Document:

exv10w2

Exhibit 10.2

 

 

STOCKHOLDER AGREEMENT

By and Among

McMoRAN EXPLORATION CO.,

FREEPORT-McMoRAN PREFERRED LLC

and

FREEPORT-McMoRAN COPPER & GOLD, INC.

December 30, 2010

 

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 	 	 	 	 	 	 
	ARTICLE I DEFINITIONS	 	 	1	 
	 
	 	 	 	 	 	 
	Section 1.1
	 	Definitions	 	 	1	 
	Section 1.2
	 	Rules of Construction	 	 	3	 
	 
	 	 	 	 	 	 
	ARTICLE II CERTAIN AGREEMENTS	 	 	4	 
	 
	 	 	 	 	 	 
	Section 2.1
	 	Lock-Up	 	 	4	 
	Section 2.2
	 	Restrictions on Certain Transfers	 	 	4	 
	Section 2.3
	 	Standstill	 	 	5	 
	Section 2.4
	 	No Solicitation	 	 	6	 
	Section 2.5
	 	Prohibition on Agreements with Plains Relating to Issuer Stock	 	 	6	 
	Section 2.6
	 	Prohibition on Agreements Relating to Issuer Stock	 	 	6	 
	Section 2.7
	 	Board of Directors; Governance	 	 	7	 
	 
	 	 	 	 	 	 
	ARTICLE III USE OF INFORMATION	 	 	9	 
	 
	 	 	 	 	 	 
	ARTICLE IV REGULATORY MATTERS	 	 	9	 
	 
	 	 	 	 	 	 
	Section 4.1
	 	HSR Act	 	 	9	 
	 
	 	 	 	 	 	 
	ARTICLE V MISCELLANEOUS	 	 	11	 
	 
	 	 	 	 	 	 
	Section 5.1
	 	Legend	 	 	11	 
	Section 5.2
	 	Notices	 	 	12	 
	Section 5.3
	 	Governing Law; Jurisdiction; Waiver of Jury Trial	 	 	13	 
	Section 5.4
	 	Entire Agreement; Amendments and Waivers	 	 	13	 
	Section 5.5
	 	Binding Effect and Assignment	 	 	13	 
	Section 5.6
	 	Enforcement of this Agreement	 	 	13	 
	Section 5.7
	 	Severability	 	 	14	 
	Section 5.8
	 	Execution	 	 	14	 

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STOCKHOLDER AGREEMENT

     This STOCKHOLDER AGREEMENT (this “Agreement”), dated as of December 30, 2010, is entered into
by and among McMoRan Exploration Co., a Delaware corporation (the “Issuer”), Freeport-McMoRan
Preferred LLC, a Delaware limited liability company (“Purchaser Sub”), and Freeport-McMoRan Copper
& Gold Inc., a Delaware corporation (“Freeport”).

WITNESSETH:

     WHEREAS, the Issuer has authorized the issuance of convertible perpetual preferred stock, par
value $0.01 per share (the “Preferred Stock”), with such rights, powers, designations, preferences
and relative, participating, optional or other rights and such qualifications, limitations or
restrictions as set forth in the Certificate of Designations, in the form attached as Exhibit
A to the Stock Purchase Agreement (as defined below), which Preferred Stock shall be
convertible into common stock, par value $0.01 per share, of the Issuer (the “Common Stock”); and

     WHEREAS, the Issuer, Purchaser Sub and Freeport (the “Parties” and each, individually, a
“Party”) are parties to that certain Stock Purchase Agreement, dated as of September 19, 2010 (the
“Stock Purchase Agreement”), by which at the Closing (as defined in the Stock Purchase Agreement)
the Issuer issued to Purchaser Sub 500,000 shares of Preferred Stock (the “Preferred Shares”); and

     WHEREAS, as a material inducement to the Issuer’s willingness to issue the Preferred Shares to
Purchaser Sub pursuant to the Stock Purchase Agreement, the Parties agreed to enter into this
Agreement to set forth the following rights and obligations of the Parties.

     NOW, THEREFORE, in consideration of the premises and the respective representations,
warranties, covenants, agreements and conditions contained herein, the Parties agree as follows:

ARTICLE I

DEFINITIONS

     Section 1.1 Definitions. As used in this Agreement, unless the context otherwise
requires, the following terms shall have the following respective meanings:

     “affiliate” has the meaning set forth in, and contemplated by, DGCL Section 203(c)(1).
Notwithstanding anything to the contrary set forth herein and for the purposes of this Agreement
only, the Issuer and its subsidiaries shall not be deemed to be affiliates of Freeport or Purchaser
Sub or their subsidiaries or of Plains or its subsidiaries.

     “Agreement” has the meaning set forth in the Preamble.

     “Board” means the Board of Directors of the Issuer.

     “business combination” has the meaning set forth in, and contemplated by, DGCL Section
203(c)(3).

 

 

     “Business Day” means any day on which commercial banks are generally open for business in New
York, New York or Houston, Texas other than a Saturday, a Sunday or a day observed as a holiday in
New York, New York or Houston, Texas under the Laws of the State of New York or the State of Texas
or the federal Laws of the United States of America.

     “Common Stock” has the meaning set forth in the Recitals.

     “Delaware Courts” has the meaning set forth in Section 5.3.

     “DGCL” means the General Corporation Law of the State of Delaware, as amended and in effect
from time to time.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Freeport” has the meaning set forth in the Preamble.

     “Freeport Designee(s)” has the meaning set forth in Section 2.7(a).

     “Governmental Entity” means any (a) multinational, federal, provincial, territorial, state,
regional, municipal, local or other government, governmental or public department, central bank,
court, tribunal, arbitral body, commission, board, bureau or agency, domestic or foreign, (b)
subdivision, agent, commission, board, or authority of any of the foregoing, or (c) quasi
governmental or private body exercising any regulatory, expropriation or taxing authority under, or
for the account of, any of the foregoing.

     “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
rules and regulations promulgated thereunder.

     “Independent Directors” means members of the Board who are (a) not directors or officers of
Freeport or of Plains, (b) not officers, employees or consultants of, or advisors to, the Issuer,
Freeport or Plains, (c) independent of Freeport and Plains within the meaning of Delaware Law, as
determined in good faith by the Board, and (d) otherwise independent within the meaning of the
rules and regulations of the NYSE as then in effect, as determined in good faith by the Board.

     “Issuer” has the meaning set forth in the Preamble.

     “Laws” means all statutes, regulations, statutory rules, orders, judgments, decrees and terms
and conditions of any grant of approval, permission, authority, permit or license of any court,
Governmental Entity, statutory body (including the NYSE) or self-regulatory authority.

     “Lock-Up Period” has the meaning set forth in Section 2.1.

     “Notice” has the meaning set forth in Section 5.2.

     “NYSE” means the New York Stock Exchange.

     “Party” and “Parties” have the respective meanings set forth in the Recitals.

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     “person” includes any individual, firm, partnership, limited partnership, joint venture,
venture capital fund, limited liability company, association, trust, estate, group, body corporate,
corporation, unincorporated association or organization, Governmental Entity, syndicate or other
entity, whether or not having legal status.

     “Plains” means Plains Exploration & Production Company, a Delaware corporation.

     “Preferred Shares” has the meaning set forth in the Recitals.

     “Preferred Stock” has the meaning set forth in the Recitals.

     “Purchaser Sub” has the meaning set forth in the Recitals.

     “Securities Act” means the Securities Act of 1933, as amended.

     “Stock Purchase Agreement” has the meaning set forth in the Recitals.

     “Shared Management Members” has the meaning set forth in Section 2.2.

     “Standstill Ownership” means ownership, calculated based on the meaning of “own” set forth in,
and contemplated by, DGCL Section 203(c)(9).

     “Standstill Period” means the period that commences on the date hereof and extends until such
time as Freeport ceases to have Standstill Ownership of at least fifteen percent (15%) of the
outstanding voting stock of the Issuer, provided that, for the avoidance of doubt, for the purposes
of such determination Freeport shall be deemed to have Standstill Ownership of the number of shares
of Common Stock into which the Preferred Shares of which Freeport has Standstill Ownership are
convertible as of the date of determination.

     “Transfer” means any direct or indirect offer for sale, sale, assignment, transfer, pledge,
hypothecation, encumbrance or other disposition (including by merger, testamentary disposition,
interspousal disposition pursuant to a domestic relations proceeding or otherwise or otherwise by
operation of Law) with respect to any capital stock of the Issuer or any securities convertible
into or exercisable or exchangeable therefor (and, depending on the context, may be used as a noun
or a verb).

     “voting stock” has the meaning set forth in, and contemplated by, DGCL Section 203(c)(8).

     Section 1.2 Rules of Construction. The division of this Agreement into articles,
sections and other portions and the insertion of headings are for convenience of reference only and
shall not affect the construction or interpretation hereof. Unless otherwise indicated, all
references to an “Article” or “Section” followed by a number or a letter refer to the specified
Article or Section of this Agreement. The terms “this Agreement,” “hereof,” “herein” and
“hereunder” and similar expressions refer to this Agreement and not to any particular Article,
Section or other portion hereof. Unless otherwise specifically indicated or the context otherwise
requires, (a) all references to “dollars” or “$” mean United States dollars, (b) words importing
the singular shall include the plural and vice versa and words importing any gender shall include

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all genders, (c) “include,” “includes” and “including” shall be deemed to be followed by the
words “without limitation,” and (d) all words used as accounting terms shall have the meanings
assigned to them under United States generally accepted accounting principles applied on a
consistent basis during the periods involved. In the event that any date on which any action is
required to be taken hereunder is not a Business Day, such action shall be required to be taken on
the next succeeding day that is a Business Day. Reference to any Party is also a reference to such
Party’s permitted successors and assigns. The Parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption
or burden of proof shall arise favoring or disfavoring any party hereto by virtue of the authorship
of any of the provisions of this Agreement.

