be a party, when executed and delivered
by such Loan Party, will constitute, a legal, valid and binding obligation of
such Loan Party (as the case may be), enforceable 

 

53

 

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.                             Governmental Approvals; No Conflicts.  
The Transactions (a) do not require any consent or approval of,
registration or filing with, or any other action by, any Governmental
Authority, except such as have been obtained or made and are in full force and
effect and except filings necessary to perfect Liens created under the Loan Documents,
(b) will not violate in any material respect any applicable law or
regulation or the charter, by-laws or other organizational documents of
Holdings or any of the Subsidiaries or any order of any Governmental Authority,
(c) will not violate or result in a default under any indenture or other
agreement relating to any Material Indebtedness or under any other material
agreement binding upon Holdings or any of the Subsidiaries or its assets, or
give rise to a right thereunder to require any payment to be made by Holdings
or any of the Subsidiaries, and (d) will not result in the creation or
imposition of any Lien on any asset of Holdings or any of the Subsidiaries,
except Liens created under the Loan Documents.

 

Section 3.04.                             Financial Condition; No Material Adverse
Change.

 

(a)                                  Financial Statements. 
Holdings has heretofore furnished to the Lenders its consolidated
balance sheet and statements of income, stockholders equity and cash flows (i) as
of and for the fiscal year ended December 31, 2005, reported on by
certified, independent public accountants, and (ii) as of and for the
fiscal quarter and the portion of the fiscal year ended on or about April 22,
2006, certified by its chief financial officer. 
Such financial statements present fairly, in all material respects, the
financial position and results of operations and cash flows of Holdings and the
Subsidiaries as of such dates and for such periods in accordance with GAAP,
subject to year-end audit adjustments and the absence of footnotes in the case of
the statements referred to in clause (ii) above.

 

(b)                                 Pro Forma.  Holdings has
heretofore furnished to the Lenders its pro forma consolidated balance sheet as
of the end of its first fiscal quarter ended on or about April 22, 2006,
prepared giving effect to the Transactions as if the Transactions had occurred
on such date.  Such pro forma
consolidated balance sheet (i) has been prepared in good faith based on
the same assumptions used to prepare the pro forma financial statements
included in the Information Memorandum (which assumptions are believed by
Holdings to be reasonable), (ii) is based on the best information
available to Holdings and the Borrower after due inquiry, (iii) accurately
reflects all adjustments necessary to give effect to the Transactions and (iv) presents
fairly, in all material respects, the pro forma financial position of the
Holdings and the Subsidiaries as of the end of its first fiscal quarter ended
on or about April 22, 2006 as if the Transactions had occurred on such
date.

 

(c)                                  Projections. 
Holdings’ forecasted consolidated balance sheets, profit and loss
statements and cash flow statements set forth in the Information Memorandum
have been prepared by Holdings in light of the business of Holdings and
Transactions and represent as of the date thereof the good faith estimate of
Holdings and its senior management of the future financial performance of the
Holdings, after giving pro forma effect to the Transactions (it being
understood that such projections may vary from actual results and such
variances may be material).

 

(d)                                 No Undisclosed Liabilities. 
Except as disclosed in the financial statements referred to above or the
notes thereto or in the Information Memorandum, after giving effect to the
Transactions, none of Holdings or the Subsidiaries has, as of the Effective
Date, any material contingent liabilities, material unusual long-term
commitments or material unrealized losses.

 

54

 

(e)                                  Material Adverse Change. 
Since December 31, 2005, there has been no material adverse change
in the business, assets, operations, prospects or condition, financial or
otherwise, of the Loan Parties taken as a whole.

 

Section 3.05.                             Properties.

 

(a)                                  Title; Liens. 
Each of Holdings and each Subsidiary has good title to, or valid
leasehold interests in, all its real and personal property material to its
business (including its Mortgaged Properties), except for minor defects in
title that do not interfere with its ability to conduct its business as currently
conducted or to utilize such properties for their intended purposes, and all
such property is owned free and clear of all Liens except for Liens permitted
by Section 6.02.

 

(b)                                 Intellectual Property. 
Each of Holdings and each Subsidiary owns, or is licensed to use, all
trademarks, tradenames, copyrights, patents and other intellectual property
material to its business, and the use thereof by Holdings and the Subsidiaries
does not infringe upon the rights of any other Person, except for any such
infringements that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.

 

(c)                                  Notice of Condemnation. 
As of the Effective Date, neither Holdings nor any of the Subsidiaries
has received notice of, or has knowledge of, any pending or contemplated
condemnation proceeding affecting any Mortgaged Property or any sale or
disposition thereof in lieu of condemnation. 
Neither any Mortgaged Property nor any interest therein is subject to
any right of first refusal, option or other contractual right to purchase such
Mortgaged Property or interest therein.

 

Section 3.06.                             Litigation and Environmental Matters.

 

(a)                                  Litigation.  There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of Holdings, threatened against
or affecting Holdings or any of the Subsidiaries (i) as to which there is
a reasonable possibility of an adverse determination and that, if finally and
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect or (ii) that involve any
of the Loan Documents or the Transactions as of the Effective Date.

 

(b)                                 Environmental Matters. 
Except with respect to any other matters that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, neither Holdings nor any of the Subsidiaries: (i) has failed to
comply with any Environmental Law or to obtain, maintain or comply with any
permit, license or other approval required under any Environmental Law, (ii) has
become subject to any Environmental Liability, (iii) has received notice
of any claim with respect to any Environmental Liability or (iv) knows of
any basis for any Environmental Liability or of any facts, circumstances,
conditions or occurrences with respect to the business or operations of
Holdings or any of the Subsidiaries, or any real property owned, leased or
operated by Holdings or any of the Subsidiaries (including any of the Mortgage
Property formerly owned, leased or operated by Holdings or any of the
Subsidiaries but no longer owned, leased or operated by Holdings or any of the
Subsidiaries) or any property adjoining or adjacent to any such real property
that has (i) formed the basis of an Environmental Liability against
Holdings or any of the Subsidiaries or any real property owned, leased or
operated by Holdings or any of the Subsidiaries or (ii) caused the
Mortgaged Property or any other real property owned, leased or operated by
Holdings or any of the Subsidiaries to be subject to any restrictions on the
ownership, lease, occupancy or transferability of such property under any
applicable Environmental Law.

 

Section 3.07.                             Compliance with Laws and Agreements. 
Each of Holdings and each Subsidiary is in compliance with all laws,
regulations and orders of any Governmental Authority applicable to it or

 

55

 

 

its property and all indentures, agreements and other instruments
binding upon it or its property, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.  No Default has
occurred and is continuing.

 

Section 3.08.                             Investment Company Act Status. 
Neither Holdings nor any of the Subsidiaries is an “investment company”
as defined in, or subject to regulation under, the Investment Company Act of
1940.

 

Section 3.09.                             Taxes.  Each of
Holdings and each Subsidiary has timely filed or caused to be filed all Tax
returns and reports required to have been filed and has paid or caused to be
paid all Taxes required to have been paid by it, except (a) Taxes that are
being contested in good faith by appropriate proceedings and for which Holdings
or such Subsidiary, as applicable, has set aside on its books adequate reserves
or (b) to the extent that the failure to do so could not reasonably be
expected to result in a Material Adverse Effect.

 

Section 3.10.                             ERISA.  No ERISA
Event has occurred or is reasonably expected to occur that, when taken together
with all other such ERISA 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 (based on the assumptions used
for purposes of Statement of Financial Accounting Standards No. 87) did
not, as of the date of the most recent financial statements reflecting such
amounts, exceed by more than $1,000,000 the fair market value of the assets of
such Plan, and the present value of all accumulated benefit obligations of all
underfunded Plans (based on the assumptions used for purposes of Statement of
Financial Accounting Standards No. 87) did not, as of the date of the most
recent financial statements reflecting such amounts, exceed by more than
$1,000,000 the fair market value of the assets of all such underfunded Plans.

 

Section 3.11.                             Disclosure.  Neither the
Information Memorandum nor any of the other reports, financial statements,
certificates or other information furnished by or on behalf of any Loan Party
to the Administrative Agent or any Lender in connection with the negotiation of
this Agreement or any other Loan Document or delivered hereunder or thereunder
(as modified or supplemented by other information so furnished and taken as a
whole) contains any material misstatement of fact or omits to state any
material fact necessary to make the statements therein taken as a whole, in the
light of the circumstances under which they were made, not misleading; provided
that, with respect to projected financial information, Holdings and the
Borrower represent only that such information was prepared in good faith based
upon assumptions believed to be reasonable at the time (it being understood
that such projections may vary from actual results and such variances may be
material).

 

Section 3.12.                             Capitalization; Subsidiaries.

 

(a)                                  Holdings’ Equity Interests Holders.  As of July 7, 2006, Schedule 3.12
identifies all of Holdings’ shareholders who own 5% or more of the capital
Stock of Holdings and the number of shares of the capital stock of Holdings
held by each.

 

(b)                                 Subsidiaries; Capitalization. 
Holdings does not have any subsidiaries other than those listed on
Schedule 3.12 hereto as of the Effective Date.  As of the Effective Date and after giving
effect to the Transactions, Schedule 3.12 sets forth the jurisdiction of
incorporation or organization of each such Subsidiary, the percentage of
Holdings’ ownership of the outstanding Equity Interests of each Subsidiary
directly owned by Holdings, the percentage of each Subsidiary’s ownership of
the outstanding Equity Interests of each other Subsidiary and the authorized,
issued and outstanding Equity Interests of each Subsidiary.  All of the outstanding capital stock of each
Subsidiary has been validly issued, is fully paid, and is nonassessable.  Except as permitted to be issued or created
pursuant to the terms hereof or as reflected on Schedule 3.12, there are
no outstanding subscriptions, options, warrants, calls, or rights 

 

56

 

(including preemptive rights) to acquire, and no
outstanding securities or instruments convertible into any Equity Interests of
any Subsidiary.

 

(c)                                  Extent of
Business; Insignificant Subsidiaries.  Neither Elgint Corp nor SK Europe, Inc. engage in any
business or own any significant assets or have any material liabilities.

 

Section 3.13.                             Insurance.  Holdings and
each Subsidiary maintains with financially sound and reputable insurers,
insurance with respect to its properties and business against such casualties
and contingencies and in such amounts as are usually carried by businesses
engaged in similar activities as Holdings and the Subsidiaries and located in
similar geographic areas in which Holdings and the Subsidiaries operate.

 

Section 3.14.                             Labor Matters. 
As of the Effective Date, there are no strikes, lockouts or slowdowns
against Holdings or any Subsidiary pending or, to the knowledge of Holdings,
threatened.  The consummation of the
Transactions will not give rise to any right of termination or right of
renegotiation on the part of any union under any collective bargaining
agreement to which Holdings or any Subsidiary is bound.

 

Section 3.15.                             Solvency.  Immediately
after the consummation of the Transactions to occur on the Effective Date and
immediately following the making of each Loan made on the Effective Date and
after giving effect to the application of the proceeds of such Loans:  (a) the fair value of the assets of the
Loan Parties taken as a whole, at a fair valuation, will exceed their debts and
liabilities, subordinated, contingent or otherwise; (b) the present fair
saleable value of the property of the Loan Parties taken as a whole will be
greater than the amount that will be required to pay the probable liability of
their debts and other liabilities, subordinated, contingent or otherwise, as
such debts and other liabilities become absolute and matured; (c) the Loan
Parties taken as a whole will be able to pay their debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; and (d) the Loan Parties taken as a whole will not
have unreasonably small capital with which to conduct the business in which
they are engaged as such business is now conducted and is proposed to be
conducted following the Effective Date. 
As used in this Section 3.15, the term “fair value” means
the amount at which the applicable assets would change hands between a willing
buyer and a willing seller within a reasonable time, each having reasonable
knowledge of the relevant facts, neither being under any compulsion to act,
with equity to both and “present fair saleable value” means the amount that may
be realized if the applicable company’s aggregate assets are sold with
reasonable promptness in an arm’s length transaction under present conditions
for the sale of a comparable business enterprises.

 

Section 3.16.                             Margin Securities. 
Neither Holdings nor any Subsidiary is engaged principally, or as one of
its important activities, in the business of extending credit for the purpose
of purchasing or carrying margin stock (within the meaning of Regulations U
or X of the Board of Governors of the Federal Reserve System), and no part
of the proceeds of any Loan will be used to purchase or carry any margin stock
or to extend credit to others for the purpose of purchasing or carrying margin
stock; provided that proceeds of a Loan may be used to purchase margin stock in
an acquisition permitted by Section 6.04(k) if after applying the
proceeds of the applicable Loan:  (a) not
more than 25% of the value of the Holdings’ and the Subsidiaries’ assets are
represented by the margin stock or (b) the Loan can otherwise be made in
compliance with Regulations U of the Board of Governors of the Federal
Reserve System.

 

Section 3.17.                             Common Enterprise. 
The successful operation and condition of each of the Loan Parties is
dependent on the continued successful performance of the functions of the group
of the Loan Parties as a whole and the successful operation of each of the Loan
Parties is dependent on the successful performance and operation of each other
Loan Party.  Each Loan Party expects to
derive benefit, directly or indirectly, from (a) successful operations of
each of the other Loan Parties and (b) the credit extended 

 

57

 

by the Lenders to the Borrower hereunder, both in their separate
capacities and as members of the group of companies.  Each Loan Party has determined that
execution, delivery, and performance of this Agreement and any other Loan
Documents to be executed by such Loan Party is within its purpose, will be of
direct and indirect benefit to such Loan Party, and is in its best interest.

 

ARTICLE IV.

 

Conditions

 

Section 4.01.                             Effective Date. 
The obligations of the Lenders to make Loans and any agreement of the
Issuing Bank to issue Letters of Credit hereunder shall not become effective
until the date on which each of the following conditions is satisfied (or
waived in accordance with Section 10.02):

 

(a)                                  Execution and Delivery of This Agreement. 
The Administrative Agent (or its counsel) shall have received from each
party hereto either (i) a counterpart of this Agreement signed on behalf
of such party or (ii) written evidence satisfactory to the Administrative
Agent (which may include telecopy transmission of a signed signature page of
this Agreement) that such party has signed a counterpart of this Agreement.

