Document:

exv10w1

 

Exhibit 10.1

AMENDED AND RESTATED

CREDIT AGREEMENT

DATED AS OF DECEMBER 29, 2006

AMONG

NEWPARK RESOURCES, INC., A DELAWARE CORPORATION,

BATSON MILL, L.P., A TEXAS LIMITED PARTNERSHIP,

DURA-BASE NEVADA, INC., A NEVADA CORPORATION,

EXCALIBAR MINERALS INC., A TEXAS CORPORATION,

EXCALIBAR MINERALS OF LA., L.L.C.,

A LOUISIANA LIMITED LIABILITY COMPANY,

NES PERMIAN BASIN, L.P., A TEXAS LIMITED PARTNERSHIP,

NEWPARK ENVIRONMENTAL SERVICES, L.L.C.,

A LOUISIANA LIMITED LIABILITY COMPANY,

NEWPARK ENVIRONMENTAL MANAGEMENT COMPANY,

L.L.C., A LOUISIANA LIMITED LIABILITY COMPANY,

NEWPARK ENVIRONMENTAL SERVICES OF TEXAS, L.P.,

A TEXAS LIMITED PARTNERSHIP,

NEWPARK HOLDINGS, INC., A LOUISIANA CORPORATION,

NEWPARK TEXAS, L.L.C., A LOUISIANA LIMITED LIABILITY COMPANY,

NID, L.P., A TEXAS LIMITED PARTNERSHIP,

NEWPARK DRILLING FLUIDS LABORATORY, INC., A TEXAS CORPORATION,

SOLOCO, L.L.C., A LOUISIANA LIMITED LIABILITY COMPANY,

SOLOCO TEXAS, L.P., A TEXAS LIMITED PARTNERSHIP,

SUPREME CONTRACTORS, L.L.C., A LOUISIANA LIMITED LIABILITY COMPANY,

COMPOSITE MAT SOLUTIONS L.L.C., A LOUISIANA LIMITED LIABILITY COMPANY,

NEWPARK ENVIRONMENTAL WATER SOLUTIONS LLC, A DELAWARE LIMITED LIABILITY

COMPANY, THE LOMA COMPANY L.L.C., A LOUISIANA LIMITED LIABILITY COMPANY, AND

NEWPARK DRILLING FLUIDS, LP, A TEXAS LIMITED PARTNERSHIP

AS BORROWERS,

THE LOAN PARTIES PARTY HERETO,

THE LENDERS PARTY HERETO FROM TIME TO TIME,

JPMORGAN CHASE BANK, N.A.

(Successor by Merger to Bank One, NA (Main Office Chicago))

AS AGENT AND LC ISSUER,

BANK OF AMERICA, N.A.,

AS SYNDICATION AGENT

AND

THE OTHER FINANCING INSTITUTIONS PARTY THERETO FROM TIME TO TIME

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	ARTICLE I DEFINITIONS	 	 	2	 
	 
	 	 	 	 	 	 
	ARTICLE II THE FACILITY	 	 	25	 
	 
	 	 	 	 	 	 
	2.1.
	 	The Facility	 	 	25	 
	 
	 	2.1.1.     Revolving Loans	 	 	25	 
	 
	 	2.1.2.     Facility LCs	 	 	27	 
	 
	 	2.1.3.     Non-Ratable Loans	 	 	31	 
	 
	 	2.1.4.     Protective Advances and Overadvances	 	 	31	 
	 
	 	2.1.5.     [Intentionally Omitted.]	 	 	32	 
	 
	 	2.1.6.     [Intentionally Omitted.]	 	 	32	 
	 
	 	2.1.7.     Reallocation of Loans and Commitments	 	 	32	 
	2.2.
	 	Ratable Loans; Risk Participation	 	 	33	 
	2.3.
	 	Payment of the Obligations	 	 	33	 
	2.4.
	 	Minimum Amount of Each Advance	 	 	33	 
	2.5.
	 	Funding Account	 	 	33	 
	2.6.
	 	Reliance Upon Authority; No Liability	 	 	34	 
	2.7.
	 	Conversion and Continuation of Outstanding Advances	 	 	34	 
	2.8.
	 	Telephonic Notices	 	 	34	 
	2.9.
	 	Notification of Advances, Interest Rates and Repayments	 	 	34	 
	2.10.
	 	Fees	 	 	35	 
	2.11.
	 	Interest Rates	 	 	35	 
	2.12.
	 	Eurodollar Advances Post Default; Default Rates	 	 	35	 
	2.13.
	 	Interest Payment Dates; Interest and Fee Basis	 	 	36	 
	2.14.
	 	Voluntary Prepayments	 	 	36	 
	2.15.
	 	Mandatory Prepayments	 	 	36	 
	2.16.
	 	Termination of the Facility	 	 	38	 
	2.17.
	 	Method of Payment	 	 	38	 
	2.18.
	 	Apportionment, Application, and Reversal of Payments	 	 	39	 
	2.19.
	 	Settlement	 	 	40	 
	2.20.
	 	Indemnity for Returned Payments	 	 	40	 
	2.21.
	 	Noteless Agreement; Evidence of Indebtedness	 	 	40	 
	2.22.
	 	Lending Installations	 	 	41	 
	2.23.
	 	Non-Receipt of Funds by the Agent; Defaulting Lenders	 	 	41	 
	2.24.
	 	Limitation of Interest	 	 	42	 
	 
	 	 	 	 	 	 
	ARTICLE III YIELD PROTECTION; TAXES	 	 	43	 
	 
	 	 	 	 	 	 
	3.1.
	 	Yield Protection	 	 	43	 
	3.2.
	 	Changes in Capital Adequacy Regulations	 	 	44	 
	3.3.
	 	Availability of Types of Advances	 	 	44	 
	3.4.
	 	Funding Indemnification	 	 	45	 
	3.5.
	 	Taxes	 	 	45	 
	3.6.
	 	Lender Statements; Survival of Indemnity	 	 	46	 
	 
	 	 	 	 	 	 
	ARTICLE IV CONDITIONS PRECEDENT	 	 	47	 

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	4.1.
	 	Effectiveness	 	 	47	 
	4.2.
	 	Each Credit Extension	 	 	50	 
	 
	 	 	 	 	 	 
	ARTICLE V REPRESENTATIONS AND WARRANTIES	 	 	51	 
	 
	 	 	 	 	 	 
	5.1.
	 	Existence and Standing	 	 	51	 
	5.2.
	 	Authorization and Validity	 	 	51	 
	5.3.
	 	No Conflict; Government Consent	 	 	51	 
	5.4.
	 	Security Interest in Collateral	 	 	51	 
	5.5.
	 	Financial Statements	 	 	52	 
	5.6.
	 	Material Adverse Change	 	 	52	 
	5.7.
	 	Taxes	 	 	52	 
	5.8.
	 	Litigation and Contingent Obligations	 	 	52	 
	5.9.
	 	Capitalization and Subsidiaries	 	 	53	 
	5.10.
	 	ERISA	 	 	53	 
	5.11.
	 	Accuracy of Information	 	 	53	 
	5.12.
	 	Names; Prior Transactions	 	 	53	 
	5.13.
	 	Regulation U	 	 	53	 
	5.14.
	 	Material Agreements	 	 	53	 
	5.15.
	 	Compliance With Laws	 	 	54	 
	5.16.
	 	Ownership of Properties	 	 	54	 
	5.17.
	 	Plan Assets; Prohibited Transactions	 	 	54	 
	5.18.
	 	Environmental Matters	 	 	54	 
	5.19.
	 	Investment Company Act	 	 	54	 
	5.20.
	 	Public Utility Holding Company Act	 	 	54	 
	5.21.
	 	Bank Accounts	 	 	54	 
	5.22.
	 	Indebtedness	 	 	54	 
	5.23.
	 	Affiliate Transactions	 	 	54	 
	5.24.
	 	Real Property; Leases	 	 	55	 
	5.25.
	 	Intellectual Property Rights	 	 	55	 
	5.26.
	 	Insurance	 	 	55	 
	5.27.
	 	Solvency	 	 	55	 
	5.28.
	 	Intercreditor Agreement; Term Agreement	 	 	56	 
	5.29.
	 	Post-Retirement Benefits	 	 	56	 
	5.30.
	 	Common Enterprise	 	 	56	 
	5.31.
	 	Reportable Transaction	 	 	56	 
	5.32.
	 	Labor Disputes	 	 	56	 
	 
	 	 	 	 	 	 
	ARTICLE VI COVENANTS	 	 	56	 
	 
	 	 	 	 	 	 
	6.1.
	 	Financial and Collateral Reporting	 	 	56	 
	6.2.
	 	Use of Proceeds	 	 	60	 
	6.3.
	 	Notices	 	 	60	 
	6.4.
	 	Conduct of Business	 	 	61	 
	6.5.
	 	Taxes	 	 	62	 
	6.6.
	 	Payment of Indebtedness and Other Liabilities	 	 	62	 
	6.7.
	 	Insurance	 	 	62	 
	6.8.
	 	Compliance with Laws	 	 	64	 
	6.9.
	 	Maintenance of Properties and Intellectual Property Rights	 	 	64	 
	6.10.
	 	Inspection	 	 	64	 
	6.11.
	 	Appraisals; Additional Real Property Requirements	 	 	65	 

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	6.12.
	 	Communications with Accountants	 	 	65	 
	6.13.
	 	Collateral Access Agreements and Real Estate Purchases	 	 	65	 
	6.14.
	 	Deposit Account Control Agreements	 	 	66	 
	6.15.
	 	Additional Collateral; Further Assurances	 	 	66	 
	6.16.
	 	Dividends	 	 	67	 
	6.17.
	 	Indebtedness	 	 	67	 
	6.18.
	 	Capital Structure	 	 	69	 
	6.19.
	 	Preservation of Existence; Merger; Survival of Liability	 	 	69	 
	6.20.
	 	Sale of Assets	 	 	70	 
	6.21.
	 	Investments and Acquisitions	 	 	70	 
	6.22.
	 	Liens	 	 	72	 
	6.23.
	 	Change of Name or Location; Change of Fiscal Year	 	 	73	 
	6.24.
	 	Affiliate Transactions	 	 	73	 
	6.25.
	 	Amendments to Agreements	 	 	73	 
	6.26.
	 	Prepayment of Indebtedness; Subordinated Indebtedness	 	 	74	 
	6.27.
	 	Financial Contracts	 	 	75	 
	6.28.
	 	Intentionally Omitted	 	 	75	 
	6.29.
	 	Financial Covenants	 	 	75	 
	 
	 	6.29.1.     Fixed Charge Coverage Ratio	 	 	75	 
	 
	 	6.29.2.     Consolidated Leverage Ratio	 	 	75	 
	 
	 	6.29.3.     [Intentionally Omitted.]	 	 	75	 
	6.30.
	 	Depository Banks	 	 	75	 
	6.31.
	 	Real Property Purchases	 	 	75	 
	6.32.
	 	Sale of Accounts	 	 	76	 
	6.33.
	 	Canadian Subsidiaries Negative Pledge	 	 	76	 
	 
	 	 	 	 	 	 
	ARTICLE VII DEFAULTS	 	 	76	 
	 
	 	 	 	 	 	 
	ARTICLE VIII REMEDIES; WAIVERS AND AMENDMENTS	 	 	79	 
	 
	 	 	 	 	 	 
	8.1.
	 	Remedies	 	 	79	 
	8.2.
	 	Waivers by Loan Parties	 	 	80	 
	8.3.
	 	Amendments	 	 	80	 
	8.4.
	 	Preservation of Rights	 	 	81	 
	 
	 	 	 	 	 	 
	ARTICLE IX GENERAL PROVISIONS	 	 	82	 
	 
	 	 	 	 	 	 
	9.1.
	 	Survival of Representations	 	 	82	 
	9.2.
	 	Governmental Regulation	 	 	82	 
	9.3.
	 	Headings	 	 	82	 
	9.4.
	 	Entire Agreement	 	 	82	 
	9.5.
	 	Several Obligations; Benefits of this Agreement	 	 	82	 
	9.6.
	 	Expenses; Indemnification	 	 	82	 
	9.7.
	 	Numbers of Documents	 	 	84	 
	9.8.
	 	Accounting	 	 	84	 
	9.9.
	 	Severability of Provisions	 	 	84	 
	9.10.
	 	Nonliability of Lenders	 	 	84	 
	9.11.
	 	Confidentiality	 	 	85	 
	9.12.
	 	Nonreliance	 	 	85	 
	9.13.
	 	Disclosure	 	 	85	 
	9.14.
	 	Patriot Act Notice	 	 	85	 
	9.15.
	 	Amendment and Restatement	 	 	86	 

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	9.16.
	 	Prior Dissolutions	 	 	86	 
	 
	 	 	 	 	 	 
	ARTICLE X THE AGENT	 	 	86	 
	 
	 	 	 	 	 	 
	10.1.
	 	Appointment; Nature of Relationship	 	 	86	 
	10.2.
	 	Powers	 	 	87	 
	10.3.
	 	General Immunity	 	 	87	 
	10.4.
	 	No Responsibility for Credit
Extensions, Recitals, etc.	 	 	87	 
	10.5.
	 	Action on Instructions of the Lenders	 	 	87	 
	10.6.
	 	Employment of Agents and Counsel	 	 	87	 
	10.7.
	 	Reliance on Documents; Counsel	 	 	87	 
	10.8.
	 	Agent’s Reimbursement and Indemnification	 	 	88	 
	10.9.
	 	Notice of Default	 	 	88	 
	10.10.
	 	Rights as a Lender	 	 	88	 
	10.11.
	 	Lender Credit Decision	 	 	89	 
	10.12.
	 	Successor Agent	 	 	89	 
	10.13.
	 	Delegation to Affiliates	 	 	89	 
	10.14.
	 	Execution of Loan Documents	 	 	89	 
	10.15.
	 	Collateral Matters	 	 	90	 
	10.16.
	 	Co-Agents, Documentation Agent,
Syndication Agent, etc.	 	 	92	 
	 
	 	 	 	 	 	 
	ARTICLE XI SETOFF; RATABLE PAYMENTS	 	 	92	 
	 
	 	 	 	 	 	 
	11.1.
	 	Setoff	 	 	92	 
	11.2.
	 	Ratable Payments	 	 	92	 
	 
	 	 	 	 	 	 
	ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS	 	 	92	 
	 
	 	 	 	 	 	 
	12.1.
	 	Successors and Assigns	 	 	92	 
	12.2.
	 	Participations	 	 	93	 
	12.3.
	 	Assignments	 	 	94	 
	12.4.
	 	Dissemination of Information	 	 	95	 
	12.5.
	 	Tax Treatment	 	 	95	 
	12.6.
	 	Assignment by LC Issuer	 	 	95	 
	 
	 	 	 	 	 	 
	ARTICLE XIII NOTICES	 	 	96	 
	 
	 	 	 	 	 	 
	13.1.
	 	Notices; Effectiveness; Electronic Communications	 	 	96	 
	13.2.
	 	Change of Address, Etc.	 	 	97	 
	 
	 	 	 	 	 	 
	ARTICLE XIV COUNTERPARTS	 	 	97	 
	 
	 	 	 	 	 	 
	ARTICLE XV GUARANTY	 	 	97	 
	 
	 	 	 	 	 	 
	15.1.
	 	Guaranty	 	 	97	 
	15.2.
	 	Guaranty of Payment	 	 	97	 
	15.3.
	 	No Discharge or Diminishment of Guaranty	 	 	97	 
	15.4.
	 	Defenses Waived	 	 	99	 
	15.5.
	 	Rights of Subrogation	 	 	99	 
	15.6.
	 	Reinstatement; Stay of Acceleration	 	 	99	 
	15.7.
	 	Information	 	 	99	 
	15.8.
	 	Termination	 	 	99	 
	15.9.
	 	Taxes	 	 	100	 
	15.10.
	 	Severability	 	 	100	 
	15.11.
	 	Contribution	 	 	100	 

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	15.12.
	 	Lending Installations	 	 	101	 
	15.13.
	 	Liability Cumulative	 	 	101	 
	 
	 	 	 	 	 	 
	ARTICLE XVI CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL	 	 	101	 
	 
	 	 	 	 	 	 
	16.1.
	 	CHOICE OF LAW	 	 	101	 
	16.2.
	 	CONSENT TO JURISDICTION	 	 	101	 
	16.3.
	 	WAIVER OF JURY TRIAL	 	 	102	 
	 
	 	 	 	 	 	 
	ARTICLE XVII THE BORROWER REPRESENTATIVE	 	 	102	 
	 
	 	 	 	 	 	 
	17.1.
	 	Appointment; Nature of Relationship	 	 	102	 
	17.2.
	 	Powers	 	 	102	 
	17.3.
	 	Employment of Agents	 	 	102	 
	17.4.
	 	Notices	 	 	102	 
	17.5.
	 	Successor Borrower Representative	 	 	102	 
	17.6.
	 	Execution of Loan Documents; Aggregate Borrowing Base Certificate	 	 	102	 
	17.7.
	 	Reporting	 	 	103	 
	 
	 	 	 	 	 	 

COMMITMENT SCHEDULE

PRICING SCHEDULE

EXHIBIT A BORROWING NOTICE

EXHIBIT B CONVERSION/CONTINUATION NOTICE

EXHIBIT C REVOLVING NOTE

EXHIBIT D FORM OF ASSUMPTION OF OBLIGATIONS

EXHIBIT E COMPLIANCE CERTIFICATE

EXHIBIT F JOINDER AGREEMENT

EXHIBIT G ASSIGNMENT AND ASSUMPTION AGREEMENT

EXHIBIT H BORROWING BASE CERTIFICATE

EXHIBIT I AGGREGATE BORROWING BASE CERTIFICATE

EXHIBIT J SUMMARY OF TRANSACTIONS

EXHIBIT K COMMITMENT INCREASE CERTIFICATE

SCHEDULE 5.8 LITIGATION AND CONTINGENT OBLIGATIONS

SCHEDULE 5.9 CAPITALIZATION AND SUBSIDIARIES

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SCHEDULE 5.12 NAMES; PRIOR TRANSACTIONS

SCHEDULE 5.14 MATERIAL AGREEMENTS

SCHEDULE 5.16 OWNERSHIP OF PROPERTIES

SCHEDULE 5.22 INDEBTEDNESS

SCHEDULE 5.23 AFFILIATE TRANSACTIONS

SCHEDULE 5.24 REAL PROPERTY; LEASES

SCHEDULE 5.25 INTELLECTUAL PROPERTY RIGHTS

SCHEDULE 5.26 INSURANCE

SCHEDULE 5.32 LABOR MATTERS

SCHEDULE 6.7 INSURANCE EXCEPTIONS

SCHEDULE 6.21 OTHER INVESTMENTS

SCHEDULE 6.22 LIENS

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AMENDED AND RESTATED

CREDIT AGREEMENT

     This Amended and Restated Credit Agreement, dated as of December 29, 2006, is among Newpark
Resources, Inc., a Delaware corporation, as the Company and as a Borrower, Batson Mill, L.P., a
Texas limited partnership, Dura-Base Nevada, Inc., a Nevada corporation, Excalibar Minerals Inc., a
Texas corporation, Excalibar Minerals of LA., L.L.C., a Louisiana limited liability company, NES
Permian Basin, L.P., a Texas limited partnership, Newpark Environmental Services, L.L.C., a
Louisiana limited liability company, Newpark Environmental Management Company, L.L.C., a Louisiana
limited liability company, Newpark Environmental Services of Texas, L.P., a Texas limited
partnership, Newpark Holdings, Inc., a Louisiana corporation, Newpark Texas, L.L.C., a Louisiana
limited liability company, NID, L.P., a Texas limited partnership, Newpark Drilling Fluids
Laboratory, Inc., a Texas corporation, SOLOCO, L.L.C., a Louisiana limited liability company,
SOLOCO Texas, L.P., a Texas limited partnership, Supreme Contractors, L.L.C., a Louisiana limited
liability company, Composite Mat Solutions L.L.C., a Louisiana limited liability company, Newpark
Environmental Water Solutions LLC, a Delaware limited liability company, The Loma Company, L.L.C.,
a Louisiana limited liability company, and Newpark Drilling Fluids, LP, a Texas limited
partnership, each as a Borrower, the other Loan Parties, the Lenders, and JPMorgan Chase Bank, N.A.
(successor by merger to Bank One, N.A. (Main Office Chicago)), as an LC Issuer and as the Agent.

RECITALS

     WHEREAS, previous hereto, the Company, certain lenders, certain guarantors, and, JPMorgan
Chase Bank, N.A. (successor by merger to Bank One, N.A. (Main Office Chicago)), as agent entered
into the Original Loan Agreement (as defined herein), which Original Loan Agreement has since been
amended, restated, modified, extended, renewed and restructured from time to time, through and
including the Amended Loan Agreement (as defined herein);

     WHEREAS, the Borrowers have now requested that the lenders further amend, restate, modify,
extend, increase, renew and restructure the loans made pursuant to the Amended Loan Agreement, to
permit certain corporate restructuring of the Loan Parties, to admit additional Persons as
borrowers, guarantors, and lenders, as the case may be, and make available to the Borrowers loans
and other extensions of credit, on the terms and conditions set forth herein in an aggregate
original principal amount not to exceed $100,000,000, as may be increased in accordance with the
terms hereof, which extensions of credit will be used by the Borrowers for the purposes set forth
in Section 6.2;

     WHEREAS, the Borrowers and the other Loan Parties have agreed to secure all of their
obligations under the Loan Documents by granting to the Agent, on behalf of the Lenders, a security
interest in and lien upon (and continuing the grant of such security interest in and lien upon) the
Collateral as set forth in the Collateral Documents; and

     WHEREAS, the Guarantors have agreed to guarantee all of the Obligations (and ratify and affirm
such guarantee previously made) of the Borrowers under the Loan Documents to the Agent and the
Lenders as set forth in the Guaranty;

     NOW, THEREFORE, in consideration of these premises and the terms and conditions set forth in
this Agreement, and for other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto do hereby amend and completely restate the Amended Loan Agreement,
effective as of the Closing Date as defined below, and do hereby agree as follows:

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ARTICLE I

DEFINITIONS

     As used in this Agreement:

     “Account” shall have the meaning given to such term in the Security Agreement.

     “Account Debtor” means any Person obligated on an Account.

     “Acquisition” means any transaction, or any series of related transactions,
consummated on or after the Closing Date, by which any Loan Party (a) acquires any going business
or all or substantially all of the assets of any Person, whether through purchase of assets, merger
or otherwise or (b) directly or indirectly acquires (in one transaction or as the most recent
transaction in a series of transactions) at least a majority (in number of votes) of the Capital
Stock of a Person which has ordinary voting power for the election of directors or other similar
management personnel of a Person (other than Capital Stock having such power only by reason of the
happening of a contingency) or a majority of the outstanding Capital Stock of a Person.

     “Adjusted Excess Cash Flow” means, for the relevant period of determination, the
amount of Consolidated EBITDA in excess of the amount of Consolidated EBITDA required for the
Company’s Fixed Charge Coverage Ratio to equal 1.5 to 1.0 for such period.

     “Advance” means a borrowing hereunder, (a) made by some or all of the Lenders on the
same Borrowing Date, or (b) converted or continued by the Lenders on the same date of conversion or
continuation, consisting, in either case, of the aggregate amount of the several Loans of the same
Type and, in the case of Eurodollar Loans, for the same Interest Period. The term Advance shall
include Non-Ratable Loans, Overadvances and Protective Advances unless otherwise expressly
provided.

     “Affiliate” of any Person means any other Person directly or indirectly controlling,
controlled by or under common control with such Person. A Person shall be deemed to control
another Person if the controlling Person owns 10% or more of any class of the voting Capital Stock
of the controlled Person or possesses, directly or indirectly, the power to direct or cause the
direction of the management or policies of the controlled Person, whether through ownership of
Capital Stock, by contract or otherwise.

     “Agent” means JPMorgan Chase in its capacity as contractual representative of the
Lenders pursuant to Article X, and not in its individual capacity as a Lender, and any
successor Agent appointed pursuant to Article X.

     “Aggregate Borrowing Base” means the aggregate of the Borrowing Bases of all of the
Borrowers.

     “Aggregate Borrowing Base Certificate” means a certificate signed by an Authorized
Officer of the Borrower Representative in the form of Exhibit I or another form which is
acceptable to the Agent in its sole discretion.

     “Aggregate Commitment” means the aggregate of the Commitments of all the Lenders, as
reduced or increased from time to time pursuant to the terms hereof, which Aggregate Commitment
shall initially be in the amount of $100,000,000.

2

 

     “Aggregate Credit Exposure” means, at any time, the aggregate of the Credit Exposure
of all the Lenders.

     “Aggregate Revolving Exposure” means, at any time, the aggregate Revolving Exposure of
all the Lenders.

     “Agreement” means this Amended and Restated Credit Agreement, dated as of December 29,
2006, as it may be amended, restated or modified and in effect from time to time.

     “Alternate Base Rate” means, for any day, a rate of interest per annum equal to the
higher of (a) the Prime Rate for such day and (b) the sum of (i) the Federal Funds Effective Rate
for such day plus (ii) 1/2% per annum.

     “Amended Agreement Lenders” has the meaning specified in Section 2.1.7.

     “Amended Loan Agreement” has the meaning specified in Section 9.15.

     “Applicable LC Fee Rate” means, at any time, the percentage rate per annum at which
fees accrue on the average daily undrawn stated amount under each Facility LC.

     “Applicable Unused Commitment Fee Rate” means, at any time, the percentage rate per
annum at which fees accrue on Available Revolving Commitment at such time as set forth in the
Pricing Schedule.

     “Applicable Margin” means, with respect to Advances of any Type at any time, the
percentage rate per annum which is applicable at such time with respect to Advances of such Type as
set forth in the Pricing Schedule.

     “Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a
Lender.

     “Arranger” means Banc One Capital Markets, Inc., a Delaware corporation, and its
successors, in its capacity as “Lead Arranger” and “Sole Book Runner” under the Amended Credit
Agreement.

     “Article” means an article of this Agreement unless another document is specifically
referenced.

     “Assignment Agreement” is defined in Section 12.3(a).

     “Authorized Officer” means any of James E. Braun, John R. Dardenne, Paul L. Howes or
Eric M. Wingerter.

     “Availability” means, with respect to all of the Borrowers, at any time, an amount
equal to the lesser of (a) the Revolving Commitment and (b) the Aggregate Borrowing Base, in each
case, minus the Aggregate Revolving Exposure.

     “Available Revolving Commitment” means, at any time, the Revolving Commitment then in
effect minus the Aggregate Revolving Exposure at such time.

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

3

 

     “Banking Services Obligations” of the Loan Parties means any and all obligations of
the Loan Parties, whether absolute or contingent and howsoever and whensoever created, arising,
evidenced or acquired (including all renewals, extensions and modifications thereof and
substitutions therefor) in connection with Banking Services.

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

     “Bankruptcy Code” means Title 11 of the U.S. Code (11 U.S.C. § 101 et
seq.) as amended, reformed, or otherwise modified from time to time, and any rule or
regulation issued thereunder.

     “Borrower” or “Borrowers” means, individually or collectively, jointly and
severally, the Company, Batson Mill, L.P., a Texas limited partnership, Dura-base Nevada, Inc., a
Nevada corporation, Excalibar Minerals Inc., a Texas corporation, Excalibar Minerals of LA.,
L.L.C., a Louisiana limited liability company, NES Permian Basin, L.P., a Texas limited
partnership, Newpark Environmental Services, L.L.C., a Louisiana limited liability company, Newpark
Environmental Management Company, L.L.C., a Louisiana limited liability company, Newpark
Environmental Services of Texas, L.P., a Texas limited partnership, Newpark Holdings, Inc., a
Louisiana corporation, Newpark Texas, L.L.C., a Louisiana limited liability company, NID, L.P., a
Texas limited partnership, Newpark Drilling Fluids Laboratory, Inc., a Texas corporation, SOLOCO,
L.L.C., a Louisiana limited liability company, SOLOCO Texas, L.P., a Texas limited partnership,
Supreme Contractors, L.L.C., a Louisiana limited liability company, Composite Mat Solutions L.L.C.,
a Louisiana limited liability company, Newpark Environmental Water Solutions LLC, a Delaware
limited liability company, The Loma Company, L.L.C., a Louisiana limited liability company, and
Newpark Drilling Fluids, LP, a Texas limited partnership.

     “Borrower Representative” means the Company, in its capacity as contractual
representative of the Borrowers pursuant to Article XVII.

     “Borrowing Base” means, at any time, with respect to each Borrower, the sum of (a) 85%
of such Borrower’s Eligible Accounts at such time, plus (b) 70% of such Borrower’s Eligible
Unbilled Accounts, plus (c) the lesser of (i) 60% of such Borrower’s Eligible Inventory,
valued at the lower of cost or market value, determined on a first-in-first-out basis, at such time
and (ii) 85% of the Net Orderly Liquidation Value of such Borrower’s Eligible Inventory,
minus (d) Reserves related to such Borrower. The Agent may, in its Permitted Discretion,
reduce the advance rates set forth above or reduce one or more of the other elements used in
computing the Borrowing Base.

     “Borrowing Base Certificate” means a certificate, signed by an Authorized Officer of a
Borrower, in the form of Exhibit H or another form which is acceptable to the Agent in its
sole discretion.

     “Borrowing Date” means a date on which an Advance or a Loan is made hereunder.

     “Borrowing Notice” is defined in Section 2.1.1(b).

     “Business Day” means (a) with respect to any borrowing, payment or rate selection of
Eurodollar Advances, a day (other than a Saturday or Sunday) on which banks generally are open in
Chicago and New York City for the conduct of substantially all of their commercial lending
activities, interbank wire transfers can be made on the Fedwire system and dealings in U.S. dollars
are carried on in the London interbank market and (b) for all other purposes, a day (other than a
Saturday or Sunday) on which banks generally are open in Chicago for the conduct of substantially
all of their commercial lending activities and interbank wire transfers can be made on the Fedwire
system.

4

 

     “Canadian Subsidiaries” is defined in Section 6.33.

     “Capital Expenditures” means, without duplication, any expenditure or commitment to
expend money for any purchase or other acquisition of any asset which would be classified as a
fixed or capital asset on a consolidated balance sheet of the Company and its Subsidiaries prepared
in accordance with GAAP.

     “Capital Stock” means any and all corporate stock, units, shares, partnership
interests, membership interests, equity interests, rights, securities, or other equivalent
evidences of ownership (howsoever designated) issued by any Person and any and all warrants, rights
or options to purchase any of the foregoing.

     “Capitalized Lease” of a Person means any lease of Property by such Person as lessee
which would be capitalized on a balance sheet of such Person prepared in accordance with GAAP.

     “Capitalized Lease Obligations” of a Person means the aggregate amount of the
obligations of such Person under Capitalized Leases which would be shown as a liability on a
balance sheet of such Person prepared in accordance with GAAP.

     “Cash Equivalent Investments” means (a) short-term obligations of, or fully guaranteed
by, the U.S., (b) commercial paper rated A-1 or better by S&P or P-1 or better by Moody’s, (c)
demand deposit accounts maintained in the ordinary course of business with any domestic office of
any commercial bank organized under the laws of the U.S. or any State thereof that has a combined
capital and surplus and undivided profits of not less than $500,000,000, and (d) certificates of
deposit issued by and time deposits with any domestic office of any commercial bank organized under
the laws of the U.S. or any State thereof that has a combined capital and surplus and undivided
profits of not less than $500,000,000; provided that, in each case, the same provides for payment
of both principal and interest (and not principal alone or interest alone) and is not subject to
any contingency regarding the payment of principal or interest.

     “Change in Control” means the acquisition by any Person, or two or more Persons acting
in concert, of beneficial ownership (within the meaning of Rule 13d3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934) of 30% or more of the outstanding shares of
voting Capital Stock of any Borrower; provided however, that the transactions contemplated in
connection with the Permitted Restructuring shall not be deemed to be a Change of Control for
purposes of this Agreement.

     “Closing Date” means the date of this Agreement.

     “Code” means the Internal Revenue Code of 1986, as amended, reformed or otherwise
modified from time to time, and any rule or regulation issued thereunder.

     “Collateral” means any and all Property covered by the Collateral Documents and any
and all other Property of any Loan Party, now existing or hereafter acquired, that may at any time
be or become subject to a security interest or Lien in favor of the Agent, on behalf of itself and
the Lenders, to secure the Secured Obligations.

     “Collateral Access Agreement” means any landlord waiver or other agreement, in form
and substance reasonably satisfactory to the Agent, between the Agent and any third party
(including any bailee, consignee, customs broker, processor, or other similar Person) in possession
of any Collateral or

5

 

any landlord of any Loan Party for any real Property where any Collateral is located, as such
landlord waiver or other agreement may be amended, restated, or otherwise modified from time to
time.

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

     “Collateral Shortfall Amount” is defined in Section 2.1.2(l).

     “Commitment” means, for each Lender, the obligation of such Lender to make Loans to
the Borrowers, and participate in Facility LCs issued upon the application of any Borrower, in an
aggregate amount not exceeding the amount set forth in the Commitment Schedule or as set
forth in any Assignment Agreement that has become effective pursuant to Section 12.3(c), as
such amount may be modified from time to time pursuant to the terms hereof.

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

     “Company” means Newpark Resources, Inc., a Delaware corporation and its successors and
assigns.

     “Compliance Certificate” is defined in Section 6.1(e).

     “Consolidated Capital Expenditures” means, with reference to any period, the Capital
Expenditures of the Company and its Subsidiaries calculated on a consolidated basis for such
period.

     “Consolidated EBITDA” means Consolidated Net Income plus, to the extent
deducted in determining Consolidated Net Income, (a) Consolidated Interest Expense, (b) expense for
taxes paid or accrued, net of tax refunds, (c) depreciation, (d) amortization, (e) any non-cash
Capital Stock based compensation expenses and (f) non-recurring non-cash charges, minus, to
the extent included in Consolidated Net Income, extraordinary gains (as determined in accordance
with GAAP) realized other than in the ordinary course of business, all calculated for the Company
and its Subsidiaries on a consolidated basis.

     “Consolidated Fixed Charges” means, with reference to any period without duplication,
cash Consolidated Interest Expense, plus prepayments and scheduled principal payments on
Indebtedness (other than with respect to (a) the Revolving Loans, (b) the repayment of the Senior
Subordinated Notes, (c) the repayment of the Indebtedness under the RBS Loan Documents and (d) the
repayment of the Term A Loans and the Supplemental Term Loans) made during such period, plus
expense for taxes paid in cash, plus dividends or distributions paid in cash, plus repurchases or
redemptions of Capital Stock paid in cash as permitted pursuant to Section 6.16(a)(iii), plus
Capitalized Lease payments, plus cash contributions to any Plan, all calculated for the Company and
its Subsidiaries on a consolidated basis.

     “Consolidated Interest Expense” means, with reference to any period, the interest
expense of the Company and its Subsidiaries calculated on a consolidated basis for such period.

     “Consolidated Leverage Ratio” means the ratio, determined as of the end of each Fiscal
Quarter of the Company for the applicable Test Period, of (a) Consolidated Total Debt on such day
to (b) Consolidated EBITDA for such Test Period.

     “Consolidated Net Income” means, with reference to any period, the net income (or
loss) of the Company and its Subsidiaries calculated on a consolidated basis for such period.

6

 

     “Consolidated Net Worth” means at any time the consolidated stockholders’ equity of
the Company and its Subsidiaries calculated on a consolidated basis as of such time.

     “Consolidated Tangible Net Worth” means Consolidated Net Worth, minus
Intangibles.

     “Consolidated Total Debt” means, at any date, the aggregate principal amount of all
Indebtedness of the Company and its Subsidiaries at such date, determined on a consolidated basis
in accordance with GAAP.

     “Contingent Obligation” of a Person means any agreement, undertaking or arrangement by
which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds
for the payment of, or otherwise becomes or is contingently liable upon, the obligation or
liability of any other Person, or agrees to maintain the net worth or working capital or other
financial condition of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter, operating agreement, take-or-pay
contract or the obligations of any such Person as general partner of a partnership with respect to
the liabilities of the partnership.

     “Controlled Group” means all members of a controlled group of corporations or other
business entities and all trades or businesses (whether or not incorporated) under common control
which, together with the Company or any of its Subsidiaries, are treated as a single employer under
Section 414 of the Code.

     “Conversion/Continuation Notice” is defined in Section 2.7.

     “Copyrights” shall have the meaning given to such term in the Security Agreement.

     “Credit Exposure” means, as to any Lender at any time, the sum of (a) such Lender’s
Revolving Exposure at such time, plus (b) an amount equal to its Pro Rata Share, if any, of
the aggregate principal amount of Non-Ratable Loans, Overadvances and Protective Advances
outstanding at such time.

     “Credit Extension” means the making of an Advance or the issuance of a Facility LC
hereunder.

     “Credit Extension Date” means the Borrowing Date for an Advance or the issuance date
for a Facility LC.

     “Customer List” means a list of a Borrower’s customers, specifying each customer’s
name, mailing address and phone number.

     “Default” means an event described in Article VII.

     “Defaulting Lender” is defined in Section 2.23(b).

     “Deferred Payment Date” is defined in Section 6.26(a).

     “Deferred Prepayment Amount” is defined in Section 6.26(a).

     “Deposit Account Control Agreement” means an agreement, in form and substance
reasonably satisfactory to the Agent, among any Loan Party, a banking institution holding such Loan
Party’s funds, and the Agent with respect to collection and control of all deposits and balances
held in a deposit account maintained by any Loan Party with such banking institution.

7

 

     “Document” shall have the meaning given to such term in the Security Agreement.

     “Domestic Subsidiary” means any Subsidiary which is organized under the laws of the
U.S. or any state of the U.S.

     “Effective Date” means the date that the conditions precedent set forth in Article
IV are satisfied.

     “Eligible Accounts” means, at any time, the Accounts of a Borrower which the Agent
determines in its Permitted Discretion are eligible as the basis for Credit Extensions hereunder.
Without limiting the Agent’s discretion provided herein, Eligible Accounts shall not include any
Account:

     (a) which is not subject to a first priority perfected security interest in
favor of the Agent;

     (b) which is subject to any Lien other than (i) a Lien in favor of the Agent
and (ii) a Permitted Lien which does not have priority over the Lien in favor of the
Agent;

     (c) with respect to which more than 90 days have elapsed since the date of the
original invoice therefor or which is more than 60 days past the due date for
payment, whichever is the earlier to occur;

     (d) which is owing by an Account Debtor for which more than 25% of the Accounts
owing from such Account Debtor and its Affiliates are ineligible hereunder;

     (e) which is owing by an Account Debtor to the extent the aggregate amount of
Accounts owing from such Account Debtor and its Affiliates to (i) such Borrower
exceeds 25% of the aggregate amount of Eligible Accounts of such Borrower or (ii)
all Borrowers exceeds 25% of the aggregate amount of Eligible Accounts of all
Borrowers;

     (f) with respect to which any covenant, representation, or warranty contained
in this Agreement or in the Security Agreement has been breached or is not true;

     (g) which (i) does not arise from the sale of goods or performance of services
in the ordinary course of business, (ii) is not evidenced by an invoice or other
documentation satisfactory to the Agent which has been sent to the Account Debtor,
(iii) represents a progress billing, (iv) is contingent upon such Borrower’s
completion of any further performance, or (v) represents a sale on a bill-and-hold,
guaranteed sale, sale-and-return, sale on approval, consignment, cash-on-delivery or
any other repurchase or return basis;

     (h) for which the goods giving rise to such Account have not been shipped to
the Account Debtor or for which the services giving rise to such Account have not
been performed by a Borrower;

     (i) with respect to which any check or other instrument of payment has been
returned uncollected for any reason;

     (j) which is owed by an Account Debtor which has (i) applied for, suffered, or
consented to the appointment of any receiver, custodian, trustee, or liquidator of
its

8

 

assets, (ii) has had possession of all or a material part of its property taken
by any receiver, custodian, trustee or liquidator, (iii) filed, or had filed against
it, any request or petition for liquidation, reorganization, arrangement, adjustment
of debts, adjudication as bankrupt, winding-up, or voluntary or involuntary case
under any state or federal bankruptcy laws, (iv) has admitted in writing its
inability, or is generally unable to, pay its debts as they become due, (v) become
insolvent, or (vi) ceased operation of its business;

     (k) which is owed by any Account Debtor which has sold all or substantially all
of its assets;

     (l) which is owed by an Account Debtor which (i) does not maintain its chief
executive office in the U.S. or Canada (other than the Province of Newfoundland) or
(ii) is not organized under applicable law of the U.S., any state of the U.S.,
Canada, or any province of Canada other than the Province of Newfoundland) unless,
in either case, such Account is backed by a Letter of Credit acceptable to the Agent
which is in the possession of the Agent;

     (m) which is owed in any currency other than U.S. dollars;

     (n) which is owed by (i) the government (or any department, agency, public
corporation, or instrumentality thereof) of any country other than the U.S. unless
such Account is backed by a Letter of Credit acceptable to the Agent which is in the
possession of the Agent, or (ii) the government of the U.S., or any department,
agency, public corporation, or instrumentality thereof, unless the Federal
Assignment of Claims Act of 1940, as amended (31 U.S.C. § 3727 et
seq. and 41 U.S.C. § 15 et seq.), and any other steps
necessary to perfect the Lien of the Agent in such Account have been complied with
to the Agent’s satisfaction;

     (o) which is owed by any Affiliate, employee, or director of any Loan Party;

     (p) which, for any Account Debtor, exceeds a credit limit determined by the
Agent, to the extent of such excess;

     (q) which is owed by an Account Debtor or any Affiliate of such Account Debtor
to which any Loan Party is indebted, but only to the extent of such indebtedness;

     (r) which is subject to any counterclaim, deduction, defense, setoff or
dispute;

     (s) which is evidenced by any promissory note, chattel paper, or instrument;

     (t) which is owed by an Account Debtor located in any jurisdiction which
requires filing of a “Notice of Business Activities Report” or other similar report
in order to permit such Borrower to seek judicial enforcement in such jurisdiction
of payment of such Account, unless such Borrower has filed such report or qualified
to do business in such jurisdiction;

     (u) with respect to which such Borrower has made any agreement with the Account
Debtor for any reduction thereof, other than discounts and adjustments given in the
ordinary course of business; or

9

 

     (v) which the Agent determines may not be paid by reason of the Account
Debtor’s inability to pay or which the Agent otherwise determines is unacceptable
for any reason whatsoever.

In the event that an Account which was previously an Eligible Account ceases to be an Eligible
Account hereunder, such Borrower or the Borrower Representative shall notify the Agent thereof (i)
within three Business Days of the earlier of the date such Borrower or the Borrower Representative
has obtained knowledge thereof if any such Account is in excess of $1,000,000 in the aggregate and
(ii) on and at the time of submission by the Borrower Representative to the Agent of the next
Aggregate Borrowing Base Certificate in all other cases.

     “Eligible Inventory” means, at any time, the Inventory of a Borrower which the Agent
determines in its Permitted Discretion is eligible as the basis for Credit Extensions hereunder.
Without limiting the Agent’s discretion provided herein, Eligible Inventory shall not include any
Inventory:

     (a) which is not subject to a first priority perfected Lien in favor of the
Agent;

     (b) which is subject to any Lien other than (i) a Lien in favor of the Agent
and (ii) a Permitted Lien which does not have priority over the Lien in favor of the
Agent;

     (c) which is, in the Agent’s opinion, slow moving, obsolete, unmerchantable,
defective, unfit for sale, not salable at prices approximating at least the cost of
such Inventory in the ordinary course of business or unacceptable due to age, type,
category and/or quantity;

     (d) with respect to which any covenant, representation, or warranty contained
in this Agreement or the Security Agreement has been breached or is not true;

     (e) which does not conform to all standards imposed by any governmental
authority;

     (f) which is not finished goods or raw materials purchased in the ordinary
course by a Borrower, and used in the manufacture of other Inventory of such
Borrower, or which constitutes work-in-process, spare or replacement parts,
subassemblies, packaging and shipping material, manufacturing supplies, display
items, bill-and-hold goods, returned or repossessed goods, defective goods, goods
held on consignment, or goods which are not of a type held for sale in the ordinary
course of business;

     (g) which is not located in the U.S. or is in transit with a common carrier
from vendors and suppliers, provided that, up to $10,000,000 of Inventory in transit
that otherwise constitutes Eligible Inventory may be included as eligible pursuant
to this clause (g) so long as (i) the Agent shall have received (1) a true
and correct copy of the non-negotiable bill of lading and other shipping documents
for such Inventory, (2) casualty insurance naming the Agent as loss payee and
otherwise covering such risks as the Agent may reasonably request, (3) a duly
executed Collateral Access Agreement from the applicable customs broker for such
Inventory, and (4) such other documentation as the Agent may request in its
Permitted Discretion, and (ii) the common carrier is not an Affiliate of the
applicable vendor or supplier;

10

 

     (h) which is located in any location leased by such Borrower unless the lessor
has delivered to the Agent a Collateral Access Agreement;

     (i) which is located in any third party warehouse or is in the possession of a
bailee and is not evidenced by a Document (other than non-negotiable bills of lading
to the extent permitted pursuant to clause (g) above), unless such warehouseman or
bailee has delivered to the Agent a Collateral Access Agreement and such other
documentation as the Agent may require;

     (j) which is the subject of a consignment by such Borrower as consignor;

     (k) which is perishable;

     (l) which contains or bears any Intellectual Property Rights licensed to such
Borrower unless the Agent is satisfied that it may sell or otherwise dispose of such
Inventory without (i) infringing the rights of such licensor, (ii) violating any
contract with such licensor, or (iii) incurring any liability with respect to
payment of royalties other than royalties incurred pursuant to sale of such
Inventory under the current licensing agreement;

     (m) which is not reflected in a current perpetual inventory report of such
Borrower (unless such Inventory is reflected in a report to the Agent as “in
transit” Inventory); or

     (n) which the Agent otherwise determines is unacceptable for any reason
whatsoever.