ARTICLE II

CERTAIN AGREEMENTS

     Section 2.1 Lock-Up. During the period commencing on the date hereof and ending one
hundred twenty (120) days thereafter (the “Lock-Up Period”), Freeport shall not, and shall cause
its controlled affiliates not to, directly or indirectly (a) lend, offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase or otherwise Transfer or dispose of any Preferred Shares or
any securities convertible into or exercisable or exchangeable for Preferred Shares or any shares
of Common Stock issuable upon conversion of any Preferred Shares or (b) enter into any swap or
other agreement, arrangement or transaction that transfers to another, in whole or in part,
directly or indirectly, any of the economic consequences of ownership of the Preferred Shares or
any securities convertible into or exercisable or exchangeable for Preferred Shares or any shares
of Common Stock issuable upon conversion of any Preferred Shares, whether any such transaction
described in clauses (a) or (b) above is to be settled by delivery of shares of Common Stock,
Preferred Shares or such other securities, in cash or otherwise. The foregoing sentence shall not
apply to transfers of shares of Common Stock or Preferred Shares by Freeport or Purchaser Sub to
its wholly-owned affiliates, provided that no such transfer(s) shall relieve Freeport or Purchaser
Sub from their obligations under this Agreement. Freeport and Purchaser Sub agree that the Issuer
may, with respect to any Preferred Shares or any securities convertible into or exercisable or
exchangeable for Preferred Shares or any shares of Common Stock issuable upon conversion of any
Preferred Shares owned by Freeport or its controlled affiliates, cause the transfer agent or other
registrar to enter stop transfer instructions and implement stop transfer procedures with respect
to any Transfer of such securities during the Lock-up Period not in compliance with this
Section 2.1.

     Section 2.2 Restrictions on Certain Transfers. Until the first anniversary of the
date hereof, Freeport shall not, and shall cause its controlled affiliates and any person that is
an officer or director of Freeport and who is also an officer or director of the Issuer (such
persons, the “Shared Management Members”) not to, Transfer any Preferred Shares or any securities
convertible into or exercisable or exchangeable for Preferred Shares or any shares of Common Stock
issuable upon conversion of any Preferred Shares to Plains. For the avoidance of doubt, the
inability of Freeport to control the actions of the Shared Management Members shall not be a
defense of Freeport to the failure to comply with its obligation under this Section 2.2 and

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Freeport shall be liable for any such failures regardless of the ability of Freeport to
control the Shared Management Members.

     Section 2.3 Standstill.

          (a) During the Standstill Period, without the prior written approval of a majority of the
Independent Directors, Freeport shall not, and shall not permit its controlled affiliates to: (i)
acquire, offer or propose to acquire, or agree or seek to acquire, or solicit the acquisition of,
by purchase or otherwise, any equity, debt or equity-linked securities of the Issuer if, following
such acquisition, Freeport and its controlled affiliates would own securities of the Issuer
representing more than 103% of the percentage of the outstanding shares of Common Stock (including
shares of Common Stock issuable upon conversion of any Preferred Shares owned by Freeport and its
controlled affiliates) owned by Freeport and its controlled affiliates on the date hereof
(including shares of Common Stock issuable upon conversion of any Preferred Shares owned by
Freeport and its controlled affiliates); (ii) form, join or in any way participate in, or enter
into any agreement, arrangement or understanding with, a “group” (within the meaning of Section
13(d)(3) of the Exchange Act and the rules and regulations thereunder) with respect to any equity
or equity-linked securities of the Issuer; (iii) commence any tender or exchange offer for any
securities of the Issuer; (iv) enter into or agree, offer, propose or seek (whether publicly or
otherwise) to enter into, or otherwise be involved in or part of, any acquisition transaction,
merger or other business combination relating to all or part of the Issuer or any of its
subsidiaries or any acquisition transaction for all or part of the assets of the Issuer or any of
its subsidiaries or any of their respective businesses; (v) call or seek to call a meeting of the
stockholders of the Issuer or initiate any stockholder proposal for action by stockholders of the
Issuer; (vi) enter into any discussions, negotiations, arrangements or understandings with any
other person with respect to any of the foregoing activities; (vii) advise, assist, encourage, act
as a financing source for or otherwise invest in any other person in connection with any of the
foregoing activities; (viii) take any action inconsistent with the purpose and intent of this
Section 2.3; (ix) disclose any intention, plan or arrangement inconsistent with any of the
foregoing, (x) with respect to any of the foregoing provisions of this paragraph, request the
Issuer to amend or waive any such provisions or otherwise consent to any action inconsistent with
any such provisions; (xi) take any initiative with respect to the Issuer which could require the
Issuer to make a public announcement regarding (A) such initiative or (B) any of the foregoing
activities; or (xii) bring any action or otherwise act to contest the validity of this Section
2.3.

          (b) Notwithstanding anything to the contrary set forth in this Agreement, the members of
Freeport’s Board of Directors who are not also Shared Management Members shall be permitted to
communicate on a confidential basis with the Independent Directors regarding any matter, including
potential transactions between Freeport and the Issuer and potential waivers or amendments to the
terms of this Agreement.

          (c) Each of the Parties agrees that any supplement, modification, amendment, or waiver by the
Issuer of the terms or provisions of that certain Stockholder Agreement, dated as of December 30,
2010, by and between the Issuer and Plains, with respect to a transaction, arrangement or
understanding involving both Plains or its controlled affiliates and Freeport or its controlled
affiliates must be approved in writing in advance by a committee of the Board consisting solely of
members of the Board who are Independent Directors.

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     Section 2.4 No Solicitation. For so long as Freeport and its controlled affiliates
collectively own more than five percent (5%) of the outstanding shares of Common Stock (including
shares of Common Stock issuable upon conversion of any Preferred Shares owned by Freeport and its
controlled affiliates), Freeport shall not, and shall not permit its controlled affiliates to: (a)
other than with respect to Freeport Designees and other nominees to the Board designated by
Freeport, in each case solely for such Freeport Designees and nominees whose election to the Board
has been recommended by the Board, make, or in any way participate in, any “solicitation” of
“proxies” (as such terms are defined under Regulation 14A under the Exchange Act) to vote, or seek
to advise or influence any person or entity with respect to the voting of, any voting securities of
the Issuer, including by forming, joining or in any way participating in a “group” (within the
meaning of Section 13(d)(3) of the Exchange Act and the rules and regulations thereunder),
provided, that for the avoidance of doubt, that the foregoing shall not prohibit any activities
with respect to the solicitation of proxies by Shared Management Members in their capacity as
officers or directors of the Issuer; (b) take any action inconsistent with the purpose and intent
of this Section 2.4; (c) disclose any intention, plan or arrangement inconsistent with any
of the foregoing, (d) request that the Issuer amend or waive, or otherwise consent to any action
inconsistent with, any provision of this Section 2.4 (except pursuant to Section
2.3(b)); or (e) take any initiative with respect to the Issuer which could require the Issuer
to make a public announcement regarding any of the foregoing activities.

     Section 2.5 Prohibition on Agreements with Plains Relating to Issuer Stock. For so
long as Freeport and its controlled affiliates collectively own more than five percent (5%) of the
outstanding shares of Common Stock (including shares of Common Stock issuable upon conversion of
any Preferred Shares owned by Freeport and its controlled affiliates), Freeport shall not, and
shall not permit its controlled affiliates to, enter into any agreement, arrangement or
understanding for the purpose of acquiring, voting (except pursuant to a revocable proxy or consent
giving in response to a proxy or consent solicitation), holding or disposing of any capital stock
of the Issuer with Plains or any of its affiliates, directors or officers, unless such agreement,
arrangement or understanding is approved in advance by a majority of the Independent Directors.
Notwithstanding the foregoing provisions of this Section 2.5, (a) the restrictions set
forth in this Section 2.5 shall not apply to any transaction in which either Plains or
Freeport or any of their controlled affiliates offers to acquire one hundred percent (100%) of the
outstanding shares of Common Stock and (b) the restrictions of this Section 2.5 shall lapse
on the first anniversary of the date hereof.

     Section 2.6 Prohibition on Agreements Relating to Issuer Stock. For so long as Freeport
and its controlled affiliates collectively own more than five percent (5%) of the outstanding
shares of Common Stock (including shares of Common Stock issuable upon conversion of any Preferred
Shares owned by Freeport and its controlled affiliates), Freeport shall not, and shall not permit
its controlled affiliates to, enter into any agreement, arrangement or understanding (other than
ordinary course director or officer compensation or indemnification arrangements or pursuant to any
stock-based compensation plans) for the purpose of acquiring, voting (except pursuant to a
revocable proxy or consent giving in response to a proxy or consent solicitation), holding or
disposing of any capital stock of the Issuer with any director or officer of Freeport or Plains who
is also a director or officer of the Issuer, unless such agreement, arrangement or understanding is
approved in advance by a majority of the Independent Directors.