 

(b)                                 Legal Opinions. 
The Administrative Agent shall have received a favorable written opinion
(addressed to the Administrative Agent and the Lenders and dated the Effective
Date) of counsel for the Loan Parties covering the matters relating to the Loan
Documents similar to those addressed in Sections 3.01, 3.02 and 3.03 of this
Agreement and the creation and perfection of the Administrative Agent’s Liens
created by the Security Agreement and covering such other matters relating to
the Loan Parties or the Loan Documents (other than the Mortgages) as the
Administrative Agent shall reasonably request, limited however, in all cases,
to the laws of the states of New York, Wisconsin, Delaware and California.  Holdings and the Borrower hereby requests
such counsel to deliver such opinions.

 

(c)                                  Corporate Authorization Documents. 
The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably request
relating to the organization, existence and good standing of each Loan Party,
the authorization of the Transactions and any other legal matters relating to
the Loan Parties, the Loan Documents or the Transactions, all in form and
substance satisfactory to the Administrative Agent and its counsel.

 

(d)                                 Closing Certificate. 
The Administrative Agent shall have received a certificate, dated the
Effective Date and signed by the President, a Vice President or a Financial
Officer of the Borrower, confirming compliance with the conditions set forth in
paragraphs (a) and (b) of Section 4.02.

 

(e)                                  Fees.  The
Administrative Agent shall have received all fees and other amounts due and
payable on or prior to the Effective Date, including, to the extent invoiced and
to the extent Holdings shall have been provided with the supporting
documentation it may reasonably request, reimbursement or payment of all
out-of-pocket expenses (including fees, charges and disbursements of counsel)
required to be reimbursed or paid by any Loan Party hereunder or under any
other Loan Document.

 

(f)                                    Guaranty Agreement. 
The Administrative Agent shall have received counterparts of the
Guaranty Agreement signed on behalf of Holdings and each Subsidiary Loan Party.

 

(g)                                 Personal Property Security. 
The Administrative Agent shall have received counterparts of the
Security Agreement signed on behalf of each Loan Party, together with the
following:

 

58

 

(i)                                     evidence reasonably satisfactory to the
Administrative Agent that upon the funding of the initial Loans hereunder, all
the certificates representing all the outstanding Equity Interests issued by
each Subsidiary owned by or on behalf of any Loan Party as of the Effective
Date (except that stock certificates representing shares of stock of an
Excluded Foreign Subsidiary shall be limited to 65% of the outstanding voting
interests of such Excluded Foreign Subsidiary) and stock powers or other
instruments of transfer, endorsed in blank, with respect to such stock
certificates, shall be promptly delivered to the Administrative Agent;

 

(ii)                                  all documentation, including Uniform
Commercial Code financing statements, required by law or reasonably requested
by the Administrative Agent to be filed, registered or recorded to create or
perfect the Liens intended to be created under the Security Agreement;

 

(iii)                               the results of the search of the Uniform
Commercial Code (or equivalent) filings, tax Liens and judgment Liens made with
respect to the Loan Parties and any predecessor company identified pursuant to
the Security Agreement in each jurisdiction deemed necessary by the
Administrative Agent, including each jurisdiction (A) in which a Loan
Party is organized and (B) where a Loan Party has its chief executive
office or has had its chief executive office within the last four months prior
to the Effective Date; and copies of the financing statements (or other
documents) disclosed by such search and evidence reasonably satisfactory to the
Administrative Agent that the Liens indicated by such financing statements (or
similar documents) are permitted by Section 6.02 or have been released or,
simultaneously with the initial Loans hereunder, will be released or assigned
to the Administrative Agent; and

 

(iv)                              Subject to the terms of the Security
Agreement:  (A) such other executed
documentation as the Administrative Agent may deem necessary to perfect and
protect its Liens, including, without limitation, intellectual property
assignments for all intellectual property pledged as Collateral, and (B) all
other Collateral the possession of which is necessary to perfect the Lien
therein.

 

(h)                                 Real Property Security Documents. 
The Administrative Agent shall have received (i) counterparts of a
Mortgage with respect to each Mortgaged Property signed on behalf of the record
owner of such Mortgaged Property, (ii) an Assignment of Lien for each
Existing Mortgage, (iii) such executed modifications to the Existing
Mortgages as the Administrative Agent may reasonably request to ensure that the
Existing Mortgages create a Lien on the related Mortgaged Property in favor of
the Administrative Agent securing the Obligations, (iv) copies of the
title insurance policies covering the Existing Mortgages and all documentation
listed as exceptions thereto, (v) to the extent not covered by a policy
described in clause (iv), a binding commitment for a policy of title
insurance issued by a nationally recognized title insurance company, in an
amount not less than the then market value of such Mortgaged Property (as
reasonably determined by Holdings), insuring the Lien of each such Mortgage as
a valid first Lien on the Mortgaged Property described therein, free of any
other Liens except as permitted by Section 6.02, together with all
documentation listed as exceptions thereto and such endorsements, coinsurance
and reinsurance as the Administrative Agent may reasonably request, and (vi) such
surveys and abstracts and other title reports relating to the Mortgaged
Property as the Administrative Agent may reasonably request.

 

(i)                                     Insurance.  The
Administrative Agent shall have received evidence that the insurance required
by Section 5.06 is in effect.

 

(j)                                     Rights Offering. 
All consents and approvals required to be obtained from any Governmental
Authority or other Person in connection with the Rights Offering shall have
been obtained.  The Rights Offering shall
have been, or substantially simultaneously with the initial funding of Loans on
the Effective Date shall be, consummated in accordance with the documentation
governing the terms thereof and applicable law, without any amendment to or
waiver of any material terms or conditions of 

 

59

 

such documentation not approved by the Required
Lenders.  The Administrative Agent shall
have received copies of the documentation governing the terms of the Rights
Offering and all certificates, opinions and other documents delivered
thereunder, including the following as contemplated thereby: (i) the final
Offering Memorandum; (ii) an amendment to Holdings’ certificate of
incorporation to increase its authorized common stock, (iii) evidence of
the shareholder approval of such amendment, (iv) a copy of the proxy
statement prepared for Holdings’ annual 2006 shareholder meeting; and (v) copies
of the Standby Purchase Agreements executed in connection with the Rights
Offering.

 

(k)                                  Payoff of Existing Indebtedness. 
A payoff letter from: (i) the administrative agent acting for the
holders of the Take Back Notes and (ii) the administrative agent under the
Existing Credit Facility pursuant to which each such party shall agree that
upon payment of the amounts set forth therein, all Liens securing the
Indebtedness described therein will be released or assigned to the
Administrative Agent.

 

The Administrative
Agent shall notify the Borrower and the Lenders of the Effective Date, and such
notice shall be conclusive and binding. 
Notwithstanding the foregoing, the obligations of the Lenders to make
Loans and any agreement of the Issuing Bank to issue Letters of Credit
hereunder shall not become effective unless each of the foregoing conditions is
satisfied (or waived pursuant to Section 10.02) at or prior to 3:00 p.m.,
Houston, Texas time, on September 30, 2006 (and, in the event such conditions
are not so satisfied or waived, the Commitments shall terminate at such time).

 

Section 4.02.                             Each Credit Event. 
The obligation of each Lender to make a Loan on the occasion of any
Borrowing, and any agreement of the Issuing Bank to issue, amend, renew or
extend any Letter of Credit, is subject to receipt of the request therefor in
accordance herewith and to the satisfaction of the following conditions:

 

(a)                                  Representations and Warranties. 
The representations and warranties of each Loan Party set forth in the
Loan Documents shall be true and correct in all material respects on and as of
the date of such Borrowing or the date of issuance, amendment, renewal or
extension of such Letter of Credit, as applicable, with the same force and
effect as if such representations and warranties had been made on and as of
such date except to the extent such representations and warranties relate
specifically to another date.

 

(b)                                 No Default.  At the time
of and immediately after giving effect to such Borrowing or the issuance,
amendment, renewal or extension of such Letter of Credit, as applicable, no
Default shall have occurred and be continuing.

 

Each Borrowing and
each issuance, amendment, renewal or extension of a Letter of Credit shall be
deemed to constitute a representation and warranty by Holdings on the date
thereof as to the matters specified in paragraphs (a) and (b) of
this Section.

 

ARTICLE V.

 

Affirmative
Covenants

 

Until the Loan Obligations have been Fully Satisfied,
Holdings and the Borrower covenant and agree with the Lenders that:

 

Section 5.01.                             Financial Statements and Other
Information.  Holdings will furnish to the Administrative
Agent:

 

60

 

(a)                                  Annual Audit. 
Within 120 days after the end of each fiscal year of Holdings, its
audited consolidated balance sheets and related statements of operations,
stockholders’ equity and cash flows as of the end of and for such year, setting
forth in each case in comparative form the figures for the previous fiscal year,
all reported on by a firm of independent certified public accountants of
recognized national standing (without a “going concern” or like qualification
or exception and without any qualification or exception as to the scope of such
audit) to the effect that such consolidated financial statements present fairly
in all material respects the financial condition and results of operations of
the Holdings and the Subsidiaries on a consolidated basis in accordance with
GAAP;

 

(b)                                 Quarterly Financial Statements. 
Within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of Holdings, its consolidated balance sheets and
related statements of operations, stockholders’ equity and cash flows as of the
end of and for such fiscal quarter and the then elapsed portion of the fiscal
year, setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet, as of
the end of) the previous fiscal year, all certified by one of its Financial
Officers as presenting fairly in all material respects the financial condition
and results of operations of Holdings and the Subsidiaries on a consolidated
basis in accordance with GAAP, subject to normal year-end audit adjustments and
the absence of footnotes;

 

(c)                                  Compliance Certificate. 
Concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial
Officer of Holdings in substantially the form of Exhibit B hereto: (i) certifying
as to whether a Default has occurred and, if a Default has occurred, specifying
the details thereof and any action taken or proposed to be taken with respect
thereto, (ii) setting forth reasonably detailed calculations demonstrating
compliance with Article VII and of the Applicable Rate, (iii) stating
whether any change in GAAP or in the application thereof has occurred since the
date of Holdings’ audited financial statements referred to in Section 3.04
and, if any such change has occurred, specifying the effect of such change on
the financial statements accompanying such certificate, and (iv) with
respect to each compliance certificate delivered with the financial statements
required by clause (a) above, beginning with such certificate
delivered for the fiscal year ending on or about December 31, 2007,
setting forth reasonably detailed calculations of Excess Cash Flow for such
fiscal year.

 

(d)                                 Accountant’s No Default Statement. 
Concurrently with any delivery of financial statements under
clause (a) above, a certificate of the accounting firm that reported
on such financial statements stating whether they obtained knowledge during the
course of their examination of such financial statements of any Default (which
certificate may be limited to the extent required by accounting rules or
guidelines);

 

(e)                                  Budget.  No later than
45 days following the first day of each fiscal year of the Holdings, a detailed
consolidated budget for such fiscal year (including a projected consolidated
balance sheet and related statements of projected operations and cash flow as
of the end of and for such fiscal year and setting forth the assumptions used
for purposes of preparing such budget);

 

(f)                                    Public Reports. 
Promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
Holdings or any Subsidiary with the Securities and Exchange Commission, or any
Governmental Authority succeeding to any or all of the functions of said
Commission, or with any national securities exchange, or distributed by
Holdings to its shareholders generally, as the case may be; and

 

(g)                                 Additional Information. 
Promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of Holdings
or any Subsidiary, or compliance with the terms of any Loan Document, as the
Administrative Agent or any Lender may reasonably request.

 

61

 

Section 5.02.                             Notices of Material Events. 
Holdings will furnish to the Administrative Agent prompt written notice
of the following:

 

(a)                                  Default.  The
occurrence of any Default;

 

(b)                                 Notice of Proceedings. 
The filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting any Loan
Party or any Affiliate thereof that, if adversely determined, could reasonably
be expected to result in a Material Adverse Effect;

 

(c)                                  ERISA Event. 
The occurrence of any ERISA Event that, alone or together with any other
ERISA Events that have occurred, could reasonably be expected to result in
liability of Holdings and the Subsidiaries in an aggregate amount exceeding
$1,000,000; and

 

(d)                                 Material Adverse Effect. 
Any other development that results in, or could reasonably be expected
to result in, a Material Adverse Effect.

 

Each notice
delivered under this Section shall be accompanied by a statement of a
Financial Officer or other executive officer of 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 5.03.                             Existence; Conduct of Business. 
Holdings will, and will cause each of the Subsidiaries to, do or cause
to be done all things necessary to preserve, renew and keep in full force and
effect its legal existence.  Holdings
will, and will cause each of the Subsidiaries to, do or cause to be done all
things necessary to preserve, renew and keep in full force and effect the
rights, licenses, permits, privileges, franchises, patents, copyrights,
trademarks and trade names, the failure of which to preserve, renew or maintain
would have a Material Adverse Effect. 
The provisions of this Section 5.03 shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 6.03 or
a transaction permitted under Section 6.05.

 

Section 5.04.                             Payment of Tax Liabilities. 
Holdings will, and will cause each of the Subsidiaries to, pay its Tax
liabilities before the same shall become delinquent or in default, except where
(a) the validity or amount thereof is being contested in good faith by
appropriate proceedings, (b) Holdings or such Subsidiary has set aside on
its books adequate reserves with respect thereto in accordance with GAAP, (c) such
contest effectively suspends collection of the contested liability and the
enforcement of any Lien securing such liability (provided that the provisions
of this clause (c) shall not be applicable if the amount of the liability
in question does not exceed $100,000) and (d) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.

 

Section 5.05.                             Maintenance of Properties. 
Holdings will, and will cause each of the Subsidiaries to, keep and maintain
all property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted.

 

Section 5.06.                             Insurance.  Holdings
will, and will cause each of the Subsidiaries to, maintain, with financially
sound and reputable insurance companies insurance in such amounts (with no
greater risk retention) and against such risks as are customarily maintained by
companies of established repute engaged in the same or similar businesses
operating in the same or similar locations. 
Holdings will furnish to the Lenders, upon request of the Administrative
Agent, information in reasonable detail as to the insurance so maintained.  Each general liability insurance policy shall
name the Administrative Agent as additional insured.  Each insurance policy covering Collateral
shall name the Administrative Agent as loss payee and shall provide that the
carrier will endeavor to give the Administrative Agent thirty (30) 

 

62

 

days prior written notice to the Administrative Agent
(or 10 days in the case of nonpayment of premiums) before canceling or
materially reducing coverage levels under such policies.