In the event that Inventory which was previously Eligible Inventory ceases to be Eligible Inventory
hereunder, such Borrower or the Borrower Representative shall notify the Agent thereof (i) within
three Business Days of the earlier of the date the Borrower or the Borrower Representative has
obtained knowledge thereof if any such Inventory has a value (based on the lower of cost,
determined on a first-in, first-out basis, or market) in excess of $1,000,000 in the aggregate and
(ii) on and at the time of submission by the Borrower Representative to the Agent of the next
Aggregate Borrowing Base Certificate in all other cases.

     “Eligible Unbilled Accounts” means, at any time, Accounts of a Borrower that are not
Eligible Accounts for the sole reason that such Accounts are not evidenced by invoices or other
documentation satisfactory to the Agent which have been sent to the Account Debtor; provided,
however, that no such Account shall be an Eligible Unbilled Account if evidence of such Account (by
an invoice or other documentation satisfactory to the Agent) is not sent to the Account Debtor
within thirty (30) days (or 60 days with respect to Accounts owing by Account Debtors approved by
Agent in its Permitted Discretion), provided that the amount of such Eligible Unbilled Accounts
shall not exceed $10,000,000 at any time of the date such Account is created. In the event that an
Account which was previously an Eligible Unbilled Account ceases to be an Eligible Unbilled Account
hereunder, such Borrower or the Borrower Representative shall notify the Agent thereof (i) within
three Business Days of the earlier of the date such Borrower or the Borrower Representative has
obtained knowledge thereof if any such Account is in excess of $500,000 in the aggregate and (ii)
in all other cases, at the time of submission by the Borrower Representative to the Agent of the
next Aggregate Borrowing Base Certificate.

     “Environmental Laws” means any and all federal, state, local and foreign statutes,
laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, plans,
injunctions, permits,

11

 

concessions, grants, franchises, licenses, agreements and other governmental restrictions
relating to (a) the protection of the environment, (b) the effect of the environment on human
health, (c) emissions, discharges or releases of pollutants, contaminants, hazardous substances or
wastes into surface water, ground water or land, or (d) the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of pollutants, contaminants, hazardous
substances or wastes or the clean-up or other remediation thereof.

     “Equipment” has the meaning specified in the Security Agreement.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from
time to time, and any rule or regulation issued thereunder.

     “Eurodollar Advance” means an Advance which, except as otherwise provided in
Section 2.12, bears interest at the applicable Eurodollar Rate.

     “Eurodollar Base Rate” means, with respect to a Eurodollar Advance for the relevant
Interest Period, the applicable British Bankers’ Association LIBOR rate for deposits in U.S.
dollars as reported by any generally recognized financial information service as of 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest Period, and having a
maturity equal to such Interest Period, provided that, if no such British Bankers’ Association
LIBOR rate is available to the Agent, the applicable Eurodollar Base Rate for the relevant Interest
Period shall instead be the rate determined by the Agent to be the rate at which JPMorgan Chase or
one of its Affiliate banks offers to place deposits in U.S. dollars with first-class banks in the
interbank market at approximately 11:00 a.m. (London time) two Business Days prior to the first day
of such Interest Period, in the approximate amount of JPMorgan Chase’s relevant Eurodollar Loan and
having a maturity equal to such Interest Period.

     “Eurodollar Loan” means a Loan which, except as otherwise provided in Section
2.12, bears interest at the applicable Eurodollar Rate.

     “Eurodollar Rate” means, with respect to a Eurodollar Advance for the relevant
Interest Period, the sum of (a) the quotient of (i) the Eurodollar Base Rate applicable to such
Interest Period, divided by (ii) one minus the Reserve Requirement (expressed as a
decimal) applicable to such Interest Period, plus (b) the Applicable Margin.

     “Excalibar” means, collectively, Excalibar Minerals Inc., a Texas corporation and
Excalibar Minerals of LA., L.L.C., a Louisiana limited liability company.

     “Excluded Taxes” means, in the case of each Lender or applicable Lending Installation
and the Agent, taxes imposed on its overall revenue or net income, and franchise taxes imposed on
it, by (a) the jurisdiction under the laws of which such Lender or the Agent is incorporated or
organized or (b) the jurisdiction in which the Agent’s or such Lender’s principal executive office
or such Lender’s applicable Lending Installation is located.

     “Exhibit” refers to an exhibit to this Agreement, unless another document is
specifically referenced.

     “Existing Obligations” means the Obligations (as defined in the Amended Loan
Agreement) outstanding on the Effective Date, immediately prior to the effectiveness of this
Agreement.

     “Facility” means the credit facility described in Section 2.1 hereof to be
provided to the Borrowers on the terms and conditions set forth in this Agreement.

12

 

     “Facility LC” is defined in Section 2.1.2(a).

     “Facility LC Application” is defined in Section 2.1.2(c).

     “Facility LC Collateral Account” is defined in Section 2.1.2(j).

     “Facility Termination Date” means June 25, 2011, or any earlier date on which the
Aggregate Commitment is reduced to zero or otherwise terminated pursuant to the terms hereof.

     “Federal Funds Effective Rate” means, for any day, an interest rate per annum equal to
the weighted average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as published for such day
(or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day,
the average of the quotations at approximately 10:00 a.m. (Chicago time) on such day on such
transactions received by the Agent from three Federal funds brokers of recognized standing selected
by the Agent in its sole discretion.

     “Fee Letter” is defined in Section 2.10(c).

     “Financial Contract” of a Person means (a) any exchange-traded or over-the-counter
futures, forward, swap or option contract or other financial instrument with similar
characteristics, or (b) any Rate Management Transaction.

     “Fiscal Month” means any of the monthly accounting periods of the Company.

     “Fiscal Quarter” means any of the quarterly accounting periods of the Company, ending
on March 31, June 30, September 30 and December 31 of each year.

     “Fiscal Year” means any of the annual accounting periods of the Company ending on
December 31 of each year.

     “Fixed Charge Coverage Ratio” means, the ratio, determined as of the end of each
Fiscal Quarter of the Company for the applicable Test Period, of (a) Consolidated EBITDA
minus the unfinanced portion of Consolidated Capital Expenditures to (b) Consolidated Fixed
Charges, all calculated for the Company and its Subsidiaries on a consolidated basis.

     “Fixtures” has the meaning specified in the Security Agreement.

     “Floating Rate” means, for any day, a rate per annum equal to (a) the Alternate Base
Rate for such day plus (b) the Applicable Margin, in each case changing when and as the
Alternate Base Rate changes.

     “Floating Rate Advance” means an Advance which, except as otherwise provided in
Section 2.12, bears interest at the Floating Rate.

     “Floating Rate Loan” means a Loan which, except as otherwise provided in Section
2.12, bears interest at the Floating Rate.

     “Foreign Intercompany Notes” is defined in Section 6.21(g).

     “Foreign Subsidiary” means any Subsidiary which is not a Domestic Subsidiary.

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     “Form 10-K” means, for any Fiscal Year, the Company’s annual report on Form 10-K (or
any successor form) and the accompanying consolidated financial statements filed with the
Securities and Exchange Commission.

     “Form 10-Q” means, for any Fiscal Quarter, the Company’s quarterly report on Form 10-Q
(or any successor form) and the accompanying consolidated financial statements filed with the
Securities and Exchange Commission.

     “Fund” means any Person (other than a natural person) that is (or will be) engaged in
making, purchasing, holding or otherwise investing in commercial loans and similar extensions of
credit in the ordinary course of its business.

     “Funding Account” is defined in Section 2.5.

     “GAAP” means generally accepted accounting principles as in effect from time to time,
applied in a manner consistent with that used in preparing the financial statements referred to in
Section 5.5.

     “Guaranteed Obligations” is defined in Section 15.1.

     “Guarantor” means each Loan Party, any other Person who becomes a Loan Party pursuant
to a Joinder Agreement, any other Person who executes a Guaranty and their respective successors
and assigns.

     “Guaranty” means Article XV of this Agreement and each separate guaranty, in
form and substance satisfactory to the Agent, delivered by (if required by Agent) a Foreign
Subsidiary (which guaranty shall be governed by the laws of the country in which such Foreign
Subsidiary is located), as it may be amended or modified and in effect from time to time.

     “Highest Lawful Rate” shall mean, on any day, the maximum nonusurious rate of interest
permitted for that day by applicable federal or Texas law stated as a rate per annum. On each day,
if any, that Chapter 303 of the Texas Finance Code, as amended (formerly Tex. Rev. Civ. Stat. Ann.
Art. 5069-1D.003) establishes the Highest Lawful Rate, such rate shall be the “indicated (weekly)
rate ceiling” (as defined in Chapter 303 of the Texas Finance Code, as amended) for that day.

     “Indebtedness” of a Person means such Person’s (a) obligations for borrowed money, (b)
obligations representing the deferred purchase price of Property or services (other than accounts
payable arising in the ordinary course of such Person’s business payable on terms customary in the
trade), (c) obligations, whether or not assumed, secured by Liens or payable out of the proceeds or
production from Property now or hereafter owned or acquired by such Person, (d) obligations which
are evidenced by notes, acceptances, or other instruments, (e) obligations of such Person to
purchase securities or other Property arising out of or in connection with the sale of the same or
substantially similar securities or Property or any other Off-Balance Sheet Obligations, (f)
Capitalized Lease Obligations, (g) Contingent Obligations for which the underlying transaction
constitutes Indebtedness under this definition, (h) the maximum available stated amount of all
letters of credit or bankers’ acceptances created for the account of such Person and, without
duplication, all reimbursement obligations with respect to letters of credit, (i) Rate Management
Transactions/Net Mark-to-Market Exposure under all Rate Management Transactions, (j) obligations of
such Person under any Sale and Leaseback Transaction, (k) obligations under any liquidated earn-out
and (l) any other obligation for borrowed money or other financial accommodation which in
accordance with GAAP would be shown as a liability on the consolidated balance sheet of such
Person.

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     “Indenture” means that certain Indenture, dated December 17, 1997, among the Company,
certain Subsidiaries of the Company, as guarantors and U.S. Bank, N.A., as trustee, pursuant to
which the Senior Subordinated Notes were issued prior to the date hereof.

     “Intangibles” means, as of any date, all of the intangible assets of a Person
including, without limitation, (a) any surplus resulting from any write-up of assets subsequent to
the Closing Date; (b) deferred assets (including without limitation, deferred taxes), other than
prepaid insurance and prepaid taxes; (c) Intellectual Property Rights, non-compete agreements,
franchises and other similar intangibles; and (d) goodwill, including any amounts, however
designated on a balance sheet, representing the excess of the purchase price paid for assets or
stock over the value assigned thereto on the books of such Person.

     “Intellectual Property Rights” means, with respect to any Person, all of such Person’s
Patents, Copyrights, Trademarks, and Licenses, all other rights under any of the foregoing, all
extensions, renewals, reissues, divisions, continuations and continuations-in-part of any of the
foregoing, and all rights to sue for past, present, and future infringement of any of the
foregoing.

     “Intercompany Notes” is defined in Section 6.17(e).

     “Intercreditor Agreement” means that certain Intercreditor Agreement dated as of
August 18, 2006 by and among Borrowers, the other Loan Parties, Agent and Term Collateral Agent, as
amended from time to time in accordance with the terms thereof.

     “Interest Period” means, with respect to a Eurodollar Advance, a period of one, two,
three or six months commencing on a Business Day selected by the Borrower Representative pursuant
to this Agreement. Such Interest Period shall end on the day which corresponds numerically to such
date one, two, three or six months thereafter, provided however, that if there is no such
numerically corresponding day in such next, second, third or sixth succeeding month, such Interest
Period shall end on the last Business Day of such next, second, third or sixth succeeding month.
If an Interest Period would otherwise end on a day which is not a Business Day, such Interest
Period shall end on the next succeeding Business Day, provided however, that if said next
succeeding Business Day falls in a new calendar month, such Interest Period shall end on the
immediately preceding Business Day.

     “Inventory” has the meaning specified in the Security Agreement.

     “Investment” of a Person means any (a) loan, advance, extension of credit (other than
accounts receivable arising in the ordinary course of business on terms customary in the trade) or
contribution of capital by such Person, (b) stocks, bonds, mutual funds, partnership interests,
notes, debentures, securities or other Capital Stock owned by such Person, (c) any deposit accounts
and certificate of deposit owned by such Person, and (d) structured notes, derivative financial
instruments and other similar instruments or contracts owned by such Person.

     “Joinder Agreement” is defined in Section 6.15(a).

     “JPMorgan Chase” means JPMorgan Chase Bank, N.A. (successor by merger to Bank One,
N.A. (Main Office Chicago)), in its individual capacity, and its successors.

     “LC Fee” is defined in Section 2.10(b).

     “LC Issuer” means JPMorgan Chase (or any subsidiary or Affiliate of JPMorgan Chase
designated by JPMorgan Chase) in its capacity as an issuer of Facility LCs hereunder.

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     “LC Obligations” means, at any time, the sum, without duplication, of (a) the
aggregate undrawn stated amount under all Facility LCs outstanding at such time plus (b)
the aggregate unpaid amount at such time of all Reimbursement Obligations.

     “LC Payment Date” is defined in Section 2.1.2(d).

     “Lenders” means the lending institutions listed on the signature pages of this
Agreement and their respective successors and assigns in accordance herewith.

     “Lending Installation” means, with respect to a Lender, the LC Issuer or the Agent,
the office, branch, subsidiary or Affiliate of such Lender, LC Issuer or the Agent listed on the
signature pages hereof or on a Schedule or otherwise selected by such Lender, the LC Issuer or the
Agent pursuant to Section 2.22.

     “Letter of Credit” of a Person means a letter of credit, bankers’ acceptances or
similar instrument which is issued upon the application of such Person or upon which such Person is
an account party or for which such Person is in any way liable.

     “Lien” means any lien (statutory or other), mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without limitation, the
interest of a vendor or lessor under any conditional sale, Capitalized Lease or other title
retention agreement).

     “Licenses” shall have the meaning given to such term in the Security Agreement.

     “Loan Documents” means this Agreement, any Notes, the Facility LC Applications, the
Collateral Documents and all other agreements, instruments, documents and certificates identified
in Section 4.1 executed and delivered to, or in favor of, Agent or any Lenders and
including all other pledges, powers of attorney, consents, assignments, contracts, notices, letter
of credit agreements and all other written matter whether heretofore, now or hereafter executed by
or on behalf of any Loan Party, or any employee of any Loan Party, and delivered to the Agent or
any Lender in connection with the Agreement or the transactions contemplated thereby. Any
reference in the Agreement or any other Loan Document to a Loan Document shall include all
appendices, exhibits or schedules thereto, and all amendments, restatements, supplements or other
modifications thereto, and shall refer to the Agreement or such Loan Document as the same may be in
effect at any and all times such reference becomes operative.

     “Loan Parties” means the Borrowers, the Borrower’s Domestic Subsidiaries and any other
Person who becomes a party to this Agreement pursuant to a Joinder Agreement and their successors
and assigns.

     “Loans” means, with respect to a Lender, such Lender’s loans made pursuant to
Article II (or any conversion or continuation thereof), including Non-Ratable Loans,
Overadvances and Protective Advances.

     “Material Adverse Effect” means a material adverse effect on (a) the business,
Property, condition (financial or otherwise), results of operations, or prospects of a Borrower and
its Subsidiaries taken as a whole, (b) the ability of any Loan Party to perform its obligations
under the Loan Documents to which it is a party, (c) the Collateral, or the Agent’s Liens (on
behalf of itself and the Lenders) on the Collateral or the priority of such Liens or (d) the
validity or enforceability of any of the Loan Documents or the rights or remedies of the Agent, the
LC Issuer or the Lenders thereunder.

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     “Material Indebtedness” means Indebtedness in an outstanding principal amount of
$1,000,000 or more in the aggregate (or the equivalent thereof in any currency other than U.S.
dollars).

     “Material Indebtedness Agreement” means any agreement under which any Material
Indebtedness was created or is governed or which provides for the incurrence of Indebtedness in an
amount which would constitute Material Indebtedness (whether or not an amount of Indebtedness
constituting Material Indebtedness is outstanding thereunder).

     “Modify” and “Modification” are defined in Section 2.1.2(a).

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

     “Mortgages” means any mortgage, deed of trust or other agreement which conveys or
evidences a Lien in favor of the Agent, for the benefit of the Agent and the Lenders, on real
Property of Loan Party, including any amendment, modification or supplement thereto.

     “Multiemployer Plan” means a Plan maintained pursuant to a collective bargaining
agreement or any other arrangement to which the Company or any member of the Controlled Group is a
party to which more than one employer is obligated to make contributions.

     “Net Cash Proceeds” means, if in connection with (a) an asset disposition, cash
proceeds net of (i) commissions and other reasonable and customary transaction costs, fees and
expenses properly attributable to such transaction and payable by such Loan Party in connection
therewith (in each case, paid to non-Affiliates), (ii) transfer taxes, (iii) amounts payable to
holders of senior Liens on such asset (to the extent such Liens constitute Permitted Liens
hereunder), if any, and (iv) an appropriate reserve for income taxes in accordance with GAAP
established in connection therewith, (b) the issuance or incurrence of Indebtedness, cash proceeds
net of attorneys’ fees, investment banking fees, accountants’ fees, underwriting discounts and
commissions and other customary fees and expenses actually incurred in connection therewith or, (c)
an equity issuance, cash proceeds net of underwriting discounts and commissions and other
reasonable costs paid to non-Affiliates in connection therewith.

     “Net Mark-to-Market Exposure” of a Person means, as of any date of determination, the
excess (if any) of all unrealized losses over all unrealized profits of such Person arising from
Rate Management Transactions. As used in this definition, “unrealized losses” means the fair
market value of the cost to such Person of replacing such Rate Management Transaction as of the
date of determination (assuming the Rate Management Transaction were to be terminated as of that
date), and “unrealized profits” means the fair market value of the gain to such Person of replacing
such Rate Management Transaction as of the date of determination (assuming such Rate Management
Transaction were to be terminated as of that date).

     “Net Orderly Liquidation Value” means, with respect to Inventory of any Person, the
orderly liquidation value thereof as determined in a manner acceptable to the Agent by an appraiser
acceptable to the Agent, net of all estimated costs of liquidation thereof.

     “Ninety-Day Average Availability” means, as of any day, the sum of the Availability
for each of the immediately preceding 90 days divided by 90.

     “Non-Ratable Loan” and “Non-Ratable Loans” are defined in Section
2.1.3.

     “Non-U.S. Lender” is defined in Section 3.5(d).

     “Notes” means, collectively, the Revolving Notes.

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     “Obligations” means all unpaid principal of and accrued and unpaid interest on the
Loans, all LC Obligations, all accrued and unpaid fees and all expenses, reimbursements,
indemnities and other obligations of the Loan Parties to the Lenders or to any Lender, the Agent,
the LC Issuer or any indemnified party arising under the Loan Documents.

     “Off-Balance Sheet Liability” of a Person means (a) any repurchase obligation or
liability of such Person with respect to accounts or notes receivable sold by such Person, (b) any
indebtedness, liability or obligation under any Sale and Leaseback Transaction which is not a
Capitalized Lease, (c) any indebtedness, liability or obligation under any so-called “synthetic
lease” transaction entered into by such Person, or (d) any indebtedness, liability or obligation
arising with respect to any other transaction which is the functional equivalent of or takes the
place of borrowing but which does not constitute a liability on the balance sheets of such Person,
but excluding from this clause (d) Operating Leases.

     “Operating Lease” of a Person means any lease of Property (other than a Capitalized
Lease) by such Person as lessee which has an original term (including any required renewals and any
renewals effective at the option of the lessor) of one year or more.

     “Operating Lease Obligations” means, as at any date of determination, the amount
obtained by aggregating the present values, determined in the case of each particular Operating
Lease by applying a discount rate (which discount rate shall equal the discount rate which would be
applied under GAAP if such Operating Lease were a Capitalized Lease) from the date on which each
fixed lease payment is due under such Operating Lease to such date of determination, of all fixed
lease payments due under all Operating Leases of the Company and its Subsidiaries.

     “Original Loan Agreement” means that certain Credit Agreement, dated June 25, 1995, by
and among Newpark Resources, Inc., certain of its Subsidiaries, the lending institutions party
thereto as lenders, Bank One, Louisiana, National Association, as administrative and syndication
agent and the other parties thereto, as amended.

     “Other Taxes” is defined in Section 3.5(b).

     “Overadvances” has the meaning specified in Section 2.1.4(b).

     “Participants” is defined in Section 12.2(a).

     “Patents” shall have the meaning given to such term in the Security Agreement.

     “Payment Date” means (a) with respect to interest payments due on any Floating Rate
Loan, the first day of each calendar month and the Facility Termination Date, (b) with respect to
interest payments due on any Eurodollar Loan, (i) the last day of the applicable Interest Period,
and (ii) in the case of any Interest Period in excess of three months, the day which is three
months after the first day of such Interest Period, and (iii) the Facility Termination Date, and
(c) with respect to any payment of LC Fees or Unused Commitment Fees, the first day of each
calendar month and the Facility Termination Date.

     “PBGC” means the Pension Benefit Guaranty Corporation, or any successor thereto.

     “Permitted Acquisitions” means Acquisitions, in each case, in the event (a) the
cumulative aggregate cash consideration (defined as total net cash to be paid, plus Indebtedness
and Contingent Obligations to be assumed in connection with such Acquisition, plus the Acquisition
costs associated with such Acquisitions) is less than $30,000,000 through the Facility Termination
Date and (b) (i) the acquisition target is in the same or similar line of business as the Company
and its Subsidiaries; (ii) the

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Company or a Domestic Subsidiary is the surviving entity holding one hundred percent (100%) of
the Capital Stock in the Acquisition target; (iii) no Default or Unmatured Default shall exist
before or after such Acquisition; (iv) such Acquisition shall be completed in accordance with
applicable laws; (v) Agent shall be provided with satisfactory opinions with regard to such
Acquisition as it may request; (vi) the terms of Section 6.15(a) or 6.15(c) as the
case may be, are satisfied; (vii) the board of directors of the Acquisition target approves the
Acquisition; and (viii) both before and (on a pro-forma basis) after giving effect to such
Acquisition, (A) the Company’s Fixed Charge Coverage Ratio shall be equal to or greater than 1.25
to 1.0 and (B) the Borrowers’ Availability shall be in excess of $15,000,000.

     “Permitted Discretion” means a determination made in good faith and in the exercise of
reasonable (from the perspective of a secured asset-based lender) business judgment.

     “Permitted Liens” is defined in Section 6.22.

     “Permitted Restructuring” is defined in Section 6.19.

     “Person” means any natural person, corporation, firm, joint venture, partnership,
limited liability company, association, enterprise, trust or other entity or organization, or any
government or political subdivision or any agency, department or instrumentality thereof.

     “Plan” means an employee pension benefit plan which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Code as to which a Loan
Party or any member of the Controlled Group may have any liability.

     “Prepayment Certificate” shall mean a certificate signed by the chief financial
officer of the Borrower Representative, certifying (i) with respect to any prepayments of Term
Loans permitted pursuant to Section 6.26(a)(ii), the manner in which the Ninety-Day Average
Availability was calculated and the amount of the proposed prepayment, and (ii) with respect to any
prepayments of Term Loans permitted pursuant to Section 6.26(a)(iii), the manner in which
the Ninety-Day Average Availability, Excess Cash Flow and the resulting prepayment were each
calculated.

     “Prepayment Fee” is defined in Section 2.16(b).

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

     “Prime Rate” means a rate per annum equal to the prime rate of interest announced from
time to time by JPMorgan Chase or its parent (which is not necessarily the lowest rate charged to
any customer), changing when and as said prime rate changes.

     “Prior Loan Agreements” has the meaning specified in Section 9.15.

     “Projections” is defined in Section 6.1(d).

     “Property” of a Person means any and all property, whether real, personal, tangible,
intangible, or mixed, of such Person, or other assets owned, leased or operated by such Person.

     “Pro Rata Share” means, with respect to any Lender, (a) with respect to Revolving
Obligations, a portion thereof equal to a fraction the numerator of which is such Lender’s
Revolving Commitment and the denominator of which is the aggregate Revolving Commitment of all
Revolving Lenders, (b) with respect to Protective Advances or with respect to all Credit Extensions
in the aggregate prior to the Facility Termination Date, a portion equal to a fraction the
numerator of which is such Lender’s

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Commitment and the denominator of which is the Aggregate Commitment of all Lenders, and (c)
with respect to Protective Advances or with respect to all Credit Extensions in the aggregate after
the Facility Termination Date, a portion equal to a fraction the numerator of which is such
Lender’s Credit Exposure and the denominator of which is the Aggregate Credit Exposure of all
Lenders.

     “Protective Advances” is defined in Section 2.1.4(a).

     “Purchasers” is defined in Section 12.3(a).

     “Rate Management Obligations” of a Person means any and all obligations of such
Person, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or
acquired (including all renewals, extensions and modifications thereof and substitutions therefor),
under (a) any and all Rate Management Transactions, and (b) any and all cancellations, buy backs,
reversals, terminations or assignments of any Rate Management Transactions.

     “Rate Management Transaction” means any transaction (including an agreement with
respect thereto) now existing or hereafter entered by any Loan Party which is a rate swap, basis
swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap
transaction, floor transaction, collar transaction, forward transaction, currency swap transaction,
cross-currency rate swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions) or any combination thereof, whether linked to
one or more interest rates, foreign currencies, commodity prices, equity prices or other financial
measures.

     “RBS Loan Agreement” means that certain Loan Agreement, dated July 26, 2004, by and
among Excalibar as borrowers and RBS Lombard, Inc. as lender, as amended from time to time.

     “RBS Loan Documents” means, collectively, the RBS Loan Agreement, and each other
instrument or document executed or delivered pursuant to or in connection therewith and the
transactions contemplated therein.

     “Regulation D” means Regulation D of the Board of Governors of the Federal Reserve
System as from time to time in effect and any successor thereto or other regulation or official
interpretation of said Board of Governors relating to reserve requirements applicable to member
banks of the Federal Reserve System.

     “Regulation U” means Regulation U of the Board of Governors of the Federal Reserve
System as from time to time in effect and any successor or other regulation or official
interpretation of said Board of Governors relating to the extension of credit by banks for the
purpose of purchasing or carrying margin stocks applicable to member banks of the Federal Reserve
System.

     “Reimbursement Obligations” means, at any time, the aggregate of all obligations of
the Borrowers then outstanding under Section 2.1.2 to reimburse the LC Issuer for amounts
paid by the LC Issuer in respect of any one or more drawings under Facility LCs.

     “Reportable Event” means a reportable event as defined in Section 4043 of ERISA and
the regulations issued under such section, with respect to a Plan, excluding, however, such events
as to which the PBGC has by regulation waived the requirement of Section 4043(a) of ERISA that it
be notified within thirty days of the occurrence of such event, provided however, that a failure to
meet the minimum funding standard of Section 412 of the Code and of Section 302 of ERISA shall be a
Reportable Event

20

 

regardless of the issuance of any such waiver of the notice requirement in accordance with
either Section 4043(a) of ERISA or Section 412(d) of the Code.

     “Reports” means reports prepared by JPMorgan Chase or another Person showing the
results of appraisals, field examinations or audits pertaining to the Borrowers’ assets from
information furnished by or on behalf of the Borrowers, after JPMorgan Chase has exercised its
rights of inspection pursuant to this Agreement, which Reports may be distributed to the Lenders by
JPMorgan Chase.

     “Required Lenders” means Lenders in the aggregate having at least a majority of the
Aggregate Commitment or, if the Aggregate Commitment has been terminated, Lenders in the aggregate
holding at least a majority of the Aggregate Credit Exposure.

     “Required Revolving Lenders” means Revolving Lenders in the aggregate having at least
a majority of the Revolving Commitment or, if the Revolving Commitment has been terminated,
Revolving Lenders in the aggregate holding at least a majority of the Aggregate Revolving Exposure.

     “Reserve Requirement” means, with respect to an Interest Period, the maximum aggregate
reserve requirement (including all basic, supplemental, marginal and other reserves) which is
imposed under Regulation D on Eurocurrency liabilities.

     “Reserves” means any and all reserves which the Agent deems necessary, in its
Permitted Discretion, to maintain (including, without limitation, reserves for accrued and unpaid
interest on the Secured Obligations, Banking Services Reserves, reserves for rent at locations
leased by any Loan Party and for consignee’s, warehousemen’s and bailee’s charges, reserves for
dilution of Accounts, reserves for Inventory shrinkage, reserves for customs charges and shipping
charges related to any Inventory in transit, reserves for Rate Management Transactions, reserves
for contingent liabilities of any Loan Party, reserves for uninsured losses of any Loan Party and
reserves for taxes, fees, assessments, and other governmental charges) with respect to the
Collateral or any Loan Party.

     “Revolving Commitment” means, (a) as to any Revolving Lender, the aggregate commitment
of such Revolving Lender to make Revolving Loans or incur LC Obligations as set forth in the
Commitment Schedule or in the most recent Assignment Agreement executed by such Revolving Lender
and (ii) as to all Revolving Lenders, the aggregate commitment of all Revolving Lenders to make the
Revolving Loans which aggregate commitment shall be One-hundred Million and No/100 Dollars
($100,000,000) on the Closing Date, as such amount may be adjusted, if at all, from time to time in
accordance with this Agreement.

     “Revolving Exposure” means, as to any Lender at any time, the sum of (a) an amount
equal to its Pro Rata Share of the aggregate principal amount of the Revolving Loans outstanding at
such time, plus (b) an amount equal to its Pro Rata Share of any LC Obligations at such
time, plus (c) an amount equal to its Pro Rata Share of the aggregate principal amount of
Non-Ratable Loans and Overadvances outstanding at such time.

     “Revolving Lenders” means, as of any date of determination, Lenders having a Revolving
Commitment.

     “Revolving Loans” means the revolving loans extended by the Lenders to the Borrowers
pursuant to Section 2.1.1 hereof.

     “Revolving Note” is defined in Section 2.21(d).

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     “Revolving Obligations” means Revolving Loans, LC Obligations, Non-Ratable Loans and
Overadvances.

     “S&P” means Standard and Poor’s Ratings Services, a division of The McGraw Hill
Companies, Inc.

     “Sale and Leaseback Transaction” means any sale or other transfer of Property by any
Person with the intent to lease such Property as lessee.

     “Schedule” refers to a specific schedule to this Agreement, unless another document is
specifically referenced.

     “Section” means a numbered section of this Agreement, unless another document is
specifically referenced.

     “Secured Obligations” means, collectively, (i) the Obligations; (ii) all Banking
Services Obligations; and (iii) all Rate Management Obligations owing to one or more Lenders or any
of their respective Affiliates, provided that at or prior to the time that any Rate Management
Transaction relating to such Rate Management Obligation is executed, the Lender party thereto
(other than JPMorgan Chase) shall have delivered written notice to the Agent that such a Rate
Management Transaction has been entered into and that it constitutes a Secured Obligation entitled
to the benefits of the Collateral Documents.

     “Security Agreement” means that certain Pledge and Security Agreement, dated as of the
date hereof, between the Loan Parties and the Agent, for the benefit of the Agent and the Lenders,
and any other pledge or security agreement entered into, after the Closing Date by any other Loan
Party (as required by this Agreement or any other Loan Document), or any other Person, as the same
may be amended, restated or otherwise modified from time to time.

     “Senior Subordinated Debt” means the Indebtedness under any unsecured notes or
debentures of the Company, subordinated to the prior payment of the Loans and the other obligations
under the Loan Documents, that may be issued by the Company in order to refinance and/or prepay the
Term Loans, provided that (i) the scheduled amortization and the final maturity shall be at least
one year beyond the corresponding amortization dates and the Facility Termination Date for the
Loans, respectively, and the subordination provisions shall be at least as favorable to the Lenders
as those in the Senior Subordinated Notes, and the other terms and conditions thereof (including,
without limitation, the covenant and event of default provisions thereof but excluding the interest
rate and any call protection provisions) taken as a whole shall be at least as favorable to the
Company and the Lenders as those in the Senior Subordinated Notes, (ii) no covenant contained in
this Agreement or any of the other Loan Documents would be violated on the proposed issuance date
after giving effect to (A) the issuance of such notes or debentures, (B) the payment of all
issuance costs, commissions, discounts, redemption premiums and other fees and charges associated
therewith, (C) the use of proceeds thereof and (D) the redemption, repayment, retirement and
repurchase of all Indebtedness of the Company and its Subsidiaries to be redeemed, repaid or
repurchased in connection therewith and (iii) substantially final drafts of the documentation
governing any such notes or debentures, showing the terms thereof, shall have been furnished to the
Lenders at least 10 days prior to the date of issuance of such notes or debentures.

     “Senior Subordinated Notes” means, collectively, the Company’s 8 5/8% Senior
Subordinated Notes due 2007, Series A, and 8 5/8% Senior Subordinated Notes due 2007, Series B,
each as issued pursuant to the Indenture, and which have been paid in full by the Company on or
around September 22, 2006 with a portion of the proceeds of the Term Loans.

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     “Settlement” is defined in Section 2.19.

     “Settlement Date” is defined in Section 2.19.

     “Single Employer Plan” means a Plan maintained by the Company or any member of the
Controlled Group for employees of the Company or any member of the Controlled Group.

     “Stated Rate” is defined in Section 2.24.

     “Subordinated Indebtedness” of a Person means any Indebtedness of such Person the
payment of which is subordinated to payment of the Secured Obligations to the written satisfaction
of the Agent.

     “Subsidiary” of a Person means, any corporation, partnership, limited liability
company, association, joint venture or similar business organization more than 50% of the
outstanding Capital Stock having ordinary voting power of which shall at the time be owned or
controlled by such Person. Unless otherwise expressly provided, all references herein to a
“Subsidiary” shall mean a Subsidiary of a Borrower.

     “Substantial Portion” means Property which represents more than 10% of the
consolidated assets of the Company and its Subsidiaries or property which is responsible for more
than 10% of the consolidated net sales or of the consolidated net income of the Company and its
Subsidiaries, in each case, as would be shown in the consolidated financial statements of the
Company and its Subsidiaries as at the beginning of the twelve-month period ending with the month
in which such determination is made (or if financial statements have not been delivered hereunder
for that month which begins the twelve-month period, then the financial statements delivered
hereunder for the quarter ending immediately prior to that month).

     “Supplemental Term Loans” means the term loans extended by the Lenders to the
Borrowers pursuant to the Amended Credit Agreement which have been paid in full on or around
September 22, 2006, with a portion of the proceeds of the Term Loans.

     “Supporting Letter of Credit” is defined in Section 2.1.2(l).

     “Taxes” means any and all present or future taxes, duties, levies, imposts,
deductions, charges or withholdings, and any and all liabilities with respect to the foregoing, but
excluding Excluded Taxes and Other Taxes.

     “Term A Loans” means the term loans extended by the Lenders to the Borrowers pursuant
to the Amended Credit Agreement which have been paid in full on or around September 22, 2006 with a
portion of the proceeds of the Term Loans.

     “Term Administrative Agent” means JPMorgan Chase Bank, N.A., together with its
affiliates, as the administrative agent for the Term Lenders under the Term Agreement and the other
Term Documents, together with any of its successors and assigns.

     “Term Agreement” means that certain Credit Agreement dated as of August 18, 2006, by
and among Borrowers, the other Loan Parties, Term Administrative Agent, Term Collateral Agent and
the Term Lenders as amended and restated from time to time as permitted by the terms of the
Intercreditor Agreement.

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     “Term Collateral Agent” means Wilmington Trust Company, together with its successors
and assigns, as the collateral agent for benefit of itself, in such capacity, the Administrative
Agent and the Term Lenders under the Term Agreement and the other Term Documents.

     “Term Documents” means the Term Agreement and the other “Loan Documents” as defined in
the Term Agreement.

     “Term Lenders” means, collectively, the “Lenders” as defined in the Term Agreement.

     “Term Loans” means, collectively, the “Loans” as defined in the Term Agreement.

     “Term Notes” means, collectively, the Term A Notes and the Supplemental Term Notes.

     “Test Period” means as of the last day of each Fiscal Quarter, the four (4)
consecutive Fiscal Quarters then ending.

     “Trademarks” shall have the meaning given to such term in the Security Agreement.

     “Transferee” is defined in Section 12.4.

     “Type” means, with respect to any Advance, its nature as a Floating Rate Advance or a
Eurodollar Advance and with respect to any Loan, its nature as a Floating Rate Loan or a Eurodollar
Loan.

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

     “Unfunded Liabilities” means the amount (if any) by which the present value of all
vested and unvested accrued benefits under all Single Employer Plans exceeds the fair market value
of all such Plan assets allocable to such benefits, all determined as of the then most recent
valuation date for such Plans using PBGC actuarial assumptions for single employer plan
terminations.

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

     “Unmatured Default” means an event which but for the lapse of time or the giving of
notice, or both, would constitute a Default.

     “Unused Commitment Fee” is defined in Section 2.10(a). 

     “U.S.” means the United States of America.

     “Wholly-Owned Subsidiary” of a Person means, any Subsidiary all of the outstanding
Capital Stock of which shall at the time be owned or controlled, directly or indirectly, by such
Person or one or more Wholly-Owned Subsidiaries of such Person, or by such Person and one or more
Wholly-Owned Subsidiaries of such Person.

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     The foregoing definitions shall be equally applicable to both the singular and plural forms of
the defined terms.

ARTICLE II

THE FACILITY

     2.1. The Facility. Each Lender severally agrees, on the terms and conditions set forth
in this Agreement, to (a) make Loans to the Borrowers as set forth below and (b) participate in
Facility LCs issued upon the request of a Borrower, provided that, after giving effect to the
making of each such Loan and the issuance of each such Facility LC, such Lender’s Credit Exposure
shall not exceed its Commitment; provided further, that the Aggregate Credit Exposure shall not
exceed the Aggregate Commitment. The LC Issuer will issue Facility LCs hereunder on the terms and
conditions set forth in Section 2.1.2. The Facility shall be composed of Revolving Loans,
Non-Ratable Loans, Protective Advances, Overadvances and Facility LCs as set forth below:

          2.1.1. Revolving Loans.

          (a) Amount. From and including the Effective Date and prior to the
Facility Termination Date, each Revolving Lender severally agrees, on the terms and
conditions set forth in this Agreement, to make revolving loans (the “Revolving
Loans”) to the Borrower Representative on behalf of the applicable Borrower and
participate in Facility LCs issued to any Borrower as set forth in Section
2.1.2 below, in aggregate amounts not to exceed such Lender’s Pro Rata Share at
such time. If any advance of a Revolving Loan or participation in a Facility LC
would exceed the Borrowers’ Availability, the Revolving Lenders will refuse to make
or may otherwise restrict the making of Revolving Loans or the issuance of Facility
LCs as the Required Revolving Lenders determine until such excess has been
eliminated, subject to the Agent’s authority, in its sole discretion, to make
Protective Advances and Overadvances pursuant to the terms of Section 2.1.4.
The Revolving Loans may consist of Floating Rate Advances or Eurodollar Advances, or
a combination thereof, selected by the Borrower Representative in accordance with
Sections 2.1.1(b) and 2.7. Subject to the terms of this Agreement,
the Borrowers may borrow, repay and reborrow Revolving Loans at any time prior to
the Facility Termination Date. The Commitments to extend credit under this
Section 2.1.1(a) shall expire on the Facility Termination Date.

           (b) Borrowing Procedures. The Borrower Representative shall select the
Type of Advance and, in the case of each Eurodollar Advance, the Interest Period
applicable thereto, from time to time. The Borrower Representative shall give the
Agent irrevocable notice in the form of Exhibit A (a “Borrowing
Notice”) not later than 11:00 a.m. (Chicago time) on the Borrowing Date of each
Floating Rate Advance and three Business Days before the Borrowing Date for each
Eurodollar Advance, specifying: (1) the name of the applicable Borrower, (2) the
Borrowing Date, which shall be a Business Day, of such Advance, (3) the aggregate
amount of such Advance, (4) the Type of Advance selected; provided that, if the
Borrower Representative fails to specify the Type of Advance requested, such request
shall be deemed a request for a Floating Rate Advance; and (5) the duration of the
Interest Period if the Type of Advance requested is a Eurodollar Advance; provided
that, if the Borrower Representative fails to select the
duration of the Interest Period for the requested Eurodollar Advance, the
Borrower Representative shall be deemed to have requested on behalf of the
applicable Borrower that such Eurodollar Advance be made with an Interest Period of
one month.

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           (c) The Agent’s Election. Promptly after receipt of a Borrowing Notice
(or telephonic notice in lieu thereof) of a requested Floating Rate Advance, the
Agent shall elect in its sole discretion to have the terms of Section
2.1.1(d) (pro rata advance by all Revolving Lenders) or Section 2.1.3
(advance by the Agent, in the form of a Non-Ratable Loan, on behalf of the Revolving
Lenders) apply to such requested Advance.

           (d) Pro Rata Advance. Unless the Agent elects to have the terms of
Section 2.1.3 apply to a requested Floating Rate Advance, or a requested
Advance is for a Eurodollar Advance, then promptly after receipt of a Borrowing
Notice or telephonic notice in lieu thereof as permitted by Section 2.8, the
Agent shall notify the Lenders by telecopy, telephone, or e-mail of the requested
Advance. Not later than noon (Chicago time) on each Borrowing Date, each Lender
shall make available its Revolving Loan in funds immediately available in Chicago to
the Agent and the Agent will make the funds so received from the Lenders available
to the Borrower Representative at the Funding Account as set forth in Section
2.5.

           (e) Increase in Aggregate Commitment. In the event that the Borrowers
desire to increase the Aggregate Commitment, and so long as no Unmatured Default or
Default shall have occurred and be continuing, with the prior written consent of
Agent, which shall be solely in its discretion, the Borrowers shall have the option
from time to time prior to the Facility Termination Date upon not less than ten (10)
days prior written notice to Agent to request that the Revolving Lenders increase
their respective Revolving Commitments such that the Aggregate Revolving Commitment
shall be increased by a minimum amount of $10,000,000 (in each case, and not to
exceed $30,000,000 in the aggregate), but no Revolving Lender shall have any
obligation whatsoever to agree to any such requested increase (or any portion
thereof), and each Revolving Lender may in its sole and absolute discretion reject
any such requested increase. Such written notice from Borrowers shall specify (i)
the date of such proposed increase in the Aggregate Commitment (which date shall not
be less than 10 Business Days from the date of receipt by Agent of Borrowers’
notice), (ii) the aggregate amount of such proposed Commitment increase, which
shall comply with the requirements set forth above, (iii) that, at the time of
and after giving effect to such proposed Aggregate Commitment increase, the
Borrowers shall be in compliance with the financial covenant set forth in Section
6.29.2, (iv) that no Unmatured Default or Default has occurred and is continuing,
or will result from such increase in the Aggregate Commitment and (v) that all
requisite corporate proceedings or actions, that may be required authorizing the
requested increase shall have been taken by each of the Borrowers. Upon receipt of
such notice from the Borrowers, the Agent shall give notice to each Lender of such
proposed increase in the Aggregate Commitment. Failure of any such Lender to
respond to such requested increase on or before the second Business Day preceding
the date of the proposed increase described in the notice shall be deemed to be a
rejection thereof. If the Revolving Lenders do not agree to increase their
respective Revolving Commitments by amounts sufficient to provide an increase in the
Aggregate Revolving Commitment, the Agent shall have the right to admit additional
Revolving Lenders, if any are agreeable, to increase the Aggregate Revolving
Commitment to the amount requested by the Borrower, up to the maximum amount of
$130,000,000. In the event of such an increase, whether by increase in the
respective Revolving Commitments of existing Revolving Lenders or
by admission of additional Revolving Lenders, the Pro Rata Share of the
Revolving Lenders automatically shall be adjusted. The Loan Parties and each of the
Revolving Lenders and any other offeree that agrees to such requested increase shall
execute and deliver to the Agent a certificate substantially in the form of Exhibit
K attached hereto (a

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 “Commitment Increase Certificate”), and upon its
receipt of a duly completed Commitment Increase Certificate, Agent shall record the
information contained therein in the Register.