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     Section 2.7 Board of Directors; Governance.

          (a) Subject to the other provisions of this Section 2.7, (i) for so long as Freeport
and its controlled affiliates collectively own shares of Common Stock (including shares of Common
Stock issuable upon conversion of any Preferred Shares owned by Freeport and its controlled
affiliates) representing more than seventy-five percent (75%) of the percentage of the outstanding
shares of Common Stock owned by Freeport and its controlled affiliates on the date hereof
(including shares of Common Stock issuable upon conversion of any Preferred Shares owned by
Freeport and its controlled affiliates), Freeport shall have the right to designate two (2) members
to be nominated to the Board and (ii) for so long as Freeport and its controlled affiliates
collectively own shares of Common Stock (including shares of Common Stock issuable upon conversion
of any Preferred Shares owned by Freeport and its controlled affiliates) representing at least
twenty-five percent (25%) and less than or equal to seventy-five percent (75%) of the percentage of
the outstanding shares of Common Stock (including shares of Common Stock issuable upon conversion
of any Preferred Shares owned by Freeport and its controlled affiliates) owned by Freeport and its
controlled affiliates on the date hereof, Freeport shall have the right to designate one (1) member
to be nominated to the Board. The Issuer shall cause the person(s) to be designated by Freeport
(such designee(s) referred to herein as the “Freeport Designee(s)”) to be nominated for election at
an annual or special stockholders meeting of the Issuer and shall take all actions necessary or
advisable to cause the Board to recommend that the stockholders vote “FOR”, and solicit proxies
for, the election of the Freeport Designee(s). If a Freeport Designee is nominated and not elected
at an annual or special stockholders meeting of the Issuer or is removed by the stockholders, then
Freeport shall provide the Issuer the name of a replacement Freeport Designee and, provided that
such person satisfies the requirements of this Section 2.7(a) and Freeport maintains the applicable
designation rights specified in the first sentence of this Section 2.7(a), the Board and the Issuer
shall take such actions as may be necessary to appoint such person to serve as a member of the
Board, including, if applicable, increasing the size of the Board and appointing such Freeport
Designee to fill the newly-created directorship. If a Freeport Designee (or any successor designee
appointed pursuant to this paragraph) ceases for any reason to serve as a director of the Company
after having been duly appointed or elected, then, provided that Freeport maintains the applicable
designation rights specified in the first sentence of this Section 2.7(a), Freeport shall
have the right to designate a replacement for such Freeport Designee to hold office for the
remaining unexpired term of the Freeport Designee. Any Freeport Designee appointed or elected to
Issuer’s Board may be removed for cause in accordance with applicable Law or the Issuer’s
certificate of incorporation and bylaws and shall (A) have the requisite skill and experience to
serve as a director of a publicly traded company, and (B) not be prohibited or disqualified from
serving as a director of the Issuer pursuant to any rule or regulation of the SEC or NYSE or by
applicable Law.

          (b) Freeport shall use its commercially reasonable efforts to cause each Freeport Designee to
provide responses that shall be true and correct in all material respects to all reasonable
requests for information by the Issuer in connection with the proxy materials to be filed by the
Company in connection with its stockholder meetings, and each Freeport Designee shall promptly
provide an agreement consenting to be named as a nominee in such proxy materials and to serve as a
director upon election to the Board. In addition, upon the Issuer’s request made at any time,
Freeport shall cause the Freeport Designee(s), if any, to complete and execute the Issuer’s
standard director and officer questionnaire prior to being admitted to the

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Board or standing for election or reelection at an annual meeting of stockholders or at such
other time as may be reasonably requested by Issuer. Not less than 120 days prior to each annual
meeting of stockholders of the Issuer (assuming for purposes of this Section 2.7(b) that
each such annual meeting shall be held on the anniversary of the prior year’s annual meeting),
Freeport shall provide the Issuer with written notice of the name(s) of the Freeport Designee, if
any, to be nominated for election at such meeting. Within 10 days after receipt of such notice,
the Issuer shall provide Freeport with written notice as to whether the Freeport Designee(s)
reasonably satisfy the requirements of Section 2.7(a). If it is determined that a Freeport
Designee does not reasonably satisfy the requirements of Section 2.7(a) or if a Freeport Designee
fails to take any of the actions set forth in this Section 2.7(b) (in which case the Issuer shall
have no obligation under this Section 2.7 with respect to such Freeport Designee), then Freeport
shall have the right to appoint substitute Freeport Designee(s).

          (c) Notwithstanding anything to the contrary in this Section 2.7, Freeport shall not
be entitled to designate a Freeport Designee and the Issuer shall have no obligations under this
Section 2.7 with respect to such Freeport Designee to the extent the sum of the number of
the Freeport Designees (including any nominees to the Board) and the number of the members of or
nominees to the Board who are also either a member of the board of directors of Freeport or any
affiliate or an officer of Freeport or any affiliate equals or exceeds two (2); provided, for the
avoidance of doubt, that if the holders of Preferred Shares (together with any parity stock with
like voting rights that are exercisable) are entitled to designate two additional directors
pursuant to the Certificate of Designations on account of dividends payable to the holders of
Preferred Shares being in arrears for six calendar quarters (whether or not consecutive) and such
unpaid dividends not being fully paid or set aside for payment, any of such directors shall not
count as “Freeport Designees”. Accordingly, notwithstanding that concurrently with the execution
of this Agreement and the “Closing” (as defined in the Stock Purchase Agreement) of the
transactions under the Stock Purchase Agreement Freeport owns a number of shares of Common Stock
which would entitle it to designate two (2) Freeport Designees pursuant to Section 2.7(a), Freeport
will not have the right to designate any Freeport Designees as members of the Board as of the
Closing if as of such Closing, and for so long thereafter as, the number of members of Freeport’s
board of directors or its executive officers also serving on the Board exceeds two (2). If at any
time Freeport and its controlled affiliates collectively own shares of Common Stock representing
less than twenty-five percent (25%) of the percentage of the outstanding shares of Common Stock
(including shares of Common Stock issuable upon conversion of any Preferred Shares owned by
Freeport and its controlled affiliates) owned by Freeport and its controlled affiliates on the date
hereof, Freeport shall have no right to designate any Freeport Designees, and the Issuer shall not
have any obligations under this Section 2.7.

          (d) For so long as Freeport and its controlled affiliates collectively own at least five
percent (5%) of the outstanding shares of Common Stock (including shares of Common Stock issuable
upon conversion of any Preferred Shares owned by Freeport and its controlled affiliates) Freeport
shall, and shall cause each of its controlled affiliates holding shares of Common Stock to, at any
annual or special meeting of stockholders of Issuer, however called, including any adjournment or
postponement thereof, appear at each such meeting or otherwise cause its shares of Common Stock to
be counted as present thereat for purposes of calculating a quorum.

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          (e) Each time the Board appoints a Freeport Designee, it will also adopt resolutions such that
each Freeport Designee (a) qualifies as a “Continuing Director” for purposes of the indenture
governing Issuer’s 11.875% Senior Notes due 2014 and (b) will not be in the class of persons
serving on the Board that could result in (x) a “Change of Control” as defined clause (iii) of the
definition thereof in Issuer’s indenture governing its 5-1/4% Convertible Senior Notes due 2011,
(y) a “Change in Control” as defined on clause (b) of the definition thereof in Issuer’s Amended
and Restated Credit Agreement dated as of August 6, 2007, as amended, or (z) a similar change of
control under any other agreement to which Issuer is a party.

          (f) At all times when any Freeport Designee is serving as a member of the Board, and following
any such Freeport Designee’s death, resignation, removal or other cessation as a director of
Issuer, each Freeport Designee shall be entitled to all rights of indemnification and exculpation
as are then made available to any other member of the Board. With respect to such rights of
indemnification, as between Freeport and its affiliates, on the one hand, and Issuer on the other
hand, Issuer shall, in all events, be the full indemnitor of first resort and shall not be entitled
to any contribution, indemnification or other payment by or from any of Freeport or its affiliates.

ARTICLE III

USE OF INFORMATION

     Section 3.1 Freeport shall not, and shall cause its controlled affiliates and each Freeport
Designee not to, use nonpublic information obtained from such Freeport Designee’s service on the
Board in any manner adverse to the Issuer.

ARTICLE IV

REGULATORY MATTERS

     Section 4.1 HSR Act.

          (a) The Issuer shall use its commercially reasonable efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary, proper or advisable under
applicable Law to permit Freeport and Purchaser Sub to obtain, as promptly as practicable following
receipt of a request from Freeport or Purchaser Sub, all terminations or expirations of any
applicable waiting periods from any Governmental Entity in connection with the HSR Act, or any
successor legislation, that are necessary, proper or advisable in order to permit Freeport or
Purchaser Sub to acquire the Common Stock upon any conversion of the Preferred Shares. In
furtherance and not in limitation of the foregoing, the Issuer shall (i) use commercially
reasonable efforts to make an appropriate filing of a Notification and Report Form to the Federal
Trade Commission and the U.S. Department of Justice pursuant to the HSR Act as promptly as
practicable, and in any event within fifteen (15) calendar days, following Issuer’s receipt of
notification by Freeport and/or Purchaser Sub of the making of a corresponding filing by Freeport
and/or Purchaser Sub relating to the Common Stock and (ii) provided that each of Freeport and
Purchaser Sub are in material compliance with their obligations set forth in this Section
4.1, call Preferred Shares held by Freeport, Purchaser Sub or any of their affiliates for
redemption only at such times as such holders shall have obtained all necessary clearances,

9

 

approvals, consents, termination or expirations of waiting periods, registrations, permits,
authorizations and other confirmations from Governmental Entities which are required in order to
permit them to convert all of such Preferred Shares to Common Stock.