 

Section 5.07.                             Casualty and Condemnation. 
Holdings will:  (a) furnish
to the Administrative Agent and the Lenders prompt written notice of any
casualty or other insured damage to any material portion of any Collateral or
the commencement of any action or proceeding for the taking of any Collateral
or any material part thereof or interest therein under power of eminent domain or by
condemnation or similar proceeding; and (b) ensure that the Net Proceeds
of any such event (whether in the form of insurance proceeds, condemnation
awards or otherwise) are collected and applied in accordance with, and to the
extent required by, Section 2.11(c).

 

Section 5.08.                             Books and Records; Inspection Rights. 
Holdings will, and will cause each of the Subsidiaries to, keep proper
books of record and account in which materially true and correct entries are
made of all dealings and transactions in relation to its business and
activities.  Holdings will, and will
cause each of the Subsidiaries to, permit any representatives designated by the
Administrative Agent (which may include representatives of any Lender), upon
reasonable prior notice, to visit and inspect its properties, to examine and
make extracts from its books and records, and to discuss its affairs, finances
and condition with its officers and independent accountants, all at such
reasonable times and as often as reasonably requested; provided  that
if no Event of Default exists, the Administrative Agent shall not conduct more
than two inspections of the Loan Party’s property in any twelve month
period.  If an Event of Default exists,
the Administrative Agent’s inspection rights shall not be limited.

 

Section 5.09.                             Compliance with Laws. 
Holdings will, and will cause each of the Subsidiaries to, comply with
all laws, rules, regulations and orders of any Governmental Authority
applicable to it or its property, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.

 

Section 5.10.                             Use of Proceeds, Letters of Credit and
Rights Offering Proceeds.  The proceeds of the Revolving
Loans, Swingline Loans and Term Loans will be used to refinance existing
indebtedness and for other general corporate purposes of the Borrower and the
Subsidiaries in the ordinary course of business.  The proceeds of the Synthetic L/C Loans will
be used only to fund Synthetic L/C Disbursements in accordance with Section 2.05(f)(i).  No part of the proceeds of any Loan will be
used, whether directly or indirectly, for any purpose that entails a violation
of any of the Regulations of the Board, including Regulations G, U and
X.  Letters of Credit will be issued only
to support transactions entered into by the Borrower and the Subsidiaries in
the ordinary course of business. 
Holdings agrees to use the proceeds received from the initial Loans
hereunder and from the Rights Offering to redeem all of the SK Preferred Stock
and repay in full the Take Back Notes and the Existing Credit Facility and to
pay the fees and expenses incurred in connection with the Transactions.

 

Section 5.11.                             Additional Subsidiaries. 
If any additional Subsidiary is formed or acquired after the Effective
Date, Holdings will notify the Administrative Agent and the Lenders thereof and
(a) if such Subsidiary is a Domestic Subsidiary and not an Excluded
Foreign Subsidiary, Holdings will:  (i) cause
such Subsidiary to become a party to the Security Documents promptly after such
Subsidiary is formed or acquired; (ii) deliver all documentation as the
Administrative Agent may require to evidence the authority of such Subsidiary
to execute, deliver and perform the Loan Documents and to evidence the
existence and good standing of such Subsidiary; and (iii) cause such
Subsidiary to promptly take such actions to create and perfect Liens on such
Subsidiary’s assets to secure the Obligations as the Administrative Agent shall
reasonably request and (b) if any Equity Interest in such Subsidiary are
owned by any Loan Party, Holdings will cause such Equity Interests to be
pledged pursuant to the Security Documents promptly after such Subsidiary is
formed or acquired (except that, if such Subsidiary is an Excluded Foreign 

 

63

 

Subsidiary, the Equity Interests issued by such Subsidiary to be
pledged pursuant to the Security Documents shall be limited to 65% of the
outstanding voting Equity Interests of such Subsidiary).

 

Section 5.12.                             Further Assurances.

 

(a)                                  General Further Assurances. 
Subject to the terms of the Security Agreement, Holdings will, and will
cause each Subsidiary who is a Loan Party to, execute any and all further
documents, financing statements, agreements and instruments, and take all such
further actions (including the filing and recording of financing statements,
fixture filings, mortgages, deeds of trust and other documents), which may be
required under any applicable law, or which the Administrative Agent may
reasonably request, to effectuate the transactions contemplated by the Loan
Documents or to grant, preserve, protect or perfect the Liens created or
intended to be created by the Security Documents or the validity or priority of
any such Lien, all at the expense of the Loan Parties.  Holdings also agrees to provide to the
Administrative Agent, from time to time upon request, evidence reasonably
satisfactory to the Administrative Agent as to the perfection and priority of
the Liens created or intended to be created by the Security Documents.

 

(b)                                 Acquisition of Material Assets. 
Subject to the terms of the Security Agreement, if any Material Real
Property is acquired by any Loan Party after the Effective Date or if any
assets are acquired in an acquisition permitted hereby by any Loan Party after
the Effective Date (other than: (i) assets constituting Collateral under
the Security Documents that become subject to the Lien of the Security
Documents upon acquisition thereof; (ii) 35% of the voting stock of
Excluded Foreign Subsidiaries, (iii) equipment subject to certificate of
title filing requirements and other rolling stock, and (iv) property
located outside the United States of America and Puerto Rico), Holdings will
notify the Administrative Agent and the Lenders thereof, and, if requested by
the Administrative Agent, Holdings will promptly cause such assets to be
subjected to a Lien securing the Obligations and will take, and cause the other
Loan Parties to 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 (a) of this Section, all at
the expense of the Loan Parties.

 

(c)                                  Mortgaged Property.

 

(i)                                     Appraisals.  If an Event
of Default exists or one or more of the Lenders are required by applicable law
to obtain an appraisal of the Mortgaged Property and the Administrative Agent
so requests, Holdings shall deliver or cause to be delivered to the
Administrative Agent a current appraisal of each parcel of the Mortgaged
Property or any portion thereof, such appraisals to be in form and scope
satisfactory to the Administrative Agent.

 

(ii)                                  Title Insurance Policies. 
Within thirty (30) days following the delivery of each modification to
the Existing Mortgages and each new Mortgage under Sections 4.01 or 5.12(b),
Holdings shall deliver or cause to be delivered to the Administrative Agent a
mortgagee policy of title insurance (or, with respect to the Existing Mortgages
if available, endorsements to the existing mortgagee policies of title
insurance issued in respect of the Existing Mortgages) written by a title
insurance company reasonably acceptable to the Administrative Agent, and in a
form reasonably satisfactory to the Administrative Agent, in an amount not less
than the then insurable value of such Mortgaged Property for new Mortgages
under Section 5.12(b) (as reasonably determined by Holdings) or, with
respect to the Existing Mortgages, in the amount of the existing mortgagee
policies of title insurance issued in respect of the Existing Mortgages,
insuring that the Mortgage creates a valid first Lien (subject to Liens
permitted under Section 6.02 on such Mortgaged Property), with no
exceptions which the Administrative Agent shall not have approved, such
approval not to be unreasonably withheld or delayed.  The mortgagee policy of title insurance shall
include an endorsement insuring against the effect of future advances under the
Loan Documents, for mechanics’ liens and for any other matter that the
Administrative Agent may 

 

64

 

reasonably request, and shall provide for affirmative
insurance and such reinsurance as the Administrative Agent may reasonably
request.

 

(iii)                               Environmental Reports. 
If the Administrative Agent at any time has reasonable basis to believe
that there may be a material violation of any Environmental Laws by, or any
material liability arising under Environmental Laws of, any Loan Party or
related to any Mortgaged Property or any real property adjacent to any
Mortgaged Property, then Holdings agrees, upon the request of the
Administrative Agent, to provide the Administrative Agent with such
environmental reports and assessments, engineering studies or other written
material or data as the Administrative Agent may reasonably require relating
thereto.

 

(iv)                              Environmental Remediation. 
In the event that the Administrative Agent determines from the
environmental reports or information delivered pursuant to clause (iii) of
this Section or pursuant to any other reasonably reliable information,
that Remedial Action to correct an adverse environmental condition is required
under Environmental Law with respect to any Loan Party or the Mortgaged
Property or any other property of any Loan Party, Holdings shall take such
action as is required under Environmental Law to cure any material violation or
potential violation of any Environmental Laws or any material actual or
potential liability under any Environmental Law.

 

(d)                                 Holdings Shareholders. 
By August 15, 2006, Holdings shall provide a listing of all of
Holdings’ shareholders who own 5% or more of the capital stock of Holdings
after giving effect to the Transactions and the number of shares of the capital
stock of Holdings held by each.

 

Section 5.13.                               Performance of Obligations. 
Holdings will, and will cause each of the Subsidiaries to, perform all
of its obligations under the terms of each mortgage, indenture, security
agreement, loan agreement or credit agreement and each other agreement,
contract or instrument by which it is bound, except such non-performances as
could not, either individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.

 

ARTICLE VI.

 

Negative Covenants

 

Until the Loan Obligations have been Fully Satisfied,
Holdings and the Borrower covenant and agree with the Lenders that:

 

Section 6.01.                             Indebtedness. 
Holdings will not, and will not permit any Subsidiary to, create, incur,
assume or permit to exist any Indebtedness, except:

 

(a)                                  Indebtedness created under the Loan
Documents;

 

(b)                                 Indebtedness existing on the date hereof
and set forth in Schedule 6.01 and extensions, renewals and replacements
of any such Indebtedness that do not increase the outstanding principal amount
thereof or result in any earlier maturity date or decreased weighted average
life thereof; provided that any Indebtedness outstanding in connection with the
SK Preferred Stock must be repaid within 45 days of the Effective Date and any
Indebtedness outstanding in connection with the Take Back Notes and the
Existing Credit Facility shall not be permitted after the initial Loans are
made hereunder;

 

(c)                                  Indebtedness of Borrower to any
subsidiary of Borrower and of any subsidiary of Borrower to Borrower or any
other subsidiary of Borrower; provided that Indebtedness that is owed to
any Loan Party by any subsidiary that is not a Loan Party shall be subject to Section 6.04;

 

65

 

 

(d)           Guarantees by Holdings of Indebtedness and other
obligations of any Subsidiary and by any Subsidiary of Indebtedness and other
obligations of Holdings or any other Subsidiary; provided that
Guarantees by any Loan Party of Indebtedness of any Subsidiary that is not a
Loan Party shall be subject to Section 6.04;

 

(e)           Indebtedness (including Capital Lease Obligations) of
the Borrower or any subsidiary of Borrower incurred to finance the acquisition,
construction or improvement of any fixed or capital asset (including real
property), and any Indebtedness assumed in connection with the acquisition of
any such asset or secured by a Lien on any such assets prior to the acquisition
thereof and extensions, renewals and replacements of any such Indebtedness that
do not increase the outstanding principal amount thereof or result in an
earlier maturity date or decreased weighted average life thereof; provided
that:

 

(i)            no Default exists or would result
therefrom;

 

(ii)           such Indebtedness is incurred prior
to or within 90 days after such acquisition or the completion of such
construction or improvement; provided that neither the Borrower nor any
subsidiary of Borrower shall be required to comply with this 90 day requirement
with respect to any financing of vehicles and neither the Borrower nor any
subsidiary of Borrower shall be required to comply with this 90 day requirement
with respect to any sale and leaseback transaction until the aggregate proceeds
received from all such sales (excluding the sales of vehicles) made since the
Effective Date equals or exceeds $7,500,000; and

 

(iii)          at the time Indebtedness is incurred
or assumed under the permissions of this paragraph (e) either:

 

(A)          the
Leverage Ratio as calculated for the four fiscal quarter period then most recently
ended for which financial statements are available on a pro forma basis after
giving effect to the Indebtedness to be incurred is equal to or less than the
ratio then in effect under Section 7.01 reduced by 0.50 or

 

(B)           the
aggregate of the then outstanding principal amount of Indebtedness incurred
under the permissions of this clause (e) (including the Indebtedness
then proposed to be incurred or assumed) shall not exceed $50,000,000;

 

(f)            Indebtedness arising in connection with Swap
Agreements permitted by Section 6.07;

 

(g)           Indebtedness of the type described in paragraph (e) of
this Section of any Person that becomes a subsidiary of Borrower after the
date hereof; provided that (i) such Indebtedness exists at the time
such Person becomes a subsidiary of Borrower and is not created in
contemplation of or in connection with such Person becoming a subsidiary of
Borrower, (ii) such Person became a subsidiary of the Borrower in a
transaction permitted by Section 6.04(k), (iii) the aggregate
principal amount of all Indebtedness permitted by this paragraph (g) which
is secured shall not exceed $5,000,000 at any one time outstanding, and (iv) the
aggregate principal amount of all Indebtedness permitted by this
paragraph (g) which is unsecured shall not exceed $15,000,000 at any
one time outstanding;

 

(h)           to the extent constituting Indebtedness, customary
indemnification and purchase price adjustments or similar obligations incurred
in connection with acquisitions and dispositions of assets otherwise permitted
hereunder;

 

66

 

 

(i)            to the extent constituting Indebtedness, deferred
compensation payable to directors, officers or employees of the Holdings and
the Subsidiaries;

 

(j)            cash management obligations and Indebtedness incurred
by Holdings or any Subsidiary in respect of netting services, overdraft
protections and similar arrangements, in each case entered into in the ordinary
course of business in connection with cash management and deposit accounts and
not involving the borrowing of money;

 

(k)           obligations, contingent or otherwise, for the payment
of money under any noncompete, consulting or similar agreement entered into
with the seller of a
Target or any other arrangements providing for the deferred payment of the
purchase price for an acquisition permitted hereby; provided that the
Indebtedness permitted by this paragraph (k) is incurred in a
transaction permitted by Section 6.04(k);

 

(l)            Indebtedness arising from the financing of insurance
premiums with the applicable insurance company or an Affiliate thereof provided
that no Default exists or would otherwise result therefrom; and

 

(m)          other unsecured Indebtedness of the Borrower and the
subsidiaries of the Borrower; provided that (i) no Default exists
or would result therefrom and (ii) either (A) the Leverage Ratio as
calculated for the four fiscal quarter period then most recently ended for
which financial statements are available on a pro forma basis after giving
effect to the Indebtedness to be incurred is equal to or less than 3.50 to 1.00
or (B) the then aggregate outstanding principal amount of Indebtedness
incurred under the permissions of this paragraph (m) (including the
Indebtedness then proposed to be incurred or assumed) shall not exceed $25,000,000.