          2.1.2. Facility LCs.

           (a) Issuance. The LC Issuer hereby agrees, on the terms and conditions
set forth in this Agreement, to issue to any Borrower standby and commercial Letters
of Credit (each, a “Facility LC”) and to renew, extend, increase, decrease
or otherwise modify each Facility LC (“Modify,” and each such action a
“Modification”), from time to time from and including the Effective Date and
prior to the Facility Termination Date upon the request of the Borrower
Representative for the account of the applicable Borrower; provided that, the
maximum face amount of the Facility LC to be issued or Modified, does not exceed the
least of (i) an amount equal to $28,000,000 minus the sum of (1) the
aggregate undrawn amount of all outstanding Facility LCs at such time plus,
without duplication, (2) the aggregate unpaid Reimbursement Obligations with respect
to all Facility LCs outstanding at such time and (ii) the Borrowers’ Availability.
No Facility LC (or any renewal thereof) shall have an expiry date later than the
earlier of (x) the thirtieth (30th) Business Day prior to the Facility
Termination Date and (y) one year after its issuance; provided that any
Letter of Credit with a one-year tenor may provide for the renewal thereof for
additional one-year periods (which shall in no event extend beyond the date referred
to in clause (x) above).

           (b) Participations. Upon the issuance or Modification by the LC Issuer
of a Facility LC in accordance with this Section 2.1.2, the LC Issuer shall
be deemed, without further action by any party hereto, to have unconditionally and
irrevocably sold to each Revolving Lender, and each Revolving Lender shall be
deemed, without further action by any party hereto, to have unconditionally and
irrevocably purchased from the LC Issuer, a participation in such Facility LC (and
each Modification thereof) and the related LC Obligations in proportion to its Pro
Rata Share.

           (c) Notice. Subject to Section 2.1.2(a), the Borrower
Representative, on behalf of the applicable Borrower, shall give the LC Issuer
notice prior to 11:00 a.m. (Chicago time) at least three Business Days prior to the
proposed date of issuance or Modification of each Facility LC, specifying the
beneficiary, the proposed date of issuance (or Modification) and the expiry date of
such Facility LC, and describing the proposed terms of such Facility LC and the
nature of the transactions proposed to be supported thereby. Upon receipt of such
notice, the LC Issuer shall promptly notify the Agent, and the Agent shall promptly
notify each Revolving Lender, of the contents thereof and of the amount of such
Revolving Lender’s participation in such proposed Facility LC. The issuance or
Modification by the LC Issuer of any Facility LC shall, in addition to the
conditions precedent set forth in Article IV (the satisfaction of which the
LC Issuer shall have no duty to ascertain), be subject to the conditions precedent
that such Facility LC shall be satisfactory to the LC Issuer and that the applicable
Borrower shall have executed and delivered such application agreement and/or such
other instruments and agreements relating to such Facility LC as the LC Issuer shall
have reasonably requested (each, a “Facility LC Application”). In the event
of any conflict between the terms of this Agreement and the terms of any Facility LC
Application, the terms of this Agreement shall control.

27

 

           (d) Administration; Reimbursement by Revolving Lenders. Upon receipt
from the beneficiary of any Facility LC of any demand for payment under such
Facility LC, the LC Issuer shall notify the Agent and the Agent shall promptly
notify the Borrower Representative and each other Revolving Lender as to the amount
to be paid by the LC Issuer as a result of such demand and the proposed payment date
(the “LC Payment Date”). The responsibility of the LC Issuer to the
Borrower Representative, the Borrowers and each Revolving Lender shall be only to
determine that the documents (including each demand for payment) delivered under
each Facility LC in connection with such presentment shall be in conformity in all
material respects with such Facility LC. The LC Issuer shall endeavor to exercise
the same care in the issuance and administration of the Facility LCs as it does with
respect to letters of credit in which no participations are granted, it being
understood that in the absence of any gross negligence or willful misconduct by the
LC Issuer, each Revolving Lender shall be unconditionally and irrevocably liable
without regard to the occurrence of any Default or any condition precedent
whatsoever, to reimburse the LC Issuer on demand for (i) such Revolving Lender’s Pro
Rata Share of the amount of each payment made by the LC Issuer under each Facility
LC to the extent such amount is not reimbursed by the Borrowers pursuant to
Section 2.1.2(e) below, plus (ii) interest on the foregoing amount
to be reimbursed by such Revolving Lender, for each day from the date of the LC
Issuer’s demand for such reimbursement (or, if such demand is made after 11:00 a.m.
(Chicago time) on such date, from the next succeeding Business Day) to the date on
which such Revolving Lender pays the amount to be reimbursed by it, at a rate of
interest per annum equal to the Federal Funds Effective Rate for the first three
days and, thereafter, at a rate of interest equal to the rate applicable to Floating
Rate Advances.

           (e) Reimbursement by Borrowers. Each Borrower shall be irrevocably and
unconditionally obligated to reimburse the LC Issuer on or before the applicable LC
Payment Date for any amounts to be paid by the LC Issuer upon any drawing under any
Facility LC, without presentment, demand, protest or other formalities of any kind;
provided that, no Borrower nor any Revolving Lender shall hereby be precluded from
asserting any claim for direct (but not consequential) damages suffered by such
Borrower or such Revolving Lender to the extent, but only to the extent, caused by
(i) the willful misconduct or gross negligence of the LC Issuer in determining
whether a request presented under any Facility LC issued by it complied with the
terms of such Facility LC or (ii) the LC Issuer’s failure to pay under any Facility
LC issued by it after the presentation to it of a request strictly complying with
the terms and conditions of such Facility LC. All such amounts paid by the LC
Issuer and remaining unpaid by the Borrowers shall bear interest, payable on demand,
for each day until paid at a rate per annum equal to (x) the rate applicable to
Floating Rate Advances for such day if such day falls on or before the applicable LC
Payment Date and (y) the sum of 2% plus the rate applicable to Floating Rate
Advances for such day if such day falls after such LC Payment Date. The LC Issuer
will pay to each Revolving Lender ratably in accordance with its Pro Rata Share all
amounts received by it from the Borrowers for application in payment, in whole or in
part, of the Reimbursement Obligation in respect of any Facility LC issued by the LC
Issuer, but only to the extent such Revolving Lender has made payment to the LC
Issuer in respect of such Facility LC pursuant to Section 2.1.2(d). Subject
to the terms and conditions of this Agreement (including without limitation the
submission of a Borrowing Notice in compliance with Section 2.1.1(b) and the
satisfaction of the applicable conditions precedent set forth in Article
IV), the Borrower Representative may request an Advance hereunder on behalf of
the applicable Borrower for the purpose of satisfying any Reimbursement Obligation.

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           (f) Obligations Absolute. Each Borrower’s obligations under this
Section 2.1.2 shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to payment
which any Borrower may have or have had against the LC Issuer, any Revolving Lender
or any beneficiary of a Facility LC. Each Borrower further agrees with the LC
Issuer and the Revolving Lenders that the LC Issuer and the Revolving Lenders shall
not be responsible for, and such Borrower’s Reimbursement Obligation in respect of
any Facility LC shall not be affected by, among other things, the validity or
genuineness of documents or of any endorsements thereon, even if such documents
should in fact prove to be in any or all respects invalid, fraudulent or forged, or
any dispute between or among any Borrower, any of its Affiliates, the beneficiary of
any Facility LC or any financing institution or other party to whom any Facility LC
may be transferred or any claims or defenses whatsoever of any Borrower or of any of
its Affiliates against the beneficiary of any Facility LC or any such transferee.
The LC Issuer shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however transmitted, in
connection with any Facility LC. Each Borrower agrees that any action taken or
omitted by the LC Issuer or any Revolving Lender under or in connection with each
Facility LC and the related drafts and documents, if done without gross negligence
or willful misconduct, shall be binding upon such Borrower and shall not put the LC
Issuer or any Revolving Lender under any liability to any Borrower. Nothing in this
Section 2.1.2(f) is intended to limit the right of the Borrowers to make a
claim against the LC Issuer for damages as contemplated by the proviso to the first
sentence of Section 2.1.2(e).

           (g) Actions of LC Issuer. The LC Issuer shall be entitled to rely, and
shall be fully protected in relying, upon any Facility LC, draft, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram,
telecopy, telex or teletype message, statement, order or other document believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by the LC Issuer. The LC Issuer shall be
fully justified in failing or refusing to take any action under this Agreement
unless it shall first have received such advice or concurrence of the Required
Revolving Lenders as it reasonably deems appropriate or it shall first be
indemnified to its reasonable satisfaction by the Revolving Lenders against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Notwithstanding any other provision of this
Section 2.1.2, the LC Issuer shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement in accordance with a
request of the Required Revolving Lenders, and such request and any action taken or
failure to act pursuant thereto shall be binding upon the Revolving Lenders and any
future holders of a participation in any Facility LC.

           (h) Indemnification. Each Borrower hereby agrees to, jointly and
severally, indemnify and hold harmless each Revolving Lender, the LC Issuer and the
Agent, and their respective directors, officers, agents and employees from and
against any and all claims and damages, losses, liabilities, costs or expenses which
such Revolving Lender, the LC Issuer or the Agent may incur (or which may be claimed
against such Revolving Lender, the LC Issuer or the Agent by any Person whatsoever)
by reason of or in connection with the issuance, execution and delivery or transfer
of or payment or failure
to pay under any Facility LC or any actual or proposed use of any Facility LC,
including, without limitation, any claims, damages, losses, liabilities, costs or
expenses which the LC Issuer may incur by reason of or in connection with (i) the
failure of any other Revolving Lender to fulfill or comply with its obligations to
the LC Issuer hereunder (but

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 nothing herein contained shall affect any rights any
Borrower may have against any Defaulting Lender) or (ii) by reason of or on account
of the LC Issuer issuing any Facility LC which specifies that the term “Beneficiary”
included therein includes any successor by operation of law of the named
Beneficiary, but which Facility LC does not require that any drawing by any such
successor Beneficiary be accompanied by a copy of a legal document, satisfactory to
the LC Issuer, evidencing the appointment of such successor Beneficiary; provided
that, the Borrowers shall not be required to indemnify any Revolving Lender, the LC
Issuer or the Agent for any claims, damages, losses, liabilities, costs or expenses
to the extent, but only to the extent, caused by (x) the willful misconduct or gross
negligence of the LC Issuer in determining whether a request presented under any
Facility LC complied with the terms of such Facility LC or (y) the LC Issuer’s
failure to pay under any Facility LC after the presentation to it of a request
strictly complying with the terms and conditions of such Facility LC. Nothing in
this Section 2.1.2(h) is intended to limit the obligations of the Borrowers
under any other provision of this Agreement.

           (i) Revolving Lenders’ Indemnification. Each Revolving Lender shall,
ratably in accordance with its Pro Rata Share, indemnify the LC Issuer, its
Affiliates and their respective directors, officers, agents and employees (to the
extent not reimbursed by the Borrowers) against any cost, expense (including
reasonable counsel fees and disbursements), claim, demand, action, loss or liability
(except such as result from such indemnitees’ gross negligence or willful misconduct
or the LC Issuer’s failure to pay under any Facility LC after the presentation to it
of a request strictly complying with the terms and conditions of the Facility LC)
that such indemnitees may suffer or incur in connection with this Section
2.1.2 or any action taken or omitted by such indemnitees hereunder.

           (j) Facility LC Collateral Account. The Borrowers agree that they
will, upon the request of the Agent in its Permitted Discretion or the Required
Revolving Lenders and until the final expiration date of any Facility LC and
thereafter as long as any amount is payable to the LC Issuer or the Revolving
Lenders in respect of any Facility LC, maintain a special collateral account
pursuant to arrangements satisfactory to the Agent (the “Facility LC Collateral
Account”) at the Agent’s office at the address specified pursuant to Article
XIII, in the name of the Borrowers but under the sole dominion and control of
the Agent, for the benefit of the Lenders and in which the Borrowers shall have no
interest other than as set forth in Section 8.1. Nothing in this
Section 2.1.2(j) shall either obligate the Agent to require any Borrower to
deposit any funds in the Facility LC Collateral Account or limit the right of the
Agent to release any funds held in the Facility LC Collateral Account in each case
other than as required by Section 8.1. Each Borrower hereby pledges,
assigns and grants to the Agent, on behalf of and for the ratable benefit of the
Lenders and the LC Issuer, a security interest in all of such Borrower’s right,
title and interest in and to all funds which may from time to time be on deposit in
the Facility LC Collateral Account to secure the prompt and complete payment and
performance of the Secured Obligations. The Agent will invest any funds on deposit
from time to time in the Facility LC Collateral Account in certificates of deposit
of JPMorgan Chase having a maturity not exceeding thirty days.

          (k) Rights as a Lender. In its capacity as a Lender, the LC Issuer
shall have the same rights and obligations as any other Lender.

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           (l) Termination of the Facility. If, notwithstanding the provisions of
this Section 2.1.2, any Facility LC is outstanding upon the earlier of (x)
the termination of this Agreement and (y) the Facility Termination Date, then upon
such termination the Borrowers shall deposit with the Agent, for the benefit of the
Agent and the Lenders, with respect to all LC Obligations, as the Agent in its
discretion shall specify, either (i) a standby letter of credit (a “Supporting
Letter of Credit”), in form and substance satisfactory to the Agent, issued by
an issuer satisfactory to the Agent, in a stated amount equal to 105% of the
difference of (x) the amount of LC Obligations at such time, less (y) the amount on
deposit in the Facility LC Collateral Account at such time which is free and clear
of all rights and claims of third parties and has not been applied against the
Obligations (such difference, the “Collateral Shortfall Amount”), under
which Supporting Letter of Credit the Agent is entitled to draw amounts necessary to
reimburse the Agent, the LC Issuer and the Lenders for payments to be made by the
Agent, the LC Issuer and the Lenders under any such Facility LC and any fees and
expenses associated with such Facility LC, or (ii) cash, in immediately available
funds, in an amount equal to 105% of the Collateral Shortfall Amount to be held in
the Facility LC Collateral Account. Such Supporting Letter of Credit or deposit of
cash shall be held by the Agent, for the benefit of the Agent and the Lenders, as
security for, and to provide for the payment of, the aggregate undrawn amount of
such Facility LC remaining outstanding.

          2.1.3. Non-Ratable Loans. Subject to the restrictions set forth in Section
2.1.1(a), the Agent may elect to have the terms of this Section 2.1.3 apply to any
requested Floating Rate Advance and JPMorgan Chase shall thereafter make an Advance, on behalf of
the Revolving Lenders and in the amount requested, available to the Borrowers on the applicable
Borrowing Date by transferring same day funds to the Funding Account. Each Advance made solely by
the Agent pursuant to this Section 2.1.3 is referred to in this Agreement as a “Non-Ratable
Loan,” and such Advances are referred to as the “Non-Ratable Loans.” Each Non-Ratable Loan shall
be subject to all the terms and conditions applicable to other Advances funded by the Revolving
Lenders, except that all payments thereon shall be payable to JPMorgan Chase solely for its own
account. The Agent shall not make any Non-Ratable Loan if the requested Non-Ratable Loan exceeds
the Borrowers’ Availability (before giving effect to such Non-Ratable Loan). Non-Ratable Loans may
be made even if a Default or Unmatured Default exists, but may not be made if the conditions
precedent set forth in Section 4.2 have not been satisfied. The Non-Ratable Loans shall be
secured by the Liens granted to the Agent in and to the Collateral and shall constitute Obligations
hereunder. All Non-Ratable Loans shall be Floating Rate Advances and are subject to the settlement
provisions set forth in Section 2.19.

          2.1.4. Protective Advances and Overadvances.

           (a) Protective Advances. Subject to the limitations set forth below,
after the occurrence and during the continuance of a Default or an Unmatured
Default, the Agent is authorized by the Borrowers and the Lenders, from time to time
in the Agent’s sole discretion (but shall have absolutely no obligation to), to make
Advances, on behalf of all Lenders, in an aggregate amount outstanding at any time
not to exceed $7,000,000, which the Agent, in its Permitted Discretion, deems
necessary or desirable (i) to preserve or protect the Collateral, or any portion
thereof, (ii) to enhance the likelihood of, or maximize the amount of, repayment of
the Loans and other Obligations, or (iii) to pay
any other amount chargeable to or required to be paid by the Borrowers pursuant
to the terms of this Agreement, including costs, fees, and expenses as described in
Section 9.6 (any of such Advances are herein referred to as “Protective
Advances”); provided that, no Protective Advance shall cause the Aggregate
Credit Exposure to exceed the Aggregate Commitment. Protective Advances may be made
even if the conditions precedent set

31

 

forth in Section 4.2 have not been
satisfied. The Protective Advances shall be secured by the Liens in favor of the
Agent in and to the Collateral and shall constitute Obligations hereunder. All
Protective Advances shall be Floating Rate Advances, shall bear interest at the
default rate set forth in Section 2.12 and shall be payable on the earlier
of demand or the Facility Termination Date. The Required Lenders may at any time
revoke the Agent’s authorization to make Protective Advances. Any such revocation
must be in writing and shall become effective prospectively upon the Agent’s receipt
thereof. At any time that there is sufficient Availability and the conditions
precedent set forth in Section 4.2 have been satisfied, the Agent may
request the Revolving Lenders to make a Revolving Loan to repay a Protective
Advance. At any other time the Agent may require the Lenders to fund their risk
participations described in Section 2.2.

          (b) Overadvances. Any provision of this Agreement to the contrary
notwithstanding, at the request of the Borrower Representative on behalf of any
Borrower, the Agent may in its sole discretion (but shall have absolutely no
obligation to), make Advances to the Borrower Representative (for the account of
such Borrower), on behalf of the Revolving Lenders, in amounts that exceed the
Borrowers’ Availability (any such excess Advances are herein referred to
collectively as “Overadvances”); provided that, (i) no such Overadvance
shall be outstanding for more than thirty (30) consecutive days, (ii) no such event
or occurrence shall cause or constitute a waiver of the Agent’s or Revolving
Lenders’ right to refuse to make any further Overadvances, Revolving Loans or
Non-Ratable Loans, or issue Facility LCs, as the case may be, at any time that an
Overadvance exists, and (iii) no Overadvance shall result in a Default or Unmatured
Default due to such Borrower’s failure to comply with Section 2.1.1(a) for
so long as the Agent permits such Overadvance to remain outstanding, but solely with
respect to the amount of such Overadvance. In addition, Overadvances may be made
even if a Default or Unmatured Default exists, but may not be made if the conditions
precedent set forth in Section 4.2 have not been satisfied (other than the
condition regarding Availability). All Overadvances shall constitute Floating Rate
Advances, shall bear interest at the default rate set forth in Section 2.12,
shall be payable on the earlier of demand or the Facility Termination Date and
are subject to the settlement provisions set forth in Section 2.19. The
authority of the Agent to make Overadvances is limited to an aggregate amount not to
exceed $7,000,000 at any time, and no Overadvance shall cause any Revolving Lender’s
Revolving Credit Exposure to exceed its Revolving Commitment or the Aggregate Credit
Exposure to exceed the Aggregate Commitment; provided that, the Required Revolving
Lenders may at any time revoke the Agent’s authorization to make Overadvances. Any
such revocation must be in writing and shall become effective prospectively upon the
Agent’s receipt thereof.

          2.1.5. [Intentionally Omitted.]

          2.1.6. [Intentionally Omitted.]

          2.1.7 Reallocation of Loans and Commitments. On the Effective Date, each Lender, if
any, whose relative proportion of its Commitment hereunder is increasing over the proportion of the
Commitment held by it prior to the Effective Date shall,
by assignments from the Lenders which were parties to the Amended Loan Agreement prior to the
Effective Date (the “Amended Agreement Lenders”) (which assignments shall be deemed to occur
hereunder automatically, and without any requirement for additional documentation, on the Effective
Date) acquire a portion of the Loans and Commitments of the Lenders so designated in such amounts,
and the Lenders shall, through Agent, make such other adjustments among themselves as shall be
necessary so that after giving effect to assignments and

32

 

adjustments, the Lenders shall hold all
Loans outstanding under this Agreement ratably in accordance with their respective Commitments as
reflected on the signature pages under such Lender’s name, as modified from time to time pursuant
to the terms hereof. On the Effective Date, all Interest Periods under the Amended Loan Agreement
in respect of any Existing Obligations under the Amended Loan Agreement shall automatically be
terminated (and the Borrowers shall on the Effective Date make payments to the Amended Agreement
Lenders that held such Existing Obligations to compensate for such termination as if such
termination were a payment or prepayment referred to in said Section 3.4), and subject to the other
restrictions contained herein, the Borrower shall be permitted to continue such Eurodollar Advances
or to convert such Eurodollar Advances into Floating Rate Advances or Floating Rate Loans,
respectively, hereunder.

     2.2. Ratable Loans; Risk Participation. Except as otherwise provided below, each
Advance made in connection with a Revolving Loan shall consist of Loans made by each Lender in an
amount equal to such Lender’s Pro Rata Share. Upon the making of an Advance by the Agent in
connection with a Non-Ratable Loan or an Overadvance (whether before or after the occurrence of a
Default or an Unmatured Default and regardless of whether the Agent has requested a Settlement with
respect to such Non-Ratable Loan or Overadvance), the Agent shall be deemed, without further action
by any party hereto, to have unconditionally and irrevocably sold to each Revolving Lender and each
Revolving Lender shall be deemed, without further action by any party hereto, to have
unconditionally and irrevocably purchased from the Agent, without recourse or warranty, an
undivided interest and participation in such Non-Ratable Loan or Overadvance in proportion to its
Pro Rata Share of the Revolving Commitment. Upon the making of an Advance by the Agent in
connection with a Protective Advance (whether before or after the occurrence of a Default or an
Unmatured Default and regardless of whether the Agent has requested a Settlement with respect to
such Protective Advance), the Agent shall be deemed, without further action by any party hereto, to
have unconditionally and irrevocably sold to each Lender and each Lender shall be deemed, without
further action by any party hereto, to have unconditionally and irrevocably purchased from the
Agent, without recourse or warranty, an undivided interest and participation in such Protective
Advance in proportion to its Pro Rata Share of the Aggregate Commitment. From and after the date,
if any, on which any Lender is required to fund its participation in any Non-Ratable Loan,
Overadvance or Protective Advance purchased hereunder, the Agent shall promptly distribute to such
Lender, such Lender’s Pro Rata Share of all payments of principal and interest and all proceeds of
Collateral received by the Agent in respect of such Loan.

     2.3. Payment of the Obligations. The Borrowers shall repay the outstanding principal
balance of the Loans, together with all other Obligations, including all accrued and unpaid
interest thereon, on the Facility Termination Date.

     2.4. Minimum Amount of Each Advance. Each Eurodollar Advance shall be in the minimum
amount of $5,000,000 and in multiples of $1,000,000 if in excess thereof. Floating Rate Advances
may be in any amount.

     2.5.
Funding Account. The Borrower Representative shall deliver to the Agent, on the Effective Date, a notice
setting forth the deposit account of the Borrower Representative (the “Funding Account”) to
which the Agent is authorized by the Borrowers to transfer the proceeds of any Advances requested
pursuant to this Agreement. The Borrower Representative may designate a replacement Funding
Account from time to time by written notice to the Agent. Any designation by the Borrower
Representative of the Funding Account must be reasonably acceptable to the Agent.

     2.6. Reliance Upon Authority; No Liability. The Agent is entitled to rely conclusively
on any individual’s request for Advances hereunder, so long as the proceeds thereof are to be
transferred to the Funding Account. The Agent shall have no duty to verify the identity of any
individual representing

33

 

himself or herself as a person authorized by the Borrowers to make such
requests on their behalf. The Agent shall not incur any liability to the Borrowers as a result of
acting upon any notice referred to in Section 2.1 which the Agent reasonably believes to
have been given by an officer or other person duly authorized by the Borrowers to request Advances
on their behalf or for otherwise acting under this Agreement. The crediting of Advances to the
Funding Account shall conclusively establish the joint and several obligation of the Borrowers to
repay such Advances as provided herein.

     2.7. Conversion and Continuation of Outstanding Advances. Floating Rate Advances shall
continue as Floating Rate Advances unless and until such Floating Rate Advances are converted into
Eurodollar Advances pursuant to this Section 2.7 or are repaid in accordance with this
Agreement. Each Eurodollar Advance shall continue as a Eurodollar Advance until the end of the
then applicable Interest Period therefor, at which time such Eurodollar Advance shall be
automatically converted into a Floating Rate Advance unless (x) such Eurodollar Advance is or was
repaid in accordance with this Agreement or (y) the Borrower Representative shall have given the
Agent a Conversion/Continuation Notice (as defined below) requesting that, at the end of such
Interest Period, such Eurodollar Advance continue as a Eurodollar Advance for the same or another
Interest Period. Subject to the terms of Section 2.4, the Borrower Representative may
elect from time to time to convert all or any part of a Floating Rate Advance into a Eurodollar
Advance on behalf of the applicable Borrower. The Borrower Representative shall give the Agent
irrevocable notice in the form of Exhibit B (a “Conversion/Continuation Notice”) of
each conversion of a Floating Rate Advance into a Eurodollar Advance or continuation of a
Eurodollar Advance not later than 11:00 a.m. (Chicago time) at least three Business Days prior to
the date of the requested conversion or continuation, specifying (i) the requested date, which
shall be a Business Day, of such conversion or continuation, (ii) the aggregate amount and Type of
the Advance which is to be converted or continued, and (iii) the amount of such Advance which is to
be converted into or continued as a Eurodollar Advance and the duration of the Interest Period
applicable thereto.

     2.8. Telephonic Notices. Each Borrower hereby authorizes the Lenders and the Agent to
extend, convert or continue Advances, effect selections of Types of Advances and to transfer funds
based on telephonic notices made by any person or persons the Agent or any Lender in good faith
believes to be acting on behalf of the Borrower Representative, it being understood that the
foregoing authorization is specifically intended to allow Borrowing Notices and
Conversion/Continuation Notices to be given telephonically. The Borrower Representative agrees to
deliver promptly to the Agent a written confirmation, if such confirmation is requested by the
Agent or any Lender, of each telephonic notice signed by an Authorized Officer of the Borrower
Representative. If the written confirmation differs in any material respect from the action taken
by the Agent and the Lenders, the records of the Agent and the Lenders shall govern absent
manifest error.

     2.9. Notification of Advances, Interest Rates and Repayments. Promptly after receipt
thereof, the Agent will notify each Lender of the contents of each Borrowing Notice,
Conversion/Continuation Notice, and repayment notice received by it hereunder. Promptly after
notice from the LC Issuer, the Agent will notify each Revolving Lender of the contents of each
request for issuance of a Facility LC hereunder or any Modification. The Agent will notify each
Lender of the interest rate applicable to each Eurodollar Advance promptly upon determination of
such interest rate and will give each Lender prompt notice of each change in the Alternate Base
Rate.

     2.10. Fees.

          (a) Unused Commitment Fee. The Borrowers agree to pay to the Agent, for
the account of each Revolving Lender in accordance with such Lender’s Pro Rata
Share, an unused commitment fee at a per annum rate equal to the Applicable Unused
Commitment Fee Rate on the average daily Available Revolving Commitment, payable

34

 

on each Payment Date hereafter and on the Facility Termination Date (the “Unused
Commitment Fee”).

          (b) LC Fees. The Borrowers, and their respective successors and
assigns, shall pay to the Agent, for the account of the Revolving Lenders ratably in
accordance with their respective Pro Rata Shares, a letter of credit fee at a per
annum rate equal to the Applicable LC Fee Rate on the average daily undrawn stated
amount under each Facility LC, such fee to be payable in arrears on each Payment
Date (the “LC Fee”). The Borrowers shall also pay to the LC Issuer for its
own account (x) at the time of issuance of each Facility LC, a fronting fee of
0.125% of the face amount of the Facility LC, and (y) documentary and processing
charges in connection with the issuance or Modification of and draws under Facility
LCs in accordance with the LC Issuer’s standard schedule for such charges as in
effect from time to time.

          (c) Agent and Arranger Fees. The Borrowers agree to pay to the Agent
such additional fees as are specified in the fee letter dated as of the Effective
Date, among the Agent and the Borrowers (the “Fee Letter”).

          (d) Increase and Extension Fee. The Borrowers agree to pay to the
Agent, for the account of each Lender, in consideration of an increase in the
Aggregate Commitment and the extension of the Facility Termination Date, a one-time
aggregate fee equal to $130,000, payable to Agent on, and fully earned and
non-refundable upon, the execution of this Agreement.

     2.11. Interest Rates. Each Floating Rate Advance shall bear interest on the outstanding
principal amount thereof, for each day from and including the date such Advance is made or is
automatically converted from a Eurodollar Advance into a Floating Rate Advance pursuant to
Section 2.7, to but excluding the date it is paid or is converted into a Eurodollar Advance
pursuant to Section 2.7 hereof, at a rate per annum equal to the Floating Rate for such
day. Changes in the rate of interest on that portion of any Advance maintained as a Floating Rate
Advance will take effect simultaneously with each change in the Alternate Base Rate. Each
Eurodollar Advance shall bear interest on the outstanding principal amount thereof from
and including the first day of the Interest Period applicable thereto to (but not including)
the last day of such Interest Period at the interest rate determined by the Agent as applicable to
such Eurodollar Advance based upon the Borrower Representative’s selections under Sections
2.1.1 and 2.7 and otherwise in accordance with the terms hereof. No Interest Period
may end after the Facility Termination Date. If at any time Loans are outstanding with respect to
which the Borrower Representative has not delivered a notice to the Agent specifying the basis for
determining the interest rate applicable thereto, those Loans shall bear interest at the Floating
Rate.

     2.12. Eurodollar Advances Post Default; Default Rates. Notwithstanding anything to the
contrary contained hereunder, during the continuance of a Default or Unmatured Default the Agent or
the Required Lenders may, at their option, by notice to the Borrower Representative (which notice
may be revoked at the option of the Required Lenders notwithstanding any provision of Section
8.3 requiring unanimous consent of the Lenders to reductions in interest rates), declare that
no Advance may be made as, converted into or continued as a Eurodollar Advance. During the
continuance of a Default the Agent or the Required Lenders may, at their option, by notice to the
Borrower Representative (which notice may be revoked at the option of the Required Lenders
notwithstanding any provision of Section 8.3 requiring unanimous consent of the Lenders to
reductions in interest rates), declare that (i) each Eurodollar Advance shall bear interest for the
remainder of the applicable Interest Period at the rate otherwise applicable to such Interest
Period plus 2% per annum, (ii) each Floating Rate Advance shall bear interest at a rate per
annum equal to the Floating Rate in effect from time to time plus 2% per annum and (iii)
the

35

 

LC Fee shall be increased by 2% per annum, provided that, during the continuance of a Default
under subsection (f) or (g) of Article VII, the interest rates set forth in
clauses (i) and (ii) above and the increase in the LC Fee set forth in clause (iii) above shall be
applicable to all Credit Extensions without any election or action on the part of the Agent or any
Lender.

     2.13. Interest Payment Dates; Interest and Fee Basis. Interest accrued on each Floating
Rate Advance shall be payable on each Payment Date, commencing with the first such date to occur
after the date hereof and at maturity. Interest accrued on each Eurodollar Advance shall be
payable on the last day of its applicable Interest Period, on any date on which the Eurodollar
Advance is prepaid, whether by acceleration or otherwise, and at maturity. Interest accrued on
each Eurodollar Advance having an Interest Period longer than three months shall also be payable on
the last day of each three-month interval during such Interest Period. Interest on all Advances,
Unused Commitment Fees and LC Fees shall be calculated for actual days elapsed on the basis of a
360-day year. Interest shall be payable for the day an Advance is made but not for the day of any
payment on the amount paid if payment is received prior to noon (local time) at the place of
payment. If any payment of principal of or interest on an Advance shall become due on a day which
is not a Business Day, such payment shall be made on the next succeeding Business Day and, in the
case of a principal payment, such extension of time shall be included in computing interest in
connection with such payment. After giving effect to any Loan, Advance, continuation, or conversion
of any Eurodollar Loan, there may not be more than eight different Interest Periods in effect
hereunder.

     2.14. Voluntary Prepayments. The Borrowers may from time to time prepay, without penalty
or premium, all or any portion of the outstanding Floating Rate Advances upon written notice to the
Agent. The Borrowers may also from time to time prepay, subject to the payment of any funding
indemnification amounts required by Section 3.4 but without penalty or premium, all
outstanding Eurodollar Advances, or, in a minimum aggregate
amount of $1,000,000 or any integral multiple of $100,000 in excess thereof, any portion of
the outstanding Eurodollar Advances upon three Business Days’ prior notice to the Agent.

     2.15. Mandatory Prepayments.

          (a) Borrowing Base Compliance. Except for Overadvances permitted
pursuant to Section 2.1.4(b), the Borrowers shall immediately repay the
Revolving Loans, Reimbursement Obligations and/or Non-Ratable Loans if at any time
the Aggregate Revolving Exposure exceeds the lesser of (i) the Revolving Commitment
and (ii) the Aggregate Borrowing Base, to the extent required to eliminate such
excess. If any such excess remains after repayment in full of all outstanding
Revolving Loans, Reimbursement Obligations and Non-Ratable Loans, the Borrowers
shall provide cash collateral or a Supporting Letter of Credit for the LC
Obligations in the manner set forth in Section 2.1.2(l) to the extent
required to eliminate such excess.

          (b) Sale of Assets. Immediately upon receipt by any Loan Party of the
Net Cash Proceeds of any asset disposition (other than sales of inventory (including
wooden and composite mats removed from the Company’s rental fleet and sold as used
mats) in the ordinary course of business and sales the Net Cash Proceeds of which do
not exceed $100,000) the applicable Borrower shall prepay the Obligations or shall
cause the applicable Loan Party to deliver funds to the Agent for application to the
Obligations, in an amount equal to all such Net Cash Proceeds. Any such prepayment
shall be applied first, to pay the principal of the Overadvances and
Protective Advances, second, to pay the principal of the Non-Ratable Loans,
third, to pay the principal of the Revolving Loans

36

 

without a concomitant
reduction in the Revolving Commitment, and fourth, to cash collateralize
outstanding Facility LCs.

          (c) Issuance of Debt or Equity. Subject to the terms of the
Intercreditor Agreement, if any Borrower issues Capital Stock (other than Capital
Stock issued to management or employees of Company or any of its Subsidiaries under
any Capital Stock based compensation plan) or any Loan Party issues Indebtedness
(other than Indebtedness permitted by Sections 6.17(a), (c),
(e), (g), and (h)), or if any Loan Party receives any
dividend or distribution from a Person other than a Loan Party, in each case, no
later than the Business Day following the date of receipt by such Borrower or other
Loan Party, as the case may be, of any Net Cash Proceeds of such issuance or receipt
of such dividend, distribution, loan or advance, the Borrowers shall prepay the
Obligations in an amount equal to all such Net Cash Proceeds, dividends,
distributions, loans or advances. Any such prepayment shall be applied
first, to pay the principal of the Overadvances and Protective Advances,
second, to pay the principal of the Non-Ratable Loans, third, to pay
the principal of the Revolving Loans without a concomitant reduction in the
Revolving Commitment, and fourth, to cash collateralize outstanding Facility
LCs.

          (d) [Intentionally Omitted.]

          (e) Insurance/Condemnation Proceeds. Subject to the terms of the
Intercreditor Agreement, any insurance or condemnation proceeds to be applied to the
Obligations in accordance with Section 6.7(d) shall be applied as follows:
(i) insurance proceeds from casualties or losses to cash or Inventory shall be
applied, first, to the Overadvances and Protective Advances, pro rata,
second, to the Non-Ratable Loans, third, to the Revolving Loans of
the Borrower who received such proceeds, fourth, to cash collateralize
outstanding Facility LCs of the Borrower who received such proceeds,
fifth, to the Revolving Loans of the other Borrowers, and
sixth, to cash collateralize outstanding Facility LCs of the other
Borrowers, and (ii) insurance or condemnation proceeds from casualties or losses to
Equipment, Fixtures and real Property shall be applied first, to pay the
principal of the Overadvances and Protective Advances second, to pay the
principal of the Non-Ratable Loans, third, to pay the principal of the
Revolving Loans, and fourth, to cash collateralize outstanding Facility LCs.
The Revolving Commitment shall not be permanently reduced by the amount of any such
prepayments. If the precise amount of insurance or condemnation proceeds allocable
to Inventory as compared to Equipment, Fixtures and real Property is not otherwise
determined, the allocation and application of those proceeds shall be determined by
the Agent, in its Permitted Discretion.

          (f) General. Subject to the terms of the Intercreditor Agreement,
without in any way limiting the foregoing, immediately upon receipt by any Loan
Party of proceeds of any sale of any Collateral, the Borrowers shall cause such Loan
Party to deliver such proceeds to the Agent, or deposit such proceeds in a deposit
account subject to a Deposit Account Control Agreement. All of such proceeds shall
be applied as set forth above or otherwise as provided in Section 2.18.
Nothing in this Section 2.15 shall be construed to constitute Agent’s or any
Lender’s consent to any transaction that is not permitted by other provisions of
this Agreement or the other Loan Documents.

37

 

     2.16. Termination of the Facility.

          (a) Without limiting Section 2.3 or Section 8.1, (a) the
Aggregate Commitments shall expire on the Facility Termination Date and

(b) the
Aggregate Credit Exposure and all other unpaid Obligations shall be paid in full by
the Borrowers on the Facility Termination Date.

          (b) The Borrowers may terminate this Agreement with at least ten Business Days’
prior written notice thereof to the Agent and the Lenders, upon (i) the payment in
full of all outstanding Loans, together with accrued and unpaid interest thereon,
(ii) the cancellation and return of all outstanding Facility LCs (or alternatively,
with respect to each such Facility LC, the furnishing to the Agent of a cash deposit
or Supporting Letter of Credit as required by Section 2.1.2(l)), (iii) the
payment in full of the early termination fee set forth in the following sentence
(the “Prepayment Fee”), (iv) the payment in full of all reimbursable expenses and
other Obligations together with accrued and unpaid interest thereon, and (v) the
payment in full of any amount due under Section 3.4. Subject to Section
2.24, if this Agreement is terminated at any time prior to the Facility
Termination Date, whether pursuant to this Section 2.16 or pursuant to
Section 8.1, the Borrower shall pay to the Agent, for the account of the
Lenders, an early termination fee determined in accordance with the following table:

	 	 	 
	Period during which early	 	 
	termination occurs	 	     Prepayment Fee
	On or prior to the first anniversary of the
Closing Date

	 	1.0% of the Aggregate
Commitment
	After the first anniversary of the Closing
Date but on or prior to the second
anniversary

     of the Closing Date

	 	0.50% of the Aggregate
Commitment

No such Prepayment Fee shall be payable in the event this Agreement is terminated in
connection with refinancing of the Obligations in a transaction in which JPMorgan
Chase or one of its Affiliates that is a banking institution provides or arranges a
replacement bank credit facility for the Borrowers.

     2.17. Method of Payment.

          (a) All payments of the Obligations hereunder shall be made, without setoff, deduction, or
counterclaim, in immediately available funds to the Agent at the Agent’s address specified pursuant
to Article XIII, or at any other Lending Installation of the Agent specified in writing by
the Agent to the Borrower Representative, by noon (local time) on the date when due and shall be
applied ratably by the Agent among the Lenders. Any payment received by the Agent after such time
shall be deemed to have been received on the following Business Day and any applicable interest or
fee shall continue to accrue. Solely for purposes of determining the amount of Loans available for
borrowing purposes, checks and cash or other immediately available funds from collections of items
of payment and proceeds of any Collateral shall be applied in whole or in part against the
Obligations, on the day of receipt, subject to actual collection. Each payment delivered to the
Agent for the account of any Lender shall be delivered promptly by the Agent to such Lender in the
same type of funds that the Agent received at its

38

 

address specified pursuant to Article XIII or at any Lending Installation
specified in a notice received by the Agent from such Lender.

     (b) At the election of the Agent, all payments of principal, interest,
reimbursement obligations in connection with Facility LCs, fees, premiums,
reimbursable expenses (including, without limitation, all reimbursement for fees and
expenses pursuant to Section 9.6), and other sums payable under the Loan
Documents, may be paid from the proceeds of Advances made hereunder whether made
following a request by the Borrower Representative pursuant to Section 2.1
or a deemed request as provided in this Section 2.17 or may be deducted from
the Funding Account or any other deposit account of any Borrower maintained with the
Agent. Each Borrower hereby irrevocably authorizes (i) the Agent to make an
Advance for the purpose of paying each payment of principal, interest and fees as it
becomes due hereunder or any other amount due under the Loan Documents and agrees
that all such amounts charged shall constitute Loans (including Non-Ratable Loans,
Overadvances and Protective Advances) and that all such Advances shall be deemed to
have been requested pursuant to Section 2.1 and (ii) the Agent to charge
the Funding Account or any other deposit account of any Borrower maintained with
JPMorgan Chase for each payment of principal, interest and fees as it becomes due
hereunder or any other amount due under the Loan Documents.

     2.18. Apportionment, Application, and Reversal of Payments. Except as otherwise
required pursuant to Section 2.15, principal and interest payments shall be apportioned
ratably among the Lenders as set forth in this Article II and payments of the fees shall,
as applicable, be apportioned ratably among the Lenders, except for fees payable solely to the
Agent or the LC Issuer and except as provided in Section 2.10(c). All payments shall be
remitted to the Agent and all such payments not relating to principal or interest of specific Loans
or not constituting payment of specific fees as specified by the Borrower Representative,
and all proceeds of any Collateral received by the Agent, shall be applied, ratably, subject to the
provisions of this Agreement, first, to pay any fees, indemnities, or expense
reimbursements including amounts then due to the Agent from the Borrowers (other than in connection
with Banking Services or Rate Management Obligations), second, to pay any fees or expense
reimbursements then due to the Lenders from the Borrowers (other than in connection with Banking
Services or Rate Management Obligations), third, to pay interest due in respect of the
Overadvances and Protective Advances, fourth, to pay the principal of the Overadvances and
Protective Advances, fifth, to pay interest due in respect of the Non-Ratable Loans,
sixth, to pay interest due in respect of the Revolving Loans (other than Non-Ratable Loans,
Overadvances and Protective Advances), seventh, to pay or prepay principal on the
Non-Ratable Loans, eighth, to pay or prepay principal of the Revolving Loans (other than
Non-Ratable Loans, Overadvances and Protective Advances) and unpaid reimbursement obligations in
respect of Facility LCs, ninth, to pay an amount to the Agent equal to one hundred five
percent (105%) of the aggregate undrawn face amount of all outstanding Facility LCs and the
aggregate amount of any unpaid reimbursement obligations in respect of Facility LCs, to be held as
cash collateral for such Obligations, tenth, to payment of any amounts owing with respect
to Banking Services and Rate Management Obligations, and eleventh, to the payment of any
other Secured Obligation due to the Agent or any Lender by the Borrowers. Notwithstanding anything
to the contrary contained in this Agreement, unless so directed by the Borrower Representative, or
unless a Default is in existence, neither the Agent nor any Lender shall apply any payment which it
receives to any Eurodollar Loan, except (a) on the expiration date of the Interest Period
applicable to any such Eurodollar Loan or (b) in the event, and only to the extent, that there are
no outstanding Floating Rate Loans and, in any event, the Borrowers shall pay the Eurodollar
breakage losses in accordance with Section 3.4. The Agent and the Lenders shall have the
continuing and exclusive right to apply and reverse and reapply any and all such proceeds and
payments to any portion of the Secured Obligations. All Loans to Borrowers and all of
the other Obligations of

39

 

Borrowers arising under this Agreement and the other Loan Documents
shall constitute one general obligation of Borrowers secured by all of the Collateral.

     2.19. Settlement. Each Revolving Lender’s funded portion of the Loans is intended by
the Revolving Lenders to be equal at all times to such Revolving Lender’s Pro Rata Share of the
outstanding Loans. Notwithstanding such agreement, the Agent, JPMorgan Chase, and the Lenders
agree (which agreement shall not be for the benefit of or enforceable by the Loan Parties) that in
order to facilitate the administration of this Agreement and the other Loan Documents, settlement
among them as to the Loans, including the Non-Ratable Loans and Overadvances shall take place on a
periodic basis as follows. The Agent shall request settlement (a “Settlement”) with the
Lenders on at least a weekly basis, or on a more frequent basis at the Agent’s election, by
notifying the Lenders of such requested Settlement by telecopy, telephone, or e-mail no later than
12:00 noon (Chicago time) on the date of such requested Settlement (the “Settlement Date”).
Each Revolving Lender (other than the Agent, in the case of the Non-Ratable Loans and
Overadvances) shall transfer the amount of such Revolving Lender’s Pro Rata Share of the
outstanding principal amount of the applicable Loan with respect to which Settlement is requested
to the Agent, to such account of the Agent as the Agent may designate, not later than 2:00 p.m.
(Chicago time), on the Settlement Date applicable thereto. Settlements may occur during the
existence of a Default or an Unmatured Default and whether or not the applicable conditions
precedent set forth in Section 4.2 have then been satisfied. Such amounts transferred to
the Agent shall be applied against the amounts of the applicable Loan and, together with JPMorgan
Chase’s Pro Rata Share of such Non-Ratable Loan or Overadvance, shall constitute Revolving Loans of
such Lenders, respectively. If any such amount is not transferred to the Agent by any Lender on
the Settlement Date applicable thereto, the Agent shall be entitled to recover such amount on
demand from such Lender together with interest thereon as specified in Section 2.23.