          (b) Each of Freeport and Purchaser Sub shall use its commercially reasonable efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable Law to obtain, as promptly as practicable following (i) Freeport or
Purchaser Sub making an appropriate filing of a Notification and Report Form to the Federal Trade
Commission and the U.S. Department of Justice pursuant to the HSR Act with respect thereto or (ii)
receipt of a written request from the Issuer, stating that the Issuer at the time of such request
has a present intention of calling some or all of the Preferred Shares held by Freeport, Purchaser
Sub or any of their affiliates for redemption, all terminations or expirations of any applicable
waiting periods from any Governmental Entity in connection with the HSR Act, or any successor
legislation, that are necessary, proper or advisable in order to permit Freeport or Purchaser Sub
or their affiliates to acquire the Common Stock upon any conversion of the Preferred Shares. In
furtherance and not in limitation of the foregoing, if not previously filed, each of Freeport and
Purchaser Sub shall use commercially reasonable efforts to make an appropriate filing of a
Notification and Report Form to the Federal Trade Commission and the U.S. Department of Justice
pursuant to the HSR Act as promptly as practicable, and in any event within fifteen (15) calendar
days, following receipt of Issuer’s written request.

          (c) With respect to the obligations of the parties pursuant to Section 4.1(a) and
Section 4.1(b), each of the Issuer, Freeport and Purchaser Sub shall (i) use commercially
reasonable efforts to supply as promptly as practicable any additional information and documentary
material that may be requested pursuant to the HSR Act and, in any event, “substantially comply”
(as provided in the HSR Act) and certify substantial compliance with any such request and (ii) take
all other commercially reasonable actions necessary to cause the expiration or termination of any
applicable waiting periods under the HSR Act as soon as possible, provided that the parties
hereto understand and agree that in no event shall any of the Issuer, Freeport or Purchaser Sub be
required by this Section 4.1 or any other provision of this Agreement (x) to enter into any
settlement, undertaking, consent decree, stipulation or agreement with any Governmental Entity in
connection with the transactions contemplated hereby or (y) to divest or otherwise hold separate
(including by establishing a trust or otherwise), or take any other action (or otherwise agree to
do any of the foregoing), in each case of clauses (x) and (y) with respect to any of such party’s
or any of its affiliates’ businesses, assets, properties or operations.

          (d) To the extent permitted by applicable Law, each of the Issuer and Freeport and/or
Purchaser Sub shall promptly notify the other of any communication concerning the matters addressed
in this Section 4.1 to that party or its affiliates from any Governmental Entity and permit
the other to review in advance any proposed communication concerning the matters addressed in this
Section 4.1 to any Governmental Entity.

          (e) To the extent permitted by applicable Law, each of the Issuer and Freeport and/or
Purchaser Sub shall not participate or agree to participate in any meeting or discussion with any
Governmental Entity in respect of any filing, investigation or other inquiry concerning the matters
addressed in this Section 4.1 unless it consults with the other in advance and, to the

10

 

extent permitted by such Governmental Entity, gives the other party the opportunity to attend
and participate in such meeting or discussion.

          (f) Each of the Issuer and Freeport and/or Purchaser Sub shall furnish the other party with
copies of all correspondence, filings and communications (and memoranda setting forth the substance
thereof) between it and its affiliates and representatives on the one hand, and any Governmental
Entity or members of any such Governmental Entity’s staff on the other hand, with respect to the
matters addressed in this Section 4.1.

          (g) Each of the Issuer, on the one hand, and Freeport and Purchaser Sub, on the other hand,
shall bear its own fees and expenses with respect to compliance with this Section 4.1.

ARTICLE V

MISCELLANEOUS

     Section 5.1 Legend.

          (a) Freeport and Purchaser Sub agrees that all certificates or other instruments representing
the Preferred Shares acquired pursuant to the Stock Purchase Agreement and any shares of Common
Stock issued upon conversion of any Preferred Shares will bear a legend substantially to the
following effect:

	 	(i)	 	THE SECURITIES REPRESENTED BY THIS INSTRUMENT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR
OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING
THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR
SUCH LAWS.
	 
	 	(ii)	 	THE SECURITIES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO TRANSFER AND OTHER RESTRICTIONS SET FORTH IN A
STOCKHOLDER AGREEMENT, DATED AS OF DECEMBER 30, 2010, COPIES OF WHICH
ARE ON FILE WITH THE SECRETARY OF THE ISSUER.

          (b) Upon the written request of Freeport accompanied by an opinion of counsel reasonably
satisfactory to the Issuer to the effect that such legend is no longer required under the
Securities Act and applicable state laws, the Issuer shall promptly cause clause (i) of the legend
specified in Section 5.1(a) to be removed from any certificate for any shares of Common
Stock or Preferred Shares to be Transferred in accordance with the terms of this Agreement. Clause
(ii) of the legend specified in Section 5.1(a) shall be removed upon the expiration of such
transfer and other restrictions set forth in this Agreement.

11

 

     Section 5.2 Notices. Any notice, request, instruction, correspondence or other
document to be given hereunder by a Party to the other Party (each, a “Notice”) shall be in writing
and delivered in person or by courier service requiring acknowledgment of receipt of delivery or
mailed by U.S. registered or certified mail, postage prepaid and return receipt requested, or by
telecopier, as follows; provided, that copies to be delivered below shall not be required for
effective notice and shall not constitute effective notice:

If to Issuer, addressed to:

McMoRan Exploration Co.

1615 Poydras Street

New Orleans, Louisiana 70112

Attention: General Counsel

Fax: (504) 585-3513

with a copy to (which copy shall not constitute notice):

Andrews Kurth LLP

600 Travis Street, Suite 4200

Houston, Texas 77002

Fax: (713) 238-7130

Attention: Michael O’Leary

If to Freeport or Purchaser Sub, addressed to:

Freeport-McMoRan Copper & Gold, Inc.

333 North Central Avenue

Phoenix, Arizona 85004

Attention: General Counsel

Fax: (602) 366-7691

with a copy to (which copy shall not constitute notice):

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, New York 10019

Fax: (212) 403-2000

Attention: Edward D. Herlihy

                 David E. Shapiro

     Notice given by personal delivery, courier service or mail shall be effective upon actual
receipt. Notice given by fax shall be confirmed by appropriate answer back and shall be effective
upon actual receipt if received during the recipient’s normal business hours, or at the beginning
of the recipient’s next Business Day after receipt if not received during the recipient’s normal
business hours. A Party may change any address to which Notice is to be given to it by giving
Notice as provided above of such change of address.

12

 

     Section 5.3 Governing Law; Jurisdiction; Waiver of Jury Trial. To the maximum extent
permitted by applicable Law, the provisions of this Agreement and the legal relations between the
Parties shall be governed by and construed and enforced in accordance with the Laws of the State of
Delaware, without regard to principles of conflicts of law. Each Party hereby irrevocably and
unconditionally (a) consents and submits to the exclusive jurisdiction of any federal or state
court located the City of Wilmington, Delaware (the “Delaware Courts”) for any actions, suits or
proceedings arising out of or relating to this Agreement or the transactions contemplated by this
Agreement (and agrees not to commence any litigation relating thereto except in such courts and
waives any claim that such Party is not subject personally to the jurisdiction of any Delaware
Court), (b) waives any objection to the laying of venue of any such litigation in the Delaware
Courts and agrees not to plead or claim (by way of a motion, as a defense or otherwise) in any
Delaware Court that such litigation brought therein has been brought in any inconvenient forum and
(c) ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT.

     Section 5.4 Entire Agreement; Amendments and Waivers. This Agreement, the Certificate
of Designations of the Preferred Stock, the Stock Purchase Agreement and each of the other
agreements entered into by the Parties in connection with the transactions contemplated by the
Stock Purchase Agreement constitute the entire agreement between and among the Parties pertaining
to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the Parties, and there are no warranties, representations
or other agreements between or among the Parties in connection with the subject matter hereof
except as set forth specifically herein. No supplement, modification or waiver of this Agreement
shall be binding unless executed in writing both Parties and, with respect to any supplement,
modification or waiver of this Agreement by the Issuer, such supplement, modification or waiver, as
applicable, has been previously approved by a committee of the Board consisting solely of members
of the Board who are Independent Directors. The failure of a Party to exercise any right or remedy
shall not be deemed or constitute a waiver of such right or remedy in the future. No waiver of any
of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (regardless of whether similar), nor shall any such waiver constitute a continuing
waiver unless otherwise expressly provided.

     Section 5.5 Binding Effect and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties and their respective permitted successors and assigns. Nothing
in this Agreement, express or implied, is intended to confer upon any person other than the Parties
and their respective permitted successors and assigns, any rights, benefits or obligations
hereunder. No Party may assign, transfer, dispose of or otherwise alienate this Agreement or any
of its rights, interests or obligations under this Agreement (whether by operation of law or
otherwise). Any attempted assignment, transfer, disposition or alienation in violation of this
Agreement shall be null, void and ineffective.