 

Section 6.02.                             Liens.  Holdings will
not, and will not permit any Subsidiary to, create, incur, assume or permit to
exist any Lien on any property or asset now owned or hereafter acquired by it
except:

 

(a)           Liens created under the Loan Documents;

 

(b)           Permitted Encumbrances;

 

(c)           any Lien on any asset of the Borrower or any
subsidiary of the Borrower existing on the date hereof and set forth in
Schedule 6.02; provided that (i) such Lien shall not apply to
any other property or asset of the Borrower or any subsidiary of Borrower and (ii) such
Lien shall secure only those obligations which it secures on the date hereof
and extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof;

 

(d)           any Lien existing on any fixed or capital asset prior
to the acquisition thereof by the Borrower or any subsidiary of Borrower or
existing on any fixed or capital asset of any Person that becomes a subsidiary
of Borrower after the date hereof prior to the time such Person becomes a
subsidiary of Borrower; provided that (A) such Lien is not created
in contemplation of or in connection with such acquisition or such Person
becoming such a subsidiary, as the case may be, (B) such Lien shall not
apply to any other asset of the Borrower or any subsidiary of Borrower and (C) such
Lien shall secure only those obligations which it secures on the date of such
acquisition or the date such Person becomes such a subsidiary, as the case may
be, and extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof;

 

(e)           Liens on fixed or capital assets (including real
property) acquired, constructed or improved by the Borrower or any subsidiary
of Borrower; provided that (A) such security interests secure

 

67

 

Indebtedness permitted by paragraph (e) of Section 6.01
and (B) such security interests shall not apply to any other property or
assets of the Borrower or any subsidiary of the Borrower;

 

(f)            to the extent constituting Liens, requirements imposed
on Borrower or any subsidiary of Borrower by Governmental Authorities to
maintain certain levels of capital or net worth due to the regulated nature of
such Person’s operations;

 

(g)           deposit, escrow or similar accounts held by customers
of Borrower or any subsidiary of Borrower as security for their respective
obligations under customer contracts entered into in the ordinary course of
business on a basis consistent with past practices;

 

(h)           Liens on the right, title and interest of Holdings and
the Subsidiaries in the proceeds from any insurance policy and the right to the
return of unearned premiums thereunder securing the Indebtedness permitted by Section 6.01(l) incurred
to finance the premiums under each such policy; and

 

(i)            other Liens securing Indebtedness or other obligations
in an aggregate principal amount not to exceed $10,000,000 at any time
outstanding; provided  that the aggregate book value of all assets
encumbered by all the Liens permitted under this paragraph (i) shall
not exceed $10,000,000, with the book value of an asset determined at the time
of the granting of the Lien therein.

 

Section 6.03.                             Fundamental Changes; Limitation on
Business.

 

(a)           Fundamental Change.  Holdings will
not, nor will it permit any Subsidiary to, merge into or consolidate with any
other Person, or permit any other Person to merge into or consolidate with it,
or liquidate or dissolve, except that, if at the time thereof and immediately
after giving effect thereto no Default shall have occurred and be
continuing:  (a) any subsidiary of
Borrower may merge into the Borrower in a transaction in which the Borrower is
the surviving corporation, (b) any subsidiary of Borrower may merge into
any other subsidiary of Borrower in a transaction in which the surviving entity
is a subsidiary of Borrower and (if any party to such merger is a Subsidiary
Loan Party) is a Subsidiary Loan Party, (c) any subsidiary of the Borrower
or the Borrower may merge into another Person in connection with an acquisition
permitted by Section 6.04 as long as, if the Borrower is involved, the
Borrower is the surviving Person or if a subsidiary of the Borrower is
involved, the surviving Person is or becomes a Subsidiary Loan Party and (d) any
subsidiary of Borrower may liquidate or dissolve if Holdings determines in good
faith that such liquidation or dissolution is in the best interests of Holdings
and is not materially disadvantageous to the Lenders and if such subsidiary is
a Subsidiary Loan Party, its assets are transferred to a Subsidiary Loan Party;
provided that any such merger involving a Person that is not a
Wholly-Owned Subsidiary immediately prior to such merger shall not be permitted
unless also permitted by Section 6.04.

 

(b)           Limitation on Business. 
Holdings will not, and will not permit any of the Subsidiaries to,
engage to any material extent in any business other than businesses of the type
conducted by Holdings and the Subsidiaries on the Effective Date and businesses
reasonably related thereto and businesses ancillary or complimentary
thereto.  Notwithstanding the
foregoing or anything else in this Agreement to the contrary, Holdings will not
permit Elgint Corp or
SK Europe, Inc. to engage in any business or own any significant assets
or have any material liabilities; provided that Elgint Corp and SK Europe, Inc. may engage in
those activities that are incidental to (i) the maintenance of its
existence in compliance with applicable law and (ii) legal, tax and
accounting matters in connection with any of the foregoing activities.

 

Section 6.04.                             Investments, Loans, Advances, Guarantees
and Acquisitions.  Holdings will not, and will not permit any of
the Subsidiaries to, purchase, hold or acquire (including pursuant to any
merger

 

68

 

with any Person that was not a Wholly-Owned Subsidiary prior to such
merger) any Equity Interests in or evidences of indebtedness or other
securities (including any option, warrant or other right to acquire any of the
foregoing) of, make or permit to exist any loans or advances to, Guarantee any
obligations of, or make or permit to exist any investment or any other interest
in, any other Person, or purchase or otherwise acquire (in one transaction or a
series of transactions) all or substantially all of the assets of a Person or
of a division or branch of such Person or any other assets of any other Person
constituting a business unit, except:

 

(a)           Permitted Investments;

 

(b)           investments existing on the date hereof and set forth
on Schedule 6.04;

 

(c)           investments
by Holdings and the Subsidiaries in Equity Interests in their respective
Subsidiaries (including any Person who after giving effect to such investment
becomes a Subsidiary); provided that (i) any such Equity Interests
held by a Loan Party shall be pledged pursuant to the Security Documents
(subject to the limitations applicable to common stock of an Excluded Foreign
Subsidiary referred to in Section 5.11); (ii) the aggregate amount of
the Net Investments by Loan Parties in Subsidiaries who are not Loan Parties
shall not exceed $30,000,000 at any time; and (iii) the aggregate amount
of the Net Investments by Loan Parties in Safety-Kleen de Mexico,
S. de R.L. de C.V., SK Servicos Ambientales Administrativos, S. de R.L. de C.V.
or any other subsidiary that is organized under the laws of Mexico shall not
exceed $10,000,000 at any time (as used in this paragraph (c), the term “Net
Investments” means at any time and with respect to any Loan Party, the sum
of (i) aggregate costs of the investments made by such Loan Party in
Subsidiaries who are not Loan Parties (including, if required by Section 4.5
of the Security Agreement, the amount of the excess above $2,500,000 in book
value of Collateral which is located outside the United States of America where
the actions required by Section 4.5 of the Security Agreement have not
been taken); minus (ii) all dividends, returns of capital and other
distributions by such Subsidiaries to the applicable Loan Party made after the
Effective Date; plus (iii) the principal amount of the loans and advances
by the applicable Loan Party to such Subsidiaries that are then outstanding;
plus (iv) the then outstanding amount of all Indebtedness of the type
described in clauses (a) through (e), (h), (k), (l) and (n) of
the definition thereof Guaranteed by the applicable Loan Party of Indebtedness
of such Subsidiaries; plus (v) the aggregate amount paid by the applicable
Loan Party under Guarantees of obligations (other than Indebtedness) of such
Subsidiaries since the Effective Date);

 

(d)           loans or advances made by the Borrower to any
subsidiary of the Borrower and made by any subsidiary of Borrower to the
Borrower or any other subsidiary of the Borrower; provided that the
amount of such loans and advances made by Loan Parties to Subsidiaries that are
not Loan Parties shall be subject to the limitation set forth in
paragraph (c) above;

 

(e)           Guarantees constituting Indebtedness permitted by Section 6.01;
provided that the aggregate principal amount of Indebtedness of
Subsidiaries that are not Loan Parties that is Guaranteed by any Loan Party
shall be subject to the limitation set forth in paragraph (c) above;

 

(f)            investments received in connection with the bankruptcy
or reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;

 

(g)           notes and other non-cash consideration received as
part of the purchase price of assets disposed of pursuant to Section 6.05;

 

(h)           extension of trade credit in the ordinary course of
business;

 

(i)            Swap Agreements permitted by Section 6.07;

 

69

 

(j)            loans and advances to officers, directors, and
employees of Holdings and the Subsidiaries made in the ordinary course of
business for travel, entertainment, relocation costs and other business
expenses up to a maximum for all such loans and advances of $1,000,000 in the
aggregate at any one time outstanding;

 

(k)           Borrower or a subsidiary of the Borrower may purchase,
hold or acquire (including pursuant to a merger) all the Equity Interests in a
Person and may purchase or otherwise acquire (in one transaction or a series of
transactions) all or substantially all of the assets of any other Person or all
or substantially all of the assets of a division or branch of such Person or
any other assets of any other Person constituting a business unit, if, with
respect to each such acquisition:

 

(i)            Default.  No Default exists or would result therefrom;

 

(ii)           Purchase Price Limitation.  The sum of the Purchase Price for the
acquisition in question plus the aggregate of all Purchase Prices paid for all
acquisitions consummated under the permissions of this paragraph (k) in
the same fiscal year does not exceed either (A) $50,000,000 or (B) $25,000,000
if the Leverage Ratio is greater than 4.00 to 1.00 (as calculated based on the
most recently ended four fiscal quarter period for which financial statements
are available and on a pro forma basis for the acquisition in question assuming
that the acquisition occurred on the first day of the applicable period);
provided that the Purchase Price for an acquisition financed with the proceeds
of a Loan made under the commitments provided for pursuant to Section 2.20
shall be excluded from any calculation under this clause (ii).  The term “Purchase Price” means, as of
any date of determination and with respect to a proposed acquisition, the
purchase price to be paid for the Target or its assets, including all cash
consideration paid (including the then estimated amount of deferred purchase
price obligations) or to be paid (based on the estimated amount thereof), the
value of all other assets to be transferred by the purchaser in connection with
such acquisition to the seller all valued in accordance with the applicable
purchase agreement and the outstanding principal amount of all Indebtedness of
the Target or the seller assumed or acquired in connection with such
acquisition; excluding however, any portion thereof paid for by the issuance of
Equity Interest in Holdings;

 

(iii)          Delivery and Notice Requirements.  Borrower shall provide to Administrative
Agent, prior to the consummation of the acquisition, the following:  (A) notice of the acquisition, (B) the
most recent financial statements of the Target that Borrower has available, (C) copies
of the applicable purchase agreement and copies of such other documentation and
information relating to the Target and the acquisition as Administrative Agent
may reasonably request, (D) if the Purchase Price for the acquisition in
question equals or exceeds $15,000,000, projected income and cash flow
statements for the Borrower for the period through the Term Loan Maturity Date,
prepared on a basis acceptable to the Administrative Agent, giving pro forma
effect to acquisition and any Indebtedness incurred in connection therewith
(assuming that the acquisition in question closed on the first day of the
applicable period, that the incurrence or assumption of Indebtedness in
connection therewith occurred on the first day of such period and, to the
extent such Indebtedness bears interest at a floating rate, using the rate in
effect at the time of calculation for the entire period of calculation) and (E) a
certificate signed by a Financial Officer of the Borrower certifying: (1) that
the Borrower shall be in compliance with the covenants contained in Article VII
on a pro forma basis for the four fiscal quarter period then most recently
ending for which financial statements are available (assuming that the
acquisition in question closed on the first day of the applicable period, that
the incurrence or assumption of Indebtedness in connection therewith occurred
on the first day of such period and, to the extent such Indebtedness bears
interest at a floating rate, using the rate in effect at the time of
calculation for the entire period of calculation), (2) if the Purchase
Price for the acquisition in question equals or exceeds $15,000,000, that the
Borrower shall be in compliance with the covenants contained in Article VII
on a projected, pro forma basis through the Term Loan Maturity Date as
calculated in accordance with clause (D) of this

 

70

 

subparagraph, (3) that after giving effect to the
acquisition in question, all representations and warranties contained in the
Loan Documents will be true and correct in all material respects on and as of
the date of the closing of the acquisition with the same force and effect as if
such representations and warranties had been made on and as of such date,
except to the extent that such representations and warranties relate
specifically to another date; (4) that no Default exists or will result
from the acquisition; and (5) to the Borrower’s calculation of its
compliance with clause (ii) of this paragraph (k);

 

(iv)          U.S. Acquisitions.  The Target is (A) organized under the
laws of a state in the United States of America and (B) involved in the
same general type of business activities as the Borrower and the subsidiaries of
the Borrower or business reasonably related thereto or ancillary or
complimentary thereto;

 

(v)           No Contested Acquisitions.  The proposed acquisition shall have been
approved by the Board of Directors of the Target (or similar governing body if
the Target is not a corporation) and no Person shall have announced that it
will oppose the acquisition;

 

(vi)          Joinder of Subsidiary.  Holdings shall have complied with its
obligations under Sections 5.11 and 5.12 promptly after as of the date of the
acquisition;

 

(vii)         Environmental Diligence.  Holdings shall have completed a due diligence
analysis of the environmental condition of the property of the Target to be
acquired and the environmental liabilities to be assumed in connection
therewith reasonably satisfactory to the Administrative Agent;

 

(viii)        Structure.  If the proposed acquisition is an acquisition
of the stock or other Equity Interest issued by a Target, the acquisition will
be structured so that the Target will become a Wholly-Owned Domestic Subsidiary
of the Borrower or will be merged with or into the Borrower or a Loan Party who
is a Wholly-Owned Domestic Subsidiary of the Borrower.  If the proposed acquisition is an acquisition
of assets, the acquisition will be structured so that the Borrower or a Subsidiary
Loan Party who is a Wholly-Owned Domestic Subsidiary of the Borrower shall
acquire the assets either directly or through a merger;

 

(l)            Guarantees by a Loan Party of leases of the Borrower
and the subsidiaries of the Borrower (other than Capital Lease Obligations)
entered into in the ordinary course of business; provided that the
aggregate amount of Guarantees by Loan Parties of leases of subsidiaries of
Borrower that are not Loan Parties is subject at all time to the limitations
set forth in paragraph (c) of this Section 6.04;

 

(m)          endorsements of items for collection or deposit in the
ordinary course of business; and

 

(n)           in addition to the investments otherwise permitted by
this Section 6.04, the Borrower and its subsidiaries may acquire Equity Interests
in or other securities of, make loans or advances to, Guarantee any obligations
of, or make any other investment in, any other Person if the aggregate amount
expended to make all such investments consummated under the permissions of this
paragraph (n) shall not exceed an amount equal to $10,000,000; provided
that as of the date of any such investment and after giving effect
thereto, (i) no Default shall exists or result therefrom; and (ii) no
investment made under this paragraph (n) shall increase the aggregate
amount of investments permitted by paragraph (c) of this Section 6.04.