     2.20. Indemnity for Returned Payments. If after receipt of any payment which is
applied to the payment of all or any part of the Obligations, the Agent or any Lender is for any
reason compelled to surrender such payment or proceeds to any Person because such payment or
application of proceeds is invalidated, declared fraudulent, set aside, determined to be void or
voidable as a preference, impermissible setoff, or a diversion of trust funds, or for any other
reason, then the Obligations or part thereof intended to be satisfied shall be revived and
continued and this Agreement shall continue in full force as if such payment or proceeds had not
been received by the Agent or such Lender and the Borrowers shall be liable to pay to the Agent and
the Lenders, and each Borrower hereby indemnifies the Agent and the Lenders and holds the Agent and
the Lenders harmless for the amount of such payment or proceeds surrendered. The provisions of
this Section 2.20 shall be and remain effective notwithstanding any contrary action which
may have been taken by the Agent or any Lender in reliance upon such payment or application of
proceeds, and any such contrary action so taken shall be without prejudice to the Agent’s and the
Lenders’ rights under this Agreement and shall be deemed to have been conditioned upon such payment
or application of proceeds having become final and irrevocable. The provisions of this Section
2.20 shall survive the termination of this Agreement.

     2.21. Noteless Agreement; Evidence of Indebtedness.

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

     (b) The Agent shall also maintain accounts in which it will record (i) the
amount of each Loan extended hereunder, the Type thereof, the name of the Borrower
who requested such Loan and the Interest Period with respect thereto, (ii) the
amount of

40

 

any principal or interest due and payable or to become due and payable
from the Borrowers to each Lender hereunder, (iii) the original stated amount of
each Facility LC and the amount of LC Obligations outstanding at any time, and (iv)
the amount of any sum received by the Agent hereunder from the Borrowers and each
Lender’s share thereof.

     (c) The entries maintained in the accounts maintained pursuant to paragraphs
(a) and (b) above shall be prima facie evidence of the existence and amounts of the
Obligations therein recorded; provided however, that the failure of the Agent or any
Lender to maintain such accounts or any error therein shall not in any manner affect
the obligation of the Borrowers to repay the Obligations in accordance with their
terms.

     (d) Any Lender may request that its Revolving Loans be evidenced by a
promissory note in substantially the form of Exhibit C (a “Revolving
Note”). In such event, each Borrower shall prepare, execute and deliver to such
Lender such Note payable to the order of such Lender. Thereafter, the Revolving
Loans evidenced by such Revolving Note, and interest on the foregoing shall at all
times (prior to any assignment pursuant to Section 12.3) be represented by
one or more Notes payable to the order of the payee named therein, except to the
extent that any such Lender subsequently returns any such Note for cancellation and
requests that such Revolving Loans, once again be evidenced as described in
paragraphs (a) and (b) above.

     2.22. Lending Installations. Each Lender may book its Loans and its participation in
any LC Obligations and the LC Issuer may book the Facility LCs at any Lending Installation selected
by such Lender or the LC Issuer, as the case may be, and may change its Lending Installation from
time to time. All terms of this Agreement shall apply to any such Lending Installation and the
Loans, Facility LCs, Reimbursement Obligations and any Notes issued hereunder shall be deemed held
by each Lender or the LC Issuer, as the case may be, for the benefit of any such Lending
Installation. Each Lender and the LC Issuer may, by written notice to the Agent and the Borrower
Representative in accordance with Article XIII, designate replacement or additional Lending
Installations through which Loans will be made by it or Facility LCs will be issued by it and for
whose account Loan payments or payments with respect to Facility LCs are to be made.

     2.23. Non-Receipt of Funds by the Agent; Defaulting Lenders.

     (a) Unless the Borrower Representative or a Lender, as the case may be,
notifies the Agent prior to the date on which it is scheduled to make payment to the
Agent of (i) in the case of a Lender, the proceeds of a Loan or (ii) in the case
of the Borrowers, a payment of principal, interest or fees to the Agent for the
account of the Lenders, that it does not intend to make such payment, the Agent may
assume that such payment has been made. The Agent may, but shall not be obligated
to, make the amount of such payment available to the intended recipient in reliance
upon such assumption. If such Lender or the Borrowers, as the case may be, have not
in fact made such payment to the Agent, the recipient of such payment shall, on
demand by the Agent, repay to the Agent the amount so made available together with
interest thereon in respect of each day during the period commencing on the date
such amount was so made available by the Agent until the date the Agent recovers
such amount at a rate per annum equal to (x) in
the case of payment by a Lender, the Federal Funds Effective Rate for such day
for the first three days and, thereafter, the interest rate applicable to the
relevant Loan or (y) in the case of payment by the Borrowers, the interest rate
applicable to the relevant Loan.

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     (b) If a payment has not been made by a Lender (a “Defaulting Lender”),
the Agent will notify the Borrower Representative of such failure to fund and, upon
demand by the Agent, the Borrowers shall pay such amount (to the extent such amount
had been made available to Borrowers hereunder) to the Agent for the Agent’s
account, together with interest thereon for each day elapsed since the Borrowing
Date at a rate per annum equal to the interest rate applicable to the relevant Loan.
The Agent shall not be obligated to transfer to a Defaulting Lender any payments
made by the Borrowers to the Agent for the Defaulting Lender’s benefit, and, in the
absence of such transfer to the Defaulting Lender, the Agent shall transfer any such
payments to each other non-Defaulting Lender ratably in accordance with their Pro
Rata Share of the Commitments (but only to the extent that such Defaulting Lender’s
Advance was funded by the other Lenders) or, if so directed by the Borrower
Representative and if no Unmatured Default or Default has occurred and is continuing
(and to the extent such Defaulting Lender’s Advance was not funded by the other
Lenders), retain the same to be re-advanced to the Borrowers as if such Defaulting
Lender had made Advances to the Borrowers. Subject to the foregoing, the Agent may
hold and, in its Permitted Discretion, setoff such Defaulting Lender’s funding
shortfall against that Defaulting Lender’s Pro Rata Share of all payments received
from the Borrowers or re-lend to the Borrowers for the account of such Defaulting
Lender the amount of all such payments received and retained by the Agent for the
account of such Defaulting Lender. Until a Defaulting Lender cures its failure to
fund its Pro Rata Share of any Advance (i) solely for the purposes of voting or
consenting to matters with respect to the Loan Documents, such Defaulting Lender
shall be deemed not to be a “Lender” and such Defaulting Lender’s Commitment shall
be deemed to be zero, (ii) such Defaulting Lender shall not be entitled to any
portion of the Unused Commitment Fee and (iii) the Unused Commitment Fee shall
accrue in favor of the Lenders which have funded their respective Pro Rata Shares of
such requested Advance and shall be allocated among such non-Defaulting Lenders
ratably based on their Pro Rata Share of the Commitments. This Section shall remain
effective with respect to such Defaulting Lender until (x) the Obligations under
this Agreement shall have been declared or shall have become immediately due and
payable, (y) the non-Defaulting Lenders, the Agent, and the Borrower Representative
shall have waived such Defaulting Lender’s default in writing, or (z) the
Defaulting Lender makes its Pro Rata Share of the applicable Advance and pays to the
Agent all amounts owing by the Defaulting Lender in respect thereof. The operation
of this Section shall not be construed to increase or otherwise affect the
Commitment of any Lender, to relieve or excuse the performance by such Defaulting
Lender or any other Lender of its duties and obligations hereunder.

     2.24. Limitation of Interest. The Borrowers, the Agent and the Lenders intend to
strictly comply with all applicable laws, including applicable usury laws. Accordingly, the
provisions of this Section 2.24 shall govern and control over every other provision of this
Agreement or any other Loan Document which conflicts or is inconsistent with this Section
2.24, even if such provision declares that it controls. As used in this Section 2.24,
the term “interest” includes the aggregate of all charges, fees, benefits or other compensation
which constitute interest under applicable law, provided that, to the maximum extent permitted by
applicable law, (a) any non-principal payment shall be characterized as an expense or as
compensation for something other than the use, forbearance or detention of money and not as
interest, and (b) all interest at any time contracted for, reserved, charged or received shall be
amortized, prorated, allocated and spread, in equal parts during the full term of the Obligations.
In no event shall the Borrowers or any other Person be obligated to pay, or any Lender have any
right or privilege to reserve, receive or retain, (a) any interest in excess of the maximum amount
of nonusurious interest permitted under the laws of the State of Texas or the applicable laws (if
any) of the U.S. or of any

42

 

other applicable state, or (b) total interest in excess of the amount
which such Lender could lawfully have contracted for, reserved, received, retained or charged had
the interest been calculated for the full term of the Obligations at the Highest Lawful Rate. On
each day, if any, that the interest rate (the “Stated Rate”) called for under this
Agreement or any other Loan Document exceeds the Highest Lawful Rate, the rate at which interest
shall accrue shall automatically be fixed by operation of this sentence at the Highest Lawful Rate
for that day, and shall remain fixed at the Highest Lawful Rate for each day thereafter until the
total amount of interest accrued equals the total amount of interest which would have accrued if
there were no such ceiling rate as is imposed by this sentence. Thereafter, interest shall accrue
at the Stated Rate unless and until the Stated Rate again exceeds the Highest Lawful Rate when the
provisions of the immediately preceding sentence shall again automatically operate to limit the
interest accrual rate. The daily interest rates to be used in calculating interest at the Highest
Lawful Rate shall be determined by dividing the applicable Highest Lawful Rate per annum by the
number of days in the calendar year for which such calculation is being made. None of the terms
and provisions contained in this Agreement or in any other Loan Document which directly or
indirectly relate to interest shall ever be construed without reference to this Section
2.24, or be construed to create a contract to pay for the use, forbearance or detention of
money at an interest rate in excess of the Highest Lawful Rate. If the term of any Obligation is
shortened by reason of acceleration of maturity as a result of any Default or by any other cause,
or by reason of any required or permitted prepayment, and if for that (or any other) reason any
Lender at any time, including but not limited to, the stated maturity, is owed or receives (and/or
has received) interest in excess of interest calculated at the Highest Lawful Rate, then and in any
such event all of any such excess interest shall be canceled automatically as of the date of such
acceleration, prepayment or other event which produces the excess, and, if such excess interest has
been paid to such Lender, it shall be credited pro tanto against the then-outstanding principal
balance of the Borrowers’ obligations to such Lender, effective as of the date or dates when the
event occurs which causes it to be excess interest, until such excess is exhausted or all of such
principal has been fully paid and satisfied, whichever occurs first, and any remaining balance of
such excess shall be promptly refunded to its payor. Chapter 346 of the Texas Finance Code (which
regulates certain revolving credit accounts (formerly Tex. Rev. Civ. Stat. Ann. Art. 5069, Ch. 15))
shall not apply to this Agreement or to any Loan, nor shall this Agreement or any Loan be governed
by or be subject to the provisions of such Chapter 346 in any manner whatsoever.

ARTICLE III

YIELD PROTECTION; TAXES

     3.1. Yield Protection. If, on or after the Closing Date, the adoption of any law or
any governmental or quasi-governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law), or any change in the interpretation or administration thereof by any
governmental or quasi-governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender or applicable Lending
Installation or the LC Issuer with any request or directive (whether or not having the force of
law) of any such authority, central bank or comparable agency:

     (a) subjects any Lender or any applicable Lending Installation or the LC Issuer
to any Taxes, or changes the basis of taxation of payments (other than with respect
to Excluded Taxes) to any Lender or the LC Issuer in respect of its Eurodollar
Loans, Facility LCs or participations therein, or

     (b) imposes or increases or deems applicable any reserve, assessment, insurance
charge, special deposit or similar requirement against assets of, deposits with or
for the account of, or credit extended by, any Lender or any applicable Lending

43

 

Installation or the LC Issuer (other than reserves and assessments taken into
account in determining the interest rate applicable to Eurodollar Advances), or

     (c) imposes any other condition the result of which is to increase the cost to
any Lender or any applicable Lending Installation or the LC Issuer of making,
funding or maintaining its Eurodollar Loans, or of issuing or participating in
Facility LCs, or reduces any amount receivable by any Lender or any applicable
Lending Installation or the LC Issuer in connection with its Eurodollar Loans,
Facility LCs or participations therein, or requires any Lender or any applicable
Lending Installation or the LC Issuer to make any payment calculated by reference to
the amount of Eurodollar Loans, Facility LCs or participations therein held or
interest or LC Fees received by it, by an amount deemed material by such Lender or
the LC Issuer as the case may be,

and the result of any of the foregoing is to increase the cost to such Lender or applicable Lending
Installation or the LC Issuer, as the case may be, of making or maintaining its Eurodollar Loans or
Commitment or of issuing or participating in Facility LCs or to reduce the return received by such
Lender or applicable Lending Installation or the LC Issuer, as the case may be, in connection with
such Eurodollar Loans, Commitment, Facility LCs or participations therein, then, within fifteen
days of demand by such Lender or the LC Issuer, as the case may be, the Borrowers shall pay such
Lender or the LC Issuer, as the case may be, such additional amount or amounts as will compensate
such Lender or the LC Issuer, as the case may be, for such increased cost or reduction in amount
received.

     3.2. Changes in Capital Adequacy Regulations. If a Lender or the LC Issuer determines
the amount of capital required or expected to be maintained by such Lender or the LC Issuer, any
Lending Installation of such Lender or the LC Issuer, or any corporation controlling such Lender or
the LC Issuer is increased as a result of a Change, then, within fifteen days of demand by such
Lender or the LC Issuer, the Borrowers shall pay such Lender or the LC Issuer the amount necessary
to compensate for any shortfall in the rate of return on the portion of such increased capital
which such Lender or the LC Issuer determines is attributable to this Agreement, its Credit
Exposure or its Commitment to make Loans and issue or participate in Facility LCs, as the case may
be, hereunder (after taking into account such Lender’s or the LC Issuer’s policies as to capital
adequacy). “Change” means (i) any change after the date of this Agreement in the
Risk-Based Capital Guidelines (as defined below) or (ii) any adoption of or change in any other
law, governmental or quasi-governmental rule, regulation, policy, guideline, interpretation, or
directive (whether or not having the force of law) after the date of this Agreement which affects
the amount of capital required or expected to be maintained by any Lender or the LC Issuer or any
Lending Installation or any corporation controlling any Lender or the LC Issuer. “Risk-Based
Capital Guidelines” means (i) the risk-based capital guidelines in effect in the U.S. on the
date of this Agreement, including transition rules, and (ii) the corresponding capital regulations
promulgated by regulatory authorities outside the U.S. implementing the July 1988 report of the
Basle Committee on Banking Regulation and Supervisory Practices Entitled “International Convergence
of Capital Measurements and Capital Standards,” including transition rules, and any amendments to
such regulations adopted prior to the date of this Agreement.

     3.3. Availability of Types of Advances. If any Lender determines that maintenance of
its Eurodollar Loans at a suitable Lending Installation would violate any applicable law, rule,
regulation, or directive, whether or not having the force of law, or if the Required Lenders
determine that (i) deposits of a type and maturity appropriate to match fund Eurodollar Advances
are not available or (ii) the interest rate applicable to Eurodollar Advances does not accurately
reflect the cost of making or maintaining Eurodollar Advances, then the Agent shall suspend the
availability of Eurodollar Advances and require any affected Eurodollar Advances to be repaid or
converted to Floating Rate Advances, subject to the payment of any funding indemnification amounts
required by Section 3.4.

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     3.4. Funding Indemnification. If any payment of a Eurodollar Advance occurs on a date
which is not the last day of the applicable Interest Period, whether because of acceleration,
prepayment or otherwise, or a Eurodollar Advance is not made on the date specified by the Borrower
Representative for any reason other than default by the Lenders, the Borrowers will indemnify each
Lender for any loss or cost incurred by it resulting therefrom, including, without limitation, any
loss or cost in liquidating or employing deposits acquired to fund or maintain such Eurodollar
Advance.

     3.5. Taxes.

     (a) All payments by the Borrowers to or for the account of any Lender, the LC
Issuer or the Agent hereunder or under any Note or Facility LC Application shall be
made free and clear of and without deduction for any and all Taxes. If any Borrower
shall be required by law to deduct any Taxes from or in respect of any sum payable
hereunder to any Lender, the LC Issuer or the Agent, (a) 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 3.5)
such Lender, the LC Issuer or the Agent (as the case may be) receives an amount
equal to the sum it would have received had no such deductions been made, (b) such
Borrower shall make such deductions, (c) such Borrower shall pay the full amount
deducted to the relevant authority in accordance with applicable law and (d) such
Borrower shall furnish to the Agent the original copy of a receipt evidencing
payment thereof within thirty days after such payment is made.

     (b) In addition, each Borrower hereby agrees to pay any present or future stamp
or documentary taxes and any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or under any Note or Facility LC
Application or from the execution or delivery of, or otherwise with respect to, this
Agreement or any Note or Facility LC Application (“Other Taxes”).

     (c) The Borrowers hereby agree to, jointly and severally, indemnify the Agent,
the LC Issuer and each Lender for the full amount of Taxes or Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed on amounts payable
under this Section 3.5) paid by the Agent, the LC Issuer or such Lender as a
result of its Commitment, any Loans made by it hereunder, any Facility LC issued
hereunder or otherwise in connection with its participation in this Agreement and
any liability (including penalties, interest and expenses) arising therefrom or with
respect thereto. Payments due under this indemnification shall be made within
thirty days of the date the Agent, the LC Issuer or such Lender makes demand
therefor pursuant to Section 3.6.

     (d) Each Lender that is not incorporated under the laws of the U.S. or a state
thereof (each a “Non-U.S. Lender”) agrees that it will, not more than ten
Business Days after the date of this Agreement, (i) deliver to the Agent two duly
completed copies of U.S. Internal Revenue Service Form W-8BEN or W-8ECI, certifying
in either case that such Lender is entitled to receive payments under this Agreement
without deduction or withholding of any U.S. federal income taxes, and (ii) deliver
to the Agent a U.S. Internal Revenue Form W-8 or W-9, as the case may be, and
certify that it is entitled to an exemption from U.S. backup withholding tax. Each
Non-U.S. Lender further undertakes to deliver to each of the Borrower Representative
and the Agent (x) renewals or additional copies of such form (or any successor
form) on or before the date that such form expires or becomes obsolete, and (y)
after the occurrence of any event requiring a change in the most recent forms so
delivered by it, such additional forms or amendments

45

 

thereto as may be reasonably
requested by the Borrower Representative or the Agent. All forms or amendments
described in the preceding sentence shall certify that such Lender is entitled to
receive payments under this Agreement without deduction or withholding of any U.S.
federal income taxes, unless an event (including without limitation any change in
treaty, law or regulation) has occurred prior to the date on which any such delivery
would otherwise be required which renders all such forms inapplicable or which would
prevent such Lender from duly completing and delivering any such form or amendment
with respect to it and such Lender advises the Borrower Representative and the Agent
that it is not capable of receiving payments without any deduction or withholding of
U.S. federal income tax.

     (e) For any period during which a Non-U.S. Lender has failed to provide the
Borrower Representative with an appropriate form pursuant to clause (d), above
(unless such failure is due to a change in treaty, law or regulation, or any change
in the interpretation or administration thereof by any governmental authority,
occurring subsequent to the date on which a form originally was required to be
provided), such Non-U.S. Lender shall not be entitled to indemnification under this
Section 3.5 with respect to Taxes imposed by the U.S.; provided that, should
a Non-U.S. Lender which is otherwise exempt from or subject to a reduced rate of
withholding tax become subject to Taxes because of its failure to deliver a form
required under clause (d), above, the Borrowers shall take such steps as such
Non-U.S. Lender shall reasonably request to assist such Non-U.S. Lender to recover
such Taxes.

     (f) Any Lender that is entitled to an exemption from or reduction of
withholding tax with respect to payments under this Agreement or any Note pursuant
to the law of any relevant jurisdiction or any treaty shall deliver to the Borrower
Representative (with a copy to the Agent), at the time or times prescribed by
applicable law, such properly completed and executed documentation prescribed by
applicable law as will permit such payments to be made without withholding or at a
reduced rate.

     (g) If the U.S. Internal Revenue Service or any other governmental authority of
the U.S. or any other country or any political subdivision thereof asserts a claim
that the Agent did not properly withhold tax from amounts paid to or for the account
of any Lender (because the appropriate form was not delivered or properly completed,
because such Lender failed to notify the Agent of a change in circumstances which
rendered its exemption from withholding ineffective, or for any other reason), such
Lender shall indemnify the Agent fully for all amounts paid, directly or indirectly,
by the Agent as tax, withholding therefor, or otherwise, including penalties and
interest, and including taxes imposed by any jurisdiction on amounts payable to the
Agent under this subsection,
together with all costs and expenses related thereto (including attorneys fees
and time charges of attorneys for the Agent, which attorneys may be employees of the
Agent). The obligations of the Lenders under this Section 3.5(g) shall
survive the payment of the Obligations and termination of this Agreement.

     3.6. Lender Statements; Survival of Indemnity. To the extent reasonably possible,
each Lender shall designate an alternate Lending Installation with respect to its Eurodollar Loans
to reduce any liability of the Borrowers to such Lender under Sections 3.1, 3.2 and
3.5 or to avoid the unavailability of Eurodollar Advances under Section 3.3, so
long as such designation is not, in the judgment of such Lender, disadvantageous to such Lender.
Each Lender shall deliver a written statement of such Lender to the Borrower Representative (with a
copy to the Agent) as to the amount due, if any, under Section 3.1, 3.2,
3.4 or 3.5. Such written statement shall set forth in reasonable detail the
calculations upon which

46

 

such Lender determined such amount and shall be final, conclusive and
binding on the Borrowers in the absence of manifest error. Determination of amounts payable under
such Sections in connection with a Eurodollar Loan shall be calculated as though each Lender funded
its Eurodollar Loan through the purchase of a deposit of the type and maturity corresponding to the
deposit used as a reference in determining the Eurodollar Rate applicable to such Loan, whether in
fact that is the case or not. Unless otherwise provided herein, the amount specified in the
written statement of any Lender shall be payable on demand after receipt by the Borrower
Representative of such written statement. The obligations of the Borrowers under Sections
3.1, 3.2, 3.4 and 3.5 shall survive payment of the Obligations and
termination of this Agreement.

ARTICLE IV

CONDITIONS PRECEDENT

     4.1. Effectiveness. This Agreement will not become effective unless the Loan Parties
have satisfied each of the following conditions, in addition to the documents delivered under or in
connection with the Prior Loan Agreements, unless the Agent, in its sole discretion, deems such
prior delivery of any document as satisfaction of any condition set forth herein, in a manner
satisfactory to the Agent and the Lenders, and with respect to any condition requiring delivery of
any agreement, certificate, document, or instrument, the Loan Parties shall have furnished to the
Agent sufficient copies of any such agreement, certificate, document, or instrument for
distribution to the Lenders:

     (a) This Agreement or counterparts hereof shall have been duly executed by each
Loan Party, the Agent and the Lenders; and the Agent shall have received duly
executed copies of the Loan Documents and such other documents, instruments,
agreements and legal opinions as the Agent shall reasonably request in connection
with the transactions contemplated by this Agreement and the other Loan Documents,
each in form and substance reasonably satisfactory to the Agent.

     (b) Each Loan Party shall have delivered copies of its articles or certificate
of incorporation, organization or limited partnership, together with all amendments,
and a certificate of good standing, each certified by the appropriate governmental
officer in its jurisdiction of incorporation or organization.

     (c) Each Loan Party shall have delivered copies, certified by its Secretary or
Assistant Secretary, of its by-laws or operating, management or partnership
agreement
and of its Board of Directors’ resolutions or the resolutions of its members
and of resolutions or actions of any other body authorizing the execution, delivery
and performance of the Loan Documents to which such Loan Party is a party.

     (d) Each Loan Party shall have delivered an incumbency certificate, executed by
its Secretary or Assistant Secretary (or Secretary or Assistant Secretary of the
general partner of such Borrower, if applicable), which shall identify by name and
title and bear the signatures of the Authorized Officers and any other officers such
Loan Party authorized to sign the Loan Documents to which such Loan Party is a
party, upon which certificate the Agent and the Lenders shall be entitled to rely
until informed of any change in writing by such Loan Party.

     (e) Each Borrower and each other Loan Party shall have delivered a certificate,
signed by the chief financial officer of such Borrower and such other Loan Party, on
the initial Credit Extension Date (i) stating that no Default or Unmatured

47

 

Default
has occurred and is continuing, (ii) stating that the representations and
warranties contained in Article V are true and correct as of such Credit
Extension Date, (iii) specifying the deposit account at JPMorgan Chase which shall
be used as the Funding Account and (iv) certifying any other factual matters as may
be reasonably requested by the Agent or any Lender.

     (f) The Loan Parties shall have delivered a written opinion of the Loan
Parties’ counsel, addressed to the Agent, the LC Issuer and the Lenders, in form and
substance satisfactory to the Agent.

     (g) The Borrowers shall have delivered any Notes requested by a Lender pursuant
to Section 2.21 payable to the order of each such requesting Lender.

     (h) The Borrowers shall have delivered money transfer authorizations as the
Agent may have reasonably requested.

     (i) Unless otherwise agreed by the Agent, the Loan Parties shall have
delivered, with respect to each parcel of real Property which is required to be
subject to a Lien in favor of the Agent, each of the following, in form and
substance reasonably satisfactory to the Agent:

     (i) a Mortgage on such property;

     (ii) evidence that a counterpart of the Mortgage has been recorded in
the place necessary, in the Agent’s judgment, to create a valid and
enforceable second priority Lien (subject only to the first priority Lien of
the Term Collateral Agent pursuant to the Term Documents subject to the
Intercreditor Agreement) in favor of the Agent for the benefit of itself and
the Lenders;

     (iii) ALTA or other mortgagee’s title policy;

     (iv) copies of Phase I Environmental Reports or other similar reports,
(in form and substance satisfactory to the Agent) as the Agent may require;

     (v) an opinion of counsel in the state in which such parcel of real
Property is located in form and substance and from counsel reasonably
satisfactory to the Agent; and

such other information, documentation, and certifications as may be reasonably
required by the Agent.

     (j) The Agent shall have received all Lien and other searches that the Agent
deems necessary, the Loan Parties shall have delivered UCC termination statements or
amendments to existing UCC financing statements with respect to any filings against
the Collateral as may be requested by the Agent and shall have authorized the filing
of such termination statements or amendments, the Agent shall have been authorized
to file any UCC financing statements that the Agent deems necessary to perfect its
Liens in the Collateral and Liens creating a first priority security interest in the
Collateral in favor of the Agent shall have been perfected.

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     (k) The Borrower Representative shall have delivered an Aggregate Borrowing
Base Certificate which calculates the Aggregate Borrowing Base as of the end of the
Business Day immediately preceding the Effective Date and each Borrower shall have
delivered a duly executed Borrowing Base Certificate for such Borrower which
calculates such Borrower’s Borrowing Base as of the end of the Business Day
immediately preceding the Effective Date.

     (l) The Agent shall have completed its business due diligence and the Loan
Parties’ corporate structure, capital structure, material accounts and governing
documents shall be acceptable to the Agent. In addition, the terms and conditions
of all Indebtedness of each Loan Party shall be acceptable to the Agent.

     (m) All legal (including tax implications) and regulatory matters, including,
but not limited to compliance with applicable requirements of Regulations U, T and X
of the Board of Governors of the Federal Reserve System, shall be satisfactory to
the Agent and the Lenders.

     (n) The Loan Parties shall have delivered (i) Collateral audits, satisfactory
to the Agent, prepared by an independent firm engaged directly by the Agent and (ii)
unless otherwise agreed by the Agent, appraisals, prepared by an independent
appraiser engaged directly by the Agent, of each parcel of real property or interest
in real property described in the Mortgages, which appraisals satisfy the
requirements of the Financial Institutions Reform, Recovery and Enforcement Act, as
amended, and the regulations promulgated thereunder, if applicable, and which shall
evidence compliance with the supervisory loan-to-value limits set forth in the
Federal Deposit Insurance Corporation Improvement Act of 1991, as amended, and the
regulations promulgated thereunder, if applicable, which audits and appraisals shall
be satisfactory to the Agent, together with evidence of compliance with applicable
federal regulations governing loans in areas having special flood hazards

     (o) The Loan Parties shall have delivered any requested environmental review
reports from firm(s) satisfactory to the Agent, which review reports shall be
acceptable to the Agent. Any environmental hazards or liabilities identified in any
such environmental review reports shall indicate the Loan Parties’ plans with
respect thereto.

     (p) The Borrowers shall have delivered evidence of insurance coverage in form,
scope, and substance reasonably satisfactory to the Agent and otherwise in
compliance with the terms of Section 6.7.

     (q) The Borrowers shall have delivered each Collateral Access Agreement
required to be provided pursuant to Section 6.13.

     (r) The Borrowers shall have delivered each Deposit Account Control Agreement
required to be provided pursuant to Section 6.14.

     (s) The Agent shall have determined that (i) since December 31, 2005, there is
an absence of any material adverse change or disruption in primary or secondary loan
syndication markets, financial markets or in capital markets generally that would
likely impair syndication of the Credit Extensions hereunder and (ii) the Loan
Parties shall have fully cooperated with the Agent’s syndication efforts including,
without limitation, by providing the Agent with information regarding the Loan
Parties’ operations and prospects and such other information as the Agent deems
necessary to successfully syndicate the Credit Extensions hereunder.

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     (t) The Borrowers shall have delivered a properly completed Facility LC
Application if the initial Credit Extension will include the issuance of a Facility
LC. The Borrowers shall have executed the LC Issuer’s master agreement for the
issuance of Letters of Credit.

     (u) Reserved.

     (v) The Borrowers shall have paid all of the fees and expenses owing to the
Agent, the LC Issuer and the Lenders pursuant to Section 2.10, and
Section 9.6(a).

     (w) The Borrowers shall have delivered to the Agent true and complete Customer
Lists for each Borrower.

     (x) The Loan Parties shall have delivered to the Agent their most recent
statement of the Unfunded Liabilities of each Single Employer Plan, certified as
correct by an actuary enrolled under ERISA.

     (y) The Loan Parties shall have delivered such other documents as the Agent,
the LC Issuer, any Lender or their respective counsel may have reasonably requested.

     4.2. Each Credit Extension. Except as otherwise expressly provided herein, the
Lenders shall not be required to make any Credit Extension if on the applicable Credit Extension
Date:

     (a) There exists any Default or Unmatured Default or any Default or Unmatured
Default shall result from any such Credit Extension and the Agent or the Required
Lenders shall have determined not to make any Credit Extension as a result of such
Default or Unmatured Default.

     (b) Any representation or warranty contained in Article V is untrue or
incorrect as of such Credit Extension Date except to the extent any such
representation or warranty is stated to relate solely to an earlier date, and the
Agent or the Required Lenders shall have determined not to make any Credit Extension
as a result of the fact that such representation or warranty is untrue or incorrect.

     (c) After giving effect to any Credit Extension, the Borrowers’ Availability
would be less than zero.

     (d) Any legal matter incident to the making of such Credit Extension shall not
be satisfactory to the Agent and its counsel.

     Each Borrowing Notice or request for issuance of Facility LC with respect to each such Credit
Extension shall constitute a representation and warranty by each Borrower that the conditions
contained in Section 4.1 have been satisfied and that none of the conditions set forth in
Section 4.2 exist as of the applicable Credit Extension Date. Any Lender may require a
duly completed Compliance Certificate as a condition to making a Credit Extension.

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ARTICLE V

REPRESENTATIONS AND WARRANTIES

     Each Loan Party represents and warrants to the Lenders as follows:

     5.1. Existence and Standing. Both before and after giving effect to the Permitted
Restructuring, each Loan Party (as the case may be) is a corporation, partnership (in the case of
Subsidiaries only) or limited liability company duly and properly incorporated or organized, as the
case may be, validly existing and (to the extent such concept applies to such entity) in good
standing under the laws of its jurisdiction of incorporation or organization and has all requisite
authority to conduct its business in each jurisdiction in which its business is conducted.

     5.2. Authorization and Validity. Each Loan Party has the power and authority and
legal right to execute and deliver the Loan Documents to which it is a party and to perform its
obligations thereunder. The execution and delivery by each Loan Party of the Loan Documents to
which it is a party and the performance of its obligations thereunder have been duly authorized by
proper proceedings, and the Loan Documents to which such Loan Party is a party constitute legal,
valid and binding obligations of such Loan Party enforceable against such Loan Party in accordance
with their terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors’ rights generally.

     5.3. No Conflict; Government Consent. Neither the execution and delivery by any Loan
Party of the Loan Documents to which it is a party, nor the consummation of the transactions
therein contemplated, nor compliance with the provisions thereof will violate (a) any law, rule,
regulation, order, writ, judgment, injunction, decree or award binding on such Loan Party or (b)
any Loan Party’s articles or certificate of incorporation, partnership agreement, certificate of
partnership, articles or certificate of organization, by-laws, or operating or other management
agreement, as the case may be, or (c) the provisions of any indenture, instrument or
agreement to which any Loan Party is a party or is subject, or by which it, or its Property,
is bound, or conflict with or constitute a default thereunder, or result in, or require, the
creation or imposition of any Lien in, of or on the Property of such Loan Party pursuant to the
terms of any such indenture, instrument or agreement. No order, consent, adjudication, approval,
license, authorization, or validation of, or filing, recording or registration with, or exemption
by, or other action in respect of any governmental or public body or authority, or any subdivision
thereof, which has not been obtained by a Loan Party, is required to be obtained by any Loan Party
in connection with the execution and delivery of the Loan Documents, the borrowings under this
Agreement, the payment and performance by the Loan Parties of the Obligations or the legality,
validity, binding effect or enforceability of any of the Loan Documents.

     5.4. Security Interest in Collateral. The provisions of this Agreement and the other
Loan Documents create legal and valid Liens on all the Collateral in favor of the Agent, for the
benefit of the Agent and the Lenders, and such Liens constitute perfected and continuing Liens on
the Collateral, securing the Obligations, enforceable against the applicable Loan Party and all
third parties, and having priority over all other Liens on the Collateral, but in the case of Liens
securing the obligations outstanding under the Term Agreement, subject to the Intercreditor
Agreement, except in the case of (a) Permitted Liens, to the extent any such Permitted Liens would
have priority over the Liens in favor of the Agent pursuant to any applicable law or agreement and
(b) Liens perfected only by possession (including possession of any certificate of title) to the
extent the Agent has not obtained or does not maintain possession of such Collateral.

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     5.5. Financial Statements.

     (a) The audited consolidated financial statements of the Company and its
Subsidiaries for the Fiscal Year ended on December 31, 2005 heretofore delivered to
the Lenders were prepared in accordance with GAAP (as in effect on the date such
statements were prepared) and fairly present the consolidated financial condition
and operations of the Company and its Subsidiaries at such date and the consolidated
results of their operations for the period then ended. The unaudited consolidated
financial statements of the Company and its Subsidiaries through September 30, 2006,
heretofore delivered by the Borrowers to the Lenders were prepared in accordance
with GAAP (as in effect on the date such statements were prepared except for the
presentation of footnotes and for applicable normal year-end audit adjustments) and
fairly present the consolidated financial condition and operations of the Company
and its Subsidiaries at such date and the consolidated results of their operations
for the period then ended.

     (b) The Projections for the Fiscal Year ending December 31, 2007, and the most
recent Projections delivered to the Agent and the Lenders pursuant to Section
6.1(d), represent the Borrowers’ good faith estimate of the future financial
performance of the Borrowers for the period set forth therein.

     5.6. Material Adverse Change. Except as set forth in Schedule 5.6, since
December 31, 2005, there has been no change in the business, Property, prospects, condition
(financial or otherwise) or results of operations of the Loan Parties which could reasonably be
expected to have a Material Adverse Effect.

     5.7. Taxes. The Loan Parties have filed all U.S. federal tax returns and all other tax returns which
are required to be filed and have paid all taxes due pursuant to said returns or pursuant to any
assessment received by any Loan Party, except such taxes, if any, as are being contested in good
faith and as to which adequate reserves have been provided in accordance with GAAP and as to which
no Lien exists. The U.S. income tax returns of the Loan Parties have been audited by the Internal
Revenue Service through the Fiscal Year ended December 31, 2002. No tax liens have been filed and
no claims are being asserted with respect to any such taxes. The charges, accruals and reserves on
the books of the Loan Parties in respect of any taxes or other governmental charges are adequate.
If any Loan Party is a limited liability company, each such limited liability company that has
elected to be taxed as a partnership qualifies for partnership tax treatment under U.S. federal tax
law.

     5.8. Litigation and Contingent Obligations. Except as set forth on Schedule
5.8, there is no litigation, arbitration, governmental investigation, proceeding or inquiry
pending or, to the knowledge of any of their corporate or executive officers, threatened against or
affecting any Loan Party which could reasonably be expected to have a Material Adverse Effect or
which seeks to prevent, enjoin or delay the making of any Credit Extensions. Other than any
liability incident to any litigation, arbitration or proceeding which (i) could not reasonably be
expected to have a Material Adverse Effect or (ii) is set forth on Schedule 5.8, no Loan
Party has any material contingent obligations not provided for or disclosed in the financial
statements referred to in Section 5.5.

     5.9. Capitalization and Subsidiaries. Schedule 5.9 sets forth (a) a correct
and complete list of the name and relationship to the Company of each and all of the Company’s
Subsidiaries, (b) the location of the chief executive office of each Loan Party and each of its
Subsidiaries and each other location where any of them have maintained their chief executive office
in the past five years, (c) a true and complete listing of each class of each Loan Party’s
authorized Capital Stock, of which all of such issued shares or interests are validly issued and
outstanding and, to the extent applicable, fully paid, non-assessable and owned beneficially and of
record by the Persons identified on Schedule 5.9, and (d) the type of entity of

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each Loan
Party. With respect to each Loan Party, Schedule 5.9 also sets forth the employer or
taxpayer identification number of each Loan Party and the organizational identification number
issued by each Loan Party’s jurisdiction of organization or a statement that no such number has
been issued. All of the issued and outstanding Capital Stock owned by any Loan Party has been (to
the extent such concepts are relevant with respect to such ownership interests) duly authorized and
issued and, to the extent applicable, is fully paid and non-assessable.

     5.10. ERISA. The Unfunded Liabilities of all Single Employer Plans do not in the
aggregate exceed $1,000,000. Neither the Company nor any other member of the Controlled Group has
incurred, or is reasonably expected to incur, any withdrawal liability to Multiemployer Plans in
excess of $1,000,000 in the aggregate. Each Plan complies in all material respects with all
applicable requirements of law and regulations, no Reportable Event has occurred with respect to
any Plan, neither the Company nor any other member of the Controlled Group has withdrawn from any
Plan or initiated steps to do so, and no steps have been taken to reorganize or terminate any Plan.

     5.11. Accuracy of Information. No information, exhibit or report furnished by any Loan Party to the Agent or to any Lender
in connection with the negotiation of, or compliance with, the Loan Documents contained any
material misstatement of fact or omitted to state a material fact or any fact necessary to make the
statements contained therein not misleading.

     5.12. Names; Prior Transactions. Except for the merger of Newpark Drilling Fluids,
LLC into Newpark Drilling Fluids, LP, the Permitted Restructuring or as otherwise set forth on
Schedule 5.12, the Loan Parties have not, during the past five years, been known by or used
any other corporate or fictitious name, or been a party to any merger or consolidation, or been a
party to any Acquisition.

     5.13. Regulation U. No Loan Party is engaged, nor will it engage, principally or as
one of its important activities, in the business of extending credit for the purpose of
“purchasing” or “carrying” any “margin stock” as such terms are defined in Regulation U of the
Federal Reserve Board as now and from time to time hereafter in effect (such securities being
referred to herein as “Margin Stock”). No Loan Party owns any Margin Stock, and none of
the proceeds of the Loans or other extensions of credit under this Agreement will be used, directly
or indirectly, for the purpose of purchasing or carrying any Margin Stock, for the purpose of
reducing or retiring any Indebtedness that was originally incurred to purchase or carry any Margin
Stock or for any other purpose that might cause any of the Loans or other extensions of credit
under this Agreement to be considered a “purpose credit” within the meaning of Regulations T, U or
X of the Federal Reserve Board. No Loan Party will take or permit to be taken any action that
might cause any Loan Document to violate any regulation of the Federal Reserve Board.

     5.14. Material Agreements. Schedule 5.14 hereto sets forth as of the Closing
Date all material agreements and contracts to which any Loan Party is a party or is bound as of the
date hereof. No Loan Party is subject to any charter or other corporate restriction which could
reasonably be expected to have a Material Adverse Effect. No Loan Party is in default in the
performance, observance or fulfillment of any of the obligations, covenants or conditions contained
in (i) any material agreement to which it is a party or (ii) any agreement or instrument evidencing
or governing Indebtedness.

     5.15. Compliance With Laws. The Loan Parties have complied with all applicable
statutes, rules, regulations, orders and restrictions of any domestic or foreign government or any
instrumentality or agency thereof having jurisdiction over the conduct of their respective
businesses or the ownership of their respective Property.

     5.16. Ownership of Properties. Except as set forth on Schedule 5.16, on the
date of this Agreement, the Loan Parties will have good title, free of all Liens other than those
permitted by Section 6.22,
to all of the Property and assets reflected in the Loan Parties’
most recent consolidated financial statements provided to the Agent as owned by the Loan Parties.

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     5.17. Plan Assets; Prohibited Transactions. No Loan Party is an entity deemed to hold “plan assets” within the meaning of 29 C.F.R. §
2510.3-101 of an employee benefit plan (as defined in Section 3(3) of ERISA) which is subject to
Title I of ERISA or any plan (within the meaning of Section 4975 of the Code), and neither the
execution of this Agreement nor the making of Credit Extensions hereunder gives rise to a
prohibited transaction within the meaning of Section 406 of ERISA or Section 4975 of the Code. No
“benefit plan investors” (as defined in 29 C.F.R. § 2510.3 (101(f)) own 25% or more of the value of
any class of equity interests in any Borrower.

     5.18. Environmental Matters. In the ordinary course of its business, the officers of
each Loan Party consider the effect of Environmental Laws on the business of such Loan Party, in
the course of which they identify and evaluate potential risks and liabilities accruing to such
Loan Party due to Environmental Laws. On the basis of this consideration, the Loan Parties have
concluded that Environmental Laws cannot reasonably be expected to have a Material Adverse Effect.
Except as set forth on Schedule 5.18, no Loan Party has received any notice to the effect
that its operations are not in material compliance with any of the requirements of applicable
Environmental Laws or are the subject of any federal or state investigation evaluating whether any
remedial action is needed to respond to a release of any toxic or hazardous waste or substance into
the environment.

     5.19. Investment Company Act. No Loan Party is an “investment company” or a company
“controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940,
as amended.

     5.20. Public Utility Holding Company Act. No Loan Party is a “holding company” or a
“subsidiary company” of a “holding company”, or an “Affiliate” of a “holding company” or of a
“subsidiary company” of a “holding company”, within the meaning of the Public Utility Holding
Company Act of 1935, as amended.

     5.21. Bank Accounts. As of the Closing Date, Exhibit B to the Security
Agreement contains a complete and accurate list of all bank accounts maintained by each Loan Party
with any bank or other financial institution.

     5.22. Indebtedness. As of the Closing Date and after giving effect to the Credit
Extensions to be made on the Closing Date (if any), the Loan Parties have no Indebtedness, except
for (a) the Obligations, and (b) any Indebtedness described on Schedule 5.22.

     5.23. Affiliate Transactions. Except as set forth on Schedule 5.23, as of the
Closing Date, there are no existing or proposed agreements, arrangements, understandings, or
transactions between any Loan Party and any of the officers, members, managers, directors,
stockholders, parents, other interest holders, employees, or Affiliates (other than Subsidiaries)
of any Loan Party or any members of their respective immediate families, and none of the foregoing
Persons are directly or indirectly indebted to or have any direct or indirect ownership,
partnership, or voting interest in any Affiliate of any Loan Party or any Person with which any
Loan Party has a business relationship or which competes with any Loan Party.

     5.24. Real Property; Leases. As of the Closing Date, Schedule 5.24 sets forth
a correct and complete list of all real Property owned by each Loan Party, all leases and subleases
of real Property by each Loan Party as lessee or sublessee, and all leases and subleases of real
Property by each Loan Party as lessor or sublessor. Each
of such leases and subleases is valid and
enforceable in accordance with its terms and is in full force and effect, and no default by any
party to any such lease or sublease exists. Each

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Loan Party has good and indefeasible title in fee
simple to the real Property identified on Schedule 5.24 as owned by such Loan Party, or
valid leasehold interests in all real Property designated therein as “leased” by such Loan Party.