     Section 5.6 Enforcement of this Agreement.

13

 

          (a) The Parties acknowledge and agree that an award of money damages would be inadequate for
any breach of this Agreement by any Party and any such breach would cause the non-breaching Party
irreparable harm. Accordingly, the Parties agree that, in the event of any breach or threatened
breach of this Agreement by one of the Parties, the non-breaching Party will also be entitled,
without the requirement of posting a bond or other security, to seek equitable relief, including
injunctive relief and specific performance, provided such Party is not in material default
hereunder. Such remedies will not be the exclusive remedies for any breach of this Agreement but
will be in addition to all other remedies available at Law or equity to each of the Parties.

          (b) In addition to any other remedies available at Law or in equity, with respect to any
breach by Freeport of its obligations under Section 2.3, any Transfer by Freeport or its
affiliates in violation of the provisions of Section 2.1 or Section 2.2 and any
acquisition by Freeport or its affiliates in violation of the provisions of Section 2.3
shall, to the fullest extent permitted by Law, be null and void ab initio, and Issuer shall not,
and shall instruct its transfer agent and other third parties not to, record or recognize any such
purported transaction on the share register of Issuer.

     Section 5.7 Severability. If any term or other provision of this Agreement is
invalid, illegal, or incapable of being enforced by any rule of applicable Law, or public policy,
all other conditions and provisions of this Agreement shall nevertheless remain in full force and
effect so long as the economic or legal substance of the transactions contemplated herein are not
affected in any manner materially adverse to any party hereto. Upon such determination that any
term or other provision is invalid, illegal, or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the original intent of the
parties hereto as closely as possible in a mutually acceptable manner in order that the
transactions contemplated herein are consummated as originally contemplated to the fullest extent
possible.

     Section 5.8 Execution. This Agreement may be executed in multiple counterparts each
of which shall be deemed an original and all of which shall constitute one instrument.

[The remainder of this page is blank]

14

 

     IN WITNESS WHEREOF, the Parties hereto have entered into this Agreement as of the date first
written above.

	 	 	 	 	 
	 	McMoRAN EXPLORATION CO.

 	 
	 	By:  	/s/ Kathleen L. Quirk
 	 
	 	 	Name:  	Kathleen L. Quirk 	 
	 	 	Title:  	Senior Vice President & Treasurer 	 
	 

	 	 	 	 	 
	 	FREEPORT-McMoRAN COPPER & GOLD INC.

 	 
	 	By:  	/s/ Richard C. Adkerson
 	 
	 	 	Name:  	Richard C. Adkerson 	 
	 	 	Title:  	President & Chief Executive Officer 	 
	 

	 	 	 	 	 
	 	FREEPORT-McMoRAN PREFERRED LLC

By: FREEPORT-McMoRAN COPPER & GOLD INC.,
       its sole member

 	 
	 	By:  	/s/ Richard C. Adkerson
 	 
	 	 	Name:  	Richard C. Adkerson 	 
	 	 	Title:  	President & Chief Executive Officer 	 
	 

[Signature Page to Stockholder Agreement]Exhibit 10.1

Exhibit 10.1

FOURTH AMENDMENT TO CREDIT AGREEMENT

This Fourth Amendment to Credit Agreement (“Fourth Amendment”) is made as of this
29th day of December, 2010, by and among PMFG, Inc. (“Holdings”), Borrowers (as defined
below), which are listed on attached Schedule 1, the Lenders (as defined below) signatory hereto
and Comerica Bank, as Agent for the Lenders (in such capacity, the “Agent”).

RECITALS

A. Holdings, Peerless Mfg. Co. (the “Company”), PMC Acquisition, Inc. (“PMC Acquisition”),
and, following the execution and delivery by any other Subsidiary (as defined in the Credit
Agreement), and acceptance by the Agent, from time to time, of a Credit Agreement Joinder Agreement
from such Subsidiary, collectively with the Company, PMC Acquisition and each such Subsidiary, the
“Borrowers” and each individually, a “Borrower”) are party to that certain Revolving Credit and
Term Loan Agreement dated April 30, 2008, with the financial institutions from time to time
signatory thereto (individually a “Lender,” and any and all such financial institutions
collectively the “Lenders”) and Agent (as amended or otherwise modified from time to time, the
“Credit Agreement”).

B. Borrowers have requested that Agent and the Lenders make certain amendments to the Credit
Agreement as set forth herein and Agent and the Lenders are willing to do so, but only on the terms
and conditions set forth in this Fourth Amendment.

NOW, THEREFORE, in consideration of the mutual agreements herein contained and other good and
valuable consideration, the sufficiency and receipt of which are hereby acknowledged, Borrowers,
Agent and the Lenders agree as follows:

1. The following definitions in Section 1 of the Credit Agreement are hereby amended and
restated as follows:

“Base Adjusted Net Worth” shall mean, as of the last day of any
fiscal quarter, an amount equal to the sum of $65,000,000
plus fifty percent (50%) of Consolidated Net Income (not
reduced by losses) of Holdings and its Consolidated Subsidiaries,
for each fiscal quarter, commencing with the quarter ending on April
2, 2011.

“Consolidated Adjusted Net Worth” shall mean as of any date of
determination, for any Person, the total common shareholders’ equity
of Holdings and its Consolidated Subsidiaries, together with the
amount, if any, of preferred stock which is classified as part of
shareholders’ equity, as reflected on the most recent regularly
prepared quarterly balance sheet of Holdings and its Consolidated
Subsidiaries, which balance sheet shall be prepared in accordance
with GAAP, plus the derivative liability incurred in connection with
the issuance of preferred Equity Interests in September, 2009, plus
the aggregate principal amount of any Subordinated Debt minus any Affiliate Receivables as of such date, as determined in
accordance with GAAP.

 

 

 

“Consolidated Fixed Charge Coverage Ratio” shall mean as of any date
of determination, the ratio of (a) Consolidated EBITDA for the four
consecutive fiscal quarters ending on the applicable date of
determination minus Capital Expenditures made by any Credit Party
during the four consecutive fiscal quarters ending on the applicable
date of determination (excluding any Capital Expenditure financed
with money borrowed (other than Revolving Credit Advances or Swing
Line Advances), Capital Expenditures not financed with the proceeds
generated from the issuance of any Equity Interests, Capital
Expenditures of the type described in and to the extent permitted
under Section 8.6(b), (c) and (d), and the principal part of
Capitalized Leases) to (b) Consolidated Fixed Charges.

“Excess Cash Flow” shall mean, for any Fiscal Year, the sum of (a)
Consolidated Net Income, excluding any non cash fair value
adjustment related to derivative liabilities associated with the
Company’s issuance of convertible preferred stock, for such Fiscal
Year plus (b) to the extent deducted in determining Consolidated Net
Income, depreciation, depletion and amortization, minus (c) the sum
of (i) Capital Expenditures made during such Fiscal Year, excluding
any Capital Expenditures financed with money borrowed (other than
with Advances of the Revolving Credit or the Swing Line) and the
principal portion of any Capitalized Leases, (ii) the amount of all
scheduled or mandatory payments or prepayments of principal on
Funded Debt made during such Fiscal Year (excluding any payment (1)
on the Revolving Credit or any other revolving loan facility except
to the extent of any permanent reduction thereof, (2) in respect of
Excess Cash Flow for any prior period and (3) with the Net Cash
Proceeds, Insurance Proceeds or Condemnation Proceeds except to the
extent that Consolidated Net Income was increased as a result
thereof) and (iii) the amount of any other prepayment made during
such Fiscal Year on any term Debt permitted hereunder, other than
any optional prepayments on the Term Loan.

“Revolving Credit Maturity Date” shall mean the earlier to occur of
(i) April 30, 2012, and (ii) the date on which the Revolving Credit
Aggregate Commitment shall terminate in accordance with the
provisions of this Agreement.

“Term Loan Maturity Date” shall mean January 1, 2016.

 

2

 

2. The following definitions are hereby added to Section 1 of the Credit Agreement:

“Fourth Amendment Effective Date” shall mean December 29, 2010.

“New Denton Facility” shall mean the proposed new manufacturing
facility of the Company to be built in Denton County, Texas.

“Peerless Asia-Pacific” shall mean Peerless Asia-Pacific Pte. Ltd,
an entity organized under the laws of Singapore.

“Peerless Propulsys” shall mean Peerless Propulsys China Holdings,
LLC, a Delaware limited liability company.

“Peerless Zhenjiang” shall mean Peerless Manufacturing (Zhenjiang)
Co., an entity organized under the laws of China.

3. Section 2.6(a) of the Credit Agreement is hereby amended and restated as follows:

“(a) Interest on the unpaid balance of all Base Rate Advances of the
Revolving Credit and the Swing Line from time to time outstanding
shall accrue from the date of such Advance to the date repaid, at a
per annum interest rate equal to the Base Rate, and shall be payable
in immediately available funds on the first day of each fiscal
quarter. Whenever any payment under this Section 2.6(a) shall become
due on a day which is not a Business Day, the date for payment
thereof shall be extended to the next Business Day. Interest
accruing at the Base Rate shall be computed on the basis of a 360
day year and assessed for the actual number of days elapsed, and in
such computation effect shall be given to any change in the interest
rate resulting from a change in the Base Rate on the date of such
change in the Base Rate.”