 

Section 6.05.                             Asset Sales. 
Holdings will not, and will not permit any of the Subsidiaries to, sell,
transfer, lease or otherwise dispose of any asset, except:

 

71

 

(a)           sales of inventory, obsolete, damaged, no longer used
or useful, uneconomic or worn out equipment (including vehicles) and Permitted
Investments in the ordinary course of business;

 

(b)           sales, transfers and dispositions to the Borrower or a
subsidiary of Borrower; provided that no Default exists or would result
and any such sales, transfers or dispositions involving a subsidiary of
Borrower that is not a Loan Party shall be made in compliance with Section 6.09
and Section 6.04;

 

(c)           leasing or licensing of real or personal property
(including subleases or sublicense) in the ordinary course of business;

 

(d)           the sale, transfer or other disposition of the real
property described on Schedule 6.05(c);

 

(e)           sales, transfers and other dispositions of assets by
Borrower and the subsidiaries of Borrower that are not permitted by any other
clause of this Section; provided that, (i) as of the date of any
disposition under this clause (c), no Default that shall have been declared
in a writing by the Administrative Agent to Holdings shall then exist and the
aggregate book value of all assets sold, transferred or otherwise disposed of
in reliance upon this clause (e) (including the disposition in
question) since the Effective Date shall not exceed an aggregate amount equal
to 5% of the consolidated assets of Holdings as then reflected in the most
recent financial statements of Holdings; (ii) no intellectual property
necessary for the operation of the business of the Borrower and its
subsidiaries may be disposed of under the provisions of this paragraph (e) (but
intellectual property may be disposed of under the terms of paragraph (c) of
this Section); and (iii) no accounts may be disposed of under the
permissions of this paragraph (e) except in connection with the
disposition of all or substantially all of the other assets of the owner of
such accounts or all or substantially all the assets of a division or line of
business of the owner of such accounts or as a result of the disposition of all
the Equity Interest of the owner of such accounts;

 

provided that all sales, transfers, leases and
other dispositions permitted hereby (other than those permitted by clause (d) and
(e) above) shall be made for fair value and for at least 75% cash
consideration.

 

Section 6.06.                             Sale and Leaseback Transactions. 
Holdings will not, and will not permit any of the Subsidiaries to, enter
into any arrangement, directly or indirectly, whereby it shall sell or transfer
any property, real or personal, used or useful in its business, whether now
owned or hereinafter acquired, and thereafter rent or lease such property or
other property that it intends to use for substantially the same purpose or
purposes as the property sold or transferred except for any such sale of any
fixed or capital assets by Borrower or any of its subsidiaries that is made for
cash consideration in a transaction permitted by Section 6.05 and unless
any Indebtedness resulting therefrom is permitted by Section 6.01(e).

 

Section 6.07.                             Swap Agreements. 
Holdings will not, and will not permit any of the Subsidiaries to, enter
into any Swap Agreement, except (a) Swap Agreements entered into to hedge
or mitigate risks to which Holdings or any Subsidiary has actual exposure
(other than those in respect of Equity Interests or Restricted Indebtedness of
Holdings or any of the Subsidiaries), and (b) Swap Agreements entered into
in order to effectively cap, collar or exchange interest rates (from fixed to
floating rates, from one floating rate to another floating rate or otherwise)
with respect to any interest-bearing liability or investment of Holdings or any
Subsidiary.

 

72

 

Section 6.08.                             Restricted Payments; Certain Payments of
Indebtedness.

 

(a)           Restricted Payments.  Holdings will
not, nor will it permit any Subsidiary to, declare or make, or agree to pay or
make, directly or indirectly, any Restricted Payment, or incur any obligation
(contingent or otherwise) to do so, except:

 

(i)            Holdings and SK Holding may declare
and pay dividends with respect to their respective capital stock payable solely
in additional shares of its capital stock;

 

(ii)           subsidiaries of Borrower may declare
and pay dividends ratably with respect to their capital stock;

 

(iii)          Borrower may pay cash dividends to SK
Holding and SK Holding may pay all or a portion of such cash dividends to
Holdings:  (A) so long as the
proceeds thereof are promptly used by SK Holding or Holdings to pay operating
expenses incurred in the ordinary course of business (including, without
limitation, outside directors and professional fees, expenses and indemnities)
and other similar corporate overhead costs and expenses and the aggregate
amount of all cash dividends paid pursuant to this clause (A) by the
Borrower shall not exceed $2,000,000 in any fiscal year of Holdings; (B) at
the times and in the amounts necessary to enable Holdings to pay its tax
obligations, provided that (1) the amount of cash dividends paid pursuant
to this clause (B) to enable Holdings to pay Federal and state income
taxes at any time shall not exceed the amount of such Federal and state income
taxes actually owing by Holdings at such time for the respective period and (2) any
refunds received by Holdings shall promptly be returned by Holdings to SK
Holdings and by SK Holdings to the Borrower; and (C) in order to allow
Holdings to make the repurchases permitted by clause (iv) below; and

 

(iv)          if no Default exists or would result,
Holdings may redeem, repurchase or otherwise acquire for value its common stock
(or any options or warrants to purchase its common stock) as long as the
aggregate amount expended in connection therewith does exceed $5,000,000 during
any fiscal year.

 

(b)           Certain Payments of Indebtedness. 
Holdings will not, nor will it permit any Subsidiary to, make or agree
to pay or make, directly or indirectly, any payment or other distribution
(whether in cash securities or other property) of or in respect of principal of
or interest on any Indebtedness of the type described in clauses (a) through
(e), (h), (k), (l) and (n) of the definition thereof, or any payment
or other distribution (whether in cash, securities or other property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any such
Indebtedness, except:

 

(i)            payment of Indebtedness created
under the Loan Documents;

 

(ii)           payment of regularly scheduled
interest and principal payments as and when due in respect of any Indebtedness;

 

(iii)          refinancing of Indebtedness to the
extent permitted by Section 6.01;

 

(iv)          repayment of Indebtedness assumed or
acquired in an acquisition permitted by Section 6.04(k);

 

(v)           repayment
of Capital Lease Obligations;

 

(vi)          payment of secured Indebtedness that
becomes due as a result of the voluntary sale or transfer of the property or
assets securing such Indebtedness;

 

73

 

(vii)         repayment of Indebtedness owed to
Holdings or any Subsidiary;

 

(viii)        repayment of Indebtedness owed by any
Foreign Subsidiary;

 

(ix)           repayment of the Indebtedness
required by Sections 5.10 and 6.01(b); and

 

(x)            repayment of any other Indebtedness
if as of the date of such repayment, no Default exists and the Leverage Ratio
as calculated for the four fiscal quarter period then most recently ended for
which financial statements are available at the time is less than 3.50 to 1.00.

 

Section 6.09.                             Transactions with Affiliates. 
Holdings will not, nor will it permit any  Subsidiary to, sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with,
any of its Affiliates, except:

 

(a)           transactions in the ordinary course of business that
are at prices and on terms and conditions not less favorable to the Borrower or
such Subsidiary than could be obtained on an arm’s-length basis from unrelated
third parties;

 

(b)           transactions between or among the Loan Parties not
involving any other Affiliate;

 

(c)           any Restricted Payment permitted by Section 6.08;

 

(d)           loans may be
made and other transactions may be entered into by Holdings and the
Subsidiaries to the extent permitted by Sections 6.01, 6.04 and 6.05;

 

(e)           customary fees,
indemnities and reimbursements may be paid to officers and directors of
Holdings and the Subsidiaries;

 

(f)            Holdings and the Subsidiaries may enter
into, and may make payments under, employment agreements, employee benefits
plans, stock option plans, indemnification provisions, severance arrangements,
and other similar compensatory arrangements with officers, employees and
directors of Holdings and the Subsidiaries in the ordinary course of
business;

 

(g)           periodic
allocations of overhead expenses among Holdings and the Subsidiaries may be
made in the ordinary course of business;

 

(h)           the
Transactions;

 

(i)            payments under
that certain Amended and Restated Partnership Agreement dated effective as of January 1,
2002 between Safety-Kleen Services, Inc. (predecessor in interest to the
Borrower) and Church & Dwight Co., Inc. relating to The ArmaKleen Company partnership, as
the same exists on the Effective Date, without giving effect to any amendment
or other modification of the payment provisions thereof which would have the
effect of increasing the payments owned by the Borrower or any other Loan Party
thereunder for purposes of this Section unless amended with the approval
of the Administrative Agent, which approval will not be unreasonably withheld
or delayed;

 

(j)            Transactions
with Foreign Subsidiaries organized under the laws of Canada or any
jurisdiction therein consummated in the ordinary course consistent with past
practices; and

 

(k)           Holdings and
the Subsidiaries may pay management, consulting, or similar fees to Affiliates
in an aggregate amount not to exceed $500,000 in any fiscal year of Holdings if
no Default exists or would result.

 

74

 

Section 6.10.          Restrictive Agreements.  Holdings will
not, nor will it permit any Subsidiary to, directly or indirectly, enter into,
incur or permit to exist any agreement or other arrangement that prohibits,
restricts or imposes any condition upon (a) the ability of Holding or any
Subsidiary to create, incur or permit to exist any Lien upon any of its
property or assets, or (b) the ability of any Subsidiary 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 Borrower or any other Subsidiary or to
Guarantee Indebtedness of the Borrower or any other Subsidiary; provided
that (i) the foregoing shall not apply to restrictions and conditions
imposed by law or imposed by a Governmental Authority or by any Loan Document, (ii) the
foregoing shall not apply to restrictions and conditions existing on the date
hereof (but shall apply to any amendment or modification 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 or assets pending such sale, provided such
restrictions and conditions apply only to the Subsidiary or assets that are to
be sold and such sale is permitted hereunder, (iv) the foregoing shall not
apply to restrictions or conditions imposed by any agreement relating to
Indebtedness permitted by this Agreement if such restrictions or conditions are
in substance no more restrictive than those contained herein, (v) clause (a) of
the foregoing shall not apply to customary provisions in leases and other
contracts restricting the assignment thereof, (vi) clause (a) of
the foregoing shall not apply to restrictions on the transfer of any asset subject
to a Lien permitted by this Agreement and (vii) the foregoing shall not
apply to customary restrictions imposed by customers under contractual
arrangements with respect to cash or other deposits required thereby or minimum
net worth or similar requirements imposed under such contractual arrangements.

 

Section 6.11.          Amendment of Material Documents. 
Holdings will not, nor will it permit any Subsidiary to, amend, modify
or waive any of its rights under its certificate of incorporation, by-laws or
other organizational documents unless such amendment, or other modification
could not reasonably be expected to be adverse to the interest of the Lenders
in any material respect.

 

Section 6.12.          Change in Fiscal Year.  Holdings will
not change the manner in which either the last day of its fiscal year or the
last days of the first three fiscal quarters of its fiscal year is calculated.

 

ARTICLE VII.

 

Financial Covenants

 

Until the Loan Obligations have been Fully Satisfied,
Holdings and the Borrower covenant and agree with the Lenders that:

 

Section 7.01.          Leverage Ratio.  As of the
last day of each fiscal quarter ending during the period set forth in the table
below, Holdings shall not permit the ratio of Consolidated Indebtedness as of
such date to Consolidated Adjusted EBITDA for the four (4) fiscal
quarters then ended to exceed the ratio set forth in the table below opposite
the applicable period:

 

	
  Period

  	
   

  	
  Ratio

  	
   

  
	
  Effective Date through
  the fiscal year ending on or about December 31, 2008

  	
   

  	
  4.50 to 1.00

  	
   

  
	
  At all times after the
  fiscal year ended on or about December 31, 2008

  	
   

  	
  4.00 to 1.00

  	
   

  

 

75

 

Section 7.02.          Interest Coverage.  As of the
last day of each fiscal quarter ending during the period set forth in the table
below, Holdings shall not permit the ratio of Consolidated EBITDA to
Consolidated Cash Interest Expense for the four (4) fiscal quarters
then ended to be less than the ratio set forth in the table below opposite the
applicable period:

 

	
  Period

  	
   

  	
  Ratio

  	
   

  
	
  Effective Date through
  the fiscal year ending on or about December 31, 2008

  	
   

  	
  2.50 to 1.00

  	
   

  
	
  At all times after the
  fiscal year ended on or about December 31, 2008

  	
   

  	
  3.00 to 1.00

  	
   

  

 

Section 7.03.          Capital Expenditures.  During each
fiscal year, the aggregate amount of all Adjusted Capital Expenditures of
Holdings and the Subsidiaries will not exceed the applicable Capital
Expenditure Limit for such fiscal year. 
The term “Capital Expenditure Limit” means the sum of the
following:  (i) the amount set forth
in the table below opposite the applicable fiscal year in the table below (for
each such year, the “Yearly Limit”) plus (ii) the portion of
the Yearly Limit from the immediately preceding fiscal year which was not
expended by Holdings and the Subsidiaries for Capital Expenditures in such
preceding fiscal year (the “Carryover Amount”).  In calculating the Carryover Amount for any
fiscal year, the Yearly Limit applicable to the previous fiscal year shall be
deemed to have been utilized first by any Capital Expenditures made in such
fiscal year.