     5.25. Intellectual Property Rights. As of the Closing Date: (a) Schedule 5.25
sets forth a correct and complete list of all material Intellectual Property Rights of each Loan
Party; (b) none of the Intellectual Property Rights listed in Schedule 5.25 is subject to
any licensing agreement or similar arrangement except as set forth in Schedule 5.25; (c)
the Intellectual Property Rights described in Schedule 5.25 constitute all of the material
property of such type necessary to the current and anticipated future conduct of the Loan Parties’
business; (d) to the best of each Loan Party’s knowledge, no slogan or other advertising device,
product, process, method, substance, part, or other material now employed, or now contemplated to
be employed, by any Loan Party infringes in any material respect upon any rights held by any other
Person; and (e) no claim or litigation regarding any of the foregoing is pending or threatened, and
no patent, invention, device, application, principle or any statute, law, rule, regulation,
standard, or code is pending or, to the knowledge of any Loan Party, proposed.

     5.26. Insurance. Schedule 5.26 lists all insurance policies of any nature
maintained, as of the Closing Date, by each Loan Party, as well as a summary of the terms of each
such policy.

     5.27. Solvency.

     (a) Immediately after the consummation of the transactions to occur on the date
hereof and immediately following the making of each Credit Extension, and after
giving effect to the application of the proceeds of such Credit Extensions, (a) the
fair value of the assets of each Loan Party, at a fair valuation, will exceed the
debts and liabilities, subordinated, contingent or otherwise, of each Loan Party;
(b) the present fair saleable value of the Property of each Loan Party will be
greater than the amount that will be required to pay the probable liability of each
Loan Party on its debts and other liabilities, subordinated, contingent or
otherwise, as such debts and other liabilities become absolute and matured; (c) each
Loan Party will be able to pay its debts and liabilities, subordinated, contingent
or otherwise, as such debts and liabilities become absolute and matured; and (d)
each Loan Party will not have unreasonably small capital with which to conduct the
businesses in which it is engaged as such businesses are now conducted and are
proposed to be conducted after the date hereof.

     (b) No Borrower intends to, nor will any Borrower permit any of its
Subsidiaries to, and no Borrower believes that it or any of its Subsidiaries will,
incur debts beyond its ability to pay such debts as they mature, taking into account
the timing of and amounts of cash to be received by it or any such Subsidiary and
the timing of the amounts of cash to be payable on or in respect of its Indebtedness
or the Indebtedness of any such Subsidiary.

     5.28. Intercreditor Agreement; Term Agreement. The Secured Obligations constitute ABL
Obligations (as defined in the Intercreditor Agreement). In addition, no Event of Default or
Default (each as defined in the Term Agreement) exists, nor will any such Event of Default or
Default exist under the Term Agreement immediately after the granting or continuation of any Loan
hereunder.

     5.29. Post-Retirement Benefits. The present value of the expected cost of
post-retirement medical and insurance benefits payable by each Loan Party to its employees and
former employees, as estimated by such Loan Party in accordance with procedures and assumptions
deemed reasonable by the Required Lenders in their Permitted Discretion, does not exceed $500,000.

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     5.30. 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 (and its board of directors or other governing body has determined that it may
reasonably be expected to derive benefit), directly and indirectly, from (i) successful operations
of each of the other Loan Parties and (ii) the credit extended by the Lenders to the Borrowers
hereunder, both in their separate capacities and as members of the group of companies. Each 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 corporate, limited partnership or limited
liability company, as applicable, purpose, will be of direct and indirect benefit to such Loan
Party, and is in its best interest.

     5.31. Reportable Transaction. The Borrowers do not intend to treat the Advances and
related transactions as being a “reportable transaction” (within the meaning of Treasury Regulation
Section 1.6011-4). In the event a Borrower determines to take any action inconsistent with such
intention, it will promptly notify the Agent thereof.

     5.32. Labor Disputes. Except as set forth on Schedule 5.32, as of the Closing
Date (a) there is no collective bargaining agreement or other labor contract covering employees of
the Borrower or any of its Subsidiaries, (b) no such collective bargaining agreement or other labor
contract, if any, is scheduled to expire during the term of this Agreement, (c) no union or other
labor organization is seeking to organize, or to be recognized as, a collective bargaining unit of
employees of the Borrower or any of its Subsidiaries or for any similar purpose, and (d) there is
no pending or (to the best of the Borrower’s knowledge) threatened, strike, work stoppage, material
unfair labor practice claim, or other material labor dispute against or affecting the Borrower or
its Subsidiaries or their employees.

ARTICLE VI

COVENANTS

     Each Loan Party executing this Agreement jointly and severally agrees as to all Loan Parties
that from and after the date hereof and until the Facility Termination Date:

     6.1. Financial and Collateral Reporting. Each Loan Party will maintain, for itself
and each Subsidiary, a system of accounting established and administered in accordance with GAAP,
and will furnish to the Lenders:

     (a) on the date of the filing of Form 10-K with the Securities and Exchange
Commission, but in no event later than ninety days after the close of each Fiscal
Year of the Company and its Subsidiaries, an audit report certified without a “going
concern” or like qualification or exception, or qualification arising out of the
scope of the audit, by independent certified public accountants acceptable to the
Required Lenders, prepared in accordance with GAAP on a consolidated and
consolidating basis (consolidating statements need not be certified by such
accountants), including balance sheets as of the end of such Fiscal Year, related
profit and loss and reconciliation of surplus statements, and a statement of cash
flows, accompanied by (i) any management letter prepared by said accountants and
(ii) a certificate of said accountants that, in the course of their examination
necessary for their certification of the foregoing, they have obtained no knowledge
of any Default or Unmatured Default, or if, in the opinion of such accountants, any
Default or Unmatured Default shall exist, stating the nature and status thereof;

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     (b) on the date of the filing of Form 10-Q with the Securities and Exchange
Commission, but in no event later than forty-five days after the close of each of
the first three quarterly periods of each Fiscal Year of the Company and its
Subsidiaries, consolidated and consolidating unaudited balance sheets as at the
close of each such Fiscal Quarter and consolidated and consolidating profit and loss
and reconciliation of surplus statements and a statement of cash flows for the
period from the beginning of the applicable Fiscal Year to the end of such Fiscal
Quarter, all certified by its chief financial officer and prepared in accordance
with GAAP (except for exclusion of footnotes and subject to normal year-end audit
adjustments);

     (c) within thirty days after the close of each Fiscal Month of the Company and
its Subsidiaries, consolidated and consolidating unaudited balance sheets as at the
close of each such Fiscal Month and consolidated and consolidating profit and loss
and reconciliation of surplus statements, and certain cash flow items deemed
necessary by Agent in its discretion, from the beginning of the applicable Fiscal
Year to the end of such Fiscal Month, all prepared in accordance with GAAP (except
for exclusion of footnotes and subject to normal year-end audit adjustments) and
certified by its chief financial officer;

     (d) as soon as available, but not later than thirty days prior to the end of
such Fiscal Year, a copy of the plan and forecast (including a projected
consolidated and consolidating balance sheet, income statement and funds flow
statement) of the Company for each Fiscal Quarter of the following Fiscal Year (the
“Projections”) in form reasonably satisfactory to the Agent;

     (e) together with each of the financial statements required under Sections
6.1(a), (b) and (c), a compliance certificate in substantially
the form of Exhibit E (a “Compliance Certificate”) signed by the
chief financial officer of the Borrower Representative showing the calculations
necessary to determine compliance with this Agreement and stating that no Default or
Unmatured Default exists, or if any Default or Unmatured Default exists, stating the
nature and status thereof.

     (f) as soon as available but in any event within three days of the end of each
calendar week (or Fiscal Month if Borrowers’ average Availability for the prior
thirty-day period exceeds $20,000,000), and at such other times as may be requested
by the Agent, as of the period then ended, an Aggregate Borrowing Base Certificate,
together with a duly executed Borrowing Base Certificate for each Borrower which
calculates such Borrower’s Borrowing Base, and supporting information in connection
therewith;

     (g) as soon as available but in any event within fifteen days of the end of
each Fiscal Month and at such other times as may be requested by the Agent, as of
the period then ended:

     (i) a detailed aging of each Borrower’s Accounts (1) including all
invoices aged by invoice date and (2) reconciled to the Aggregate Borrowing
Base Certificate and such Borrower’s Borrowing Base Certificate delivered as
of such date prepared in a manner reasonably acceptable to the Agent,
together with a summary specifying the name, address, and balance due for
each Account Debtor;

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     (ii) a schedule detailing each Borrower’s Inventory, in form
satisfactory to the Agent, (1) by location (showing Inventory in transit,
any Inventory located with a third party under any consignment, bailee
arrangement, or warehouse agreement), by class (raw material,
work-in-process and finished goods), by product type, and by volume on hand,
which Inventory shall be valued at the lower of cost (determined on a
first-in, first-out basis) or market and adjusted for Reserves as the Agent
has previously indicated to the Borrower are deemed by the Agent to be
appropriate, (2) including a report of any variances or other results of
Inventory counts performed by such Borrower since the last Inventory
schedule (including information regarding sales or other reductions,
additions, returns, credits issued by such Borrower and complaints and
claims made against such Borrower), and (3) reconciled to such Borrower’s
Borrowing Base Certificate delivered as of such date;

     (iii) a worksheet of calculations prepared by each Borrower to
determine Eligible Accounts, Eligible Unbilled Accounts and Eligible
Inventory, such worksheets detailing the Accounts and Inventory excluded
from Eligible Accounts, Eligible Unbilled Accounts and Eligible Inventory
and the reason for such exclusion;

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

     (v) a reconciliation of the loan balance per each Borrower’s general
ledger to the loan balance under this Agreement.

     (h) as soon as available but in any event within fifteen days of the end of
each Fiscal Month, and at such other times as may be requested by the Agent, as of
the month then ended, a schedule and aging of the Borrowers’ accounts payable;

     (i) promptly upon the Agent’s request:

     (i) copies of invoices in connection with the invoices issued by the
Borrowers in connection with any Accounts, credit memos, shipping and
delivery documents, and other information related thereto;

     (ii) copies of purchase orders, invoices, and shipping and delivery
documents in connection with any Inventory or Equipment purchased by any
Loan Party; and

     (iii) a schedule detailing the balance of all intercompany accounts of
the Loan Parties;

     (j) as soon as available but in any event within three days of the end of each
calendar week and at such other times as may be requested by the Agent, as of the
period then ended, the Borrower’s sales journal, cash receipts journal (identifying
trade and non-trade cash receipts) and debit memo/credit memo journal;

     (k) as soon as possible and in any event within thirty days of filing thereof,
copies of all tax returns filed by any Loan Party with the U.S. Internal Revenue
Service;

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     (l) as soon as possible and in any event within two-hundred and seventy days
after the close of the Fiscal Year of the Company, a statement of the Unfunded
Liabilities of each Single Employer Plan, certified as correct by an actuary
enrolled under ERISA;

     (m) as soon as possible and in any event within ten days after any Borrower
knows that any Reportable Event has occurred with respect to any Plan, a statement,
signed by the chief financial officer of such Borrower, describing said Reportable
Event and the action which such Borrower proposes to take with respect thereto;

     (n) as soon as possible and in any event within thirty days of filing therewith
with the PBGC, the U.S. Internal Revenue Service or any other governmental entity, a
copy of each annual report or other filing with respect to any Plan;

     (o) as soon as possible and in any event within ten days after receipt by any
Loan Party, a copy of (i) any material notice or claim to the effect that any Loan
Party is or may be liable to any Person as a result of the release by any Loan
Party, or any other Person of any toxic or hazardous waste or substance into the
environment, and (ii) any material notice alleging any violation of any federal,
state or local environmental, health or safety law or regulation by the any Loan
Party;

     (p) within ten days of each March 31 and September 30, an updated Customer List
for each Borrower, certified as true and correct by an Authorized Officer of each
such Borrower;

     (q) concurrently with the furnishing thereof to the shareholders of the
Borrowers, copies of all financial statements, reports and proxy statements so
furnished;

     (r) promptly upon the filing thereof, copies of all registration statements and
annual, quarterly, monthly or other regular reports which any Loan Party files with
the Securities and Exchange Commission;

     (s) as soon as possible and in any event within ten days after the end of each
Fiscal Quarter (or more frequently as requested by Agent in its discretion), a
detailed listing of all advances of proceeds of Loans made by the Borrower
Representative to each Borrower during the immediately preceding Fiscal Month and a
detailed listing of all intercompany loans made by the Borrowers during such Fiscal
Month;

     (t) on the first Business Day of the month of each March and September, a
certificate of good standing for each Loan Party from the appropriate governmental
officer in its jurisdiction of incorporation, formation, or organization; and

     (u) such other information (including non-financial information) as the Agent
or any Lender may from time to time reasonably request.

     6.2. Use of Proceeds.

     (a) The Borrowers will use the proceeds of the Credit Extensions for (i)
general corporate purposes (not otherwise prohibited by this Agreement) and (ii)
Permitted Acquisitions.

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     (b) No Loan Party will use any of the proceeds of the Credit Extensions to (i)
purchase or carry any Margin Stock in violation of Regulation U, (ii) repay or
refinance any Indebtedness of any Person incurred to buy or carry any Margin Stock,
(iii) acquire any security in any transaction that is subject to Section 13 or
Section 14 of the Securities Exchange Act of 1934 (and the regulations promulgated
thereunder), or (iv) make any Acquisition other than Permitted Acquisitions.

     6.3. Notices. Each Loan Party will give prompt notice in writing to the Agent and the
Lenders of:

     (a) the occurrence of any Default or Unmatured Default;

     (b) any other development, financial or otherwise, which could reasonably be
expected to have a Material Adverse Effect;

     (c) the assertion by the holder of any Capital Stock of any Loan Party or the
holder of any Indebtedness of any Loan Party in excess of $1,000,000 that any
default exists with respect thereto or that any Loan Party is not in compliance
therewith;

     (d) receipt of any material written notice that any Loan Party is subject to
any investigation by any governmental entity with respect to any potential or
alleged violation of any applicable Environmental Law or of imposition of any Lien
against any Property of any Loan Party for any liability with respect to damages
arising from, or costs resulting from, any violation of any Environmental Laws;

     (e) receipt of any notice of litigation commenced or threatened against any
Loan Party that (i) seeks damages in excess of $2,000,000, (ii) seeks injunctive
relief, (iii) is asserted or instituted against any Plan, its fiduciaries or its
assets, (iv) alleges criminal misconduct by any Loan Party, (v) alleges the
violation of any law regarding, or seeks remedies in connection with, any
Environmental Laws; or (vi) involves any product recall;

     (f) any Lien (other than Permitted Liens) or claim made or asserted against any
of the Collateral;

     (g) its decision to change, (i) such Loan Party’s name or type of entity, (ii)
such Loan Party’s articles or certificate of incorporation, partnership agreement,
certificate of partnership, articles or certificate of organization, by-laws, or
operating or other management agreement (with respect to clauses (i) and (ii) other
than with respect to the Permitted Restructuring), and (iii) the location where any
Collateral is held or maintained; provided that, in no event shall the Agent receive
notice of such change less than thirty days prior thereto;

     (h) commencement of any proceedings contesting any tax, fee, assessment, or
other governmental charge in excess of $500,000;

     (i) the opening of any new deposit account by any Loan Party with any bank or
other financial institution;

     (j) any loss, damage, or destruction to the Collateral in the amount of
$500,000 or more, whether or not covered by insurance;

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

     (l) all material amendments to real estate leases, together with a copy of each
such amendment;

     (m) immediately after becoming aware of any pending or threatened strike, work
stoppage, unfair labor practice claim, or other labor dispute affecting the Borrower
or any of its Subsidiaries in a manner;

     (n) evidence of payment of monthly lease or rental payments as to each leased
or rented location for which a landlord or bailee waiver has not been obtained
(which shall be delivered within three Business Days after payment thereof);

     (o) the fact that such Loan Party has entered into a Rate Management
Transaction or an amendment to a Rate Management Transaction, together with copies
of all agreements evidencing such Rate Management Transactions or amendments thereto
(which shall be delivered within two Business Days);

     (p) any notice provided to or by Term Administrative Agent and/or Term
Collateral Agent relating to any “Default” or “Event of Default” or event relating
to a “Material Adverse Effect” (each as defined in the Term Agreement), such notice
to be
contemporaneously delivered by the Borrower Representative to the Agent and the
Lenders; and

     (q) any other matter as the Agent may reasonably request.

     6.4. Conduct of Business. Both before and after giving effect to the Permitted
Restructuring, each Loan Party will:

     (a) carry on and conduct its business in substantially the same manner and in
substantially the same fields of enterprise as it is presently conducted;

     (b) do all things necessary to remain duly incorporated or organized, validly
existing and (to the extent such concept applies to such entity) in good standing as
a domestic corporation, partnership or limited liability company in its jurisdiction
of incorporation or organization, as the case may be, and maintain all requisite
authority to conduct its business in each jurisdiction in which its business is
conducted;

     (c) keep adequate books and records with respect to its business activities in
which proper entries, reflecting all financial transactions, are made in accordance
with GAAP and on a basis consistent with the Financial Statements delivered to the
Agent pursuant to
Section 4.1(n) (unless otherwise consented to by Agent in
its discretion);

     (d) at all times maintain, preserve and protect all of its assets and
properties used or useful in the conduct of its business, and keep the same in good
repair, working order and condition in all material respects (taking into
consideration ordinary wear and tear) and from time to time make, or cause to be
made, all necessary or appropriate repairs, replacements and improvements thereto
consistent with industry practices; and

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     (e) transact business only in such corporate and trade names as are set forth
in Schedule 5.12 (as may be updated by Borrowers upon consummation of the
Permitted Restructuring), unless such Loan Party has provided Agent with thirty
days’ prior written notice of a change (other than with respect to the Permitted
Restructuring) to such corporate or trade names and otherwise complied with the
terms of Section 6.23.

     6.5. Taxes. Each Loan Party will timely file complete and correct U.S. federal and
applicable foreign, state and local tax returns required by law and pay when due all taxes,
assessments and governmental charges and levies upon it or its income, profits, Property or
Collateral, except those which are being contested in good faith by appropriate proceedings and
with respect to which adequate reserves have been set aside in accordance with GAAP. At any time
that any Loan Party is organized as a limited liability company, each such limited liability
company that has elected to be taxed as a partnership will qualify for partnership tax treatment
under U.S. federal tax law.

     6.6. Payment of Indebtedness and Other Liabilities. Each Loan Party will pay or
discharge when due all Material Indebtedness permitted by Section 6.17 owed by such Loan
Party (or its successor pursuant to the Permitted Restructuring), and all other liabilities and
obligations due to materialmen, mechanics, carriers, warehousemen, and landlords, except that the
Loan Parties may in good faith contest, by appropriate proceedings diligently pursued, any
such obligations; provided that, (a) adequate reserves have been set aside for such
liabilities in accordance with GAAP, (b) such liabilities would not result in aggregate liabilities
in excess of $1,000,000, (c) no Lien shall be imposed to secure payment of such liabilities that is
superior to the Agent’s Liens securing the Secured Obligations, (d) none of the Collateral becomes
subject to forfeiture or loss as a result of the contest and (e) such Loan Party shall promptly pay
or discharge such contested liabilities, if any, and shall deliver to the Agent evidence reasonably
acceptable to the Agent of such compliance, payment or discharge, if such contest is terminated or
discontinued adversely to such Loan Party or the conditions set forth in this proviso are no longer
met.

     6.7. Insurance.

     (a) Except as set forth on Schedule 6.7, each Loan Party shall at all
times maintain, with financially sound and reputable carriers having a Financial
Strength rating of at least A by A.M. Best Company, insurance against: (i) loss or
damage by fire and loss in transit; (ii) theft, burglary, pilferage, larceny,
embezzlement, and other criminal activities; (iii) business interruption; (iv)
general liability and (v) and such other hazards, as is customary in the business of
such Loan Party. All such insurance shall be in amounts, cover such assets and be
under policies acceptable to the Agent in its Permitted Discretion. In the event
any Collateral is located in any area that has been designated by the Federal
Emergency Management Agency as a “Special Flood Hazard Area”, the applicable Loan
Party shall purchase and maintain flood insurance on such Collateral (including any
personal Property which is located on any real Property leased by such Loan Party
within a “Special Flood Hazard Area”). The amount of all insurance required by this
Section shall at a minimum comply with applicable law, including the Flood Disaster
Protection Act of 1973, as amended. All premiums on such insurance shall be paid
when due by the applicable Loan Party, and copies of the policies delivered to the
Agent. If any Loan Party fails to obtain any insurance as required by this Section,
the Agent at the direction of the Required Lenders may obtain such insurance at the
Borrowers’ expense. By purchasing such insurance, the Agent shall not be deemed to
have waived any Default or Unmatured Default arising from any Loan Party’s failure
to maintain such insurance or pay any premiums therefor. No Loan Party will use or
permit any Property to be used in violation of applicable law or in any manner which
might render inapplicable any insurance coverage.

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     (b) All insurance policies required under Section 6.7(a) shall name the
Agent (for the benefit of the Agent and the Lenders) as an additional insured or as
loss payee, as applicable, and shall provide that, or contain loss payable clauses
or mortgagee clauses, in form and substance satisfactory to the Agent, which provide
that:

     (i) all proceeds thereunder with respect to any Collateral shall be
payable to the Agent;

     (ii) no such insurance shall be affected by any act or neglect of the
insured or owner of the Property described in such policy; and

     (iii) such policy and loss payable clauses may be canceled, amended, or
terminated only upon at least thirty days prior written notice given to the
Agent.

     (c) The Borrowers must give the Agent prior written notice of any change in
insurance carriers and any new insurance policy shall comply with the provisions of
this Section 6.7 and otherwise be acceptable to the Agent. Without in any
way limiting the foregoing, in no event shall the Borrowers change their insurance
carrier without first obtaining a loss payable endorsement in form and substance
satisfactory to the Agent.

     (d) Notwithstanding the foregoing, any insurance or condemnation proceeds
received by the Loan Parties shall, subject to the terms of the Intercreditor
Agreement, be immediately forwarded to the Agent and the Agent may, at its option,
apply any such proceeds to the reduction of the Obligations in accordance with
Section 2.15(e), provided that in the case of insurance proceeds pertaining
to any Loan Party other than the Borrowers, such insurance proceeds shall be applied
to the Loans owing by the Borrowers. The Agent may permit or require any Loan Party
to use such money, or any part thereof, to replace, repair, restore or rebuild the
Collateral in a diligent and expeditious manner with materials and workmanship of
substantially the same quality as existed before the loss, damage or destruction.
Notwithstanding the foregoing, if the casualty giving rise to such insurance
proceeds could not reasonably be expected to have a Material Adverse Effect and such
insurance proceeds do not exceed $1,000,000 in the aggregate, upon the applicable
Loan Party’s request, the Agent shall permit such Loan Party to replace, restore,
repair or rebuild the property; provided that, if such Loan Party has not completed
or entered into binding agreements to complete such replacement, restoration, repair
or rebuilding within ninety days of such casualty, the Agent may apply such
insurance proceeds to the Obligations in accordance with Section 2.15. All
insurance proceeds that are to be made available to the Borrowers to replace,
repair, restore or rebuild the Collateral shall be applied by the Agent to reduce
the outstanding principal balance of the Revolving Loans (which application shall
not result in a permanent reduction of the Revolving Commitment) and upon such
application, the Agent shall establish a Reserve against the Aggregate Borrowing
Base in an amount equal to the amount of such proceeds so applied. All insurance
proceeds made available to any Loan Party that is not a Borrower to replace, repair,
restore or rebuild Collateral shall be deposited in a cash collateral account. In
either case, thereafter, such funds shall be made available to the applicable Loan
Party to provide funds to replace, repair, restore or rebuild the Collateral as
follows:

     (i) the Borrower Representative, on behalf of the applicable Borrower,
shall request a Revolving Loan or the Borrower Representative, on behalf of
the applicable Loan Party, shall request a release from the cash collateral
account be made in the amount needed;

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     (ii) so long as the conditions set forth in Section 4.2 have
been met, the Revolving Lenders shall make such Revolving Loan or the Agent
shall release funds from the cash collateral account; and

     (iii) in the case of insurance proceeds applied against the Revolving
Loan, the Reserve established with respect to such insurance proceeds shall
be reduced by the amount of such Revolving Loan.

     6.8. Compliance with Laws. Each Loan Party will comply with all laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject
including, without limitation, all Environmental Laws.

     6.9. Maintenance of Properties and Intellectual Property Rights. Each Loan Party will
do all things necessary to (a) maintain, preserve, protect and keep its Property in good repair,
working order and condition, and make all necessary and proper repairs, renewals and replacements
so that its business carried on in connection therewith may be properly conducted at all times and
(b) obtain and maintain in effect at all times all material franchises, governmental
authorizations, Intellectual Property Rights, licenses and permits, which are necessary for it to
own its Property or conduct its business as conducted on the Closing Date.

     6.10. Inspection. Each Loan Party will permit the Agent and the Lenders, by their
respective employees, representatives and agents, from time to time upon two Business Days’ prior
notice as frequently as the Agent reasonably determines to be appropriate, to (a) inspect any of
the Property, the Collateral, and the books and financial records of such Loan Party, (b) examine,
audit and make extracts or copies of the books of accounts and other financial records of such Loan
Party, (c) have access to its properties, facilities, the Collateral and its advisors, officers,
directors and employees to discuss the affairs, finances and accounts of such Loan Party and (d)
review, evaluate and make test verifications and counts of the Accounts, Inventory and other
Collateral of such Loan Party. If a Default or an Unmatured Default has occurred and is
continuing, each Loan Party shall provide such access to the Agent and to each Lender at all times
and without advance notice. Furthermore, so long as any Default has occurred and is continuing,
each Loan Party shall provide the Agent and each Lender with access to its suppliers. Each Loan
Party shall promptly make available to the Agent and its counsel originals or copies of all books
and records that the Agent may reasonably request. The Loan Parties acknowledge that from time to
time the Agent may prepare and may distribute to the Lenders certain audit reports pertaining to
the Loan Parties’ assets for internal use by the Agent and the Lenders from information furnished
to it by or on behalf of the Loan Parties, after the Agent has exercised its rights of inspection
pursuant to this Agreement.

     6.11. Appraisals; Additional Real Property Requirements. Whenever a Default or
Unmatured Default exists, and at such other times (which shall occur not less than once per
calendar year) as the Agent requests, the Loan Parties shall, at their sole expense, provide the
Agent with appraisals or updates thereof of their Inventory, Equipment and real Property from an
appraiser selected and engaged by the Agent, and prepared on a basis, satisfactory to the Agent,
such appraisals and updates to include, without limitation, information required by applicable law
and regulations and by the internal policies of the Lenders. At the request of the Agent, the Loan
Parties shall, at their sole expense, deliver, with respect to each parcel of real Property, which
is required from time to time to be subject to a Lien in favor of the Agent, a Mortgage on such
real Property duly executed by the appropriate Loan Party in recordable form, an ALTA or other
mortgagee’s title policy and a copy of a Phase I Environmental Report or other similar report, each
in form and substance satisfactory to the Agent.

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     6.12. Communications with Accountants. Each Loan Party executing this Agreement
authorizes (a) the Agent and (b) so long as a Default has occurred and is continuing, each Lender,
to communicate directly with its independent certified public accountants and authorizes and shall
instruct those accountants and advisors to communicate to the Agent and each Lender information
relating to any Loan Party with respect to the business, results of operations and financial
condition of any Loan Party.

     6.13. Collateral Access Agreements and Real Estate Purchases. Each Loan Party shall use commercially reasonable efforts to obtain a Collateral Access
Agreement, from the lessor of each leased property, mortgagee of owned property or bailee or
consignee with respect to any warehouse, processor or converter facility or other location where
Collateral is stored or located, which agreement or letter shall provide access rights, contain a
waiver or subordination of all Liens or claims that the landlord, mortgagee or bailee or consignee
may assert against the Collateral at that location, and shall otherwise be reasonably satisfactory
in form and substance to the Agent. With respect to such locations or warehouse space leased or
owned as of the Closing Date and thereafter, if the Agent has not received a Collateral Access
Agreement as of the Effective Date (or, if later, as of the date such location is acquired or
leased), the Borrowers’ Eligible Inventory at that location shall be excluded from the Aggregate
Borrowing Base and the applicable Borrower’s Borrowing Base. After the Closing Date, no real
property or warehouse space shall be leased by any Loan Party and no Inventory shall be shipped to
a processor or converter under arrangements established after the Closing Date, unless and until a
satisfactory Collateral Access Agreement shall first have been obtained with respect to such
location and if it has not been obtained, Borrowers’ Eligible Inventory at that location shall be
excluded from the Aggregate Borrowing Base and the applicable Borrower’s Borrowing Base. Each Loan
Party shall timely and fully pay and perform its obligations under all leases and other agreements
with respect to each leased location or third party warehouse where any Collateral is or may be
located. To the extent permitted hereunder, if any Loan Party proposes to acquire a fee ownership
interest in real Property after the Closing Date, it shall first provide the Agent with notice of
such proposed acquisition and, if required by the Agent, provide to the Agent a mortgage or deed of
trust granting the Agent a second priority Lien on such real Property (subject only to the first
priority Lien of the Term Collateral Agent pursuant to the Term Documents, subject to the
Intercreditor Agreement), together with environmental audits, mortgage title insurance commitment,
real property survey, local counsel opinion(s), and, if required by the Agent, supplemental
casualty insurance and flood insurance, and such other documents, instruments or agreements
reasonably requested by the Agent, in each case, in form and substance reasonably satisfactory to
the Agent.

     6.14. Deposit Account Control Agreements. The Loan Parties will provide to the Agent
upon the Agent’s request, a Deposit Account Control Agreement duly executed on behalf of each
financial institution holding a deposit account of a Loan Party as set forth in the Security
Agreement.

     6.15. Additional Collateral; Further Assurances.

     (a) Subject to applicable law, each Loan Party shall, unless the Required
Lenders otherwise consent, (i) cause each of its Subsidiaries (excluding any Foreign
Subsidiary) to become or remain a Borrower (unless otherwise permitted by Agent in
its sole discretion) and (ii) cause each of its Subsidiaries (excluding any Foreign
Subsidiary) formed or acquired after the Closing Date in accordance with the terms
of this Agreement to become a party to this Agreement by executing the Joinder
Agreement set forth as Exhibit F hereto (the “Joinder Agreement”).

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     (b) Upon the request of the Agent, each Loan Party shall (i) grant Liens to the
Agent, for the benefit of the Agent and the Lenders, pursuant to such documents as
the Agent may reasonably deem necessary and deliver such property, documents, and
instruments as the Agent may request to perfect the Liens of the Agent in any
Property of such Loan Party which constitutes Collateral, including any parcel of
real Property located in the U.S. owned by any Loan Party, and (ii) in connection
with the foregoing requirements, or either of them, deliver to the Agent all items
of the type required by Section 4.1 (as applicable). Upon execution and
delivery of such Loan Documents and
other instruments, certificates, and agreements, each such Person shall
automatically become a Guarantor hereunder and thereupon shall have all of the
rights, benefits, duties, and obligations in such capacity under the Loan Documents.

     (c) Each Loan Party will cause (i) 100% of the issued and outstanding Capital
Stock of each of its Domestic Subsidiaries and (ii) 65% (or such greater percentage
that, due to a change in an applicable law after the date hereof, (1) could not
reasonably be expected to cause the undistributed earnings of such Foreign
Subsidiary as determined for U.S. federal income tax purposes to be treated as a
deemed dividend to such Foreign Subsidiary’s U.S. parent and (2) could not
reasonably be expected to cause any material adverse tax consequences) of the issued
and outstanding Capital Stock entitled to vote (within the meaning of Treas. Reg.
Section 1.956-2(c)(2)) and 100% of the issued and outstanding Capital Stock not
entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) in each
Foreign Subsidiary directly owned by such Loan Party or any Domestic Subsidiary to
be subject at all times to a second priority, perfected Lien (subject only to the
first priority Lien of the Term Collateral Agent pursuant to the Term Documents,
subject to the Intercreditor Agreement) in favor of the Agent pursuant to the terms
and conditions of the Loan Documents or other security documents as the Agent shall
reasonably request.

     (d) Without limiting the foregoing, each Loan Party shall, and shall cause each
of the Loan Parties’ Subsidiaries which is required to become a Loan Party pursuant
to the terms of this Agreement to, execute and deliver, or cause to be executed and
delivered, to the Agent such documents and agreements, and shall take or cause to be
taken such actions as the Agent may, from time to time, reasonably request to carry
out the terms and conditions of this Agreement and the other Loan Documents.

     (e) Notwithstanding the foregoing, at any time after a Default has occurred,
each Loan Party shall, upon the request of the Agent, cause each Foreign Subsidiary
to become a Loan Party and a Guarantor and to grant Liens to the Agent on its assets
and have the balance of its stock pledged to the Agent.

     6.16. Dividends.

     (a) No Loan Party will declare or pay any dividends or make any distributions
on its Capital Stock (other than dividends or distributions payable in its own
common stock or pursuant to the Permitted Restructuring) or redeem, repurchase or
otherwise acquire or retire any of its Capital Stock at any time outstanding, other
than with respect to the following:

     (i) any Subsidiary may declare and pay dividends or make distributions
to the Borrowers or to a Wholly-Owned Subsidiary of the Borrowers;

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     (ii) Reserved.

     (iii) the Company may repurchase or redeem its Capital Stock from time
to time, not in excess of an aggregate of $10,000,000 from the Closing Date
to the Facility Termination Date; provided, however, that no repurchase or
redemption may be made unless (A) both before and (on a pro-forma basis)
after giving effect thereto (1) the Borrowers’ Fixed Charge Coverage Ratio
has been
and will be equal to or greater than 1.5 to 1.0 for two consecutive
Fiscal Quarters, (2) the Borrowers’ Availability is equal to or greater than
$15,000,000, (3) there is no Default or Unmatured Default in existence and
none would result from such repurchase of redemption, and (4) the repurchase
or redemption is permitted by the Term Agreement;

     (iv) any Loan Party may retire Capital Stock if the retirement (A)
consists of a conversion of any class of Capital Stock into another class of
common stock or (B) the sole consideration paid in connection with such
retirement is common stock; and

     (v) each Borrower may pay dividends or make distributions to its
partners or members in an aggregate amount not greater than the amount
necessary for such partners or members to pay their actual state and United
States federal income tax liabilities in respect of income earned by such
Borrower.

     (b) No Loan Party shall directly or indirectly enter into or become bound by
any agreement, instrument, indenture or other obligation (other than this Agreement,
the other Loan Documents, the Term Documents and any indenture pursuant to which
Senior Subordinated Debt permitted by Section 6.17 is issued) that could
directly or indirectly restrict, prohibit or require the consent of any Person with
respect to the payment of dividends or distributions or the making or repayment of
intercompany loans by a Subsidiary of the Borrowers to the Borrowers.

     6.17. Indebtedness. No Loan Party will create, incur or suffer to exist any
Indebtedness, except:

     (a) the Obligations;

     (b) Indebtedness existing on the date hereof and described in Schedule
5.22;

     (c) purchase money Indebtedness incurred in connection with the purchase of any
Equipment; provided that, the amount of such purchase money Indebtedness shall be
limited to an amount not in excess of the purchase price of such Equipment and the
aggregate of all such purchase money Indebtedness shall not exceed $5,000,000;

     (d) Indebtedness which represents an extension, refinancing, or renewal of any
of the Indebtedness described in clauses (b), (c), (g) and
(i) hereof; provided that, (i) the principal amount or interest rate of such
Indebtedness is not increased, (ii) any Liens securing such Indebtedness are not
extended to any additional Property of any Loan Party, (iii) no Loan Party that is
not obligated with respect to repayment of such Indebtedness as of the Closing Date
or as of the date such Indebtedness was incurred, whichever is later, is required to
become obligated with respect thereto, (iv) such extension, refinancing or renewal
does not result in a shortening of the average weighted

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maturity of the Indebtedness
so extended, refinanced, renewed, (v) the terms of any such extension, refinancing,
or renewal are not less favorable to the obligor thereunder than the original terms
of such Indebtedness and (iv) if the Indebtedness that is refinanced, renewed, or
extended was subordinated in right of payment to the Obligations, then the terms and
conditions of the refinancing, renewal, or extension Indebtedness must include
subordination terms and conditions that are at least as favorable to the Agent and
the
Lenders as those that were applicable to the refinanced, renewed, or extended
Indebtedness;

     (e) Indebtedness owing by any Borrower to any other Loan Party with respect to
intercompany loans, provided further, that:

     (i) upon the request of the Agent, the applicable Loan Parties shall
have executed and delivered to the other Borrower, on the Effective Date, a
demand note (collectively, the “Intercompany Notes”) to evidence any
such intercompany Indebtedness owing at any time by any Borrower to another
Loan Party, which Intercompany Notes shall be in form and substance
reasonably satisfactory to the Agent and shall be pledged and delivered to
the Agent pursuant to the Security Agreement as additional collateral
security for the Secured Obligations;

     (ii) the Loan Parties shall record all intercompany transactions on
their books and records in a manner reasonably satisfactory to the Agent;

     (iii) the obligations of the Borrowers under any such Intercompany
Notes shall be subordinated to the Obligations of the Loan Parties hereunder
in a manner reasonably satisfactory to the Agent; and

     (iv) at the time any such intercompany loan or advance is made and
after giving effect thereto, each Loan Party thereto shall be Solvent.

     (f) Contingent Obligations (i) by endorsement of instruments for deposit or
collection in the ordinary course of business (ii) consisting of the Reimbursement
Obligations and (iii) consisting of guarantees of Indebtedness incurred for the
benefit of any other Loan Party if the primary obligation is expressly permitted
elsewhere in this Section 6.17, provided that guarantees of Indebtedness
permitted by Section 6.17(h) shall be subordinated to the same extent as the
Senior Subordinated Debt is subordinated to the Loans;

     (g) Indebtedness arising under Rate Management Transactions related to the
Loans having a Net Mark-to-Market Exposure not exceeding $1,000,000;

     (h) Indebtedness of the Company in respect of any Senior Subordinated Debt the
net proceeds of which are used to prepay, redeem, retire or repurchase the
outstanding principal amount of the then outstanding Term Loans (including any
accrued and unpaid interest and any premiums, fees and expenses, in each case, in
connection therewith);

     (i) other unsecured Indebtedness in an amount not in excess of $5,000,000; and

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     (j) Subject to Subsection (h) hereof, Indebtedness under the Term
Agreement not to exceed the aggregate principal amount of $150,000,000 and as long
as such Indebtedness is subject to the terms of the Intercreditor Agreement.

     6.18. Capital Structure . If all or any part of a Loan Party’s Capital Stock has
been pledged to the Agent, that Loan Party shall not issue additional Capital Stock other than in
connection with the Permitted Restructuring. No Loan Party shall engage in any business other than
the businesses currently engaged in by it.

     6.19. Preservation of Existence; Merger; Survival of Liability.

     (a) Each Loan Party will preserve and maintain its existence except for
certain dissolutions, mergers, conversions, name changes (and dividend and capital
contributions) to be consummated on or before January 1, 2007 pursuant to the
corporate restructuring of the Loan Parties and their respective Affiliates, in each
instance, as described in Exhibit J; provided however, that the Company and
each such other Loan Party affected or other new Subsidiary and/or Affiliate of
Borrowers and/or the other Loan Parties created in connection the actions
described on Exhibit J shall comply with the following conditions, in each
case, to the reasonable satisfaction of Agent: (i) upon consummation of all of the
transactions contemplated by the Permitted Restructuring, the Company will own,
directly or indirectly all of the then existing Loan Parties and all other entities
otherwise described on Exhibit J pursuant to the Permitted Restructuring,
(ii) all transactions contemplated by the Permitted Restructuring shall be
consummated on or before January 1, 2007, (iii) all requisite corporate proceedings,
including any shareholder consents that may be required, authorizing the
transactions contemplated by the Permitted Restructuring shall have been taken, (iv)
all documents necessary or prepared in connection with the Permitted Restructuring
shall be in form and substance reasonably satisfactory to Agent and its counsel, (v)
with respect to the transactions contemplated by the Permitted Restructuring,
including the mergers, name changes, conversions, entity creations and dissolutions,
within ten (10) Business Days after filing the requisite documents with the
applicable Secretary of State (or equivalent Governmental Authority), Agent shall
have received evidence of such filings (including a copy of the certificate of
limited partnership, certificate of limited liability company, or certificate of
incorporation) certified by such Secretary of State (or equivalent Governmental
Authority), (vi) Agent shall have received all information and copies of all other
documents, including records of requisite corporate action and proceedings which
Agent may have requested in connection therewith, such documents where requested by
Agent or its counsel to be certified by appropriate corporate officers, (vii) such
entities shall have expressly assumed the Secured Obligations by executing an
Assumption of Obligations in the form attached hereto as Exhibit D and otherwise by
complying with the provisions of Section 6.15 hereof, as requested by
Agent, and (viii) Agent shall have filed a UCC-1 financing statement or UCC-3
Amendment naming each such entity as debtor, and the Loan Parties shall have taken
all such other actions as Agent shall deem appropriate to evidence, reaffirm,
preserve and perfect its Liens and other rights hereunder and under the other Loan
Documents (the foregoing events described in this Section 6.19(a) being
collectively, a “Permitted Restructuring”)

     (b) Other than with respect to the Permitted Restructuring, no Loan Party will
merge or consolidate with or into any other Person, except that (a) any Subsidiary
of a Borrower may merge into such Borrower or a Wholly-Owned Subsidiary of such
Borrower that is a Loan Party, (b) any Loan Party (other than the Borrowers) may
merge

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with any other Loan Party and (c) in connection with a Permitted Acquisition,
provided that the Loan Party is the surviving entity.

     6.20. Sale of Assets. No Loan Party will lease, sell or otherwise dispose of its
Property (including any Capital Stock owned by it other than with respect to the Permitted
Restructuring) to any other Person except:

     (a) sales of Inventory (including wooden and composite mats removed from the
Company’s rental fleet and sold as used mats) in the ordinary course of business;

     (b) the sale or other disposition of Equipment that is obsolete or no longer
useful in such Loan Party’s business and having a book value not exceeding $100,000
in the aggregate in any Fiscal Year; and

     (c) the sale or disposition of other assets having a book value not exceeding
$100,000 in the aggregate in any Fiscal Year.

Subject to the terms of the Intercreditor Agreement, the Net Cash Proceeds of any sale or
disposition (to the extent such Net Cash Proceeds exceed $100,000) permitted pursuant to this
Section (other than pursuant to Section 6.20(a)) shall be delivered to the Agent as
required by Section 2.15 and applied to the Obligations as set forth therein; provided,
however, that the Company may retain up to $150,000 of un-reinvested Net Cash Proceeds from any
sale or disposition pursuant to this Section in any calendar year.

     6.21. Investments and Acquisitions. No Loan Party will (i) make or suffer to exist
any Investments (including without limitation, loans and advances to, and other Investments in,
Subsidiaries), or commitments therefor, (ii) create any Subsidiary, (iii) become or remain a
partner in any partnership or joint venture, or (iv) make any Acquisition, except:

     (a) Cash Equivalent Investments, subject to control agreements in favor of the
Agent for the benefit of the Lenders or otherwise subject to a perfected security
interest in favor of the Agent for the benefit of the Lenders;

     (b) Investments in existence on the Closing Date and described in Schedule
6.21;

     (c) Investments consisting of loans or advances made to (i) the executive
officers of such Loan Party on an arms-length basis in the ordinary course of
business consistent with past practices for travel and entertainment expenses and
similar purposes up to a maximum of $25,000 to any employee and up to a maximum of
$75,000 in the aggregate (for all Loan Parties) at any one time outstanding and (ii)
the executive officers of such Loan Party on an arms-length basis in the ordinary
course of business consistent with past practices for relocation expenses and
similar purposes up to a maximum of $300,000 to any employee and up to a maximum of
$1,000,000 in the aggregate (for all Loan Parties) at any one time outstanding;

     (d) subject to Sections 4.2(a) and 4.4 of the Security Agreement,
Investments comprised of notes payable, or stock or other securities issued by
Account Debtors to such Loan Party pursuant to negotiated agreements with respect to
settlement
of such Account Debtor’s Accounts in the ordinary course of business,
consistent with past practices;

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     (e) additional Investments in Wholly-Owned Subsidiaries which are Loan Parties;
and

     (f) Permitted Acquisitions and the formation of Wholly Owned Subsidiaries of
the Borrowers in connection with a Permitted Acquisition; and

     (g) Investments in the form of loans and advances to Wholly-Owned Foreign
Subsidiaries, provided that:

     (i) the applicable Foreign Subsidiary shall have executed and delivered
to the Loan Party a demand note (collectively, the “Foreign Intercompany
Notes”) to evidence any such intercompany Indebtedness owing at any time
by any Foreign Subsidiary to a Loan Party, which Foreign Intercompany Notes
shall be in form and substance reasonably satisfactory to the Agent (a copy
of such executed note shall be delivered to Agent);

     (ii) all Foreign Subsidiaries and Loan Parties shall record all
intercompany transactions on their books and records in a manner reasonably
satisfactory to the Agent;

     (iii) at the time any such intercompany loan or advance is made by a
Loan Party and after giving effect thereto, such Loan Party shall be
Solvent;

     (iv) no Default or Unmatured Default would occur and be continuing
after giving effect to any such proposed intercompany loan;

     (v) in the case of any such intercompany loans made by any Borrower,
the Borrowers’ Availability shall not be less than $15,000,000 after giving
effect to such intercompany loan; and

     (vi) the aggregate balance of all such intercompany loans owing to the
Borrowers by the Foreign Subsidiaries shall not exceed $40,000,000 at any
time.