4. Section 2.9 of the Credit Agreement is hereby amended and restated as follows:

“2.9 Revolving Credit Facility Fee. From the Effective Date
to the Revolving Credit Maturity Date, Borrowers shall pay to the
Agent for distribution to the Lenders pro-rata in accordance with
their respective Percentages, a Revolving Credit Facility Fee
quarterly in arrears on the first day of each fiscal quarter
thereafter (in respect of the prior fiscal quarter or any portion
thereof). The Revolving Credit Facility Fee payable to each Lender
shall be determined by multiplying the Applicable Fee Percentage
times the Revolving Credit Aggregate Commitment then in effect
(whether used or unused). The Revolving Credit Facility Fee shall be
computed on the basis of a year of three hundred sixty (360) days
and assessed for the actual number of days elapsed. Whenever any
payment of the Revolving Credit Facility Fee shall be due on a day which is not a Business Day, the date for payment
thereof shall be extended to the next Business Day. Upon receipt of
such payment, Agent shall make prompt payment to each Lender of its
share of the Revolving Credit Facility Fee based upon its respective
Percentage. It is expressly understood that the Revolving Credit
Facility Fees described in this Section are not refundable.”

 

3

 

5. Section 3.2(a)(i)(B) of the Credit Agreement is hereby amended and restated as follows:

“(B) such Letter of Credit shall expire not later than the earlier
of (x) twenty four months from the date of issuance thereof, or if
approved by Agent in its sole discretion, for a period longer than
twenty four months from the date of issuance thereof, and (Y) in
each case, the one (1) year anniversary of the Revolving Credit
Maturity Date in effect on the date of issuance or extension
thereof, as the case may be, or for such longer term as may be
approved in writing by the Issuing Lender, the Agent and the
Revolving Credit Lenders; provided that:

i) any Standby Letter of Credit may provide for automatic
extension thereof for additional consecutive periods of up to twenty
four months so long as no such Letter of Credit will, in any event,
have a stated expiry date that is later than the one (1) year
anniversary of the Revolving Credit Maturity Date in effect on the
date of extension thereof;

ii) with respect to any Standby Letter of Credit that (x) will
have an expiry date that is after the Revolving Credit Maturity Date
in effect on the date of issuance or extension thereof, as the case
may be, Borrowers shall deliver to Agent, on or prior to the date of
issuance or extension thereof, cash collateral in an amount equal to
105% of the maximum amount that may be available to be drawn at any
time prior to the stated expiry of such Letter of Credit, for
deposit into an account controlled by the Agent, and Agent agrees to
release cash collateral provided with respect to any such Letter of
Credit to the Borrowers if at any time such Letter of Credit shall
expire prior to the Revolving Credit Maturity Date then in effect or
(y) will have an expiry date that is more than twenty four months
after the date of issuance thereof, as the case may be, Borrowers
shall deliver to Agent, on or prior to the date of issuance or
extension thereof, cash collateral in an amount equal to 105% of the
maximum amount that may be available to be drawn at any time prior
to the stated expiry of such Letter of Credit, for deposit into an
account controlled by the Agent;

 

4

 

iii) any Existing Letter of Credit which, as of the Effective
Date, has an expiry date that is later than the one (1) year
anniversary of the Revolving Credit Maturity Date and/or is longer
than twenty four months from the date of issuance thereof, shall
only be subject to the requirements under this clause (B) (including
clauses (i) and (ii) above) upon any extension (including automatic
extension) of such Existing Letter of Credit subsequent to the
Effective Date; provided that, prior to any extension of such Letter
of Credit which has an expiry date that is later than the Revolving
Credit Maturity Date then in effect, Borrowers shall deliver to
Agent, on or before the date that is ten (10) Business Days prior to
the Revolving Credit Maturity Date, cash collateral in an amount
equal to 105% of the maximum amount that may be available to be
drawn at any time prior to the stated expiry of such Letter of
Credit, for deposit into an account controlled by the Agent, and
Agent agrees to release cash collateral provided with respect to any
such Letter of Credit to the Borrowers if at any time such Letter of
Credit shall expire prior to the Revolving Credit Maturity Date then
in effect;”

6. Section 3.4(b)(ii) of the Credit Agreement is hereby amended and restated as follows:

“(ii) in the case of fees due under clause (a)(i) above, shall be
payable quarterly in arrears on the last day of each fiscal
quarter,”

7. Section 4.3(a) of the Credit Agreement is hereby amended and restated as follows:

“(a) Borrowers shall repay the Term Loan in equal quarterly
principal installments of $650,000, to be paid on the first day of
each fiscal quarter, commencing on April 3, 2011, until the Term
Loan Maturity Date, when all remaining outstanding principal plus
accrued interest thereon shall be due and payable in full.”

8. Section 4.6(a) of the Credit Agreement is hereby amended and restated as follows:

“(a) Interest on the unpaid principal of all Base Rate Advances of
the Term Loan from time to time outstanding shall accrue until paid
at a per annum interest rate equal to the Base Rate, and shall be
payable in immediately available funds quarterly in arrears on the
first day of each fiscal quarter. Whenever any payment under this
Section 4.6 shall become due on a day that is not a Business Day,
the date for payment shall be extended to the next Business Day.
Interest accruing at the Base Rate shall be computed on the
basis of a 360 day year and assessed for the actual number of days
elapsed, and in such computation effect shall be given to any change
in the interest rate resulting from a change in the Base Rate on the
date of such change in the Base Rate.”

 

5

 

9. Section 4.8(a) of the Credit Agreement is hereby amended and restated as follows:

“(a) Subject to clauses (e) and (f) hereof, the Term Loan shall be
subject to required principal reductions in the amount of Applicable
Recapture Percentage of Excess Cash Flow for each Fiscal Year, such
prepayments to be payable in respect of each Fiscal Year beginning
with the Fiscal Year ending July 2, 2011, and each Fiscal Year
thereafter, and to be due on the first day of the second fiscal
quarter of the following Fiscal Year.”

10. Section 4.8(c) is hereby amended and restated as follows:

“(c) Subject to clauses (e) and (f) hereof, (i) immediately upon
receipt by any Credit Party of Net Cash Proceeds generated from the
issuance of any Equity Interests of any Credit Party after the
Second Amendment Effective Date (other than (A) the proceeds from
any Equity Interests issued under any stock option or employee
incentive plans listed on Schedule 6.12 hereto (or any successor
plans) or in connection with the conversion of any Subordinated Debt
to equity, (B) any Net Cash Proceeds applied to acquire and/or
improve the New Denton Facility within the earlier of three years
after receipt by such Credit Party of such amounts and completion of
such acquisition and improvements, (C) if approved by Agent, any Net
Cash Proceeds applied as cash collateral for any Letter of Credit
issued to support certain large projects provided that, upon the
release of any such cash collateral, Borrowers shall be obligated to
apply such amounts to repay the Term Loan in accordance with this
clause (c) and (D) the first $5,000,000 generated from any issuance
of Equity Interests made after the Fourth Amendment Effective Date
(except to the extent of any such issuance and proceeds described in
clauses (A), (B) and (C) above)), Borrowers shall prepay the Term
Loan by an amount equal to the Applicable Equity Proceeds Recapture
Percentage of such Net Cash Proceeds from the issuance of any Equity
Interests; and (ii) immediately upon receipt by any Credit Party of
Net Cash Proceeds generated from Net Cash Proceeds from the issuance
of any Subordinated Debt after the Effective Date, Borrowers shall
prepay the Term Loan by an amount equal to one hundred percent
(100%) of such Net Cash Proceeds from the issuance of Subordinated
Debt.”

 

6

 

11. Section 7.9(a) and (b) of the Credit Agreement is amended and restated as follows:

“(a) Consolidated Total Leverage Ratio. Maintain a Consolidated Total
Leverage Ratio as of the last day of each fiscal quarter ending during the periods
specified below of not greater than the ratio set forth below opposite the
applicable period:

	 	 	 	 	 
	Quarters Ending	 	Ratio	 
	January 1, 2011, April 2, 2011
	 	3.25 to 1.00
	July 2, 2011 and thereafter
	 	3.00 to 1.00

“(b) Consolidated Fixed Charge Coverage Ratio. Maintain a
Consolidated Fixed Charge Coverage Ratio as of the last day of each fiscal
quarter during the periods specified below of not less than the ratio set
forth below opposite the applicable period:

	 	 	 	 	 
	Quarters Ending	 	Ratio	 
	January 1, 2011, April 2, 2011
	 	1.15 to 1.00
	July 2, 2011 and thereafter
	 	1.25 to 1.00

12. The following is hereby added to Section 7.12 of the Credit Agreement as new clause (f):

“(f) Notwithstanding anything herein to the contrary, so long as no Default
or Event of Default has occurred as a result of the failure to comply with
Section 8.16 hereof, the Borrowers shall not be required to cause Peerless
Propulsys to comply with Sections 7.12(a), (b) (with respect to any Equity
Interests in any Subsidiaries owned by Peerless Propulsys) or (c).”

13. Section 8.6(d) of the Credit Agreement is hereby amended and restated as follows:

“(d) Capital Expenditures made during in each of the 2011 and 2012 Fiscal
Years in an aggregate amount not to exceed $2,500,000 per year, only solely
in connection with the acquisition by the Borrowers from CEFCO Global Clean
Energy, LLC of the exclusive rights to use the process for the selective and
sequential capture and removal of pollutants from gaseous mixtures”.