 

	
  Fiscal
  Year Ending on or About

  	
   

  	
  Yearly Limit

  	
   

  
	
  December 31, 2006

  	
   

  	
  $

  	
  40,000,000

  	
   

  
	
  December 31, 2007

  	
   

  	
  $

  	
  40,000,000

  	
   

  
	
  December 31, 2008 and each fiscal year
  thereafter

  	
   

  	
  $

  	
  50,000,000

  	
   

  

 

“Adjusted
Capital Expenditures” means, for any period, all Capital Expenditures
incurred during such period, minus the following, but only to the extent
included in such Capital Expenditures:

 

(a)           Environmental
Liability Expenditures made during such period in an aggregate amount of
$12,000,000 or less (or if Environmental Liability Expenditures are not
otherwise included in Capital Expenditures during such period, plus
Environmental Liability Expenditures in excess of $12,000,000 in such period);

 

(b)           Capital
Expenditures financed during such period with the proceeds of Loans made under
the commitments provided for in Section 2.20 of this Agreement;

 

(c)           Capital
Expenditures made during such period to acquire equipment owned by the Borrower
or one of its subsidiaries and delivered to a customer for use by the customer
in the ordinary course of the Borrower’s or such subsidiaries’ business; and

 

(d)           Capital
Expenditures paid for during such period with the proceeds from permitted asset
dispositions and casualty and condemnation events.

 

76

 

ARTICLE VIII.

 

Events of Default

 

Section 8.01.          Events of Default; Remedies. 
If any of the following events (“Events of Default”) shall occur:

 

(a)           the Borrower shall fail to pay any principal of any
Loan or any reimbursement obligation in respect of any L/C 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 Borrower 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 8.01) payable under this Agreement or
any other Loan Document, when and as the same shall become due and payable, and
such failure shall continue unremedied for a period of five days;

 

(c)           any representation, warranty or certification made or
deemed made by or on behalf of Holdings or any Subsidiary in or in connection
with any 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 any 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)           Holdings or the Borrower shall fail to observe or
perform any covenant, condition or agreement contained in Section 5.01 and
such failure shall continue unremedied for a period of 15 days or Holdings or
the Borrower shall fail to observe or perform any covenant, condition or
agreement contained in Sections 5.02(a) or 5.03 (with respect to the
existence of Holdings or the Borrower) or in Articles VI or VII;

 

(e)           any Loan Party shall fail to observe or perform any
covenant, condition or agreement contained in any Loan Document (other than
those specified in clause (a), (b) or (d) of this Section 8.01),
and such failure shall continue unremedied for a period of 30 days after
notice thereof from the Administrative Agent to the Borrower (which notice will
be given at the request of any Lender);

 

(f)            Holdings or any Subsidiary 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, subject to any applicable grace periods;

 

(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 Holdings or any 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 Holdings or any Subsidiary or
for a substantial 

 

77

 

part of its assets, and, in any such case, such
proceeding or petition shall continue undismissed for 60 days or an order
or decree approving or ordering any of the foregoing shall be entered;

 

(i)            Holdings or any 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 8.01,
(iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for Holdings or any
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;

 

(j)            Holdings or any Subsidiary shall become unable or
admit in writing its inability 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 $10,000,000 shall be rendered against Holdings,
any Subsidiary or any combination thereof and the same shall remain
undischarged for a period of 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 Holdings or any
Subsidiary to enforce any such judgment;

 

(l)            an ERISA Event shall have occurred that, when taken
together with all other ERISA Events that have occurred, could reasonably be expected
to result in a Material Adverse Effect;

 

(m)          any Lien purported to be created under any Security
Document shall cease to be, or shall be asserted by any Loan Party not to be, a
valid and perfected Lien on any material portion of the Collateral, with the
priority required hereby, except (i) as a result of the sale or other
disposition of the applicable Collateral in a transaction permitted under the
Loan Documents or (ii) as a result of the Administrative Agent’s failure
to maintain possession of any stock certificates, promissory notes or other
instruments delivered to it under the Security Documents;

 

(n)           any Security Document shall otherwise for any reason
cease to be in full force and effect and valid, binding and enforceable in
accordance with its terms after its date of execution, or any Loan Party shall
so state in writing;

 

(o)           any Loan Party shall suffer any uninsured,
unindemnified or under insured loss of Collateral in excess of $12,000,000
unless with respect to any situation in which the insurance or indemnity
coverage is denied, the applicable Loan Party is contesting such denial in good
faith pursuant to proceedings diligently pursued; or

 

(p)           a Change in Control shall occur;

 

then, and in every
such event (other than an event with respect to the Borrower described in
clause (h) or (i) of this Section), 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 Borrower,
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
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 Loans so declared to be
due and payable, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall become due and payable
immediately, without presentment, demand, 

 

78

 

protest, notice of
intent to accelerate, notice of acceleration 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, the Commitments shall automatically terminate and the principal
of the Loans then outstanding, together with accrued interest thereon and all
fees and other obligations of the Borrower accrued hereunder, shall
automatically become due and payable, without presentment, demand, protest,
notice of intent to accelerate, notice of acceleration or other notice of any
kind, all of which are hereby waived by the Borrower.  In addition, if any Event of Default shall
occur and be continuing, the Administrative Agent may (and if directed by the
Required Lenders, shall) foreclose or otherwise enforce any Lien granted to the
Administrative Agent, for the benefit of the Secured Parties, to secure payment
and performance of the Obligations in accordance with the terms of the Loan
Documents and exercise any and all rights and remedies afforded by the laws of
the State of New York or any other jurisdiction, by any of the Loan Documents,
by equity, or otherwise.

 

Section 8.02.          Performance by the Administrative Agent. 
If any Loan Party shall fail to perform any covenant or agreement in
accordance with the terms of the Loan Documents, the Administrative Agent may
and shall, at the direction of the Required Lenders, perform or attempt to
perform such covenant or agreement on behalf of the applicable Loan Party.  In such event, the Borrower shall, at the
request of the Administrative Agent promptly pay any amount expended by the
Administrative Agent or the Lenders in connection with such performance or
attempted performance to the Administrative Agent, together with interest
thereon at the interest rate provided for in Section 2.13(d) from and
including the date of such expenditure to but excluding the date such
expenditure is paid in full. 
Notwithstanding the foregoing, it is expressly agreed that neither the
Administrative Agent nor any Lender shall have any liability or responsibility
for the performance of any obligation of any Loan Party under any Loan
Document.

 

ARTICLE IX.

 

The Administrative
Agent

 

Section 9.01.          Appointment.  Each of the
Lenders and the Issuing Bank hereby irrevocably appoints JPMorgan Chase Bank,
National Association, as agent on its behalf, and on behalf of each of its
Affiliates who are owed Obligations (each such Affiliate by acceptance of the
benefits of the Loan Documents hereby ratifying such appointment) and
authorizes the Administrative Agent to take such actions on its behalf and on
behalf of such Affiliates 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.

 

Section 9.02.          Rights as a Lender.  The Person
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 Person and its Affiliates
may accept deposits from, lend money to and generally engage in any kind of
business with Holdings or any Subsidiary or other Affiliate thereof as if it
were not the Administrative Agent hereunder.

 

Section 9.03.          Limitation of Duties and Immunities. 
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 a 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 by the
Required Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 10.02), 

 

79

 

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 Holdings or any
of the Subsidiaries that is communicated to or obtained by the Person 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 10.02)
or in the absence of its own gross negligence or willful misconduct.  The Administrative Agent shall not be deemed
to have knowledge of any Default unless and until written notice thereof is
given to the Administrative Agent by Holdings 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 thereunder or in connection
therewith, (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, or (v) the satisfaction of 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 the
Administrative Agent.

 

Section 9.04.          Reliance on Third Parties. 
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 reasonably 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 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.

 

Section 9.05.          Sub-Agents.  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 this Article shall
apply to any such sub-agent and to the Related Parties of each 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.

 

Section 9.06.          Successor Agent.  Subject to
the appointment and acceptance of a successor the Administrative Agent as
provided in this paragraph, the Administrative Agent may resign at any time by
notifying the Lenders, the Issuing Bank and the Borrower.  Upon any such resignation, the Required
Lenders shall have the right, subject to approval by the Borrower (which
approval shall not be unreasonably withheld or delayed), 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 bank with an office in New York, New York, or an
Affiliate of any such bank.  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
Borrower to a successor Administrative Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Borrower and such
successor.  After the Administrative
Agent’s resignation hereunder, the provisions of this Article and Section 10.03
shall continue in effect for the benefit of such retiring Administrative Agent,
its sub-agents and their respective Related Parties in

 

80

 

 

respect of any actions taken or omitted to be taken by any of them
while it was acting as Administrative Agent. 
Upon the effectiveness of the retirement of any Administrative Agent,
the retiring Administrative Agent may, at its option (i) transfer the management
of all then existing Credit Linked Accounts to the successor Administrative
Agent or (ii) close all such Credit Linked Accounts upon the establishment
of new Credit Linked Accounts with the successor Administrative Agent (and the
successor Administrative Agent shall establish such new accounts) and transfer
all amounts on deposit in such Credit Linked Accounts to such new
accounts.  Any successor Administrative
Agent, any sub agent and any other Person designated to receive payments under
the Loan Documents from the Loan Parties for the benefit of the Administrative
Agent, Lender or Issuing Bank shall be a “U.S. person” and a “financial
institution” as such terms are defined in Section 1.441-1 of the Treasury
Regulations under the Code.

 

Section 9.07.                             Independent Credit Decisions. 
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.

 

Section 9.08.                             Other Agents. 
Credit Suisse, Nexbank SSB and Wachovia Bank, National Association have
been designated as “syndication agent” or “co-documentation agents” hereunder
in recognition of the level of each of their Commitments.  Neither Credit Suisse, Nexbank SSB nor
Wachovia Bank, National Association is an agent for the Lenders and no such
Lender shall have any obligation hereunder other than those existing in its
capacity as a Lender.  Without limiting
the foregoing, no such Lender shall have or be deemed to have any fiduciary
relationship with or duty to any Lender.

 

Section 9.09.                             Powers and Immunities of Issuing Bank and
Swingline Lender.  Neither the Issuing Bank, the Swingline
Bank  nor any of their respective Related
Parties shall be liable for any action taken or omitted to be taken by any of
them hereunder or otherwise in connection with any Loan Document except for its
or their own gross negligence or willful misconduct.  Without limiting the generality of the
preceding sentence, the Issuing Bank and the Swingline Lender (a) shall have
no duties or responsibilities except those expressly set forth in the Loan
Documents, and shall not by reason of any Loan Document be a trustee or
fiduciary for any Lender or for the Administrative Agent, (b) shall not be
required to initiate any litigation or collection proceedings under any Loan
Document, (c) shall not be responsible to any Lender or the Administrative
Agent for any recitals, statements, representations, or warranties contained in
any Loan Document, or any certificate or other documentation referred to or
provided for in, or received by any of them under, any Loan Document, or for
the value, validity, effectiveness, enforceability, or sufficiency of any Loan
Document or any other documentation referred to or provided for therein or for
any failure by any Person to perform any of its obligations thereunder, (d) may
consult with legal counsel (including counsel for the Borrower), independent
public accountants, and other experts selected by it and shall not be liable
for any action taken or omitted to be taken in good faith by it in accordance
with the advice of such counsel, accountants, or experts, and (e) shall
incur no liability under or in respect of any Loan Document by acting upon any
notice, consent, certificate, or other instrument or writing believed by it to
be genuine and signed or sent by the proper party or parties.  As to any matters not expressly provided for
by any Loan Document, the Issuing Bank and the Swingline Lender shall in all cases
be fully protected in acting, or in refraining from acting, hereunder in
accordance with instructions signed by the Required Lenders, and such
instructions of the Required Lenders and any action taken or failure to act
pursuant thereto shall be binding on all of the Lenders and the Administrative
Agent; provided, however, that the Issuing Bank shall not be required to take
any action which exposes it to personal liability or which is contrary to any
Loan Document or applicable law.

 

81

 

Section 9.10.                             Permitted Release of Collateral and
Subsidiary Loan Parties.

 

(a)           Automatic Release.  If any Loan
Party sells any Collateral which is permitted to be disposed of under Section 6.05,
the Liens in the Collateral granted to the Administrative Agent under the Loan
Documents shall automatically terminate and the Collateral will be disposed of
free and clear of all Liens of the Administrative Agent.

 

(b)           Written Release.  The
Administrative Agent is authorized to release of record, and shall release of
record, any Liens encumbering any Collateral that is permitted to be sold upon
an authorized officer of the Borrower certifying in writing to the
Administrative Agent that the proposed disposition of Collateral is permitted
under Section 6.05.  To the extent
the Administrative Agent is required to execute any release documents in
accordance with the immediately preceding sentence, the Administrative Agent
shall do so promptly upon request of the Borrower without the consent or
further agreement of any Secured Party. 
If the disposition of Collateral is not permitted under or pursuant to
the Loan Documents, the Liens encumbering the Collateral may only be released
in accordance with the provisions of Section 10.02.

 

(c)           Other Authorized Release and Subordination. 
The Administrative Agent is irrevocably authorized by the Secured
Parties, without any consent or further agreement of any Secured Party to:  (i) subordinate or release the Liens
granted to the Administrative Agent to secure the Obligations with respect to
any property which is permitted to be subject to a Lien of the type described
in paragraphs (d) and (e) of Section 6.02 and (ii) release
the Administrative Agent’s Liens when all the Obligations have been Fully
Satisfied.  When all the Obligations have
been Fully Satisfied, the Administrative Agent is also irrevocably authorized
by the Secured Parties, without any consent or further agreement of any Secured
Party, to assign the Liens granted under the Security Documents to any Person
or the agent of one or more Persons who provide the funds to refinance the
Loans as long as: (i) such assignment is without recourse, representation
or warranty; (ii) the Loan Parties agree and confirm that the indemnity
under Section 10.03 hereof shall continue for the benefit of each
Indemnitee (as such term is defined therein) with respect to such assignment
and the documentation executed in connection therewith (and for such purpose,
such documentation is included in the term “Loan Documents”); and (ii) the
assignee of such Liens shall agree to hold the Administrative Agent and the
Secured Parties harmless from, and agree that neither the Administrative Agent
nor any Secured Party shall have any responsibility for, any matter relating to
such assignment or the Security Documents.