     6.22. Liens.

     (a) No Loan Party will create, incur, or suffer to exist any Lien in, of, or on
the Property of such Loan Party, (including, without limitation, the real Property
or marine vessels of such Loan Party) except the following (collectively,
“Permitted Liens”):

     (i) Liens for taxes, fees, assessments, or other governmental charges
or levies on the Property of such Loan Party if such Liens (1) shall not at
the time be delinquent or (2) subject to the provisions of Section
6.6, do not secure obligations in excess of $250,000, are being
contested in good faith and by appropriate proceedings diligently pursued,
adequate reserves in accordance with GAAP have been set aside on the books
of such Loan Party, and a stay of enforcement of such Lien is in effect;

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     (ii) Liens imposed by law, such as carrier’s, warehousemen’s, and
mechanic’s Liens and other similar Liens arising in the ordinary course of
business which secure payment of obligations not more than ten days past
due;

     (iii) statutory Liens in favor of landlords of real Property leased by
such Loan Party; provided that, such Loan Party is current with respect to
payment of all rent and other amounts due to such landlord under any lease
of such real Property;

     (iv) Liens arising out of pledges or deposits under worker’s
compensation laws, unemployment insurance, old age pensions, or other social
security or retirement benefits, or similar legislation or to secure the
performance of bids, tenders, or contracts (other than for the repayment of
Indebtedness) or to secure indemnity, performance, or other similar bonds
for the performance of bids, tenders, or contracts (other than for the
repayment of Indebtedness) or to secure statutory obligations (other than
liens arising under ERISA or Environmental Laws) or surety or appeal bonds,
or to secure indemnity, performance, or other similar bonds;

     (v) utility easements, building restrictions, and such other
encumbrances or charges against real Property as are of a nature generally
existing with respect to properties of a similar character and which do not
in any material way affect the marketability of such real Property or
interfere with the use thereof in the business of such Loan Party;

     (vi) Liens existing on the Closing Date and described in Schedule
6.22;

     (vii) Liens resulting from any extension, refinancing, or renewal of
the related Indebtedness as permitted pursuant to Section 6.17(d);
provided that, the Liens evidenced thereby are not increased to cover any
additional Property not covered thereby immediately prior to such extension,
refinancing or renewal;

     (viii) Liens securing purchase money Indebtedness of such Loan Party
permitted pursuant to Section 6.17(c); provided that, such Liens
attach only to the Property which was purchased with the proceeds of such
purchase money Indebtedness;

     (ix) Liens in favor of the Agent granted pursuant to any Loan Document;

     (x) Liens in favor of the Term Administrative Agent and/or the Term
Collateral Agent, as applicable, securing the Indebtedness owing under the
Term Agreement so long as the Intercreditor Agreement is in full force and
effect with respect thereto.

     (b) Notwithstanding the foregoing, none of the Liens permitted pursuant to this
Section 6.22, other than (1) clauses (i) and (ix) above, may at any time
attach to any Accounts of any Loan Party and (2) clauses (i) through (iii) and (ix)
above, may at any time attach to any Inventory of any Loan Party.

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     (c) Other than as provided in the Loan Documents or in connection with the
creation or incurrence of any Indebtedness under Section 6.17(c), no Loan
Party will enter into or become subject to any negative pledge or other restriction
on the right of such Loan Party to grant Liens to the Agent and the Lenders on any
of its Property; provided that, any such negative pledge or other restriction
entered into in connection with the creation of Indebtedness under Section
6.17(c) shall be limited to the Property securing such purchase money
Indebtedness.

     6.23. Change of Name or Location; Change of Fiscal Year. Other than with respect to
the Permitted Restructuring, no Loan Party shall (a) change its name as it appears in official
filings in the state of its incorporation or organization, (b) change its chief executive office,
principal place of business, mailing address, corporate offices or warehouses or locations at which
Collateral is held or stored, or the location of its records concerning the Collateral as set forth
in the Security Agreement, (c) change the type of entity that it is, (d) change its organization
identification number, if any, issued by its state of incorporation or other organization, or (e)
change its state of incorporation or organization, in each case, unless (1) the Agent shall have
received at least thirty days’ prior written notice of such change and (2) the Agent shall have
acknowledged in writing that, either (i) such change will not adversely affect the validity,
perfection or priority of the Agent’s security interest in the Collateral, or (ii) any reasonable
action requested by the Agent in connection therewith has been completed or taken (including any
action to continue the perfection of any Liens in favor of the Agent, on behalf of Lenders, in any
Collateral), provided that, any new location shall be in the continental U.S. No Loan Party shall
change its Fiscal Year.

     6.24. Affiliate Transactions. No Loan Party will enter into any transaction
(including, without limitation, the purchase or sale of any Property or service) with, or make any
payment or transfer (including, without limitation, any payment or transfer with respect to any
fees or expenses for management services) to, any of its Affiliates except in the ordinary course
of business and pursuant to the reasonable requirements of such Loan Party’s business and, with
respect to each such transaction involving an Affiliate that is not a party to this Agreement, upon
fair and reasonable terms no less favorable to such Loan Party than such Loan Party would obtain in
a comparable arms-length transaction.

     6.25. Amendments to Agreements. Other than pursuant to the Permitted Restructuring,
no Loan Party will, nor will any Loan Party permit its Subsidiary to, amend or terminate its
articles of incorporation, charter, certificate of formation, by-laws, operating, management or
partnership agreement or other organizational document.

     6.26. Prepayment of Indebtedness; Subordinated Indebtedness.

     (a) No Loan Party shall, directly or indirectly, voluntarily purchase, redeem,
defease or prepay any principal of, premium, if any, interest or other amount
payable in respect of any Indebtedness prior to its scheduled maturity, other than
(i) the Obligations; (ii) the voluntary prepayment of the Term Loans pursuant to
Section 2.14(a) of the Term Agreement (including any applicable prepayment
premium); provided that (A) both before and after giving pro forma effect to such
prepayment, the Ninety-Day Average Availability calculated in the related Prepayment
Certificate and on the prepayment date is equal to or greater than $30,000,000, (B)
no Default has occurred and is continuing or would result from such prepayment, and
(C) a Prepayment Certificate shall have been
delivered to Agent; (iii) the mandatory prepayment of the Term Loans pursuant
to Section 2.15(a), Section 2.15(b) and Section 2.15(d) of
the Term Agreement (including any applicable prepayment premium), in each case,
subject to the terms of the Intercreditor Agreement; (iv) the mandatory prepayment
of the Term Loans with respect

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to the Company’s Excess Cash Flow (as defined in the
Term Agreement) pursuant to Section 2.15(c) thereof; provided that (A) both
before and after giving pro forma effect to such prepayment, the Ninety-Day Average
Availability calculated in the related Prepayment Certificate and on the prepayment
date is equal to or greater than $20,000,000 (provided that for any prepayment with
regard to the Company’s Excess Cash Flow (as defined in the Term Agreement) for
Fiscal Year 2006, such Ninety-Day Average Availability shall be equal to or greater
than $15,000,000), (B) no Default has occurred and is continuing or would result
from such prepayment, and (C) a Prepayment Certificate shall have been delivered to
Agent; (v) Indebtedness secured by a Permitted Lien if the asset securing such
Indebtedness has been sold or otherwise disposed of in accordance with Section
6.20; (vi) Indebtedness permitted by Section 6.17(d) upon any
refinancing thereof in accordance therewith; and (vii) Indebtedness permitted by
Section 6.17(e); (viii) Indebtedness under the Term Loans repaid in
connection with a refinancing thereof, provided that such refinancing constitutes
Senior Subordinated Debt permitted under Section 6.17(h). Notwithstanding
the foregoing, if all or a portion of a prepayment under Section 2.15(c) of
the Term Agreement is not permitted to be paid in full pursuant to clause
(iv)(A) or (B) above (the “Deferred Prepayment Amount”), the
Ninety-Day Average Availability may be recalculated on the date (the “Deferred
Payment Date”) that is thirty (30) days after the Scheduled Prepayment Date (as
defined in the Term Agreement), and if on the Deferred Payment Date the prepayment
of the Deferred Prepayment Amount is permitted under clauses (iv)(A) and (B) above
(with regard to clause (iv)(A), determined based on the Ninety-Day Average
Availability as of the Deferred Payment Date) and a Prepayment Certificate has been
delivered in accordance with clause (iv)(C) above, the prepayment of the
Deferred Prepayment Amount pursuant to clause (iv) above shall be permitted
on the date that is five (5) days after the Deferred Payment Date.

     (b) With respect to the foregoing, no Loan Party shall make any amendment or
modification to any note or other agreement evidencing or governing any Subordinated
Indebtedness, including any Senior Subordinated Debt, in a manner adverse to the
Lenders (other than (i) amendments, supplements or modifications to such
Subordinated Indebtedness, including any Senior Subordinated Debt, which reduce the
interest rate or extend the maturity thereof, or (ii) waivers of compliance by the
Company or any of its Subsidiaries with any of the terms or conditions of such
Subordinated Indebtedness, including any Senior Subordinated Debt (except those
terms or conditions which by their terms are for the benefit of the Lenders).

     6.27. Financial Contracts. No Loan Party shall enter into or remain liable upon any
Financial Contract, except for (a) Rate Management Transactions permitted by Section 6.17(g), and
(b) Financial Contracts that constitute currency swap transactions of Canadian Dollars provided
that (i) they do not exceed an aggregate notional amount of 100% of all Canadian Dollar loans
reasonably projected to be outstanding from the Company to Newpark Canada and any other Canadian
Subsidiaries, together with all Investments by the Company in such entities during the term of such
Financial Contract minus the aggregate principal amount (stated in Canadian Dollars) of all
Revolving Loans, reasonably projected to be outstanding during the term of such Financial Contract,
and (ii) they are for a term of three years or less.

     6.28. Intentionally Omitted.

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     6.29. Financial Covenants.

     6.29.1. Fixed Charge Coverage Ratio. The Company will not permit the Fixed Charge
Coverage Ratio, determined as of the end of each of the Company’s Fiscal Quarter for the
applicable Test Period, to be less than the corresponding ratio set forth below:

	 	 	 
	 	 	Minimum Fixed Charge
	Date of Determination	 	Coverage Ratio
	Through and including December 31,
2006 and thereafter

	 	1.1 to 1.0

     6.29.2. Consolidated Leverage Ratio. The Company will not permit the Consolidated
Leverage Ratio, determined as of the end of each of the Company’s Fiscal Quarters for the
applicable Test Period, to be greater than the corresponding ratio set forth below:

	 	 	 
	 	 	Maximum Consolidated
	Date of Determination	 	Leverage Ratio
	September 30, 2006

	 	3.25 to 1.00
	December 31, 2006

	 	3.00 to 1.00
	March 31, 2007

	 	3.00 to 1.00
	June 30, 2007

	 	3.00 to 1.00
	September 30, 2007

	 	3.00 to 1.00
	December 31, 2007 and each Fiscal
Quarter thereafter

	 	2.75 to 1.00

     6.29.3. [Intentionally Omitted.]

     6.30. Depository Banks. Each Loan Party shall maintain the Agent as such Loan Party’s
principal depository bank, including for the maintenance of operating, administrative, cash
management, collection activity, and other deposit accounts for the conduct of its business.

     6.31. Real Property Purchases. No Loan Party shall purchase a fee simple ownership
interest in real Property with an aggregate purchase price in excess of $5,000,000

     6.32. Sale of Accounts . No Loan Party will, nor will any Loan Party permit its Subsidiary to, sell or otherwise
dispose of any notes receivable or accounts receivable, with or without recourse.

     6.33. Canadian Subsidiaries Negative Pledge. No Loan Party will, nor will any Loan
Party permit any of its Subsidiaries that are organized under the laws of a province of Canada
(“Canadian Subsidiaries”) to, create, incur or suffer to exist, any Lien in, of, or on any
Property of such Canadian Subsidiary (including, without limitation, the real Property or marine
vessels of such Canadian Subsidiary).

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ARTICLE VII

DEFAULTS

The occurrence of any one or more of the following events shall constitute a “Default”
hereunder:

     (a) any representation or warranty made or deemed made by or on behalf of any
Loan Party to any Lender or the Agent under or in connection with this Agreement,
any other Loan Document, any Credit Extension, or any certificate or information
delivered in connection with any of the foregoing shall be materially false on the
date as of which made;

     (b) nonpayment, when due (whether upon demand or otherwise), of any principal,
interest, fee, Reimbursement Obligation or any other obligation owing under any of
the Loan Document;

     (c) the breach by any Loan Party of any of the terms or provisions of
Section 6.2, 6.3(a), 6.16 through 6.23 or 6.25 through
6.33;

     (d) the breach by any Loan Party (other than a breach which constitutes a
Default under another Section of this Article VII) of any of the terms or
provisions of (i) Section 6.1, 6.3 (other than Section 6.3(a)), 6.4
through 6.15, or 6.24 of this Agreement which is not remedied within
five days from the earlier of (x) the date on which any Loan Party had actual or
constructive knowledge of such breach or (y) the date on which such Loan Party
receives written notice from the Agent or any Lender or (ii) any other Section of
this Agreement which is not remedied within fifteen days after the earlier of (x)
the date on which any Loan Party had actual or constructive knowledge of such breach
or (y) the date on which such Loan Party receives written notice from the Agent or
any Lender;

     (e) failure of any Loan Party to pay when due any Material Indebtedness or a
default, breach or other event occurs under any term, provision or condition
contained in any Material Indebtedness Agreement of any Loan Party, the effect of
which default, event or condition is to cause, or to permit the holder(s) of such
Material Indebtedness or the lender(s) under any Material Indebtedness Agreement to
cause, such Material Indebtedness to become due prior to its stated maturity or any
commitment to lend under any Material Indebtedness Agreement to be terminated prior
to its stated expiration date; any Material Indebtedness of any Loan Party shall be
declared to be due and payable or required to be prepaid or repurchased (other than
by a regularly scheduled payment) prior to the stated maturity thereof; or any Loan
Party shall not pay, or admit in writing its inability to pay, its debts generally
as they become due;

     (f) any Loan Party shall (i) have an order for relief entered with respect to
it under the Bankruptcy Code as now or hereafter in effect, (ii) make an assignment
for the benefit of creditors, (iii) apply for, seek, consent to, or acquiesce in,
the appointment of a receiver, custodian, trustee, examiner, liquidator or similar
official for it or any portion of its Property which constitutes a Substantial
Portion, (iv) institute any proceeding seeking an order for relief under the
Bankruptcy Code as now or hereafter in effect or seeking to adjudicate it a bankrupt
or insolvent, or seeking dissolution, winding up, liquidation, reorganization,
arrangement, adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fail to file an

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answer or other pleading denying the material allegations of any such proceeding
filed against it, (v) take any corporate or partnership action to authorize or
effect any of the foregoing actions set forth in this subsection (f) or (vi)
fail to contest in good faith any appointment or proceeding described in
subsection (g) below;

     (g) a receiver, trustee, examiner, liquidator or similar official shall be
appointed for any Loan Party or any portion of its Property which constitutes a
Substantial Portion, or a proceeding described in subsection (f)(iv) of
Article VII shall be instituted against any Loan Party and such appointment
continues undischarged or such proceeding continues undismissed or unstayed for a
period of sixty consecutive days;

     (h) any court, government or governmental agency shall condemn, seize or
otherwise appropriate, or take custody or control of, all or any portion of the
Property of any Loan Party which, when taken together with all other Property of any
Loan Party so condemned, seized, appropriated, or taken custody or control of,
during the twelve-month period ending with the month in which any such action
occurs, constitutes a Substantial Portion;

     (i) any loss, theft, damage or destruction of any item or items of Collateral
or other property of any Loan Party occurs which could reasonably be expected to
cause a Material Adverse Effect and is not adequately covered by insurance;

     (j) any Loan Party shall fail within thirty days to pay, bond or otherwise
discharge one or more (i) judgments or orders for the payment of money in excess of
$1,000,000 (or the equivalent thereof in currencies other than U.S. Dollars) in the
aggregate, or (ii) nonmonetary judgments or orders which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect, which
judgments or orders, in any such case, are not stayed on appeal or otherwise being
appropriately contested in good faith by proper proceedings diligently pursued;

     (k) any Change in Control shall occur;

     (l) the Unfunded Liabilities of all Single Employer Plans shall exceed in the
aggregate $1,000,000 or any Reportable Event shall occur in connection with any
Plan;

     (m) any Borrower or any other member of the Controlled Group shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred withdrawal
liability to such Multiemployer Plan in an amount which, when aggregated with all
other amounts required to be paid to Multiemployer Plans by such Borrower or any
other member of the Controlled Group as withdrawal liability (determined as of the
date of such notification), exceeds $1,000,000 or requires payments exceeding
$1,000,000 per annum;

     (n) a Borrower or any other member of the Controlled Group shall have been
notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV of ERISA, if
as a result of such reorganization or termination the aggregate annual contributions
of such Borrower and the other members of the Controlled Group (taken as a whole) to
all Multiemployer Plans which are then in reorganization or being terminated have
been or will be increased over the amounts contributed to such Multiemployer Plans
for the respective plan years of each such Multiemployer Plan immediately preceding
the plan

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year in which the reorganization or termination occurs by an amount
exceeding $1,000,000;

     (o) any Loan Party shall (i) be the subject of any proceeding or investigation
pertaining to the release by the any Loan Party or any other Person of any toxic or
hazardous waste or substance into the environment, or (ii) violate any Environmental
Law, which, in the case of an event described in clause (i) or clause (ii), could
reasonably be expected to have a Material Adverse Effect (as determined by Agent in
its Permitted Discretion);

     (p) the occurrence of any “default”, as defined in any Loan Document (other
than this Agreement) or the breach of any of the terms or provisions of any Loan
Document (other than this Agreement), which default or breach continues beyond any
period of grace therein provided;

     (q) any Guaranty shall fail to remain in full force or effect or any action
shall be taken to discontinue or to assert the invalidity or unenforceability of any
Guaranty, or any Guarantor shall fail to comply with any of the terms or provisions
of the Guaranty to which it is a party, or any Guarantor shall deny that it has any
further liability under any Guaranty to which it is a party, or shall give notice to
such effect;

     (r) any Collateral Document shall for any reason fail to create a valid and
perfected first priority security interest (or, to the extent provided in the
Intercreditor Agreement, a second priority security interest) in any Collateral
purported to be covered thereby, except as permitted by the terms of any Collateral
Document, or any Collateral Document shall fail to remain in full force or effect or
any action shall be taken to discontinue or to assert the invalidity or
unenforceability of any Collateral Document, or any Loan Party shall fail to comply
with any of the terms or provisions of any Collateral Document;

     (s) any material provision of any Loan Document for any reason ceases to be
valid, binding and enforceable in accordance with its terms (or any Loan Party shall
challenge the enforceability of any Loan Document or shall assert in writing, or
engage in any action or inaction based on any such assertion, that any provision of
any of the Loan Documents has ceased to be or otherwise is not valid, binding and
enforceable in accordance with its terms);

     (t) the representations and warranties set forth in Section 5.17 (Plan
Assets; Prohibited Transactions) shall at any time not be true and correct;

     (u) nonpayment by any Borrower or any of its Subsidiaries of any Rate
Management Obligation when due or the breach by any Borrower or any of its
Subsidiaries of any term, provision or condition contained in any Rate Management
Transaction or any transaction of the type described in the definition of “Rate
Management Transactions,” whether or not any Lender or Affiliate of a Lender is a
party thereto; or

     (v) any Loan Party is criminally indicted or convicted under any law that may
reasonably be expected to lead to a forfeiture of any Property of such Loan Party
having a fair market value in excess of $500,000.

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ARTICLE VIII

REMEDIES; WAIVERS AND AMENDMENTS

     8.1. Remedies.

     (a) If any Default occurs, the Agent may in its discretion (and at the written
request of the Required Lenders, shall) (i) reduce the Aggregate Commitment or the
Revolving Commitment, (ii) terminate or suspend the obligations of the Lenders to
make Loans hereunder and the obligation and power of the LC Issuer to issue Facility
LCs, (iii) declare all or any portion of the Obligations to be due and payable,
whereupon such Obligations shall become immediately due and payable, without
presentment, demand, protest or notice of any kind, all of which the Borrower hereby
expressly waives, (iv) upon notice to the Borrower Representative and in addition to
the continuing right to demand payment of all amounts payable under this Agreement,
the Agent may either (1) make demand on the Borrowers to pay, and the Borrowers
will, forthwith upon such demand and without any further notice or act, pay to the
Agent an amount, in immediately available funds (which funds shall be held in the
Facility LC Collateral Account), equal to 105% of the Collateral Shortfall Amount or
(2) deliver a Supporting Letter of Credit as required by Section 2.1.2(l),
whichever the Agent may specify in its sole discretion, (v) increase the rate of
interest applicable to the Loans and the LC Fees as set forth in this Agreement and
(vi) exercise any rights and remedies provided to the Agent under the Loan Documents
or at law or equity, including all remedies provided under the UCC.

     (b) If any Default described in subsections (f) or (g) of
Article VII occurs with respect to any Loan Party, the obligations of the
Lenders to make Loans hereunder and the obligation and power of the LC Issuer to
issue Facility LCs shall automatically terminate and all Obligations shall
immediately become due and payable without any election or action on the part of the
Agent, the LC Issuer or any Lender and the Loan Parties will be and become thereby
unconditionally obligated, without any further notice, act or demand, to pay to the
Agent an amount equal to 105% of the Collateral Shortfall Amount, which funds shall
be deposited in the Facility LC Collateral Account.

     (c) If, within thirty days after acceleration of the maturity of the
Obligations or termination of the obligations of the Lenders to make Loans and the
obligation and power of the LC Issuer to issue Facility LCs hereunder as a result of
any Default (other than any Default as described in subsections (f) or
(g) of Article VII with respect to any Borrower) and before any
judgment or decree for the payment of the Obligations due shall have been obtained
or entered, the Required Lenders (in their sole discretion) shall so direct, the
Agent shall, by notice to the Borrower Representative, rescind and annul such
acceleration and/or termination.

     (d) If at any time while any Default is continuing, the Agent determines that
the Collateral Shortfall Amount at such time is greater than zero, the Agent may
make demand on the Borrowers (upon notice to the Borrower Representative) to pay,
and the Borrowers will, forthwith upon such demand and without any further notice or
act, pay to the Agent an amount equal to 105% of the Collateral Shortfall Amount,
which funds shall be deposited in the Facility LC Collateral Account. The Borrowers
hereby pledge, assign, and grant to the Agent, on behalf of and for the benefit of
the Agent, the Lenders, and the LC Issuer, a security interest in all of the
Borrowers’ right, title, and interest in and to all

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funds which may from time to
time be on deposit in the Facility LC Collateral Account to secure the prompt and
complete payment and performance of the Obligations.

     (e) The Agent may at any time or from time to time after funds are deposited in
the Facility LC Collateral Account, apply such funds to the payment of the
Obligations and any other amounts as shall from time to time have become due and
payable by the Borrowers to the Lenders or the LC Issuer under the Loan Documents.

     (f) At any time while any Default is continuing, neither the Borrowers nor any
Person claiming on behalf of or through the Borrowers shall have any right to
withdraw any of the funds held in the Facility LC Collateral Account. After all of
the Secured Obligations have been indefeasibly paid in full and the Aggregate
Commitment has been terminated, any funds remaining in the Facility LC Collateral
Account shall be returned by the Agent to the Borrowers or paid to whomever may be
legally entitled thereto at such time.

     8.2. Waivers by Loan Parties. Except as otherwise provided for in this Agreement or
by applicable law, each Loan Party waives: (a) presentment, demand and protest and notice of
presentment, dishonor, notice of intent to accelerate, notice of acceleration, protest, default,
nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all
commercial paper, accounts, contract rights, documents, instruments, chattel paper and guaranties
at any time held by the Agent on which any Loan Party may in any way be liable, and hereby ratifies
and confirms whatever the Agent may do in this regard, (b) all rights to notice and a hearing prior
to the Agent’s taking possession or control of, or to the Agent’s replevy, attachment or levy upon,
the Collateral or any bond or security that might be required by any court prior to allowing the
Agent to exercise any of its remedies, and (c) the benefit of all valuation, appraisal, marshaling
and exemption laws.

     8.3. Amendments.

     (a) Subject to the provisions of this Section 8.3, no amendment, waiver
or modification of any provision of this Agreement or any other Loan Document, and
no consent with respect to any departure by any Loan Party therefrom, shall be
effective unless the same shall be in writing and signed by the Required Lenders (or
the Agent with the consent in writing of the Required Lenders) and the Loan Parties
and then any such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.

     (b) Notwithstanding subsection (a) above, no such amendment, waiver or
other modification with respect to this Agreement shall, without the consent of all
of the Lenders:

     (i) extend the final maturity of any Loan to a date after the Facility
Termination Date;

     (ii) postpone any regularly scheduled payment of principal of any Loan
or reduce or forgive all or any portion of the principal amount of any Loan
or any Reimbursement Obligation;

     (iii) reduce the rate or extend the time of payment of interest or fees
payable to the Lenders pursuant to any Loan Document;

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     (iv) reduce the percentage or number of Lenders specified in the
definition of Required Lenders;

     (v) extend the Facility Termination Date;

     (vi) increase the amount of the Aggregate Commitment or the Commitment
of any Lender hereunder (other than pursuant to Section 12.3);

     (vii) increase the advance rates set forth in the definition of
Borrowing Base;

     (viii) permit any Loan Party to assign its rights under this Agreement;

     (ix) amend this Section 8.3;

     (x) release any guarantor of any Credit Extension, except as otherwise
permitted herein or in the other Loan Documents; or

     (xi) except as provided in Section 10.16 or any Collateral
Document, release all or substantially all of the Collateral.

     (c) No amendment of any provision of this Agreement relating to the Agent or to
the Non-Ratable Loans, the Overadvances or the Protective Advances shall be
effective without the written consent of the Agent. No amendment of any provision
relating to the LC Issuer shall be effective without the written consent of the LC
Issuer. The Agent may (i) amend the Commitment Schedule to reflect assignments
entered into pursuant to Section 12.3, and (ii) waive payment of the fee
required under Section 12.3(c) without obtaining the consent of any other
party to this Agreement.

     8.4. Preservation of Rights. No delay or omission of the Lenders, the LC Issuer or
the Agent to exercise any right under the Loan Documents shall impair such right or be construed to
be a waiver of any Default or an acquiescence therein, and the making of a Credit Extension
notwithstanding the existence of a Default or the inability of the Borrowers to satisfy the
conditions precedent to such Credit Extension shall not constitute any waiver or acquiescence. Any
single or partial exercise of any such right shall not preclude other or further exercise thereof
or the exercise of any other right, and no waiver, amendment or other variation of the terms,
conditions or provisions of the Loan Documents whatsoever shall be valid unless in writing signed
by the Lenders required pursuant to Section 8.3, and then only to the extent in such
writing specifically set forth. All remedies contained in the Loan Documents or by law afforded
shall be
cumulative and all shall be available to the Agent, the LC Issuer and the Lenders until the
Obligations have been paid in full.

ARTICLE IX

GENERAL PROVISIONS

     9.1. Survival of Representations. All representations and warranties of the Loan
Parties contained in this Agreement and the other Loan Documents shall survive the execution and
delivery of the Loan Documents and the making of the Credit Extensions herein contemplated.

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     9.2. Governmental Regulation. Anything contained in this Agreement to the contrary
notwithstanding, neither the LC Issuer nor any Lender shall be obligated to extend credit to the
Borrowers in violation of any limitation or prohibition provided by any applicable statute or
regulation.

     9.3. Headings. Section headings in the Loan Documents are for convenience of
reference only, and shall not govern the interpretation of any of the provisions of the Loan
Documents.

     9.4. Entire Agreement. The Loan Documents embody the entire agreement and
understanding among the Loan Parties, the Agent, the LC Issuer and the Lenders and supersede all
prior agreements and understandings among the Loan Parties, the Agent and the Lenders relating to
the subject matter thereof other than those contained in the Fee Letter which shall survive and
remain in full force and effect during the term of this Agreement. THIS WRITTEN AGREEMENT
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

     9.5. Several Obligations; Benefits of this Agreement. The respective obligations of
the Lenders hereunder are several and not joint and no Lender shall be the partner or agent of any
other lender (except to the extent to which the Agent is authorized to act as administrative agent
for the Lenders hereunder). The failure of any Lender to perform any of its obligations hereunder
shall not relieve any other Lender from any of its obligations hereunder. This Agreement shall not
be construed so as to confer any right or benefit upon any Person other than the parties to this
Agreement and their respective successors and assigns, provided however, that the parties hereto
expressly agree that the Arranger shall enjoy the benefits of the provisions of Sections 9.6,
9.10 and 10.11 to the extent specifically set forth therein and shall have the right to
enforce such provisions on its own behalf and in its own name to the same extent as if it were a
party to this Agreement.

     9.6. Expenses; Indemnification.

     (a) Expenses. The Borrowers shall reimburse the Agent and the Arranger
for any costs, internal charges and out-of-pocket expenses (including attorneys’
fees and time charges of attorneys for the Agent, which attorneys may be employees
of the Agent) paid or incurred by the Agent or the Arranger in connection with the
preparation, negotiation, execution, delivery, syndication, distribution (including,
without limitation, via the internet or through a service such as Intralinks),
review, amendment, modification, and administration of the Loan Documents. The
Borrowers also agree to reimburse the Agent, the Arranger, the LC Issuer and the
Lenders for any costs, internal charges and out-of-pocket expenses (including
attorneys’ fees and time charges of attorneys for the Agent, the Arranger, the LC
Issuer and the Lenders, which attorneys may be employees of the Agent, the Arranger,
the LC Issuer or the Lenders) paid or incurred by the Agent, the Arranger, the LC
Issuer or any Lender in connection with the collection and enforcement of the Loan
Documents. Expenses being reimbursed by the Borrowers under this Section include,
without limitation, costs and expenses incurred in connection with:

     (i) appraisals of all or any portion of the Collateral, including each
parcel of real Property or interest in real Property described in any
Collateral Document, if required, which appraisals shall be in conformity
with the applicable requirements of any law or any governmental rule,
regulation, policy, guideline or directive (whether or not having the force
of law), or any

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interpretation thereof, including, without limitation, the
provisions of Title XI of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended, reformed or otherwise modified from
time to time, and any rules promulgated to implement such provisions
(including travel, lodging, meals and other out of pocket expenses);

     (ii) field examinations and audits and the preparation of Reports at
the Agent’s then customary charge (such charge is currently $800 per day (or
portion thereof) for each Person retained or employed by the Agent with
respect to each field examination or audit) plus travel, lodging, meals and
other out of pocket expenses;

     (iii) any amendment, modification, supplement, consent, waiver or other
documents prepared with respect to any Loan Document and the transactions
contemplated thereby;

     (iv) lien and title searches and title insurance;

     (v) taxes, fees and other charges for recording the Mortgages, filing
financing statements and continuations, and other actions to perfect,
protect, and continue the Agent’s Liens (including costs and expenses paid
or incurred by the Agent in connection with the consummation of the
Agreement);

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

     (vii) any litigation, contest, dispute, proceeding or action (whether
instituted by Agent, the LC Issuer, any Lender, any Loan Party or any other
Person and whether as to party, witness or otherwise) in any way
relating to the Collateral, the Loan Documents or the transactions
contemplated thereby; and

     (viii) costs and expenses of forwarding loan proceeds, collecting
checks and other items of payment, and establishing and maintaining the
Funding Account and lock boxes, and costs and expenses of preserving and
protecting the Collateral

     The foregoing shall not be construed to limit any other provisions of the Loan
Documents regarding costs and expenses to be paid by the Borrowers. All of the foregoing
costs and expenses may be charged to the Borrower’s Loan Account as Revolving Loans, or to
another deposit account, all as described in Section 2.17(b).

     (b) Indemnification. The Borrowers hereby further agree, jointly and
severally, to indemnify the Agent, the Arranger, the LC Issuer each Lender, their
respective Affiliates, and each of their directors, officers and employees against
all losses, claims, damages, penalties, judgments, liabilities and expenses
(including, without limitation, all expenses of litigation or preparation therefor
whether or not the Agent, the Arranger, the LC Issuer any Lender or any Affiliate is
a party thereto) which any of them may pay or incur arising out of or relating to
this Agreement, the other Loan Documents, the transactions contemplated hereby or
the direct or indirect application or proposed application of the proceeds of any
Credit Extension hereunder except to the extent that they are determined in a final
non-appealable judgment by a court of competent

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jurisdiction to have resulted from
the gross negligence or willful misconduct of the party seeking indemnification.
The obligations of the Borrowers under this Section 9.6 shall survive the
termination of this Agreement. WITHOUT LIMITATION OF THE FOREGOING, IT IS THE
INTENTION OF THE BORROWERS AND THE BORROWERS AGREE THAT THE FOREGOING INDEMNITIES
SHALL APPLY TO EACH INDEMNIFIED PARTY WITH RESPECT TO LOSSES, CLAIMS, DAMAGES,
PENALTIES, JUDGMENTS, LIABILITIES AND EXPENSES (INCLUDING, WITHOUT LIMITATION, ALL
EXPENSES OF LITIGATION OR PREPARATION THEREFOR), WHICH IN WHOLE OR IN PART ARE
CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OF SUCH (AND/OR ANY OTHER) INDEMNIFIED
PARTY.

     9.7. Numbers of Documents. All statements, notices, closing documents, and requests
hereunder shall be furnished to the Agent with sufficient counterparts so that the Agent may
furnish one to each of the Lenders.

     9.8. Accounting. Except as provided to the contrary herein, all accounting terms used
herein shall be interpreted and all accounting determinations hereunder shall be made in accordance
with GAAP in a manner consistent with that used in preparing the financial statements referred to
in Section 5.5, except that any calculation or determination which is to be made on a
consolidated basis shall be made for the Company and all of its Subsidiaries, including those
Subsidiaries, if any, which are unconsolidated on the Company’s audited financial statements. If
at any time any change in GAAP would affect the computation of any financial ratio or requirement
set forth in any Loan Document, and the Borrowers (through the Borrower Representative), the Agent
or the Required Lenders shall so request the Agent, the Lenders and the Loan Parties shall
negotiate in good faith to amend such ratio or requirement to preserve
the original intent thereof in light of such change in GAAP (subject to the approval of the
Required Lenders), provided that, until so amended, such ratio or requirement shall continue to be
computed in accordance with GAAP prior to such change therein and the Borrowers shall provide to
the Agent and the Lenders reconciliation statements showing the difference in such calculation,
together with the delivery of monthly, quarterly and annual financial statements required
hereunder.

     9.9. Severability of Provisions. Any provision in any Loan Document that is held to
be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that jurisdiction, be
inoperative, unenforceable, or invalid without affecting the remaining provisions in that
jurisdiction or the operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared to be severable.

     9.10. Nonliability of Lenders. The relationship between any Loan Party on the one
hand and the Lenders, the LC Issuer and the Agent on the other hand shall be solely that of debtor
and creditor. Neither the Agent, the Arranger, the LC Issuer nor any Lender shall have any
fiduciary responsibilities to any Loan Party. Neither the Agent, the Arranger, the LC Issuer nor
any Lender undertakes any responsibility to any Loan Party to review or inform such Loan Party of
any matter in connection with any phase of any Loan Party’s business or operations. The Loan
Parties agree that neither the Agent, the Arranger, the LC Issuer nor any Lender shall have
liability to any Loan Party (whether sounding in tort, contract or otherwise) for losses suffered
by any Loan Party in connection with, arising out of, or in any way related to, the transactions
contemplated and the relationship established by the Loan Documents, or any act, omission or event
occurring in connection therewith, unless it is determined in a final non-appealable judgment by a
court of competent jurisdiction that such losses resulted from the gross negligence or willful
misconduct of the party from which recovery is sought. Neither the Agent, the Arranger, the LC
Issuer nor any Lender shall have any liability with respect to, and each Loan Party hereby waives,
releases and agrees not to sue for, any special, indirect, consequential or punitive damages

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suffered by any Loan Party in connection with, arising out of, or in any way related to the Loan
Documents or the transactions contemplated thereby.

     9.11. Confidentiality. The Agent and each Lender agrees to hold any confidential
information which it may receive from the Borrower in connection with this Agreement in confidence,
except for disclosure (a) to its Affiliates and to the Agent and any other Lender and their
respective Affiliates, (b) to legal counsel, accountants, and other professional advisors to such
Lender or to a Transferee, (c) to regulatory officials, (d) to any Person as requested pursuant to
or as required by law, regulation, or legal process, (e) to any Person in connection with any legal
proceeding to which it is a party, (f) to its direct or indirect contractual counterparties in swap
agreements or to legal counsel, accountants and other professional advisors to such counterparties,
(g) permitted by Section 12.4, and (h) to rating agencies if requested or required by such
agencies in connection with a rating relating to the Credit Extensions hereunder. Without limiting
Section 9.4, the Borrowers agree that the terms of this Section 9.11 shall set
forth the entire agreement between the Borrowers and each Lender (including the Agent) with respect
to any confidential information previously or hereafter received by such Lender in connection with
this Agreement, and this Section 9.11 shall supersede any and all prior confidentiality
agreements entered into by such Lender with respect to such confidential information.
Notwithstanding anything herein to the contrary, confidential information shall not include, and
each party to any of the Loan Documents and their respective Affiliates (and the respective
partners, directors, officers, employees, advisors,
representatives and other agents of each of the foregoing and their Affiliates) may disclose
to any and all Persons, without limitation of any kind, (i) any information with respect to the
U.S. federal and state income tax treatment of the transactions contemplated hereby and any facts
that may be relevant to understanding such tax treatment, which facts shall not include for this
purpose the names of the parties or any other Person named herein, or information that would permit
identification of the parties or such other Persons, or any pricing terms or other nonpublic
business or financial information that is unrelated to such tax treatment or facts, and (ii) all
materials of any kind (including opinions or other tax analyses) relating to such tax treatment or
facts that are provided to any of the Persons referred to above, and it is hereby confirmed that
each of the Persons referred to above has been authorized to make such disclosures since the
commencement of discussions regarding the transactions contemplated hereby.

     9.12. Nonreliance. Each Lender hereby represents that it is not relying on or looking
to any Margin Stock for the repayment of the Credit Extensions provided for herein.

     9.13. Disclosure. Each Loan Party and each Lender hereby acknowledges and agrees that
JPMorgan Chase and/or its Affiliates from time to time may hold investments in, make other loans to
or have other relationships with any of the Loan Parties and their respective Affiliates.

     9.14. Patriot Act Notice. IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW
ACCOUNT. To help the government fight the funding of terrorism and money laundering activities,
Federal law requires all financial institutions to obtain, verify, and record information that
identifies each person or entity that opens an account, including any deposit account, treasury
management account, loan, other extension of credit, or other financial services product. What
this means for the Borrowers: When a Borrower opens an account, if such Borrower is an individual,
the Agent and the Lenders will ask for such Borrower’s name, residential address, date of birth,
and other information that will allow Agent and the Lenders to identify such Borrower, and, if the
Borrower is not an individual, the Agent and the Lenders will ask for such Borrower’s name,
employer identification number, business address, and other information that will allow the Agent
and the Lenders to identify such Borrower. The Agent and the Lenders may also ask, if a Borrower
is an individual, to see such Borrower’s driver’s license or other identifying documents, and, if a
Borrower is not an individual, to see such Borrower’s legal organizational documents or other
identifying documents.

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     9.15. Amendment and Restatement. This Agreement is an amendment and restatement of
that certain Amended and Restated Credit Agreement, dated as of February 25, 2004, among Newpark
Resources, Inc., the lending institutions party thereto as “Lenders”, Bank One, N.A. (Main Office
Chicago), as agent and LC Issuer, and the other parties thereto, as amended, which agreement
amended and restated that certain Amended and Restated Credit Agreement, dated as of January 31,
2002 among the above-referenced parties (collectively, the “Amended Loan Agreement” and
together with the Original Loan Agreement and all interim amendments, restatements and other
modifications thereto, collectively, the “Prior Loan Agreements”). All “Obligations” under
the Prior Loan Agreements and all Liens securing payment of “Obligations” under the Prior Loan
Agreements shall in all respects be continuing and this Agreement shall not be deemed to evidence
or result in a novation or repayment and re-borrowing of such “Obligations”. This
Agreement shall supersede the Prior Loan Agreements. From and after the Effective Date, this
Agreement shall govern the terms of the “Obligations” under the Prior Loan Agreements. To the
extent not replaced by Loan Documents dated as of the Closing Date, any “Loan Documents” (as
defined in the Prior Loan Agreements) executed in connection with the Prior Loan Agreements (other
than any such Loan Document that is specifically terminated by the parties thereto) shall continue
to be effective, and all references in those prior Loan Documents to the “Amended and Restated
Credit Agreement,” the “Credit Agreement”, the “Agreement” or similar references, shall be deemed
to refer to this Agreement without further amendment thereof.

     9.16. Prior Dissolutions. Immediately prior to the consummation of the transactions
contemplated hereby, the Agent and Lenders under the Amended Loan Agreement hereby consent to the
prior dissolution of Newpark Water Technology Partners LLC, OLS Consulting Services, Inc., Shamrock
Drilling Fluids, Inc., and Newport Water Technology Partners, LLC in each case, effective as of the
date of such dissolution.

ARTICLE X

THE AGENT

     10.1. Appointment; Nature of Relationship. JPMorgan Chase is hereby appointed by each
of the Lenders as its contractual representative (herein referred to as the “Agent”)
hereunder and under each other Loan Document, and each of the Lenders irrevocably authorizes the
Agent to act as the contractual representative of such Lender with the rights and duties expressly
set forth herein and in the other Loan Documents. The Agent agrees to act as such contractual
representative upon the express conditions contained in this Article X. Notwithstanding
the use of the defined term “Agent,” it is expressly understood and agreed that the Agent shall not
have any fiduciary responsibilities to any Lender by reason of this Agreement or any other Loan
Document and that the Agent is merely acting as the contractual representative of the Lenders with
only those duties as are expressly set forth in this Agreement and the other Loan Documents. In
its capacity as the Lenders’ contractual representative, the Agent (a) does not hereby assume any
fiduciary duties to any of the Lenders, (b) is a “representative” of the Lenders within the meaning
of the term “secured party” as defined in the Texas Uniform Commercial Code and (c) is acting as an
independent contractor, the rights and duties of which are limited to those expressly set forth in
this Agreement and the other Loan Documents. Each of the Lenders hereby agrees to assert no claim
against the Agent on any agency theory or any other theory of liability for breach of fiduciary
duty, all of which claims each Lender hereby waives.

     10.2. Powers. The Agent shall have and may exercise such powers under the Loan
Documents as are specifically delegated to the Agent by the terms of each thereof, together with
such powers as are reasonably incidental thereto. The Agent shall have no implied duties to the
Lenders, or any obligation to the Lenders to take any action thereunder except any action
specifically provided by the Loan Documents to be taken by the Agent.

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     10.3. General Immunity. Neither the Agent nor any of its directors, officers, agents
or employees shall be liable to the Borrowers, the Lenders or any Lender for any action taken or
omitted to be taken by it or them hereunder
or under any other Loan Document or in connection herewith or therewith except to the extent
such action or inaction is determined in a final non-appealable judgment by a court of competent
jurisdiction to have arisen from the gross negligence or willful misconduct of such Person.

     10.4. No Responsibility for Credit Extensions, Recitals, etc. Neither the Agent nor
any of its directors, officers, agents or employees shall be responsible for or have any duty to
ascertain, inquire into, or verify (a) any statement, warranty or representation made in connection
with any Loan Document or any borrowing hereunder; (b) the performance or observance of any of the
covenants or agreements of any obligor under any Loan Document, including, without limitation, any
agreement by an obligor to furnish information directly to each Lender; (c) the satisfaction of any
condition specified in Article IV, except receipt of items required to be delivered solely
to the Agent; (d) the existence or possible existence of any Default or Unmatured Default; (e) the
validity, enforceability, effectiveness, sufficiency or genuineness of any Loan Document or any
other instrument or writing furnished in connection therewith; (f) the value, sufficiency,
creation, perfection or priority of any Lien in any Collateral; or (g) the financial condition of
any Loan Party, any Guarantor or any Affiliate of any Loan Party.