 

7

 

14. Section 8.7(f) and (g) of the Credit Agreement are hereby amended and restated as follows:

“(f) intercompany loans made on or after the Effective Date by (i) any
Credit Party (other than Peerless Propulsys) to a Foreign Subsidiary or a
Domestic Disregarded Subsidiary, provided that the aggregate amount of
such loans shall not exceed (x) on or prior to the Trigger Date, $1,000,000
at any one time outstanding and (y) after the Trigger Date, $3,000,000 at
any one time outstanding, and such loans shall be evidenced by and funded
under an Intercompany Note pledged to the Agent under the appropriate
Collateral Documents and no Event of Default shall have occurred and be
continuing at the time such loans are made and (ii) by Peerless Propulsys to
Peerless Zhenjiang;”

“(g) (i) intercompany Investments made prior to the Fourth Amendment
Effective Date by Company to or in Peerless Manufacturing Canada, Ltd. in
connection with its Investment in Mitech Services Ltd. in an aggregate
amount not to exceed $750,000, and (ii) other intercompany Investments made
on or after the Effective Date by (i) any Credit Party (other than Peerless
Propulsys) to a Foreign Subsidiary, a Domestic Disregarded Subsidiary or
Peerless Propulsys, provided that (A) the aggregate amount of such
Investments shall not exceed $1,860,000, plus up to $600,000 of intercompany
Investments made after the Fourth Amendment Effective Date by Company in
Peerless Propulsys, and (B) that no Event of Default shall have occurred and
be continuing at the time such Investment is made; and (ii) Peerless
Propulsys to Peerless Zhenjiang;”

15. Section 8.15 of the Credit Agreement is hereby amended and restated as follows:

“8.15 Fiscal Year. Permit the Fiscal Year of any Credit Party to
end on a day other than the Saturday closest to June 30.”

16. The following is hereby added as new Section 8.16 of the Credit Agreement:

“8.16 Limitations on Peerless Propulsys. Notwithstanding anything
to the contrary herein, permit Peerless Propulsys to hold any material
assets, own any Subsidiaries, become liable for any material obligations,
make any loans, advances or Investments or engage in any trade or business
or conduct any business activity, other than (i) its ownership of Equity
Interests in Peerless Zhenjiang, (ii) intercompany loans or Investments made
by Peerless Propulsys to or in Peerless Zhenjiang and (iii) its business
activities related to Peerless Zhenjiang that do not otherwise violate the
terms of this Agreement.”

17. Schedule 1.1 of the Credit Agreement is hereby amended, restated and replaced with the
Schedule 1.1 attached hereto as Attachment 1.

18. Exhibit J of the Credit Agreement is hereby amended, restated and replaced with the
Exhibit J attached hereto as Attachment 2.

 

8

 

19. Borrowers agree to execute and deliver, or cause to be executed and delivered, to Agent,
on or before March 29, 2011 (or such longer time period as Agent may agree), such Pledge Agreements
and take such actions as may be necessary to ensure a valid first priority perfected Lien over
sixty-five percent (65%) in the aggregate of the Equity Interests of Peerless
Asia-Pacific together with corporate authority items, certificates, opinions of counsel and
other supporting documentation, as reasonably required by the Agent or its counsel. The Lenders
hereby waive any Default or Event of Default resulting solely from the failure of the Borrowers to
previously provide the documents and other items required under Section 7.12 of the Credit
Agreement with respect to (i) Peerless Asia-Pacific until the date specified above in this Section
7 and (ii) Peerless Propulsys and Peerless Zhenjiang so long as the Borrowers are in compliance
with Section 8.16 of the Credit Agreement.

20. This Fourth Amendment shall become effective (according to the terms hereof) on the date
(the “Fourth Amendment Effective Date”) that the following conditions have been fully satisfied by
Borrowers (the “Conditions”):

	 	(a)	 	Agent shall have received via facsimile or electronic mail (followed by the
prompt delivery of original signatures) counterpart originals of this Fourth Amendment,
in each case duly executed and delivered by the Agent, Borrowers and the Lenders.

	 	(b)	 	Agent shall have received certified copies of resolutions of each of the
Borrowers and Holdings authorizing, as applicable, the execution and delivery of this
Fourth Amendment and the other Loan Documents required hereunder and the performance by
the Borrowers and Holdings of each of their respective obligations under the Credit
Agreement as amended by this Fourth Amendment.

	 	(c)	 	Agent shall have received an amendment to the Security Agreement and other
documents necessary to ensure a valid first priority perfected Lien over all of the
Equity Interests of Peerless Propulsys owned by Company, together with such supporting
documentation, including without limitation corporate authority items, certificates and
opinions of counsel, as reasonably required by the Agent, in each case in form
reasonably satisfactory to the Agent, in its reasonable discretion.

	 	(d)	 	Borrowers shall have made payment on Term Loan in an aggregate amount not to be
less than $6,000,000 from cash on hand.

	 	(e)	 	Borrowers shall have paid to the Agent, for distribution to each Lender, (i) a
nonrefundable amendment fee in an amount equal to twenty five (25) basis points on such
Lender’s Percentage of the Revolving Credit Aggregate Commitment and Term Loan
immediately prior to giving effect to the Fourth Amendment and (ii) and to the Agent
all fees and other amounts, if any, that are due and owing to the Agent as of the
Second Amendment Effective Date.

 

9

 

21. Borrowers hereby certify to the Agent and the Lenders as of the Fourth Amendment Effective
Date and after giving effect to this Amendment, that (a) execution and delivery of this Fourth
Amendment and the other Loan Documents required to be delivered hereunder, and the performance by
Borrowers of their obligations under the Credit Agreement as amended hereby (herein, as so amended,
the “Amended Credit Agreement”) are within the Borrowers’ powers, have been duly authorized, are
not in contravention of law or the terms of its articles of incorporation or bylaws or other
organizational documents of the parties thereto, as
applicable, and except as have been previously obtained do not require the consent or
approval, material to the amendments contemplated in this Fourth Amendment, of any governmental
body, agency or authority, and the Amended Credit Agreement and the other Loan Documents required
to be delivered hereunder will constitute the valid and binding obligations of such undersigned
parties enforceable in accordance with its terms, except as enforcement thereof may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium, ERISA or similar laws affecting the
enforcement of creditors’ rights generally and by general principles of equity (whether enforcement
is sought in a proceeding in equity or at law), (b) the representations and warranties set forth in
Section 6 of the Amended Credit Agreement are true and correct on and as of the Fourth Amendment
Effective Date (except to the extent such representations specifically relate to an earlier date),
and (c) on and as of the Fourth Amendment Effective Date, after giving effect to this Fourth
Amendment, no Default or Event of Default shall have occurred and be continuing.

22. Except as specifically set forth above, this Fourth Amendment shall not be deemed to amend
or alter in any respect the terms and conditions of the Amended Credit Agreement (including without
limitation all conditions and requirements for Advances and any financial covenants), any of the
Notes issued thereunder or any of the other Loan Documents. Nor shall this Fourth Amendment
constitute a waiver or release by the Agent or the Lenders of any right, remedy, Default or Event
of Default under or a consent to any transaction not meeting the terms and conditions of the
Amended Credit Agreement, any of the Notes issued thereunder or any of the other Loan Documents.
Furthermore, this Fourth Amendment shall not affect in any manner whatsoever any rights or remedies
of the Lenders with respect to any other non-compliance by Borrowers or any Guarantor with the
Amended Credit Agreement or the other Loan Documents, whether in the nature of a Default or Event
of Default, and whether now in existence or subsequently arising, and shall not apply to any other
transaction. Borrowers hereby confirm that each of the Collateral Documents continues in full
force and effect and secures, among other things, all of its obligations, liabilities and
indebtedness owing to the Agent and the Lenders under the Credit Agreement and the other Loan
Documents (where applicable, as amended herein).

23. Borrowers hereby acknowledge and agree that this Fourth Amendment and the amendments
contained herein do not constitute any course of dealing or other basis for altering any obligation
of Borrowers, any other Credit Party, any Guarantor or any other party or any rights, privilege or
remedy of the Lenders under the Credit Agreement, any other Loan Document, any other agreement or
document, or any contract or instrument.

24. Except as specifically defined to the contrary herein, capitalized terms used in this
Fourth Amendment shall have the meanings set forth in the Credit Agreement.

25. This Fourth Amendment may be executed in counterpart in accordance with Section 13.9 of
the Credit Agreement and shall be considered a “Loan Document” within the meaning of the Credit
Agreement.

26. This Fourth Amendment shall be construed in accordance with and governed by the laws of
the State of Texas.

 

10

 

WITNESS the due execution hereof as of the day and year first above written.

	 	 	 	 	 
	 	COMERICA BANK, as Agent

 	 
	 	By:  	/s/
David Milton	 
	 	 	Name:  	David Milton	 
	 	 	Title:  	Senior
Vice President	 

Signature Page to Fourth Amendment (1017576)

 

 

 

	 	 	 	 	 
	 	PMFG, INC.

 	 
	 	By:  	/s/
Henry Schopfer	 
	 	 	Name:  	Henry Schopfer	 
	 	 	Title:  	Chief
Financial Officer	 
	 
	 	PEERLESS MFG. CO.

 	 
	 	By:  	/s/
Henry Schopfer	 
	 	 	Name:  	Henry Schopfer	 
	 	 	Title:  	Vice
President	 
	 
	 	PMC ACQUISITION, INC.