 

(d)                                 Authorized Release of Subsidiary Loan
Party.  If:

 

(i)            no Default exists or would result;
and

 

(iii)          the Administrative Agent shall have
received a certificate of an authorized officer of the Borrower requesting the
release of a Subsidiary Loan Party, certifying that (A) no Default exists
or will result from the release of the Subsidiary Loan Party; and (B) the
Administrative Agent is authorized to release such Subsidiary Loan Party
because the Equity Interest issued by such Subsidiary Loan Party or the assets
of such Subsidiary Loan Party have been sold in a transaction permitted by Section 6.05
(including with the consent of the Required Lenders pursuant to Section 10.02(b));

 

then the
Administrative Agent is irrevocably authorized by the Secured Parties, without
any consent or further agreement of any Secured Party, to release the Liens
granted to the Administrative Agent to secure the Obligations in the assets of
such Subsidiary Loan Party and release such Subsidiary Loan Party from all obligations
under the Loan Documents.  To the extent
the Administrative Agent is required to execute any release documents in
accordance with the immediately preceding sentence, the Administrative Agent

 

82

 

shall do so
promptly upon request of the Borrower without the consent or further agreement
of any Secured Party.

 

Section 9.11.                             Lender Affiliates and Deutsche Bank AG
Rights and Obligations.  By accepting the benefits of
the Loan Documents, each Affiliate of a Lender that is owed any Obligation and
Deutsche Bank AG is bound by the terms of the Loan Documents.  But notwithstanding the foregoing:  (a) neither the Administrative Agent,
any Lender nor any Loan Party shall be obligated to deliver any notice or communication
required to be delivered to any Lender under any Loan Documents to any
Affiliate of any Lender or to Deutsche Bank AG; and (b) no Affiliate of
any Lender that is owed any Obligation nor Deutsche Bank AG shall be included
in the determination of the Required Lenders or entitled to consent to, reject,
or participate in any manner in any amendment, waiver or other modification of
any Loan Document; except as specifically provided in clause (C) of the
last proviso in Section 10.02(b). 
Other than the delivery of proceeds of Collateral in accordance with Section 2.18(a) to
any Affiliate of a Person who was a Lender but at the time of determination is
no longer a Lender (any such Affiliate, herein a “Prior Lender Affiliate”)
and to Deutsche Bank AG and compliance with Section 10.02(b), the
Administrative Agent shall not have any liabilities, obligations or
responsibilities of any kind whatsoever to any Affiliate of any Lender who is
owed any Obligation or to Deutsche Bank AG. 
The Administrative Agent shall deal solely and directly with the related
Lender of any Affiliate or any Prior Lender Affiliate in connection with all
matters relating to the Loan Documents. 
The Obligation owed to such Affiliate shall be considered the Obligation
of its related Lender for all purposes under the Loan Documents and such Lender
shall be solely responsible to the other parties hereto for all the obligations
of such Affiliate under any Loan Document. 
By accepting the benefits of the Loan Documents, each Prior Lender Affiliate
and Deutsche Bank AG agree that the Administrative Agent shall be entitled to
the benefits and protections of Section 9.03 and the other terms of this Article IX
while acting for its benefit for purposes of securing the Obligations owed to
it.  In furtherance of the foregoing,
each Prior Lender Affiliate and Deutsche Bank AG agrees to hold the
Administrative Agent, each Lender and each of their respective Related Parties
(each a “Protected Party”) harmless from and agrees that each Protected
Party shall have no responsibility for any and all losses, claims, damages,
liabilities and related expenses incurred by or asserted against any Prior
Lender Affiliate or Deutsche Bank AG arising out of, in connection with, or as
a result of their participation as a Secured Party  under the Loan Documents; provided
that such hold harmless shall not be available to a Protected Party to the
extent that such losses, claims, damages, liabilities or related expenses are
determined by a court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of the Protected Party.  Promptly upon the request of the
Administrative Agent, each Prior Lender Affiliate and Deutsche Bank AG agree to
provide the Administrative Agent with a statement of the amount of the
Obligations owed to it and such other information relating to such Obligations
as the Administrative Agent may reasonably request.

 

ARTICLE X.

 

Miscellaneous

 

Section 10.01.                       Notices.  Except in the
case of notices and other communications expressly permitted to be given by
telephone or other means, all notices and other communications provided for
herein or in any of the other Loan Documents shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:

 

(i)            if to any Loan Party, to it at 5400
Legacy Drive, Cluster II, Building 3, Plano, TX 
75024; Attention of Dennis McGill, Executive Vice President and Chief
Financial Officer (Telecopy No. 972.265.2988);

 

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(ii)           if to the Administrative Agent or the
Issuing Bank or the Swingline Lender, to JPMorgan Chase Bank, National
Association, Loan and Agency Services Group, 1111 Fannin, 9th Floor Houston,
Texas  77002 Telephone:  713.750.2984; Telecopy:  713.750.2129 and JPMorgan Chase Bank,
National Association, 2200 Ross Avenue, Third Floor, Dallas, Texas  75201, Attention:  Brian McDougal, Telephone:  214.965.3849; Telecopy:  214.965.2044; and

 

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

 

Notices and other
communications to the Lenders hereunder may be delivered or furnished by
electronic communications pursuant to procedures approved by the Administrative
Agent; provided that the foregoing shall not apply to notices pursuant to Article II
unless otherwise agreed by the Administrative Agent and the applicable
Lender.  The Administrative Agent or the
Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.  Any party hereto may change its address or
telecopy number for notices and other communications hereunder by notice to the
other parties hereto.  All notices and
other communications given to any party hereto in accordance with the
provisions of this Agreement shall be deemed to have been given on the date of
receipt.

 

Section 10.02.                       Waivers; Amendments.

 

(a)           No Waiver; Rights Cumulative. 
No failure or delay by the Administrative Agent, the Issuing Bank or any
Lender in exercising, and no course of dealing with respect to, 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 Administrative Agent, the Issuing Bank and the Lenders hereunder and
under the other Loan Documents 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 Loan Party 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)           Amendments.  Neither this
Agreement nor any other Loan Document nor any provision hereof or thereof may
be waived, amended or modified except, (x) pursuant to an Increased
Commitment Supplement executed in accordance with the terms and conditions of Section 2.20
or the procedures set out in the definition of the term “Revolving Commitment”
which only needs to be signed by Holdings, the Borrower, the Administrative
Agent and the Lenders increasing or providing new Commitments thereunder and (y) in
the case of this Agreement and any circumstance other than as described in
clause (x) pursuant to an agreement or agreements in writing entered
into by Holdings, the Borrower and the Required Lenders or, in the case of any
other Loan Document, pursuant to an agreement or agreements in writing entered
into by the Administrative Agent and the Loan Party or Loan Parties that are
parties thereto, in each case with the consent of the Required Lenders; provided
that no such agreement shall:

 

(i)            increase the Commitment of any
Lender without the written consent of such Lender,

 

84

 

(ii)           reduce the principal amount of any
Loan or L/C Disbursement or reduce the rate of interest thereon, or reduce
any fees or other amount payable hereunder (including the amounts payable under
Section 2.05(e)(i)(D)), without the written consent of each Lender
affected thereby,

 

(iii)          postpone the scheduled date of payment
of the principal amount of any Loan or L/C Disbursement, or any interest
thereon, or any fees or other amounts payable hereunder (including the amounts
payable under Section 2.05(e)(i)(D)), or reduce the amount of, waive or
excuse any such payment, or postpone the scheduled date of expiration of any
Commitment, without the written consent of each Lender affected thereby,

 

(iv)          change Section 2.18(b) or (c) or
(f) in a manner that would alter the pro rata sharing of payments required
thereby, without the written consent of each Lender,

 

(v)           change any of the provisions of this Section or
the definition of “Required Lenders,” “Secured Party” or “Obligations” (or for
purposes of such definition only, any term defined therein) or any other
provision of any Loan Document specifying the number or percentage of Lenders
(or Lenders of any Class) required to waive, amend or modify any rights
thereunder or make any determination or grant any consent thereunder, without
the written consent of each Lender (or each Lender of such Class, as the case
may be),

 

(vi)          release Holdings or any Subsidiary
Loan Party from its Guarantee under the Guaranty Agreement (except as expressly
provided in Section 9.10(d)), or limit its liability in respect of such
Guarantee, without the written consent of each Lender,

 

(vii)         release all or substantially all of the
Collateral from the Liens of the Security Documents, without the written
consent of each Lender except as expressly provided in Section 9.10(b),

 

(viii)        change any provisions of any Loan
Document in a manner that by its terms directly, materially and adversely
affects the rights in respect of payments due to Lenders holding Loans of any Class differently
than those holding Loans of any other Class, without the written consent of
Lenders holding a majority in interest of the outstanding Loans and unused
Commitments of each affected Class,

 

(ix)           change the rights of the Lenders of
any Class to accept offers for prepayments as provided in Section 2.11,
without the written consent of Lenders of such Class holding a majority of
the outstanding Loans of such Class;

 

provided  further that (A) no such agreement shall
amend, modify or otherwise affect the rights or duties of the Administrative
Agent, the Issuing Bank or the Swingline Lender without the prior written
consent of the Administrative Agent, the Issuing Bank or the Swingline Lender,
as the case may be; (B) any waiver, amendment or modification of this
Agreement that by its terms affects the rights or duties under this Agreement
of the Revolving Lenders (but not the Synthetic L/C Lenders, Incremental Term
Lenders and Term B Lenders), the Synthetic L/C Lenders (but not the Revolving
Lenders, Incremental Term Lenders and Term B Lenders), the Term B Lenders (but
not the Revolving Lenders, Incremental Term Lenders and Synthetic L/C Lenders)
or the Incremental Term Lenders (but not the Revolving Lenders, Term B Lenders
and Synthetic L/C Lenders) may be effected by an agreement or agreements in
writing entered into by Holdings, the Borrower and requisite percentage in
interest of the affected Class of Lenders; and (C) no such agreement
shall make any change that would cause the Obligations owed to Deutsche Bank AG’s
or any Prior Lender Affiliate to no longer be secured by the Collateral or
change Section 2.18(b) or (c) or (f) if the effect of such
change would be to alter the pro rata sharing of payments

 

85

 

required thereby in a manner adverse to Deutsche Bank AG or a Prior
Lender Affiliate, in each case, without the prior written consent of Deutsche
Bank AG or the applicable Prior Lender Affiliate.

 

Section 10.03.                       Expenses; Indemnity; Damage Waiver.

 

(a)           Expenses.  The Borrower
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 of the credit facilities, the preparation of the Loan Documents
(subject, with respect to expenses incurred in connection with the syndication
and preparation of the Loan Documents incurred prior to the Effective Date, to
the terms of that certain Fee Letter dated June 19, 2006 among the
Borrower, JPMCB, J.P. Morgan Securities, Inc., Credit Suisse, and Credit
Suisse Securities (USA) LLC), the administration of the Loan Documents or any
amendments, modifications or waivers of the provisions thereof (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 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.

 

(b)           Indemnity.  THE BORROWER
SHALL 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, LIABILITIES AND RELATED EXPENSES
(INCLUDING THE FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY
INDEMNITEE BUT EXCLUDING TAXES, WHICH SHALL BE GOVERNED SOLELY AND EXCLUSIVELY
BY SECTION 2.17), INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE ARISING
OUT OF, IN CONNECTION WITH, OR AS A RESULT OF (I) THE EXECUTION OR
DELIVERY OF ANY LOAN DOCUMENT OR ANY OTHER AGREEMENT OR INSTRUMENT CONTEMPLATED
HEREBY, THE PERFORMANCE BY THE PARTIES TO THE LOAN DOCUMENTS 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 MORTGAGED PROPERTY OR ANY
OTHER PROPERTY CURRENTLY OR FORMERLY OWNED OR OPERATED BY ANY OF THE LOAN PARTIES,
OR ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO ANY LOAN PARTY, 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, LIABILITIES OR RELATED EXPENSES ARE
DETERMINED BY A COURT OF COMPETENT JURISDICTION TO

 

86

 

HAVE RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF SUCH INDEMNITEE.

 

(c)           Lender’s Agreement to Pay. 
To the extent that the Borrower fails to pay any amount required to be
paid by it to the Administrative Agent, the Issuing Bank or the Swingline
Lender under paragraph (a) or (b) of this Section, each Lender
severally agrees to pay to the Administrative Agent, the Issuing Bank or the
Swingline Lender, as the case may be, such Lender’s pro rata share (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, liability or related expense, as the case may
be, was incurred by or asserted against the Administrative Agent, the Issuing
Bank or the Swingline Lender in its capacity as such.  For purposes hereof, a Lender’s “pro rata
share” shall be determined based upon its share of the sum of the total
Revolving Exposures, outstanding Term Loans, Synthetic L/C Loans and unused Commitments
at the time.

 

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

 

(e)           Payment.  All amounts
due under this Section shall be payable not later than ten Business Days
after written demand therefor.

 

Section 10.04.                       Successors and Assigns.

 

(a)           Successors and Assigns.  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,
any Affiliate of a Lender who is owed any of the Obligations, any other Secured
Party and any Indemnitee), except that (i) neither the Borrower nor
Holdings 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 Holdings 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.  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, any Affiliate
of a Lender who is owed any of the Obligations, any other Secured Party and any
Indemnitee), 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)           Assignment.  (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
Commitments, the Loans at the time owing to it and the amount on deposit in its
Credit Linked Account) with the prior written consent (such consent not to be
unreasonably withheld or delayed) of:

 

(A)          the Borrower, provided that no
consent of the Borrower shall be required for an assignment to a Lender, an
Affiliate of a Lender, an Approved Fund (as defined below) or, if an Event of
Default exists, any other assignee; and

 

87

 

(B)           the Administrative Agent, provided
that no consent of the Administrative Agent shall be required for an assignment
of (x) any Revolving Commitment to an assignee that is a Lender with a
Revolving Commitment immediately prior to giving effect to such assignment or (y) any
Synthetic L/C Commitment to an assignee that is a Lender with a Synthetic L/C
Commitment immediately prior to giving effect to such assignment or (z) all
or any portion of a Term Loan to a Lender, an Affiliate of a Lender or an
Approved Fund.