     10.5. Action on Instructions of the Lenders. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder and under any other Loan Document in
accordance with written instructions signed by the Required Lenders, and such instructions and any
action taken or failure to act pursuant thereto shall be binding on all of the Lenders. The
Lenders hereby acknowledge that the Agent shall be under no duty to take any discretionary action
permitted to be taken by it pursuant to the provisions of this Agreement or any other Loan Document
unless it shall be requested in writing to do so by the Required Lenders. The Agent shall be fully
justified in failing or refusing to take any action hereunder and under any other Loan Document
unless it shall first be indemnified to its satisfaction by the Lenders pro rata against any and
all liability, cost and expense that it may incur by reason of taking or continuing to take any
such action.

     10.6. Employment of Agents and Counsel. The Agent may execute any of its duties as
the Agent hereunder and under any other Loan Document by or through employees, agents, and
attorneys-in-fact and shall not be answerable to the Lenders, except as to money or securities
received by the Agent or its authorized agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning the contractual arrangement between the Agent and the Lenders and all matters
pertaining to the Agent’s duties hereunder and under any other Loan Document.

     10.7. Reliance on Documents; Counsel. The Agent shall be entitled to rely upon any
Note, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex, electronic mail
message, statement, paper or document believed by it to be genuine and correct and to have been
signed or sent by the proper person or persons, and, in respect to legal matters, upon the opinion
of counsel selected by the Agent, which counsel may be employees of the Agent. For purposes of
determining compliance with the conditions specified in Sections 4.1 and 4.2, each
Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or
to be satisfied with, each document or other matter required thereunder to be consented to or
approved by or acceptable or satisfactory to a Lender unless the Agent shall have received notice
from such Lender prior to the applicable date specifying its objection thereto.

     10.8. Agent’s Reimbursement and Indemnification. The Lenders agree to reimburse and
indemnify the Agent ratably in proportion to their respective Commitments (or, if the Commitments
have been terminated, in proportion to their Commitments immediately prior to such termination) (a)
for any

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amounts not reimbursed by the Borrowers for which the Agent is entitled to reimbursement by
the Borrowers under the Loan Documents, (b) for any
other expenses incurred by the Agent on behalf
of the Lenders, in connection with the preparation, execution, delivery, administration and
enforcement of the Loan Documents (including, without limitation, for any expenses incurred by the
Agent in connection with any dispute between the Agent and any Lender or between two or more of the
Lenders) and (c) for any liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in any way relating to or arising out of the Loan
Documents or any other document delivered in connection therewith or the transactions contemplated
thereby (including, without limitation, for any such amounts incurred by or asserted against the
Agent in connection with any dispute between the Agent and any Lender or between two or more of the
Lenders), or the enforcement of any of the terms of the Loan Documents or of any such other
documents, provided that, (i) no Lender shall be liable for any of the foregoing to the extent any
of the foregoing is found in a final non-appealable judgment by a court of competent jurisdiction
to have resulted from the gross negligence or willful misconduct of the Agent and (ii) any
indemnification required pursuant to Section 3.5(g) shall, notwithstanding the provisions
of this Section 10.8, be paid by the relevant Lender in accordance with the provisions
thereof. The obligations of the Lenders under this Section 10.8 shall survive payment of
the Obligations and termination of this Agreement.

     10.9. Notice of Default. The Agent shall not be deemed to have knowledge or notice of
the occurrence of any Default or Unmatured Default hereunder unless the Agent has received written
notice from a Lender, any Borrower or the Borrower Representative referring to this Agreement
describing such Default or Unmatured Default and stating that such notice is a “notice of default.”
In the event that the Agent receives such a notice, the Agent shall give prompt notice thereof to
the Lenders; provided, that, the Agent shall not be liable to any Lender for any failure to do so,
except to the extent that such failure is attributable to the Agent’s gross negligence or willful
misconduct.

     10.10. Rights as a Lender. In the event the Agent is a Lender, the Agent shall have
the same rights and powers hereunder and under any other Loan Document with respect to its
Commitment and its Credit Extensions as any Lender and may exercise the same as though it were not
the Agent, and the term “Lender” or “Lenders” shall, at any time when the Agent is a Lender, unless
the context otherwise indicates, include the Agent in its individual capacity. The Agent and its
Affiliates may accept deposits from, lend money to, and generally engage in any kind of trust,
debt, equity or other transaction, in addition to those contemplated by this Agreement or any other
Loan Document, with any Loan Party in which such Loan Party is not restricted hereby from engaging
with any other Person, all as if JPMorgan Chase were not the Agent and without any duty to account
therefor to Lenders. JPMorgan Chase and its Affiliates may accept fees and other consideration from
any Loan Party for services in connection with this Agreement or otherwise without having to
account for the same to Lenders. The Agent in its individual capacity, is not obligated to remain a
Lender.

     10.11. Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Agent,
the Arranger or any other Lender and based on the financial statements prepared by the Loan Parties
and such other documents and information as it has deemed appropriate, made its own credit analysis
and decision to enter into this Agreement and the other Loan Documents. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent, the Arranger or any
other Lender and based on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under this Agreement and
the other Loan Documents. Except for any notice, report, document, credit information or other
information expressly required to be furnished to the Lenders by the Agent or Arranger hereunder,
neither the Agent nor the Arranger shall have any duty or responsibility (either initially or on a
continuing basis) to provide any Lender with any notice, report, document, credit information or
other information

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concerning the affairs, financial condition or business of the Borrowers or any
of their Affiliates that may come into the possession of the Agent or Arranger (whether or not in
their respective capacity as Agent or Arranger) or any of their Affiliates.

     10.12. Successor Agent. The Agent may resign at any time by giving written notice
thereof to the Lenders and the Borrower Representative, such resignation to be effective upon the
appointment of a successor Agent or, if no successor Agent has been appointed, forty-five days
after the retiring Agent gives notice of its intention to resign. The Agent may be removed at any
time with or without cause by written notice received by the Agent from the Required Lenders, such
removal to be effective on the date specified by the Required Lenders. Upon any such resignation
or removal, the Required Lenders shall have the right to appoint, on behalf of the Borrowers and
the Lenders, a successor Agent. If no successor Agent shall have been so appointed by the Required
Lenders within thirty days after the resigning Agent’s giving notice of its intention to resign,
then the resigning Agent may appoint, on behalf of the Borrowers and the Lenders, a successor
Agent. Notwithstanding the previous sentence, the Agent may at any time without the consent of the
Borrowers or any Lender, appoint any of its Affiliates which is a commercial bank as a successor
Agent hereunder. If the Agent has resigned or been removed and no successor Agent has been
appointed, the Lenders may perform all the duties of the Agent hereunder and the Borrowers shall
make all payments in respect of the Obligations to the applicable Lender and for all other purposes
shall deal directly with the Lenders. No successor Agent shall be deemed to be appointed hereunder
until such successor Agent has accepted the appointment. Any such successor Agent shall be a
commercial bank having capital and retained earnings of at least $100,000,000. Upon the acceptance
of any appointment as the Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges and duties of the
resigning or removed Agent. Upon the effectiveness of the resignation or removal of the Agent, the
resigning or removed Agent shall be discharged from its duties and obligations hereunder and under
the Loan Documents. After the effectiveness of the resignation or removal of an Agent, the
provisions of this Article X shall continue in effect for the benefit of such Agent in
respect of any actions taken or omitted to be taken by it while it was acting as the Agent
hereunder and under the other Loan Documents. In the event that there is a successor to the Agent
by merger, or the Agent assigns its duties and obligations to an Affiliate pursuant to this
Section 10.12, then the term “Prime Rate” as used in this Agreement shall mean the
prime rate, base rate or other analogous rate of the new Agent.

     10.13. Delegation to Affiliates. The Borrowers and the Lenders agree that the Agent
may delegate any of its duties under this Agreement to any of its Affiliates. Any such Affiliate
(and such Affiliate’s directors, officers, agents and employees) which performs duties in
connection with this Agreement shall be entitled to the same benefits of the indemnification,
waiver and other protective provisions to which the Agent is entitled under Articles IX and
X.

     10.14. Execution of Loan Documents. The Lenders hereby empower and authorize the
Agent, on behalf of the Agent and the Lenders, to execute and deliver to the Loan Parties the Loan
Documents and all related agreements, certificates, documents, or instruments as shall be necessary
or appropriate to effect the purposes of the Loan Documents. Each Lender agrees that any action
taken by the Agent or the Required Lenders in accordance with the terms of this Agreement or the
other Loan Documents, and the exercise by the Agent or the Required Lenders of their respective
powers set forth therein or herein, together with such other powers that are reasonably incidental
thereto, shall be binding upon all of the Lenders. The Lenders acknowledge that all of the
Obligations hereunder constitute one debt, secured pari passu by all of the Collateral.

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     10.15. Collateral Matters.

     (a) The Lenders hereby irrevocably authorize the Agent, at its option and in
its sole discretion, to release or subordinate (as applicable) any Liens granted to
the Agent by the Loan Parties on any Collateral (i) upon the termination of the
Aggregate Commitment, payment and satisfaction in full in cash of all Obligations
(other than Unliquidated Secured Obligations), and the cash collateralization of all
Unliquidated Secured Obligations in a manner satisfactory to each affected Lender,
(ii) constituting Property being sold or disposed of if the Loan Party disposing of
such Property certifies to the Agent that the sale or disposition is made in
compliance with the terms of this Agreement (and the Agent may rely conclusively on
any such certificate, without further inquiry), (iii) constituting Property in which
no Loan Party has at any time during the term of this Agreement owned any interest,
(iv) constituting property leased to a Loan Party under a lease which has expired or
been terminated in a transaction permitted under this Agreement, (v) owned by or
leased to an Loan Party which is subject to a purchase money security interest or
which is the subject of a Capitalized Lease, in either case, entered into by such
Loan Party pursuant to Section 6.17(c), (vi) as required to effect any sale
or other disposition of such Collateral in connection with any exercise of remedies
of the Agent and the Lenders pursuant to Section 8.1 or (vii) as provided in
Section 4.2 of the Intercreditor Agreement, upon any release, sale or disposition of
Term Priority Collateral (as defined in the Intercreditor Agreement). Upon request
by the Agent at any time, the Lenders will confirm in writing the Agent’s authority
to release any Liens upon particular types or items of Collateral pursuant to this
Section 10.15. Except as provided in the preceding sentence, the Agent will
not release any Liens on Collateral without the prior written authorization of the
Required Lenders; provided that, the Agent may in its discretion, release its Liens
on Collateral valued in the aggregate not in excess of $2,500,000 during any
calendar year without the prior written authorization of the Lenders.

     (b) Upon receipt by the Agent of any authorization required pursuant to
Section 10.15(a) from the Required Lenders of the Agent’s authority to
release any Liens upon particular types or items of Collateral, and upon at least
five Business Days prior written request by the Loan Parties, the Agent shall (and
is hereby irrevocably authorized by the Lenders to) execute such documents as may be
necessary to evidence the release of its Liens upon such Collateral; provided that,
(i) the Agent shall not be required to execute any such document on terms which, in
the Agent’s opinion, would expose the Agent to liability or create any obligation or
entail any consequence other than the release of such Liens without recourse or
warranty and (ii) such release shall not in any manner discharge, affect, or impair
the Obligations or any Liens (other than those expressly being
released) upon (or obligations of the Loan Parties in respect of) all interests
retained by the Loan Parties, including the proceeds of any sale, all of which shall
continue to constitute part of the Collateral.

     (c) The Agent shall have no obligation whatsoever to any of the Lenders to
assure that the Collateral exists or is owned by the Loan Parties or is cared for,
protected, or insured or has been encumbered, or that the Liens granted to the Agent
therein have been properly or sufficiently or lawfully created, perfected,
protected, or enforced or are entitled to any particular priority, or to exercise at
all or in any particular manner or under any duty of care, disclosure, or fidelity,
or to continue exercising, any of the rights, authorities, and powers granted or
available to the Agent pursuant to any of the Loan Documents, it being understood
and agreed that in respect of the Collateral, or any act,

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omission, or event related
thereto, the Agent may act in any manner it may deem appropriate, in its sole
discretion given the Agent’s own interest in the Collateral in its capacity as one
of the Lenders and that the Agent shall have no other duty or liability whatsoever
to any Lender as to any of the foregoing.

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

     (e) Each Lender hereby agrees as follows: (a) such Lender is deemed to have
requested that the Agent furnish such Lender, promptly after it becomes available, a
copy of each Report prepared by or on behalf of the Agent; (b) such Lender expressly
agrees and acknowledges that neither JPMorgan Chase nor the Agent (i) makes any
representation or warranty, express or implied, as to the completeness or accuracy
of any Report or any of the information contained therein, or (ii) shall be liable
for any information contained in any Report; (c) such Lender expressly agrees and
acknowledges that the Reports are not comprehensive audits or examinations, that the
Agent, JPMorgan Chase, or any other party performing any audit or examination will
inspect only specific information regarding the Loan Parties and will rely
significantly upon the Loan Parties’ books and records, as well as on
representations of the Loan Parties’ personnel and that JPMorgan Chase undertakes no
obligation to update, correct or supplement the Reports; (d) such Lender agrees to
keep all Reports confidential and strictly for its internal use, not share the
Report with any Loan Party and not to distribute any Report to any other Person
except as otherwise permitted pursuant to this Agreement; and (e) without limiting
the generality of any other indemnification provision contained in this Agreement,
such Lender agrees (i) that neither JPMorgan Chase nor the Agent shall be liable to
such Lender or any other Person receiving a copy of the Report for any inaccuracy or
omission contained in or relating to a Report, (ii) to conduct its own due diligence
investigation and make credit decisions with respect to the Loan Parties based on
such documents as such Lender deems appropriate without any reliance on the Reports
or on the Agent or JPMorgan Chase, (iii) to hold the Agent and any such other Person
preparing a Report harmless from any action the indemnifying Lender may take or
conclusion the indemnifying Lender may reach or draw from any Report in connection
with any Credit Extensions that the indemnifying Lender has made or may make to the
Loan Parties, or the indemnifying Lender’s participation in, or the indemnifying
Lender’s purchase of,
any Obligations and (iv) to pay and protect, and indemnify, defend, and hold
the Agent and any such other Person preparing a Report harmless from and against,
the claims, actions, proceedings, damages, costs, expenses, and other amounts
(including reasonable attorney fees) incurred by the Agent and any such other Person
preparing a Report as the direct or indirect result of any third parties who might
obtain all or part of any Report through the indemnifying Lender.

     10.16. Co-Agents, Documentation Agent, Syndication Agent, etc. Neither any of the
Lenders identified in this Agreement as a “co-agent” nor the Documentation Agent or the Syndication
Agent shall have any right, power, obligation, liability, responsibility or duty under this
Agreement other than those applicable to all Lenders as such. Without limiting the foregoing, none
of such Lenders shall have or be

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deemed to have a fiduciary relationship with any Lender. Each
Lender hereby makes the same acknowledgments with respect to such Lenders as it makes with respect
to the Agent in Section 10.11.

ARTICLE XI

SETOFF; RATABLE PAYMENTS

     11.1. Setoff. In addition to, and without limitation of, any rights of the Lenders
under applicable law, if any Loan Party becomes insolvent, however evidenced, or any Default
occurs, any and all deposits (including all account balances, whether provisional or final and
whether or not collected or available) and any other Indebtedness at any time held or owing by any
Lender or any Affiliate of any Lender to or for the credit or account of any Borrower may be offset
and applied toward the payment of the Secured Obligations owing to such Lender, whether or not the
Secured Obligations, or any part thereof, shall then be due.

     11.2. Ratable Payments. If any Lender, whether by setoff or otherwise, has payment
made to it upon its Credit Exposure (other than payments received pursuant to Section 3.1,
3.2, 3.4 or 3.5) in a greater proportion than that received by any other
Lender, such Lender agrees, promptly upon demand, to purchase a portion of the Aggregate Credit
Exposure held by the other Lenders so that after such purchase each Lender will hold its Pro Rata
Share of the Aggregate Credit Exposure. If any Lender, whether in connection with setoff or
amounts which might be subject to setoff or otherwise, receives collateral or other protection for
its Secured Obligations or such amounts which may be subject to setoff, such Lender agrees,
promptly upon demand, to take such action necessary such that all Lenders share in the benefits of
such collateral ratably in proportion to respective Pro Rata Share of the Aggregate Credit
Exposure. In case any such payment is disturbed by legal process, or otherwise, appropriate
further adjustments shall be made.

ARTICLE XII

BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

     12.1. Successors and Assigns. The terms and provisions of the Loan Documents shall be
binding upon and inure to the benefit of the Loan Parties and the Lenders and their respective
successors and assigns permitted hereby, except that (a) the Loan Parties shall not have the right
to assign their rights or obligations under the Loan Documents without the prior written consent of
each Lender, (b) any assignment by any Lender must be
made in compliance with Section 12.3, and (c) any transfer by Participation must be
made in compliance with Section 12.2. Any attempted assignment or transfer by any party
not made in compliance with this Section 12.1 shall be null and void, unless such attempted
assignment or transfer is treated as a participation in accordance with Section 12.2. The
parties to this Agreement acknowledge that clause (b) of this Section 12.1 relates only to
absolute assignments and this Section 12.1 does not prohibit assignments creating security
interests, including, without limitation, (x) any pledge or assignment by any Lender of all or any
portion of its rights under this Agreement and any Note to a Federal Reserve Bank or (y) in the
case of a Lender which is a Fund, any pledge or assignment of all or any portion of its rights
under this Agreement and any Note to its trustee in support of its obligations to its trustee;
provided however, that no such pledge or assignment creating a security interest shall release the
transferor Lender from its obligations hereunder unless and until the parties thereto have complied
with the provisions of Section 12.3. The Agent may treat the Person which made any Credit
Extension or which holds any Note as the owner thereof for all purposes hereof unless and until
such Person complies with Section 12.3; provided however, that the Agent may in its
discretion (but shall not be required to) follow instructions from the Person which made any Credit
Extension or which holds any Note to direct payments relating to such Credit Extension or Note to
another Person. Any assignee of the rights to any Credit Extension or any Note agrees by
acceptance of such assignment to be

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bound by all the terms and provisions of the Loan Documents.
Any request, authority or consent of any Person, who at the time of making such request or giving
such authority or consent is the owner of the rights to any Credit Extension (whether or not a Note
has been issued in evidence thereof), shall be conclusive and binding on any subsequent holder or
assignee of the rights to such Credit Extension.

     12.2. Participations.

     (a) Permitted Participants; Effect. Any Lender may at any time sell to
one or more banks or other entities (“Participants”) participating interests
in any Credit Exposure of such Lender, any Note held by such Lender, any Commitment
of such Lender or any other interest of such Lender under the Loan Documents. In
the event of any such sale by a Lender of participating interests to a Participant,
such Lender’s obligations under the Loan Documents shall remain unchanged, such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, such Lender shall remain the owner of its Credit
Exposure and the holder of any Note issued to it in evidence thereof for all
purposes under the Loan Documents, all amounts payable by the Borrowers under this
Agreement shall be determined as if such Lender had not sold such participating
interests, and the Borrowers and the Agent shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and obligations
under the Loan Documents.

     (b) Voting Rights. Each Lender shall retain the sole right to approve,
without the consent of any Participant, any amendment, modification or waiver of any
provision of the Loan Documents other than any amendment, modification or waiver
with respect to any Credit Extension or Commitment in which such Participant has an
interest which would require consent of all of the Lenders pursuant to the terms of
Section 8.3 or of any other Loan Document.

     (c) Benefit of Certain Provisions. Each Loan Party agrees that each
Participant shall be deemed to have the right of setoff provided in Section
11.1 in respect of its participating interest in amounts owing under the Loan
Documents to the same extent as if the amount of its participating interest were
owing directly to it as a Lender under the Loan Documents, provided that, each
Lender shall retain the right of setoff provided in Section 11.1 with
respect to the amount of participating interests sold to each
Participant. The Lenders agree to share with each Participant, and each
Participant, by exercising the right of setoff provided in Section 11.1,
agrees to share with each Lender, any amount received pursuant to the exercise of
its right of setoff, such amounts to be shared in accordance with Section
11.2 as if each Participant were a Lender. The Borrowers further agree that
each Participant shall be entitled to the benefits of Sections 3.1,
3.2, 3.4 and 3.5 to the same extent as if it were a Lender
and had acquired its interest by assignment pursuant to Section 12.3,
provided that, (i) a Participant shall not be entitled to receive any greater
payment under Section 3.1, 3.2 or 3.5 than the Lender who
sold the participating interest to such Participant would have received had it
retained such interest for its own account, unless the sale of such interest to such
Participant is made with the prior written consent of the Borrower Representative,
and (ii) any Participant not incorporated under the laws of the U.S. or any state
thereof agrees to comply with the provisions of Section 3.5 to the same
extent as if it were a Lender.

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     12.3. Assignments.

     (a) Permitted Assignments. Any Lender may at any time assign to one or
more banks or other entities (“Purchasers”) all or any part of its rights
and obligations under the Loan Documents. Such assignment shall be substantially in
the form of Exhibit G (an “Assignment Agreement”). Each such
assignment with respect to a Purchaser which is not a Lender or an Affiliate of a
Lender or an Approved Fund shall either be in an amount equal to the entire
applicable Commitment and Credit Extensions of the assigning Lender or (unless each
of the Borrower Representative and the Agent otherwise consents) be in an aggregate
amount not less than $5,000,000 in the case of any assignment of a Revolving
Commitment. The amount of the assignment shall be based on the Commitment or
outstanding Credit Extensions (if the Commitment has been terminated) subject to the
assignment, determined as of the date of such assignment or as of the “Trade Date,”
if the “Trade Date” is specified in the assignment.

     (b) Consents. The consent of the Borrower Representative shall be
required prior to an assignment becoming effective unless the Purchaser is a Lender,
an Affiliate of a Lender or an Approved Fund, provided that, the consent of the
Borrower Representative shall not be required if a Default has occurred and is
continuing. The consent of the Agent shall be required prior to an assignment
becoming effective unless the Purchaser is a Lender with a Revolving Commitment (in
the case of an assignment of a Revolving Commitment) or is a Lender, an Affiliate of
a Lender or an Approved Fund (in the case of an assignment of any other Commitment
or Loans). The consent of the LC Issuer shall be required prior to an assignment of
a Revolving Commitment becoming effective unless the Purchaser is a Lender with a
Revolving Commitment. Any consent required under this Section 12.3(b) shall
not be unreasonably withheld or delayed.

     (c) Effect; Effective Date. Upon (i) delivery to the Agent of a duly
executed Assignment Agreement, together with any consents required by Sections
12.3(a) and 12.3(b), and (ii) payment of a $3,500 fee to the Agent for
processing such assignment effective on the effective date specified by the Agent in
such Assignment Agreement. The Assignment Agreement shall contain a representation
by the Purchaser to the effect that none of the consideration used to make the
purchase of the Commitment and Credit Exposure under the applicable Assignment
Agreement constitutes “plan assets” as defined under ERISA and that the rights and
interests of the Purchaser in and under the Loan Documents will not be “plan assets”
under ERISA. On and after the effective date of such Assignment Agreement, such
Purchaser shall for all purposes be a Lender party
to this Agreement and any other Loan Document executed by or on behalf of the
Lenders and shall have all the rights and obligations of a Lender under the Loan
Documents, to the same extent as if it were an original party thereto, and the
transferor Lender shall be released with respect to the Commitment and Credit
Exposure assigned to such Purchaser without any further consent or action by the
Borrowers, the Lenders or the Agent. In the case of an Assignment Agreement
covering all of the assigning Lender’s rights and obligations under this Agreement,
such Lender shall cease to be a Lender hereunder but shall continue to be entitled
to the benefits of, and subject to, those provisions of this Agreement and the other
Loan Documents which survive payment of the Obligations and termination of the
applicable agreement. Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this Section 12.3
shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with Section
12.2. Upon the consummation of any assignment to a Purchaser pursuant to this
Section 12.3(c), the transferor Lender,

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the Agent and the Borrowers shall,
if the transferor Lender or the Purchaser desires that its Loans be evidenced by
Notes, make appropriate arrangements so that new Notes or, as appropriate,
replacement Notes are issued to such transferor Lender and new Notes or, as
appropriate, replacement Notes, are issued to such Purchaser, in each case in
principal amounts reflecting their respective Commitments, as adjusted pursuant to
such assignment.

     (d) Register. The Agent, acting solely for this purpose as an agent of
the Borrowers, shall maintain at one of its offices in the U.S. a copy of each
Assignment Agreement delivered to it and a register for the recordation of the names
and addresses of the Lenders, and the Commitments of, and principal amounts of the
Credit Extensions owing to, each Lender pursuant to the terms hereof from time to
time (the “Register”). The entries in the Register shall be conclusive, and
the Borrowers, the Agent and the Lenders may 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 Borrowers and any Lender, at any reasonable
time and from time to time upon reasonable prior notice.

     12.4. Dissemination of Information. Each Loan Party authorizes each Lender to
disclose to any Participant or Purchaser or any other Person acquiring an interest in the Loan
Documents by operation of law (each a “Transferee”) and any prospective Transferee any and
all information in such Lender’s possession concerning the creditworthiness of the Loan Parties,
including without limitation any information contained in any Reports; provided that, each
Transferee and prospective Transferee agrees to be bound by Section 9.11 of this Agreement.

     12.5. Tax Treatment. If any interest in any Loan Document is transferred to any
Transferee which is not incorporated under the laws of the U.S. or any state thereof, the
transferor Lender shall cause such Transferee, concurrently with the effectiveness of such
transfer, to comply with the provisions of Section 3.5(d).

     12.6. Assignment by LC Issuer. Notwithstanding anything contained herein, if at any time JPMorgan Chase assigns all of its
Revolving Commitment and Revolving Loans pursuant to Section 12.3, JPMorgan Chase may, upon
thirty days’ notice to the Borrower Representative and the Lenders, resign as LC Issuer. In the
event of any such resignation as LC Issuer, the Borrower Representative shall be entitled to
appoint from among the Lenders a successor LC Issuer hereunder; provided however, that no failure
by the Borrower Representative to appoint any such successor shall affect the resignation of
JPMorgan Chase as LC Issuer. If JPMorgan Chase resigns as LC Issuer, it shall retain all the
rights and obligations of the LC Issuer hereunder with respect to the Facility LCs outstanding as
of the effective date of its resignation as LC Issuer and all LC Obligations with respect thereto
(including the right to require the Lenders to make Revolving Loans or fund risk participations in
outstanding Reimbursement Obligations pursuant to Section 2.1.2(d)).

ARTICLE XIII

NOTICES

     13.1. Notices; Effectiveness; Electronic Communications.

     (a) Notices Generally. Except in the case of notices and other
communications expressly permitted to be given by telephone (and except as provided
in

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paragraph (b) below), all notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by telecopier as follows:

     (i) if to any Loan Party, at its address or telecopier number set forth
on the signature page hereof;

     (ii) if to the Agent, at its address or telecopier number set forth on
the signature page hereof;

     (iii) if to the LC Issuer, at its address or telecopier number set
forth on the signature page hereof;

     (iv) if to a Lender, to it at its address or telecopier number set
forth in its Administrative Questionnaire.

     Notices sent by hand or overnight courier service, or mailed by certified or registered
mail, shall be deemed to have been given when received; notices sent by telecopier shall be
deemed to have been given when sent (except that, if not given during normal business hours
for the recipient, shall be deemed to have been given at the opening of business on the next
Business Day for the recipient). Notices delivered through electronic communications to the
extent provided in paragraph (b) below, shall be effective as provided in said paragraph
(b).

     (b) Electronic Communications. Notices and other communications to the
Lenders and the LC Issuer hereunder may be delivered or furnished by electronic
communication (including e-mail and internet or intranet websites) pursuant to
procedures approved by the Agent or as otherwise determined by the Agent, provided
that, the foregoing shall not apply to notices to any Lender or the LC Issuer
pursuant to Article II if such Lender or the LC Issuer, as applicable, has
notified the Agent that it is incapable of receiving notices under such Article by
electronic communication. The Agent or any Loan Party may, in its respective
discretion, agree to accept notices and
other communications to it hereunder by electronic communications pursuant to
procedures approved by it or as it otherwise determines, provided that such
determination or approval may be limited to particular notices or communications.
Notwithstanding the foregoing, in every instance, the Borrower Representative shall
be required to provide paper copies of the Compliance Certificates required by
Section 6.1(e) to the Agent.

     Unless the Agent otherwise prescribes, (i) notices and other communications sent to an
e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from
the intended recipient (such as by the “return receipt requested” function, as available,
return e-mail or other written acknowledgement), provided that if such notice or other
communication is not given during the normal business hours of the recipient, such notice or
communication shall be deemed to have been given at the opening of business on the next
Business Day for the recipient, and (ii) notices or communications posted to an Internet or
intranet website shall be deemed received upon the deemed receipt by the intended recipient
at its e-mail address as described in the foregoing clause (i) of notification that such
notice or communication is available and identifying the website address therefor.

     13.2. Change of Address, Etc. Any party hereto may change its address or telecopier
number for notices and other communications hereunder by notice to the other parties hereto.

96

 

ARTICLE XIV

COUNTERPARTS

     This Agreement may be executed in any number of counterparts, all of which taken together
shall constitute one agreement, and any of the parties hereto may execute this Agreement by signing
any such counterpart. This Agreement shall be effective when it has been executed by the Loan
Parties, the Agent, the LC Issuer and the Lenders and each party has notified the Agent by
facsimile transmission or telephone that it has taken such action.

ARTICLE XV

GUARANTY

     15.1. Guaranty. Each Guarantor (other than those that have delivered a separate
Guaranty; each to be referred to in this Article XV as a Guarantor and collectively as the
Guarantors) hereby agrees that it is jointly and severally liable for, and, as primary obligor and
not merely as surety, absolutely and unconditionally guarantees to the Lenders the prompt payment
when due, whether at stated maturity, upon acceleration or otherwise, and at all times thereafter,
of the Secured Obligations and all costs and expenses including, without limitation, all court
costs and attorneys’ and paralegals’ fees (including allocated costs of in-house counsel and
paralegals) and expenses paid or incurred by the Agent, the LC Issuer and the Lenders in
endeavoring to collect all or any part of the Secured Obligations from, or in prosecuting any
action against, any Borrower, any Guarantor or any other guarantor of all or any part of the
Secured Obligations (such costs and expenses, together with the Secured Obligations, collectively
the “Guaranteed Obligations”). Each Guarantor further agrees that the Guaranteed
Obligations may be extended or renewed in whole or in part without notice to or further assent from
it, and that it remains bound upon its guarantee notwithstanding any such extension or renewal.

     15.2. Guaranty of Payment. This Guaranty is a guaranty of payment and not of
collection. Each Guarantor waives any right to require the Agent, the LC Issuer or any Lender to
sue any Borrower, any Guarantor, any other guarantor, or any other person obligated for all or any
part of the Guaranteed Obligations, or otherwise to enforce its payment against any collateral
securing all or any part of the Guaranteed Obligations.

     15.3. No Discharge or Diminishment of Guaranty.

     (a) Except as otherwise provided for herein and to the extent provided for
herein, the obligations of each Guarantor hereunder are unconditional and absolute
and not subject to any reduction, limitation, impairment or termination for any
reason (other than the indefeasible payment in full in cash of the Guaranteed
Obligations), including:

     (i) any claim of waiver, release, extension, renewal, settlement,
surrender, alteration, or compromise of any of the Guaranteed Obligations,
by operation of law or otherwise;

     (ii) any change in the corporate existence, structure or ownership of
any Borrower or any other guarantor of or other person liable for any of the
Guaranteed Obligations;

     (iii) any insolvency, bankruptcy, reorganization or other similar
proceeding affecting any Borrower, any Guarantor, or any other guarantor of
or

97

 

other person liable for any of the Guaranteed Obligations, or their
assets or any resulting release or discharge of any obligation of any
Borrower, any Guarantor, or any other guarantor of or other person liable
for any of the Guaranteed Obligations; or

     (iv) the existence of any claim, setoff or other rights which any
Guarantor may have at any time against any Borrower, any Guarantor, any
other guarantor of the Guaranteed Obligations, the Agent, the LC Issuer, any
Lender, or any other person, whether in connection herewith or in any
unrelated transactions.

     (b) The obligations of each Guarantor hereunder are not subject to any defense
or setoff, counterclaim, recoupment, or termination whatsoever by reason of the
invalidity, illegality, or unenforceability of any of the Guaranteed Obligations or
otherwise, or any provision of applicable law or regulation purporting to prohibit
payment by any Borrower, any Guarantor or any other guarantor of or other person
liable for any of the Guaranteed Obligations, of the Guaranteed Obligations or any
part thereof.

     (c) Further, the obligations of any Guarantor hereunder are not discharged or
impaired or otherwise affected by:

     (i) the failure of the Agent, the LC Issuer or any Lender to assert any
claim or demand or to enforce any remedy with respect to all or any part of
the Guaranteed Obligations;

     (ii) any waiver or modification of or supplement to any provision of
any agreement relating to the Guaranteed Obligations;

     (iii) any release, non-perfection, or invalidity of any indirect or
direct security for the obligations of any Borrower for all or any part of
the Guaranteed Obligations or any obligations of any other guarantor of or
other person liable for any of the Guaranteed Obligations;

     (d) any action or failure to act by the Agent, the LC Issuer or any Lender with
respect to any collateral securing any part of the Guaranteed Obligations; and

     (e) any default, failure or delay, willful or otherwise, in the payment or
performance of any of the Guaranteed Obligations, or any other circumstance, act,
omission or delay that might in any manner or to any extent vary the risk of such
Guarantor or that would otherwise operate as a discharge of any Guarantor as a
matter of law or equity (other than the indefeasible payment in full in cash of the
Guaranteed Obligations).

     15.4. Defenses Waived. To the fullest extent permitted by applicable law, each
Guarantor hereby waives any defense based on or arising out of any defense of any Borrower or any
Guarantor or the unenforceability of all or any part of the Guaranteed Obligations from any cause,
or the cessation from any cause of the liability of any Borrower or any Guarantor, other than the
indefeasible payment in full in cash of the Guaranteed Obligations. Without limiting the generality
of the foregoing, each Guarantor irrevocably waives acceptance hereof, presentment, demand, protest
and, to the fullest extent permitted by law, any notice not provided for herein, as well as any
requirement that at any time any action be taken by any person against any Borrower, any Guarantor,
any other guarantor of any of the Guaranteed Obligations,

98

 

or any other person. The Agent may, at
its election, foreclose on any Collateral held by it by one or more judicial or nonjudicial sales,
accept an assignment of any such Collateral in lieu of foreclosure or otherwise act or fail to act
with respect to any collateral securing all or a part of the Guaranteed Obligations, compromise or
adjust any part of the Guaranteed Obligations, make any other accommodation with any Borrower, any
Guarantor, any other guarantor or any other person liable on any part of the Guaranteed Obligations
or exercise any other right or remedy available to it against any Borrower, any Guarantor, any
other guarantor or any other person liable on any of the Guaranteed Obligations, without affecting
or impairing in any way the liability of such Guarantor under this Guaranty except to the extent
the Guaranteed Obligations have been fully and indefeasibly paid in cash. To the fullest extent
permitted by applicable law, each Guarantor waives any defense arising out of any such election
even though that election may operate, pursuant to applicable law, to impair or extinguish any
right of reimbursement or subrogation or other right or remedy of any Guarantor against any
Borrower, any other guarantor or any other person liable on any of the Guaranteed Obligations, as
the case may be, or any security.

     15.5. Rights of Subrogation. No Guarantor will assert any right, claim or cause of
action, including, without limitation, a claim of subrogation, contribution or indemnification that
it has against any Borrower, any Guarantor, any person liable on the Guaranteed Obligations, or any
collateral, until the Loan Parties and the Guarantors have fully performed all their obligations to
the Agent, the LC Issuer and the Lender.

     15.6. Reinstatement; Stay of Acceleration. If at any time any payment of any portion
of the Guaranteed Obligations is rescinded or must otherwise be restored or returned upon the
insolvency, bankruptcy, or reorganization of any Borrower or otherwise, each Guarantor’s
obligations under this Guaranty with respect to that payment shall be
reinstated at such time as though the payment had not been made and whether or not the Agent,
the LC Issuer and the Lenders are in possession of this Guaranty. If acceleration of the time for
payment of any of the Guaranteed Obligations is stayed upon the insolvency, bankruptcy or
reorganization of any Borrower, all such amounts otherwise subject to acceleration under the terms
of any agreement relating to the Guaranteed Obligations shall nonetheless be payable by the
Guarantors forthwith on demand by the Lender.

     15.7. Information. Each Guarantor assumes all responsibility for being and keeping
itself informed of the Borrowers’ financial condition and assets, and of all other circumstances
bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature, scope and extent
of the risks that each Guarantor assumes and incurs under this Guaranty, and agrees that neither
the Agent, the LC Issuer nor any Lender shall have any duty to advise any Guarantor of information
known to it regarding those circumstances or risks.

     15.8. Termination. The Lenders may continue to make loans or extend credit to any
Borrower based on this Guaranty until five days after the Agent receives written notice of
termination from any Guarantor. Notwithstanding receipt of any such notice, each Guarantor will
continue to be liable to the Lender for any Guaranteed Obligations created, assumed or committed to
prior to the fifth day after receipt of the notice, and all subsequent renewals, extensions,
modifications and amendments with respect to, or substitutions for, all or any part of that
Guaranteed Obligations.

     15.9. Taxes. All payments of the Guaranteed Obligations will be made by each
Guarantor free and clear of and without deduction for or on account of any and all present or
future taxes, levies, imposts, duties, charges, deductions or withholdings of whatever nature
imposed by any governmental authority with respect to such payments, and any and all liabilities
with respect to the foregoing, but excluding franchise taxes and taxes imposed on overall net
income of the Lender by the U.S. or the jurisdiction in which the Lender’s applicable Lending
Installation is located (collectively, “Taxes”). If

99

 

any Guarantor is required by law to
deduct any Taxes from or in respect of any sum payable to the Lenders under this Guaranty, (a) the
sum payable must be increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this provision) the Lenders receive an
amount equal to the sum it would have received had no such deductions been made, (b) the Guarantors
must then make such deductions, and must pay the full amount deducted to the relevant authority in
accordance with applicable law, and (c) the Guarantors must furnish to the Lender within forty-five
days after their due date certified copies of all official receipts evidencing payment thereof.

     15.10. Severability. The provisions of this Guaranty are severable, and in any action
or proceeding involving any state corporate law, or any state, federal or foreign bankruptcy,
insolvency, reorganization or other law affecting the rights of creditors generally, if the
obligations of any Guarantor under this Guaranty would otherwise be held or determined to be
avoidable, invalid or unenforceable on account of the amount of such Guarantor’s liability under
this Guaranty, then, notwithstanding any other provision of this Guaranty to the contrary, the
amount of such liability shall, without any further action by the Guarantors or the Lenders, be
automatically limited and reduced to the highest amount that is valid and enforceable as determined
in such action or proceeding (such highest amount determined hereunder being the relevant
Guarantor’s “Maximum Liability”. This Section with respect to the Maximum Liability of
each
Guarantor is intended solely to preserve the rights of the Lenders to the maximum extent not
subject to avoidance under applicable law, and no Guarantor nor any other person or entity shall
have any right or claim under this Section with respect to such Maximum Liability, except to the
extent necessary so that the obligations of any Guarantor hereunder shall not be rendered voidable
under applicable law. Each Guarantor agrees that the Guaranteed Obligations may at any time and
from time to time exceed the Maximum Liability of each Guarantor without impairing this Guaranty or
affecting the rights and remedies of the Lenders hereunder, provided that, nothing in this sentence
shall be construed to increase any Guarantor’s obligations hereunder beyond its Maximum Liability.

     15.11. Contribution. In the event any Guarantor (a “Paying Guarantor”) shall
make any payment or payments under this Guaranty or shall suffer any loss as a result of any
realization upon any collateral granted by it to secure its obligations under this Guaranty, each
other Guarantor (each a “Non-Paying Guarantor”) shall contribute to such Paying Guarantor
an amount equal to such Non-Paying Guarantor’s “Pro Rata Share” of such payment or payments made,
or losses suffered, by such Paying Guarantor. For purposes of this Article XV, each
Non-Paying Guarantor’s “Pro Rata Share” with respect to any such payment or loss by a
Paying Guarantor shall be determined as of the date on which such payment or loss was made by
reference to the ratio of (i) such Non-Paying Guarantor’s Maximum Liability as of such date
(without giving effect to any right to receive, or obligation to make, any contribution hereunder)
or, if such Non-Paying Guarantor’s Maximum Liability has not been determined, the aggregate amount
of all monies received by such Non-Paying Guarantor from the Borrowers after the date hereof
(whether by loan, capital infusion or by other means) to (ii) the aggregate Maximum Liability of
all Guarantors hereunder (including such Paying Guarantor) as of such date (without giving effect
to any right to receive, or obligation to make, any contribution hereunder), or to the extent that
a Maximum Liability has not been determined for any Guarantor, the aggregate amount of all monies
received by such Guarantors from the Borrowers after the date hereof (whether by loan, capital
infusion or by other means). Nothing in this provision shall affect any Guarantor’s several
liability for the entire amount of the Guaranteed Obligations (up to such Guarantor’s Maximum
Liability). Each of the Guarantors covenants and agrees that its right to receive any contribution
under this Guaranty from a Non-Paying Guarantor shall be subordinate and junior in right of payment
to the payment in full in cash of the Guaranteed Obligations. This provision is for the benefit of
both the Agent, the LC Issuer, the Lenders and the Guarantors and may be enforced by any one, or
more, or all of them in accordance with the terms hereof.

100

 

     15.12. Lending Installations. The Guaranteed Obligations may be booked at any Lending
Installation. All terms of this Guaranty apply to and may be enforced by or on behalf of any
Lending Installation.

     15.13. Liability Cumulative. The liability of each Loan Party as a Guarantor under
this Article XV is in addition to and shall be cumulative with all liabilities of each Loan
Party to the Agent, the LC Issuer and the Lenders under this Agreement and the other Loan Documents
to which such Loan Party is a party or in respect of any obligations of liabilities of the other
Loan Parties, without any limitation as to amount, unless the instrument or agreement evidencing or
creating such other liability specifically provides to the contrary.

ARTICLE XVI

CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

     16.1. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A CONTRARY
EXPRESS CHOICE OF LAW PROVISION) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS (WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS) OF THE STATE OF TEXAS, BUT GIVING EFFECT
TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

     16.2. CONSENT TO JURISDICTION. EACH LOAN PARTY HEREBY IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY U.S. FEDERAL OR TEXAS STATE COURT SITTING IN DALLAS, TEXAS IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND EACH LOAN PARTY HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS
TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS
AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT, THE LC ISSUER OR ANY
LENDER TO BRING PROCEEDINGS AGAINST ANY LOAN PARTY IN THE COURTS OF ANY OTHER JURISDICTION. ANY
JUDICIAL PROCEEDING BY ANY LOAN PARTY AGAINST THE AGENT, THE LC ISSUER OR ANY LENDER INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTION WITH ANY
LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN DALLAS, TEXAS.

     16.3. WAIVER OF JURY TRIAL. EACH LOAN PARTY, THE AGENT, THE LC ISSUER AND EACH LENDER
HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.

ARTICLE XVII

THE BORROWER REPRESENTATIVE

     17.1. Appointment; Nature of Relationship. The Company is hereby appointed by each of
the Borrowers as its contractual representative (herein referred to as the “Borrower
Representative”)

101

 

hereunder and under each other Loan Document, and each of the Borrowers
irrevocably authorizes the Borrower Representative to act as the contractual representative of such
Borrower with the rights and duties expressly set forth herein and in the other Loan Documents.
The Borrower Representative agrees to act as such contractual representative upon the express
conditions contained in this Article XVI. Additionally, the Borrowers hereby appoint the
Borrower Representative as their agent to receive all of the proceeds of the Loans in the
Funding Account, at which time the Borrower Representative shall promptly disburse such Loans to
the appropriate Borrower. The Agent and the Lenders, and their respective officers, directors,
agents or employees, shall not be liable to the Borrower Representative or any Borrower for any
action taken or omitted to be taken by the Borrower Representative or the Borrowers pursuant to
this Section 17.1.

     17.2. Powers. The Borrower Representative shall have and may exercise such powers
under the Loan Documents as are specifically delegated to the Borrower Representative by the terms
of each thereof, together with such powers as are reasonably incidental thereto. The Borrower
Representative shall have no implied duties to the Borrowers, or any obligation to the Lenders to
take any action thereunder except any action specifically provided by the Loan Documents to be
taken by the Borrower Representative.

     17.3. Employment of Agents. The Borrower Representative may execute any of its duties
as the Borrower Representative hereunder and under any other Loan Document by or through Authorized
Officers.

     17.4. Notices. Each Borrower shall immediately notify the Borrower Representative of
the occurrence of any Default or Unmatured Default hereunder referring to this Agreement describing
such Default or Unmatured Default and stating that such notice is a “notice of default.” In the
event that the Borrower Representative receives such a notice, the Borrower Representative shall
give prompt notice thereof to the Agent and the Lenders. Any notice provided to the Borrower
Representative hereunder shall constitute notice to each Borrower on the date received by the
Borrower Representative.