 	 
	 	By:  	/s/
Henry Schopfer	 
	 	 	Name:  	Henry Schopfer	 
	 	 	Title:  	Vice
President	 
	 
	 	NITRAM ENERGY, INC.

 	 
	 	By:  	/s/
Henry Schopfer	 
	 	 	Name:  	Henry Schopfer	 
	 	 	Title:  	Vice
President	 
	 
	 	BOS-HATTEN, INC.

 	 
	 	By:  	/s/
Henry Schopfer	 
	 	 	Name:  	Henry Schopfer	 
	 	 	Title:  	Vice
President	 
	 
	 	BURGESS — MANNING, INC.

 	 
	 	By:  	/s/
Henry Schopfer	 
	 	 	Name:  	Henry Schopfer	 
	 	 	Title:  	Vice
President	 

Signature Page to Fourth Amendment (1017576)

 

 

 

	 	 	 	 	 
	 	BURMAN MANAGEMENT, INC.

 	 
	 	By:  	/s/
Henry Schopfer	 
	 	 	Name:  	Henry Schopfer	 
	 	 	Title:  	Vice
President	 

Signature Page to Fourth Amendment (1017576)

 

 

 

LENDERS:

	 	 	 	 	 
	 	COMERICA BANK, as a Lender, Issuing Lender and Swing

Line Lender

 	 
	 	By:  	/s/
David Milton	 
	 	 	Name:  	David Milton	 
	 	 	Title:  	Senior
Vice President	 

Signature Page to Fourth Amendment (1017576)

 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	MB FINANCIAL BANK, N.A.

 	 
	 	By:  	/s/
Evelyn Guzman	 
	 	 	Name:  	Evelyn Guzman	 
	 	 	Title:  	Commercial
Banking Officer	 

Signature Page to Fourth Amendment (1017576)

 

 

 

	 	 	 	 	 
	 	CITIBANK N.A.

 	 
	 	By:  	/s/
Deborah Purvin	 
	 	 	Name:  	Deborah Purvin	 
	 	 	Title:  	Vice
President	 

Signature Page to Fourth Amendment (1017576)

 

 

 

SCHEDULE 1

Peerless Mfg. Co.

PMC Acquisition, Inc.

Nitram Energy, Inc.

Bos-Hatten, Inc.

Burgess — Manning, Inc.

Burman Management, Inc.

 

 

 

ATTACHMENT 1

Schedule 1.1

Applicable Margin Grid

Revolving Credit and Term Loan Facilities

(basis points per annum)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Basis for Pricing	 	Level I	 	 	Level II	 	 	Level III	 	 	Level IV*	 
	Consolidated Total Leverage Ratio*
	 	 	<1.50 to 1.00	 	 	 	≥1.50 to 1.00 but <2.00 to 1.00	 	 	 	≥2.00 to 1.00 but <2.50 to 1.00	 	 	 	≥2.50 to 1.00	 
	Revolving Credit Eurodollar Margin
	 	 	300.00	 	 	 	350.00	 	 	 	400.00	 	 	 	450.00	 
	Revolving Credit Base Rate Margin
	 	 	225.00	 	 	 	275.00	 	 	 	300.00	 	 	 	350.00	 
	Revolving Credit Facility Fee
	 	 	25.00	 	 	 	25.00	 	 	 	25.00	 	 	 	25.00	 
	Letter of Credit Fees (exclusive of facing fees)
	 	 	300.00	 	 	 	350.00	 	 	 	400.00	 	 	 	450.00	 
	Term Loan Eurodollar Margin
	 	 	325.00	 	 	 	375.00	 	 	 	425.00	 	 	 	475.00	 
	Term Loan Base Rate Margin
	 	 	225.00	 	 	 	275.00	 	 	 	325.00	 	 	 	375.00	 

	 	 	 
	*	 	Definitions as set forth in the Credit Agreement.

	 
	**	 	Level IV pricing shall be in effect from the Fourth Amendment Effective Date until the
delivery of the financial statements for the fiscal quarter ending April 4, 2011 after which
time the Applicable Margins and Applicable Fee Percentages shall be determined in accordance
with Section 11.9 of the Credit Agreement.

 

 

 

ATTACHMENT 2

EXHIBIT J

FORM OF COVENANT COMPLIANCE REPORT

	 	 	 
	TO:

	 	Comerica Bank, as Agent
	 
	 	 
	RE:

	 	Revolving Credit and Term Loan Agreement made as of April 30, 2008, by
and among the financial institutions from time to time signatory
thereto (individually a “Lender,” and any and all such financial
institutions collectively the “Lenders”), Comerica Bank, as
Administrative Agent for the Lenders (in such capacity, the “Agent”),
PMFG, Inc. (“Holdings”) and Peerless Mfg. Co., PMC Acquisition, Inc.,
Nitram Energy, Inc., Bos-Hatten, Inc., Burgess — Manning, Inc., BurMan
Management, Inc. and such other Subsidiaries which from time to time
become signatories thereto (each, individually a “Borrower,” and
collectively the “Borrowers”) (as amended, supplemented, amended and
restated or otherwise modified from time to time, the “Credit
Agreement”).

This Covenant Compliance Report (“Report”) is furnished pursuant to Section 7.2(a) of the
Credit Agreement and sets forth various information as of                     ,
20_____ 
(the “Computation
Date”).

1. Consolidated Total Leverage Ratio (Section 7.9(a)). On the Computation Date, the
Consolidated Total Leverage Ratio, which is required to be not greater than
 _____ 
to 1.00 was                     
to 1.00, as computed in the supporting documents attached hereto as Schedule 1.

2. Consolidated Fixed Charge Coverage Ratio (Section 7.9(b)). On the Computation Date, the
Consolidated Fixed Charge Coverage Ratio, which is required to be not less than
 _____ 
to 1.00 was
                     to 1.00, as computed in the supporting documents attached hereto as Schedule 2.

3. Consolidated Adjusted Net Worth (Section 7.9(c)). On the Computation Date, the
Consolidated Adjusted Net Worth, which is required to be not less than the Base Adjusted Net Worth,
which, as of the Computation Date, was $                    , was $                    , as computed in the supporting
documents attached hereto as Schedule 3.

 

 

 

4. Capital Expenditures (Section 8.6). On the Computation Date:

	 	(a)	 	Capital Expenditures to replace and upgrade the equipment and other assets of
Nitram and its Subsidiaries, which were required to be not more than $1,500,000 in the
aggregate, were $                     in the aggregate as of the Computation Date;

	 	(b)	 	Capital Expenditures made solely from the Net Cash Proceeds from the sale of the
property located at 2819 Walnut Hill Lane, Dallas, Texas 75229, which were required to be
not more than $4,000,000 in the aggregate, were $                     in the aggregate as of the
Computation Date;

	 	(c)	 	Capital Expenditures made during each of the 2011 and 2012 Fiscal Years, only
solely in connection with the acquisition by the Borrowers from CEFCO Global Clean
Energy, LLC of the exclusive rights to use the process for the selective and sequential
capture and removal of pollutants from gaseous mixtures, which were required to be not
more than $2,500,000 in the aggregate for each such Fiscal Year, were $                     in the
aggregate as of the Computation Date for the applicable Fiscal Year; and

	 	(d)	 	other Capital Expenditures, the aggregate amount of which in any Fiscal Year shall
not exceed $                     (such amount to be the sum of the Cap Ex Basket plus any
unused portion of such Cap Ex Basket for the Fiscal Year ending immediately prior to the
applicable Fiscal Year, provided that any amounts carried forward shall be applied to the
last Capital Expenditures made in the applicable Fiscal Year and shall expire at the end
of the applicable Fiscal Year), were $                                         in the aggregate as of the
Computation Date for the applicable Fiscal Year. “Cap Ex Basket” shall mean (i) at any
time on or prior to the Trigger Date, $2,000,000 and (ii) after the Trigger Date,
$3,000,000;

as evidenced in each case by the supporting documentation attached as Schedule 4

The undersigned Borrower Representative hereby certifies that:

A. To the best of my knowledge, all of the information set forth in this Report (and in any
Schedule attached hereto) is true and correct in all material respects.

B. To the best of my knowledge, the representation and warranties of the Credit Parties
contained in the Credit Agreement and in the Loan Documents are true and correct in all material
respects with the same effect as though such representations and warranties had been made on and at
the date hereof, except to the extent that such representations and warranties expressly relate to
an
earlier specific date, in which case such representations and warranties were true and correct
in all material respects as of the date when made.

 

2

 

C. I have reviewed the Credit Agreement and this Report is based on an examination sufficient
to assure that this Report is accurate.

D. To the best of my knowledge, except as stated in Schedule 5 hereto (which shall describe
any existing Default or Event of Default and the notice and period of existence thereof and any
action taken with respect thereto or contemplated to be taken by any Borrower or any other Credit
Party), no Default or Event of Default has occurred and is continuing on the date of this Report.

Capitalized terms used in this Report and in the Schedules hereto, unless specifically defined
to the contrary, have the meanings given to them in the Credit Agreement.

IN WITNESS WHEREOF, Borrowers have caused this Report to be executed and delivered by the
undersigned Borrower Representative this
 _____ 
day of                     ,
 _____.

	 	 	 	 	 
	 	 	 
	 	 	  	 	 
	 	By:  	 	 
	 	 	Its:  	 	 

 

3

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