 

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

 

(A)          except
in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment
of the entire remaining amount of the assigning Lender’s Commitment or Loans of
any Class, 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 Administrative
Agent) shall not be less than $5,000,000 or, in the case of a Term Loan or a
Synthetic L/C Commitment, $1,000,000 unless each of the Borrower and the
Administrative Agent otherwise consent, provided that no such consent of
the Borrower shall be required if an Event of Default exists;

 

(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, provided
that this clause shall not be construed to prohibit the assignment of a
proportionate part of all the assigning Lender’s rights and obligations in
respect of one Class of Commitments or Loans;

 

(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;

 

(D)          the
assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent an Administrative Questionnaire in which the assignee designates one or
more credit contacts to whom all syndicate-level information (which may contain
material non-public information about the Borrower and its affiliates, the Loan
Parties and their related parties or their respective securities) will be made
available and who may receive such information in accordance with the assignee’s
compliance procedures and applicable laws, including Federal and state
securities laws; and

 

(E)           without
the consent of the Borrower and the Administrative Agent, the amount on deposit
in a Credit Linked Account of any Synthetic L/C Lender shall not be released in
connection with any assignment by such Synthetic L/C Lender, but shall instead
be purchased by the relevant assignee and continue to be held for application in
accordance with Section 2.05(e). 
Each Synthetic L/C Lender agrees that immediately prior to such
assignment (x) the Administrative Agent shall establish a new Credit
Linked Account in the name of such assignee, (y) unless otherwise
consented to by the Administrative Agent, a corresponding portion of the amount
on deposit in the Credit Linked Account of the assignor Synthetic L/C Lender
shall be purchased by the assignee and shall be transferred from the assignor’s
Credit Linked Account to the assignee’s Credit Linked Account and (z) if
after giving effect to such assignment the aggregate amount of the Credit
Linked Account of the assignor Synthetic L/C Lender shall be $0, the
Administrative Agent shall close the Credit Linked Account of such assignor
Synthetic L/C Lender.

 

For the purposes
of this Section 10.04(b), the term “Approved Fund” means any Person
(other than a natural person) that is engaged in making, purchasing, holding or
investing in bank loans and similar extensions of credit in the ordinary course
of its business and that is administered or managed by (a) a

 

88

 

Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.

 

(iii)          Subject to acceptance and recording
thereof pursuant to paragraph (b)(iv) 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 2.15, 2.16, 2.17 and
10.03).  Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this Section 10.04 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 for
this purpose as an agent of the Borrower, shall maintain at one of its offices
a copy of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans and L/C Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be
conclusive absent manifest error.  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 under the Loan Documents, 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.

 

(c)           Participations.  (i) Any
Lender may, without the consent of the Borrower, 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 Borrower, 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 this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; 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 10.02(b) that affects such

 

89

 

Participant. 
Subject to paragraph (c)(ii) of this Section, the Borrower
agrees that each Participant shall be entitled to the benefits of
Sections 2.15, 2.16 and 2.17 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 10.08
as though it were a Lender, provided such Participant agrees to be subject to Section 2.18(c) as
though it were a Lender.

 

(ii)           A Participant shall not be entitled
to receive any greater payment under Sections 2.15 or 2.17 than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower’s prior written consent.  A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 2.17
unless the Borrower is notified of the participation sold to such Participant
and such Participant complies with Section 2.17(e) as though it were
a Lender.

 

(d)           Pledge.  Any Lender
may at any time pledge or assign a security interest in all or any portion of
its rights under this Agreement to secure obligations of such Lender, including
any pledge or assignment to secure obligations to a Federal Reserve Bank, and
this Section shall not apply to any such 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 10.05.                       Survival.  All
covenants, agreements, representations and warranties made by the Loan Parties
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 Default or incorrect
representation or warranty at the time any credit is extended hereunder, and shall
continue in full force and effect until the Obligations have been Fully
Satisfied.  The provisions of
Sections 2.15, 2.16, 2.17 and 10.03 and Article IX 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 10.06.                       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 EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES
RELATING TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY AND ALL PREVIOUS
COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER ORAL OR
WRITTEN, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED
OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OR DISCUSSIONS OF THE PARTIES HERETO. 
THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.  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 may be sent on pages designated only as “Safety-Kleen
Systems, Inc. August 3, 2006 Credit Agreement, Signature Page” or
similar designation, without page numbers or other identifying
information), 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

 

90

 

 

 

counterpart of a signature page of this Agreement
by telecopy shall be effective as delivery of a manually executed counterpart
of this Agreement.

 

Section 10.07.                       Severability. 
Any provision of this Agreement 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 hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.

 

Section 10.08.                       Right of Setoff. 
If an Event of Default exists, each Lender and each of its 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 Lender or Affiliate to or for the credit
or the account of the Borrower against any of and all the obligations of the
Borrower now or hereafter existing under this Agreement held by such Lender,
irrespective of whether or not such Lender shall have made any demand under
this Agreement and although such obligations may be unmatured.  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.

 

Section 10.09.                       Governing Law; Jurisdiction; Consent to
Service of Process.

 

(a)           Governing Law.  This
Agreement shall be governed by and construed in accordance with the applicable
law pertaining in the State of New York, other than those conflict of law
provisions that would defer to the substantive laws of another
jurisdiction.  This governing law
election has been made by the parties in reliance (at least in part) on Section 5-1401
of the General Obligations Law of the State of New York, as amended (as and to
the extent applicable), and other applicable law.

 

(b)           Jurisdiction.  EACH OF
HOLDINGS AND THE BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR
ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE SUPREME COURT
OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES
DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT
FROM ANY THEREOF, 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 HOLDINGS, THE
BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

(c)           Venue.  Each of
Holdings and the 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 

 

91

 

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)           Service of Process.  Each party to
this Agreement irrevocably consents to service of process in the manner
provided for notices in Section 10.01. 
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 10.10.                       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 (WHETHER BASED
ON CONTRACT, TORT OR ANY OTHER THEORY). 
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY 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 10.11.                       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 10.12.                       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, trustees, 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 applicable laws or regulations 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 the enforcement of rights hereunder, (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 and its
obligations, (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 the
Administrative Agent, the Issuing Bank or any Lender on a non-confidential
basis from a source other than the Borrower. 
For the purposes of this Section, “Information” means all
information received from the Loan Parties relating to the Loan Parties or
their business, other than any such information that is available to the
Administrative Agent, the Issuing Bank or any Lender on a non-confidential
basis prior to disclosure by the Loan Parties. 
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.

 

EACH LENDER ACKNOWLEDGES THAT
INFORMATION AS DEFINED IN SECTION 10.12(a) FURNISHED TO IT PURSUANT TO
THIS AGREEMENT MAY INCLUDE 

92

 

MATERIAL
NON-PUBLIC INFORMATION CONCERNING THE LOAN PARTIES AND THEIR RESPECTIVE RELATED
PARTIES OR THEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED
COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND
THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH
THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES
LAWS.

 

ALL
INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE
LOAN PARTIES OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF
ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN
MATERIAL NON-PUBLIC INFORMATION ABOUT THE LOAN PARTIES AND THEIR RESPECTIVE
AFFILIATES AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES.  ACCORDINGLY, EACH LENDER REPRESENTS TO
HOLDINGS, THE BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN
ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE
INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE
WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW.

 

Section 10.13.                       Maximum Interest Rate.

 

(a)           Limitation to Maximum Rate; Recapture. 
No interest rate specified in any Loan Document shall at any time exceed
the Maximum Rate.  If at any time the
interest rate (the “Contract Rate”) for any obligation under the Loan
Documents shall exceed the Maximum Rate, thereby causing the interest accruing
on such obligation to be limited to the Maximum Rate, then any subsequent
reduction in the Contract Rate for such obligation shall not reduce the rate of
interest on such obligation below the Maximum Rate until the aggregate amount
of interest accrued on such obligation equals the aggregate amount of interest
which would have accrued on such obligation if the Contract Rate for such
obligation had at all times been in effect. 
As used herein, the term “Maximum Rate” means, at any time with
respect to any Lender, the maximum rate of nonusurious interest under
applicable law that such Lender may charge Borrower.  The Maximum Rate shall be calculated in a
manner that takes into account any and all fees, payments, and other charges
contracted for, charged, or received in connection with the Loan Documents that
constitute interest under applicable law. 
Each change in any interest rate provided for herein based upon the
Maximum Rate resulting from a change in the Maximum Rate shall take effect
without notice to Borrower at the time of such change in the Maximum Rate.  For purposes of determining the Maximum Rate
under Texas law, if applicable, the applicable rate ceiling shall be the weekly
rate ceiling described in, and computed in accordance with, Article 5069-1.04,
Vernon’s Texas Civil Statutes.

 

(b)           Cure Provisions.  No provision
of any Loan Document shall require the payment or the collection of interest in
excess of the maximum amount permitted by applicable law.  If any excess of interest in such respect is
hereby provided for, or shall be adjudicated to be so provided, in any Loan
Document or otherwise in connection with this loan transaction, the provisions
of this Section shall govern and prevail and neither Borrower nor the
sureties, guarantors, successors, or assigns of Borrower shall be obligated to
pay the excess amount of such interest or any other excess sum paid for the
use, forbearance, or detention of sums loaned pursuant hereto.  In the event any Lender ever receives,
collects, or applies as interest any such sum, such amount which would be in
excess of the maximum amount permitted by applicable law shall be applied as a
payment and reduction of the principal of the obligations outstanding
hereunder, and, if the principal of the obligations outstanding hereunder has
been paid in full, any remaining excess shall forthwith be paid to the
Borrower.  In determining whether or not
the interest paid or payable exceeds the Maximum Rate, Borrower and each Lender
shall, to the extent permitted by 

 

93

 

applicable law, (a) characterize any
non-principal payment as an expense, fee, or premium rather than as interest, (b) exclude
voluntary prepayments and the effects thereof, and (c) amortize, prorate,
allocate, and spread in equal or unequal parts the total amount of interest
throughout the entire contemplated term of the obligations outstanding
hereunder so that interest for the entire term does not exceed the Maximum
Rate.

 

Section 10.14.                       No Duty.  All
attorneys, accountants, appraisers, and other professional Persons and
consultants retained by the Administrative Agent or any Lender shall have the
right to act exclusively in the interest of the Administrative Agent and the
Lenders and shall have no duty of disclosure, duty of loyalty, duty of care, or
other duty or obligation of any type or nature whatsoever to Holdings,
Borrower, any other Loan Party, any of the Holdings’ shareholders or any other
Person.

 

Section 10.15.                       No Fiduciary Relationship. 
The relationship between the Loan Parties on the one hand and the
Administrative Agent and each Lender on the other is solely that of debtor and
creditor, and neither the Administrative Agent nor any Lender has any fiduciary
or other special relationship with any Loan Party, and no term or condition of
any of the Loan Documents shall be construed so as to deem the relationship
between the Loan Parties on the one hand and the Administrative Agent and each
Lender on the other to be other than that of debtor and creditor.

 

Section 10.16.                       Equitable Relief. 
Holdings and the Borrower each recognize that in the event Holdings, the
Borrower or any other Loan Party fails to pay, perform, observe, or discharge
any or all of the obligations under the Loan Documents, any remedy at law may
prove to be inadequate relief to the Administrative Agent and the Lenders.  Holdings and the Borrower therefore agree
that the Administrative Agent and the Lenders, if the Administrative Agent or
the Required Lenders so request, shall be entitled to temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages.

 

Section 10.17.                       Construction. 
Holdings, the Borrower, each other Loan Party (by its execution of the
Loan Documents to which its is a party), the Administrative Agent and each
Lender acknowledges that each of them has had the benefit of legal counsel of
its own choice and has been afforded an opportunity to review the Loan
Documents with its legal counsel and that the Loan Documents shall be construed
as if jointly drafted by the parties thereto.

 

Section 10.18.                       Independence of Covenants. 
All covenants under the Loan Documents shall be given independent effect
so that if a particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception to, or be
otherwise within the limitations of, another covenant shall not avoid the
occurrence of a Default if such action is taken or such condition exists.

 

Section 10.19.                       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 that pursuant to the
requirements of the Act, it is required to obtain, verify and record
information that identifies the Borrower, which information includes the name
and address of the Borrower and other information that will allow such Lender
to identify the Borrower in accordance with the Act.

 

Signature
pages start on the next page

 

94

 

IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be duly executed by
their respective authorized officers as of the day and year first above
written.

 

 

	
   

  	
  SAFETY-KLEEN HOLDCO., INC.

  
	
   

  	
  SAFETY-KLEEN SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dennis  McGill

  
	
   

  	
   

  	
  Dennis McGill, Executive Vice President and Chief
  Financial Officer of Holdings and the Borrower

  

 

 

	
   

  	
  JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
  individually and as Administrative Agent,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian  McDougal

  
	
   

  	
   

  	
  Brian McDougal, Vice President

  

 

 

	
   

  	
  CREDIT SUISSE, CAYMAN ISLANDS BRANCH

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David  Dodd

  
	
   

  	
   

  	
  Name:

  	
  David Dodd

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Shaheen  Malik

  
	
   

  	
   

  	
  Name:

  	
  Shaheen Malik

  
	
   

  	
   

  	
  Title:

  	
  Associate

  

 

 

	
   

  	
  WACHOVIA BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Clint Bryant

  
	
   

  	
   

  	
  Name:

  	
  Clint Bryant

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

 

	
   

  	
  AMEGY BANK NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Cyndi Giles

  
	
   

  	
   

  	
  Name:

  	
  Cyndi Giles

  
	
   

  	
   

  	
  Title:

  	
  Vice President

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