     17.5. Successor Borrower Representative. Upon the prior written consent of the Agent,
the Borrower Representative may resign at any time, such resignation to be effective upon the
appointment of a successor Borrower Representative. The Agent shall give prompt written notice of
such resignation to the Lenders.

     17.6. Execution of Loan Documents; Aggregate Borrowing Base Certificate. The
Borrowers hereby empower and authorize the Borrower Representative, on behalf of the Borrowers, to
execute and deliver to the Agent and the Lenders the Loan Documents and all related agreements,
certificates, documents, or instruments as shall be necessary or appropriate to effect the purposes
of the Loan Documents, including without limitation, the Aggregate Borrowing Base Certificates and
the Compliance Certificates. Each Borrower agrees that any action taken by the Borrower
Representative or the Borrowers in accordance with the terms of this Agreement or the other Loan
Documents, and the exercise by the Borrower Representative of its powers set forth therein or
herein, together with such other powers that are reasonably incidental thereto, shall be binding
upon all of the Borrowers.

     17.7. Reporting. Each Borrower hereby agrees that such Borrower shall furnish
promptly after each Fiscal Month to the Borrower Representative a copy of its Borrowing Base
Certificate and any other certificate or report required hereunder or requested by the Borrower
Representative on which the Borrower
Representative shall rely to prepare the Aggregate Borrowing Base Certificates and Compliance
Certificates required pursuant to the provisions of this Agreement.

[Signature Pages Follow]

102

 

     IN WITNESS WHEREOF, the Loan Parties, the Lenders, the LC Issuer and the Agent have
executed this Agreement as of the date first above written.

	 	 	 	 	 	 	 
	 	 	BORROWERS:	 	 
	 
	 	 	 	 	 	 
	 	 	NEWPARK RESOURCES, INC.,	 	 
	 	 	DURA-BASE NEVADA, INC.,	 	 
	 	 	EXCALIBAR MINERALS INC.,	 	 
	 	 	EXCALIBUR MINERALS OF LA., L.L.C.,	 	 
	 	 	NEWPARK ENVIRONMENTAL SERVICES, L.L.C.,	 	 
	 	 	NEWPARK ENVIRONMENTAL MANAGEMENT COMPANY, L.L.C.,	 	 
	 	 	NEWPARK HOLDINGS, INC.,	 	 
	 	 	NEWPARK TEXAS, L.L.C.,	 	 
	 	 	NEWPARK DRILLING FLUIDS LABORATORY, INC.,	 	 
	 	 	SOLOCO, L.L.C.,	 	 
	 	 	SUPREME CONTRACTORS, L.L.C.,	 	 
	 	 	COMPOSITE MAT SOLUTIONS L.L.C.,	 	 
	 	 	NEWPARK ENVIRONMENTAL WATER

 SOLUTIONS LLC, and THE
LOMA COMPANY, L.L.C.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ John R. Dardenne
 

	 	 
	 

	 	 	 	John R. Dardenne	 	 
	 

	 	 	 	Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	BATSON MILL, L.P.,	 	 
	 	 	NES PERMIAN BASIN, L.P.,	 	 
	 	 	NEWPARK DRILLING FLUIDS, LP,	 	 
	 	 	NEWPARK ENVIRONMENTAL SERVICES OF TEXAS, L.P.,	 	 
	 	 	NID, L.P., and	 	 
	 	 	SOLOCO TEXAS, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By: 
	 	Newpark Holdings, Inc., the general partner of
such entity	 	 
	 
	 	 	 	 	 	 
	 

	 	By: 
	 	/s/ John R. Dardenne	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	John R. Dardenne	 	 
	 

	 	 	 	Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	LOAN PARTIES:	 	 
	 
	 	 	 	 	 	 
	 	 	MALLARD & MALLARD OF LA., INC.	 	 

 

 

	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ John R. Dardenne	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	John R. Dardenne	 	 
	 

	 	 	 	Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	NEWPARK ENVIRONMENTAL SERVICES	 	 
	 	 	MISSISSIPPI, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Newpark Holdings, Inc., its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ John R. Dardenne	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	John R. Dardenne	 	 
	 

	 	 	 	Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	NOTICE ADDRESS FOR ALL LOAN PARTIES:	 	 
	 	 	c/o Newpark Resources, Inc.	 	 
	 	 	3850 North Causeway Blvd., Suite 1770	 	 
	 	 	Metairie, Louisiana 70002-1752	 	 
	 	 	Attention: Mr. John R. Dardenne, Sr., Treasurer	 	 
	 	 	Telephone: (504) 838-8222	 	 
	 	 	Facsimile: (504) 833-9506	 	 

 

 

	 	 	 	 	 	 	 
	 	 	LENDERS:	 	 
	 
	 	 	 	 	 	 
	 	 	JPMORGAN CHASE BANK, N.A., (successor by merger to
Bank One, N.A. (Main Office Chicago)),
Individually, as Agent and LC Issuer	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ J. Devin Mock	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	J. Devin Mock	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	Address:	 	 
	 	 	JPMorgan Chase Bank,
N.A.	 	 
	 	 	2200 Ross Avenue, 6th Floor	 	 
	 	 	Dallas, Texas 75201	 	 
	 	 	Attention: J. Devin Mock	 	 
	 	 	Telephone: (214) 965-2382	 	 
	 	 	Facsimile: (214) 965-2594	 	 

 

 

	 	 	 	 	 	 	 
	 	 	CAPITAL ONE, NATIONAL ASSOCIATION,

as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Cheryl Denenea	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Cheryl Denenea	 	 
	 

	 	Title:
	 	Vice President	 	 

 

 

	 	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A., 

as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ John Olsen	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	John Olsen	 	 
	 

	 	Title:
	 	Vice President	 	 

 

 

	 	 	 	 	 	 	 
	 	 	WHITNEY NATIONAL BANK,

as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Josh Jones	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Josh Jones	 	 
	 

	 	Title:
	 	Vice Presidentexv4w1

 

EXHIBIT
4.1

 

SECOND AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

OF

NATURAL RESOURCE PARTNERS L.P.

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	ARTICLE I
	 	 	 	 
	 	 	 
	 	 	 	 
	 	 	DEFINITIONS
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 1.1	 	Definitions
	 	 	2	 
	Section 1.2	 	Construction
	 	 	23	 
	 	 	 
	 	 	 	 
	 	 	ARTICLE II
	 	 	 	 
	 	 	 
	 	 	 	 
	 	 	ORGANIZATION
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 2.1	 	Formation
	 	 	23	 
	Section 2.2	 	Name
	 	 	23	 
	Section 2.3	 	Registered Office; Registered Agent; Principal Office; Other Offices
	 	 	24	 
	Section 2.4	 	Purpose and Business
	 	 	24	 
	Section 2.5	 	Powers
	 	 	24	 
	Section 2.6	 	Power of Attorney
	 	 	25	 
	Section 2.7	 	Term
	 	 	26	 
	Section 2.8	 	Title to Partnership Assets
	 	 	26	 
	 	 	 
	 	 	 	 
	 	 	ARTICLE III
	 	 	 	 
	 	 	 
	 	 	 	 
	 	 	RIGHTS OF LIMITED PARTNERS
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 3.1	 	Limitation of Liability
	 	 	27	 
	Section 3.2	 	Management of Business
	 	 	27	 
	Section 3.3	 	Outside Activities of the Limited Partners
	 	 	27	 
	Section 3.4	 	Rights of Limited Partners
	 	 	27	 
	 	 	 
	 	 	 	 
	 	 	ARTICLE IV
	 	 	 	 
	 	 	 
	 	 	 	 
	 	 	CERTIFICATES; RECORD HOLDERS; TRANSFER OF
	 	 	 	 
	 	 	PARTNERSHIP INTERESTS; REDEMPTION
	 	 	 	 
	 	 	OF PARTNERSHIP INTERESTS
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 4.1	 	Certificates
	 	 	28	 
	Section 4.2	 	Mutilated, Destroyed, Lost or Stolen Certificates
	 	 	29	 
	Section 4.3	 	Record Holders
	 	 	30	 
	Section 4.4	 	Transfer Generally
	 	 	30	 
	Section 4.5	 	Registration and Transfer of Limited Partner Interests
	 	 	30	 
	Section 4.6	 	Transfer of the General Partner’s General Partner Interest
	 	 	31	 
	Section 4.7	 	Transfer of Incentive Distribution Rights
	 	 	32	 

NATURAL RESOURCE PARTNERS L.P.

SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP

 

 

	 	 	 	 	 	 	 
	Section 4.8	 	Restrictions on Transfers
	 	 	32	 
	Section 4.9	 	Citizenship Certificates; Non-citizen Assignees
	 	 	33	 
	Section 4.10	 	Redemption of Partnership Interests of Non-citizen Assignees
	 	 	34	 
	 	 	 
	 	 	 	 
	 	 	ARTICLE V
	 	 	 	 
	 	 	 
	 	 	 	 
	 	 	CAPITAL CONTRIBUTIONS AND ISSUANCE OF 

PARTNERSHIP INTERESTS
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 5.1	 	Organizational Contributions
	 	 	35	 
	Section 5.2	 	Contributions by the General Partner and its Affiliates
	 	 	36	 
	Section 5.3	 	Contributions by Initial Limited Partners
	 	 	36	 
	Section 5.4	 	Interest and Withdrawal
	 	 	36	 
	Section 5.5	 	Capital Accounts
	 	 	36	 
	Section 5.6	 	Issuances of Additional Partnership Securities
	 	 	39	 
	Section 5.7	 	Limitations on Issuance of Additional Partnership Securities
	 	 	40	 
	Section 5.8	 	Conversion of Subordinated Units
	 	 	43	 
	Section 5.9	 	Limited Preemptive Right
	 	 	45	 
	Section 5.10	 	Splits and Combinations
	 	 	45	 
	Section 5.11	 	Fully Paid and Non-Assessable Nature of Limited Partner Interests
	 	 	46	 
	Section 5.12	 	Establishment of Class B Units
	 	 	46	 
	 	 	 
	 	 	 	 
	 	 	ARTICLE VI
	 	 	 	 
	 	 	 
	 	 	 	 
	 	 	ALLOCATIONS AND DISTRIBUTIONS
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 6.1	 	Allocations for Capital Account Purposes
	 	 	52	 
	Section 6.2	 	Allocations for Tax Purposes
	 	 	60	 
	Section 6.3	 	Requirement and Characterization of Distributions; Distributions to Record Holders
	 	 	62	 
	Section 6.4	 	Distributions of Available Cash from Operating Surplus
	 	 	63	 
	Section 6.5	 	Distributions of Available Cash from Capital Surplus
	 	 	65	 
	Section 6.6	 	Adjustment of Minimum Quarterly Distribution and Target Distribution Levels
	 	 	65	 
	Section 6.7	 	Special Provisions Relating to the Holders of Subordinated Units and Class B Units
	 	 	66	 
	Section 6.8	 	Special Provisions Relating to the Holders of Incentive Distribution Rights
	 	 	67	 
	Section 6.9	 	Entity-Level Taxation
	 	 	67	 
	 	 	 
	 	 	 	 
	 	 	ARTICLE VII
	 	 	 	 
	 	 	 
	 	 	 	 
	 	 	MANAGEMENT AND OPERATION OF BUSINESS
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 7.1  	 	Management
	 	 	67	 

NATURAL RESOURCE PARTNERS L.P.

SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP

ii

 

 

	 	 	 	 	 	 	 
	Section 7.2	 	Certificate of Limited Partnership
	 	 	70	 
	Section 7.3	 	Restrictions on the General Partner’s Authority
	 	 	70	 
	Section 7.4	 	Reimbursement of the General Partner
	 	 	71	 
	Section 7.5	 	Outside Activities
	 	 	72	 
	Section 7.6	 	Loans from the General Partner; Loans or Contributions from the
Partnership; Contracts with Affiliates;
Certain Restrictions on the General Partner
	 	 	73	 
	Section 7.7	 	Indemnification
	 	 	75	 
	Section 7.8	 	Liability of Indemnitees
	 	 	76	 
	Section 7.9	 	Resolution of Conflicts of Interest
	 	 	77	 
	Section 7.10	 	Other Matters Concerning the General Partner
	 	 	79	 
	Section 7.11	 	Purchase or Sale of Partnership Securities
	 	 	79	 
	Section 7.12	 	Registration Rights of the General Partner and its Affiliates
	 	 	79	 
	Section 7.13	 	Reliance by Third Parties
	 	 	83	 
	 	 	 
	 	 	 	 
	 	 	ARTICLE VIII
	 	 	 	 
	 	 	 
	 	 	 	 
	 	 	BOOKS, RECORDS, ACCOUNTING AND REPORTS
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 8.1	 	Records and Accounting
	 	 	84	 
	Section 8.2	 	Fiscal Year
	 	 	84	 
	Section 8.3	 	Reports
	 	 	84	 
	 	 	 
	 	 	 	 
	 	 	ARTICLE IX 
	 	 	 	 
	 	 	 
	 	 	 	 
	 	 	TAX MATTERS
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 9.1	 	Tax Returns and Information
	 	 	85	 
	Section 9.2	 	Tax Elections
	 	 	85	 
	Section 9.3	 	Tax Controversies
	 	 	85	 
	Section 9.4	 	Withholding
	 	 	85	 
	 	 	 
	 	 	 	 
	 	 	ARTICLE X
	 	 	 	 
	 	 	 
	 	 	 	 
	 	 	ADMISSION OF PARTNERS
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 10.1	 	Intentionally Omitted
	 	 	86	 
	Section 10.2	 	Admission of Substituted Limited Partner
	 	 	86	 
	Section 10.3	 	Admission of Successor General Partner
	 	 	87	 
	Section 10.4	 	Admission of Additional Limited Partners
	 	 	87	 
	Section 10.5  	 	Amendment of Agreement and Certificate of Limited Partnership
	 	 	87	 

NATURAL RESOURCE PARTNERS L.P.

SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP

iii

 

 

	 	 	 	 	 	 	 
	 	 	ARTICLE XI
	 	 	 	 
	 	 	 
	 	 	 	 
	 	 	WITHDRAWAL OR REMOVAL OF PARTNERS
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 11.1	 	Withdrawal of the General Partner
	 	 	88	 
	Section 11.2	 	Removal of the General Partner
	 	 	89	 
	Section 11.3	 	Interest of Departing Partner and Successor General Partner
	 	 	90	 
	Section 11.4	 	Termination of Subordination Period, Conversion of Subordinated Units and
Extinguishment of Cumulative
Common Unit Arrearages
	 	 	91	 
	Section 11.5	 	Withdrawal of Limited Partners
	 	 	91	 
	 	 	 
	 	 	 	 
	 	 	ARTICLE XII
	 	 	 	 
	 	 	 
	 	 	 	 
	 	 	DISSOLUTION AND LIQUIDATION 
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 12.1	 	Dissolution
	 	 	92	 
	Section 12.2	 	Continuation of the Business of the Partnership After Dissolution
	 	 	92	 
	Section 12.3	 	Liquidator
	 	 	93	 
	Section 12.4	 	Liquidation
	 	 	94	 
	Section 12.5	 	Cancellation of Certificate of Limited Partnership
	 	 	94	 
	Section 12.6	 	Return of Contributions
	 	 	95	 
	Section 12.7	 	Waiver of Partition
	 	 	95	 
	Section 12.8	 	Capital Account Restoration
	 	 	95	 
	 	 	 
	 	 	 	 
	 	 	ARTICLE XIII
	 	 	 	 
	 	 	 
	 	 	 	 
	 	 	AMENDMENT OF PARTNERSHIP AGREEMENT; 
MEETINGS; RECORD DATE
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 13.1	 	Amendment to be Adopted Solely by the General Partner
	 	 	95	 
	Section 13.2	 	Amendment Procedures
	 	 	97	 
	Section 13.3	 	Amendment Requirements
	 	 	97	 
	Section 13.4	 	Special Meetings
	 	 	98	 
	Section 13.5	 	Notice of a Meeting
	 	 	98	 
	Section 13.6	 	Record Date
	 	 	98	 
	Section 13.7	 	Adjournment
	 	 	98	 
	Section 13.8	 	Waiver of Notice; Approval of Meeting; Approval of Minutes
	 	 	99	 
	Section 13.9	 	Quorum
	 	 	99	 
	Section 13.10	 	Conduct of a Meeting
	 	 	100	 
	Section 13.11	 	Action Without a Meeting
	 	 	100	 
	Section 13.12  	 	Voting and Other Rights
	 	 	101	 

NATURAL RESOURCE PARTNERS L.P.

SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP

iv

 

 

	 	 	 	 	 	 	 
	 	 	ARTICLE XIV
	 	 	 	 
	 	 	 
	 	 	 	 
	 	 	MERGER
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 14.1	 	Authority
	 	 	101	 
	Section 14.2	 	Procedure for Merger or Consolidation
	 	 	101	 
	Section 14.3	 	Approval by Limited Partners of Merger or Consolidation
	 	 	102	 
	Section 14.4	 	Certificate of Merger
	 	 	103	 
	Section 14.5	 	Effect of Merger
	 	 	103	 
	 	 	 
	 	 	 	 
	 	 	ARTICLE XV
	 	 	 	 
	 	 	 
	 	 	 	 
	 	 	RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 15.1	 	Right to Acquire Limited Partner Interests
	 	 	104	 
	 	 	 
	 	 	 	 
	 	 	ARTICLE XVI
	 	 	 	 
	 	 	 
	 	 	 	 
	 	 	GENERAL PROVISIONS
	 	 	 	 
	 	 	 
	 	 	 	 
	Section 16.1	 	Addresses and Notices
	 	 	106	 
	Section 16.2	 	Further Action
	 	 	106	 
	Section 16.3	 	Binding Effect
	 	 	106	 
	Section 16.4	 	Integration
	 	 	107	 
	Section 16.5	 	Creditors
	 	 	107	 
	Section 16.6	 	Waiver
	 	 	107	 
	Section 16.7	 	Counterparts
	 	 	107	 
	Section 16.8	 	Applicable Law
	 	 	107	 
	Section 16.9	 	Invalidity of Provisions
	 	 	107	 
	Section 16.10	 	Consent of Partners
	 	 	107	 

NATURAL RESOURCE PARTNERS L.P.

SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP

 v

 

 

SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED

PARTNERSHIP OF NATURAL RESOURCE PARTNERS L.P.

     THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF NATURAL RESOURCE PARTNERS
L.P., dated as of January 4, 2007, is entered into by and among NRP (GP) LP, a Delaware limited
partnership, as the General Partner, and the Limited Partners, together with any other Persons who
become Partners in the Partnership as provided herein.

     WHEREAS, the General Partner, the Organizational Limited Partner, and the Limited Partners of
the Partnership entered into that certain First Amended and Restated Agreement of Limited
Partnership of the Partnership dated as of October 17, 2002 (the “Partnership Agreement”);

     WHEREAS, Section 13.1(d)(i) of the Partnership Agreement provides that the General Partner may
amend any provision of the Partnership Agreement without the approval of any Partner or Assignee to
reflect a change that, in the discretion of the General Partner, does not adversely affect the
Limited Partners (including any particular class of Partnership Interests as compared to other
classes of Partnership Interests) in any material respect;

     WHEREAS, acting pursuant to the power and authority granted to the General Partner under
Section 13.1(d)(i) of the Partnership Agreement, the General Partner entered into Amendment No. 1
to the Partnership Agreement effective as of December 8, 2003, Amendment No. 2 to the Partnership
Agreement effective as of August 2, 2005 and Amendment No. 3 to the Partnership Agreement effective
as of October 20, 2005 (as so amended, the “Amended Partnership Agreement”);

     WHEREAS, Section 5.6(a) of the Amended Partnership Agreement provides that the Partnership may
issue additional Partnership Securities for any Partnership purpose at any time and from time to
time to such Persons for such consideration and on such terms and conditions as shall be
established by the General Partner in its sole discretion, all without the approval of any Limited
Partners;

     WHEREAS, Section 5.6(b) of the Amended Partnership Agreement provides that the Partnership
Securities authorized to be issued by the Partnership pursuant to Section 5.6(a) of the Amended
Partnership Agreement may be issued in one or more classes, or one or more series of any such
classes, with such designations, preferences, rights, powers and duties as shall be fixed by the
General Partner in the exercise of its sole discretion;

     WHEREAS, Section 13.1(g) of the Amended Partnership Agreement provides that the General
Partner, without the approval of any Partner or Assignee (subject to the provisions of Section 5.7
of the Amended Partnership Agreement), may amend any provision of the Amended Partnership Agreement
to reflect an amendment that, in the discretion of the General Partner, is necessary or advisable
in connection with the authorization of issuance of any class or series of Partnership Securities
pursuant to Section 5.6 of the Amended Partnership Agreement;

NATURAL RESOURCE PARTNERS L.P.

SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP

 

 

     WHEREAS, the General Partner has determined that the issuance of the Class B Units provided
for in this Agreement is permitted by Section 5.7 of the Amended Partnership Agreement;

     WHEREAS, Section 13.1(d)(i) of the Amended Partnership Agreement provides that the General
Partner may amend any provision of the Amended Partnership Agreement without the approval of any
Partner or Assignee to reflect a change that, in the discretion of the General Partner, does not
adversely affect the Limited Partners (including any particular class of Partnership Interests as
compared to other classes of Partnership Interests) in any material respect; and

     WHEREAS, acting pursuant to the power and authority granted to the General Partner under
Section 13.1(d)(i) of the Amended Partnership Agreement and Section 13(g) of the Amended
Partnership Agreement, the General Partner desires (i) to amend the Amended Partnership Agreement
to create a class of Units to be designated the “Class B Units” and to fix the preferences and the
relative, participating, optional and other special rights, powers and duties pertaining to the
Class B Units and (ii) to restate the Amended Partnership Agreement, as amended by the amendments
described in clause (i) of this paragraph.

     NOW, THEREFORE, the General Partner does hereby amend and restate the Amended Partnership
Agreement to provide in its entirety as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions.

     The following definitions shall be for all purposes, unless otherwise clearly indicated to the
contrary, applied to the terms used in this Agreement.

     “Acquisition” means any transaction in which any Group Member acquires (through an asset
acquisition, merger, stock acquisition or other form of investment) control over all or a portion
of the assets, properties or business of another Person for the purpose of increasing the operating
capacity or revenues of the Partnership Group from the operating capacity or revenues of the
Partnership Group existing immediately prior to such transaction.

     “Additional Book Basis” means the portion of any remaining Carrying Value of an Adjusted
Property that is attributable to positive adjustments made to such Carrying Value as a result of
Book-Up Events. For purposes of determining the extent that Carrying Value constitutes Additional
Book Basis:

     (i) Any negative adjustment made to the Carrying Value of an Adjusted Property as a
result of either a Book-Down Event or a Book-Up Event shall first be deemed to offset or
decrease that portion of the Carrying Value of such Adjusted
Property that is attributable to any prior positive adjustments made thereto pursuant
to a Book-Up Event or Book-Down Event.

2

 

     (ii) If Carrying Value that constitutes Additional Book Basis is reduced as a result of
a Book-Down Event and the Carrying Value of other property is increased as a result of such
Book-Down Event, an allocable portion of any such increase in Carrying Value shall be
treated as Additional Book Basis; provided that the amount treated as Additional Book Basis
pursuant hereto as a result of such Book-Down Event shall not exceed the amount by which the
Aggregate Remaining Net Positive Adjustments after such Book-Down Event exceeds the
remaining Additional Book Basis attributable to all of the Partnership’s Adjusted Property
after such Book-Down Event (determined without regard to the application of this clause (ii)
to such Book-Down Event).

     “Additional Book Basis Derivative Items” means any Book Basis Derivative Items that are
computed with reference to Additional Book Basis. To the extent that the Additional Book Basis
attributable to all of the Partnership’s Adjusted Property as of the beginning of any taxable
period exceeds the Aggregate Remaining Net Positive Adjustments as of the beginning of such period
(the “Excess Additional Book Basis”), the Additional Book Basis Derivative Items for such period
shall be reduced by the amount that bears the same ratio to the amount of Additional Book Basis
Derivative Items determined without regard to this sentence as the Excess Additional Book Basis
bears to the Additional Book Basis as of the beginning of such period.

     “Additional Limited Partner” means a Person admitted to the Partnership as a Limited Partner
pursuant to Section 10.4 and who is shown as such on the books and records of the Partnership.

     “Adena” means Adena Minerals, LLC, a Delaware limited liability company.

     “Adena Contribution Agreements” means (i) that certain Contribution Agreement, dated as of
December 14, 2006 by and among Foresight, Adena, the Partnership, the General Partner and the
Operating Company and (ii) the Second Contribution Agreement.

     “Adena Group” means Cline, Foresight and Adena and their respective Affiliates (including,
without limitation, all Persons that are Affiliates of any of such Persons as of the date of this
Agreement and all Persons that become Affiliates of any of such Persons after the date of this
Agreement) other than the Partnership Group.

     “Adena Restricted Business” has the meaning assigned to the term “Restricted Business” under
the Restricted Business Contribution Agreement.

     “Adjusted Capital Account” means the Capital Account maintained for each Partner as of the end
of each fiscal year of the Partnership, (a) increased by any amounts that such Partner is obligated
to restore under the standards set by Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or is
deemed obligated to restore under Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5)) and
(b) decreased by (i) the amount of all losses and deductions that, as of the end of
such fiscal year, are reasonably expected to be allocated to such Partner in subsequent years
under Sections 704(e)(2) and 706(d) of the Code and Treasury Regulation Section 1.751-1(b)(2)(ii),
and (ii) the amount of all distributions that, as of the end of such fiscal year, are reasonably
expected to be made to such Partner in subsequent years in accordance with the terms

3

 

of this
Agreement or otherwise to the extent they exceed offsetting increases to such Partner’s Capital
Account that are reasonably expected to occur during (or prior to) the year in which such
distributions are reasonably expected to be made (other than increases as a result of a minimum
gain chargeback pursuant to Section 6.1(d)(i) or 6.1(d)(ii)). The foregoing definition of Adjusted
Capital Account is intended to comply with the provisions of Treasury Regulation Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith. The “Adjusted Capital
Account” of a Partner in respect of a General Partner Interest, a Common Unit, a Subordinated Unit,
a Class B Unit or an Incentive Distribution Right or any other specified interest in the
Partnership shall be the amount which such Adjusted Capital Account would be if such General
Partner Interest, Common Unit, Subordinated Unit, Class B Unit, Incentive Distribution Right or
other interest in the Partnership were the only interest in the Partnership held by such Partner
from and after the date on which such General Partner Interest, Common Unit, Subordinated Unit,
Class B Unit, Incentive Distribution Right or other interest was first issued.

     “Adjusted Operating Surplus” means, with respect to any period, Operating Surplus generated
during such period (a) less (i) any net increase in Working Capital Borrowings with respect to such
period and (ii) any net reduction in cash reserves for Operating Expenditures with respect to such
period not relating to an Operating Expenditure made with respect to such period, and (b) plus (i)
any net decrease in Working Capital Borrowings with respect to such period, and (ii) any net
increase in cash reserves for Operating Expenditures with respect to such period required by any
debt instrument for the repayment of principal, interest or premium. Adjusted Operating Surplus
does not include that portion of Operating Surplus included in clause (a)(i) of the definition of
Operating Surplus.

     “Adjusted Property” means any property the Carrying Value of which has been adjusted pursuant
to Section 5.5(d)(i) or 5.5(d)(ii).

     “Affiliate” means, with respect to any Person, any other Person that directly or indirectly
through one or more intermediaries controls, is controlled by or is under common control with, the
Person in question. For the avoidance of doubt, (a) each of Great Northern, New Gauley and Western
Pocahantas (and any successor thereto) shall be deemed to be an Affiliate for purposes of this
definition for so long as it holds an interest in the General Partner and (b) each of Cline, Adena
and Foresight (and any successors thereto) shall be deemed to be an Affiliate for purposes of this
definition for so long as it together with any of its Affiliates has the right to appoint a
director of the General Partner. As used herein, the term “control” means the possession, direct
or indirect, of the power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or otherwise.

     “Aggregate Remaining Net Positive Adjustments” means, as of the end of any taxable period, the
sum of the Remaining Net Positive Adjustments of all the Partners.

     “Agreed Value” of any Contributed Property means the fair market value of such property or
other consideration at the time of contribution as determined by the General Partner using such
reasonable method of valuation as it may adopt. The General Partner shall, in its discretion, use
such method as it deems reasonable and appropriate to allocate the aggregate Agreed Value of
Contributed Properties contributed to the Partnership in a single or integrated

4

 

transaction among
each separate property on a basis proportional to the fair market value of each Contributed
Property.

     “Agreement” means this Second Amended and Restated Agreement of Limited Partnership of Natural
Resource Partners L.P., as it may be amended, supplemented or restated from time to time.

     “Amended Partnership Agreement” has the meaning assigned to such term in the Recitals.

     “Ark Land” means Ark Land Company, a Delaware corporation.

     “Assignee” means a Non-citizen Assignee or a Person to whom one or more Limited Partner
Interests have been transferred in a manner permitted under this Agreement and who has executed and
delivered a Transfer Application as required by this Agreement, but who has not been admitted as a
Substituted Limited Partner.

     “Associate” means, when used to indicate a relationship with any Person, (a) any corporation
or organization of which such Person is a director, officer or partner or is, directly or
indirectly, the owner of 20% or more of any class of voting stock or other voting interest; (b) any
trust or other estate in which such Person has at least a 20% beneficial interest or as to which
such Person serves as trustee or in a similar fiduciary capacity; and (c) any relative or spouse of
such Person, or any relative of such spouse, who has the same principal residence as such Person.

     “Available Cash” means, with respect to any Quarter ending prior to the Liquidation Date:

          (a) the sum of (i) all cash and cash equivalents of the Partnership Group on hand at the end
of such Quarter, and (ii) all additional cash and cash equivalents of the Partnership Group on hand
on the date of determination of Available Cash with respect to such Quarter resulting from Working
Capital Borrowings made subsequent to the end of such Quarter, less

          (b) the amount of any cash reserves that are necessary or appropriate in the reasonable
discretion of the General Partner to (i) provide for the proper conduct of the business of the
Partnership Group (including reserves for future capital expenditures and for anticipated future
credit needs of the Partnership Group) subsequent to such Quarter, (ii) comply with applicable law
or any loan agreement, security agreement, mortgage, debt instrument or other agreement or
obligation to which any Group Member is a party or by which it is bound or its
assets are subject or (iii) provide funds for distributions under Section 6.4 or 6.5 in
respect of any one or more of the next four Quarters; provided, however, that the General Partner
may not establish cash reserves pursuant to (iii) above if the effect of such reserves would be
that the Partnership is unable to distribute the Minimum Quarterly Distribution on all Common
Units, plus any Cumulative Common Unit Arrearage on all Common Units, with respect to such Quarter;
and, provided further, that disbursements made by a Group Member or cash reserves established,
increased or reduced after the end of such Quarter but on or before the date of

5

 

determination of
Available Cash with respect to such Quarter shall be deemed to have been made, established,
increased or reduced, for purposes of determining Available Cash, within such Quarter if the
General Partner so determines.

     Notwithstanding the foregoing, “Available Cash” with respect to the Quarter in which the
Liquidation Date occurs and any subsequent Quarter shall equal zero.

     “Book Basis Derivative Items” means any item of income, deduction, gain or loss included in
the determination of Net Income or Net Loss that is computed with reference to the Carrying Value
of an Adjusted Property (e.g., depreciation, depletion, or gain or loss with respect to an Adjusted
Property).

     “Book-Down Event” means an event which triggers a negative adjustment to the Capital Accounts
of the Partners pursuant to Section 5.5(d).

     “Book-Tax Disparity” means with respect to any item of Contributed Property or Adjusted
Property, as of the date of any determination, the difference between the Carrying Value of such
Contributed Property or Adjusted Property and the adjusted basis thereof for federal income tax
purposes as of such date. A Partner’s share of the Partnership’s Book-Tax Disparities in all of its
Contributed Property and Adjusted Property will be reflected by the difference between such
Partner’s Capital Account balance as maintained pursuant to Section 5.5 and the hypothetical
balance of such Partner’s Capital Account computed as if it had been maintained strictly in
accordance with federal income tax accounting principles.

     “Book-Up Event” means an event which triggers a positive adjustment to the Capital Accounts of
the Partners pursuant to Section 5.5(d).

     “Business Day” means Monday through Friday of each week, except that a legal holiday
recognized as such by the government of the United States of America or the State of Texas shall
not be regarded as a Business Day.

     “Capital Account” means the capital account maintained for a Partner pursuant to Section 5.5.
The “Capital Account” of a Partner in respect of a General Partner Interest, a Common Unit, a Class
B Unit, a Subordinated Unit, an Incentive Distribution Right or any other Partnership Interest
shall be the amount which such Capital Account would be if such General Partner Interest, Common
Unit, Class B Unit, Subordinated Unit, Incentive Distribution Right or other Partnership Interest
were the only interest in the Partnership held by such Partner from and
after the date on which such General Partner Interest, Common Unit, Class B Unit, Subordinated
Unit, Incentive Distribution Right or other Partnership Interest was first issued.

     “Capital Contribution” means any cash, cash equivalents or the Net Agreed Value of Contributed
Property that a Partner contributes to the Partnership pursuant to this Agreement or the
Contribution Agreement, or any payment made by the General Partner to the Partnership described in
Section 5.2(c).

     “Capital Improvement” means any (a) addition or improvement to the capital assets owned by any
Group Member or (b) acquisition of existing, or the construction of new, capital

6

 

assets (including,
without limitation, coal mines and related assets), in each case if such addition, improvement,
acquisition or construction is made to increase the operating capacity or revenues of the
Partnership Group from the operating capacity or revenues of the Partnership Group existing
immediately prior to such addition, improvement, acquisition or construction.

     “Capital Surplus” has the meaning assigned to such term in Section 6.3(a).

     “Carrying Value” means (a) with respect to a Contributed Property, the Agreed Value of such
property reduced (but not below zero) by all depreciation, amortization and cost recovery
deductions charged to the Partners’ and Assignees’ Capital Accounts in respect of such Contributed
Property, and (b) with respect to any other Partnership property, the adjusted basis of such
property for federal income tax purposes, all as of the time of determination. The Carrying Value
of any property shall be adjusted from time to time in accordance with Sections 5.5(d)(i) and
5.5(d)(ii) and to reflect changes, additions or other adjustments to the Carrying Value for
dispositions and acquisitions of Partnership properties, as deemed appropriate by the General
Partner.

     “Cause” means a court of competent jurisdiction has entered a final, non-appealable judgment
finding the General Partner liable for actual fraud, gross negligence or willful or wanton
misconduct in its capacity as a general partner of the Partnership.

     “Certificate” means a certificate (i) substantially in the form of Exhibit A to this
Agreement, (ii) issued in global form in accordance with the rules and regulations of the
Depositary or (iii) in such other form as may be adopted by the General Partner in its discretion,
issued by the Partnership evidencing ownership of one or more Common Units or a certificate, in
such form as may be adopted by the General Partner in its discretion, issued by the Partnership
evidencing ownership of one or more other Partnership Securities.

     “Certificate of Limited Partnership” means the Certificate of Limited Partnership of the
Partnership filed with the Secretary of State of the State of Delaware as such Certificate of
Limited Partnership may be amended, supplemented or restated from time to time.

     “Citizenship Certification” means a properly completed certificate in such form as may be
specified by the General Partner by which an Assignee or a Limited Partner certifies that he
(and if he is a nominee holding for the account of another Person, that to the best of his
knowledge such other Person) is an Eligible Citizen.

     “Claim” has the meaning assigned to such term in Section 7.12(d).

     “Class B Distribution Increase Date” has the meaning assigned to such term in Section 5.12(g).

     “Class B Unit Arrearage” means, with respect to any Class B Unit, whenever used, as to any
Quarter, the amount, if any, by which (a) the Minimum Quarterly Distribution in respect of such
Quarter (or, for the period from the Class B Distribution Increase Date through the Conversion
Effective Date, 110% of the Minimum Quarterly Distribution) exceeds (b) the sum

7

 

of all Available
Cash distributed with respect to a Class B Unit in respect of such Quarter pursuant to Section
5.12(b)(ii)(B)(x).

     “Class B Units” means a Partnership Security representing a fractional part of the Partnership
Interests of all Limited Partners and Assignees and having the rights and obligations specified
with respect to the Class B Units in this Agreement. The term “Class B Unit” does not refer to (a)
a Common Unit prior to the conversion of a Class B Unit into a Common Unit pursuant to the terms
hereof or (b) a Subordinated Unit.

     “Cline” means Christopher Cline, an individual residing in Palm Beach County, Florida.

     “Closing Date” means October 17, 2002.

     “Closing Price” has the meaning assigned to such term in Section 15.1(a).

     “Code” means the Internal Revenue Code of 1986, as amended and in effect from time to time.
Any reference herein to a specific section or sections of the Code shall be deemed to include a
reference to any corresponding provision of any successor law.

     “Combined Interest” has the meaning assigned to such term in Section 11.3(a).

     “Commission” means the United States Securities and Exchange Commission.

     “Common Unit” means a Partnership Security representing a fractional part of the Partnership
Interests of all Limited Partners and Assignees and having the rights and obligations specified
with respect to Common Units in this Agreement. The term “Common Unit” does not refer to a
Subordinated Unit or a Class B Unit prior to its conversion into a Common Unit pursuant to the
terms hereof.

     “Common Unit Arrearage” means, with respect to any Common Unit, whenever issued, as to any
Quarter within the Subordination Period, the excess, if any, of (a) the Minimum Quarterly
Distribution with respect to a Common Unit in respect of such Quarter over (b) the sum
of all Available Cash distributed with respect to a Common Unit in respect of such Quarter
pursuant to Section 6.4(a)(i).

     “Conflicts Committee” means a committee of the Board of Directors of the general partner of
the General Partner (or the applicable governing body of any successor to the General Partner)
composed entirely of two or more directors who are not (a) security holders, officers or employees
of the General Partner, (b) officers, directors or employees of any Affiliate of the General
Partner or (c) holders of any ownership interest in the Partnership Group other than Common Units
and who also meet the independence standards required to serve on an audit committee of a board of
directors by the National Securities Exchange on which the Common Units are listed for trading.

     “Contributed Property” means each property or other asset, in such form as may be permitted by
the Delaware Act, but excluding cash, contributed to the Partnership. Once the

8

 

Carrying Value of a
Contributed Property is adjusted pursuant to Section 5.5(d), such property shall no longer
constitute a Contributed Property, but shall be deemed an Adjusted Property.

     “Contribution Agreement” means that certain Contribution, Conveyance and Assumption
Agreement, dated as of the Closing Date, among the General Partner, the Partnership, the Operating
Company and certain other parties, together with the additional conveyance documents and
instruments contemplated or referenced thereunder.

     “Conversion Approval” has the meaning assigned to such term in Section 5.12(f).

     “Conversion Approval Date” has the meaning assigned to such term in Section 5.12(f).

     “Conversion Effective Date” has the meaning assigned to such term in Section 5.12(h).

     “Cumulative Class B Unit Arrearage” means, with respect to any Class B Unit, whenever issued,
as of the end of any Quarter, the excess, if any, of (a) the sum resulting from adding together the
Class B Unit Arrearages for each of the Quarters during which any Class B Unit has been Outstanding
over (b) the sum of any distributions theretofore made to a Class B Unit pursuant to Section
5.12(b)(ii)(B) and the penultimate sentence of Section 6.5 (including any distributions to be made
in respect of the last of such Quarters).

     “Cumulative Common Unit Arrearage” means, with respect to any Common Unit, whenever issued,
and as of the end of any Quarter, the excess, if any, of (a) the sum resulting from adding together
the Common Unit Arrearage as to an Initial Common Unit for each of the Quarters within the
Subordination Period ending on or before the last day of such Quarter over (b) the sum of any
distributions theretofore made pursuant to Section 6.4(a)(ii) and the second sentence of Section
6.5 with respect to an Initial Common Unit (including any distributions to be made in respect of
the last of such Quarters).

     “Curative Allocation” means any allocation of an item of income, gain, deduction, loss or
credit pursuant to the provisions of Section 6.1(d)(xi).

     “Current Market Price” has the meaning assigned to such term in Section 15.1(a).

     “Delaware Act” means the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. Section
17-101, et seq., as amended, supplemented or restated from time to time, and any successor to such
statute.

     “Departing Partner” means a former General Partner from and after the effective date of any
withdrawal or removal of such former General Partner pursuant to Section 11.1 or 11.2.

     “Depositary” means, with respect to any Units issued in global form, The Depository Trust
Company and its successors and permitted assigns.

     “Economic Risk of Loss” has the meaning set forth in Treasury Regulation Section 1.752-2(a).

9

 

     “Eligible Citizen” means a Person qualified to own interests in real property in jurisdictions
in which any Group Member does business or proposes to do business from time to time, and whose
status as a Limited Partner or Assignee does not or would not subject such Group Member to a
significant risk of cancellation or forfeiture of any of its properties or any interest therein.

     “Event of Withdrawal” has the meaning assigned to such term in Section 11.1(a).

     “Excess Payment” has the meaning set forth in Section 5.12(b)(vi)(B)(as set forth in Section
5.12(g)).

     “Final Subordinated Units” has the meaning assigned to such term in Section 6.1(d)(x).

     “First Liquidation Target Amount” has the meaning assigned to such term in Section
6.1(c)(i)(D).

     “First Target Distribution” means $0.5625 per Unit per Quarter (or, with respect to the period
commencing on the Closing Date and ending on December 31, 2002, it means the product of $0.5625
multiplied by a fraction of which the numerator is the number of days in such period and of which
the denominator is 92), subject to adjustment in accordance with Sections 6.6 and 6.9.

     “Foresight” means Foresight Reserves LP, a Delaware limited partnership.

     “Fully Diluted Basis” means, when calculating the number of Outstanding Units for any period,
a basis that includes, in addition to the Outstanding Units, all Partnership Securities and
options, rights, warrants and appreciation rights relating to an equity interest in the Partnership
(a) that are convertible into or exercisable or exchangeable for Units that are senior to or pari
passu with the Subordinated Units, (b) whose conversion, exercise or exchange price is less than
the Current Market Price on the date of such calculation, and (c) that may be converted into or
exercised or exchanged for such Units prior to or during the Quarter following the end of the
last Quarter contained in the period for which the calculation is being made without the
satisfaction of any contingency beyond the control of the holder other than the payment of
consideration and the compliance with administrative mechanics applicable to such conversion,
exercise or exchange; provided that for purposes of determining the number of Outstanding Units on
a Fully Diluted Basis when calculating whether the Subordination Period has ended or Subordinated
Units are entitled to convert into Common Units pursuant to Section 5.8, such Partnership
Securities, options, rights, warrants and appreciation rights shall be deemed to have been
Outstanding Units only for the four Quarters that comprise the last four Quarters of the
measurement period; provided, further, that if consideration will be paid to any Group Member in
connection with such conversion, exercise or exchange, the number of Units to be included in such
calculation shall be that number equal to the difference between (i) the number of Units issuable
upon such conversion, exercise or exchange and (ii) the number of Units which such consideration
would purchase at the Current Market Price.

     “General Partner” means NRP (GP) LP and its successors and permitted assigns as general
partner of the Partnership.

10

 

     “General Partner Interest” means the ownership interest of the General Partner in the
Partnership (in its capacity as a general partner without reference to any Limited Partner Interest
held by it) which may be evidenced by Partnership Securities or a combination thereof or interest
therein, and includes any and all benefits to which the General Partner is entitled as provided in
this Agreement, together with all obligations of the General Partner to comply with the terms and
provisions of this Agreement.

     “Great Northern” means Great Northern Properties Limited Partnership, a Delaware limited
partnership.

     “Group” means a Person that with or through any of its Affiliates or Associates has any
agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except
voting pursuant to a revocable proxy or consent given to such Person in response to a proxy or
consent solicitation made to 10 or more Persons) or disposing of any Partnership Securities with
any other Person that beneficially owns, or whose Affiliates or Associates beneficially own,
directly or indirectly, Partnership Securities.

     “Group Member” means a member of the Partnership Group.

     “Holder” as used in Section 7.12, has the meaning assigned to such term in Section 7.12(a).

     “Incentive Distribution Right” means a non-voting Limited Partner Interest issued pursuant to
Section 5.2, which Partnership Interest confers upon the holder thereof only the rights and
obligations specifically provided in this Agreement with respect to Incentive Distribution Rights
(and no other rights otherwise available to or other obligations of a holder of a Partnership
Interest). Notwithstanding anything in this Agreement to the contrary, the holder of
an Incentive Distribution Right shall not be entitled to vote such Incentive Distribution
Right on any Partnership matter except as may otherwise be required by law.

     “Incentive Distributions” means any amount of cash distributed to the holders of the Incentive
Distribution Rights pursuant to Sections 6.4(a)(v), (vi) and (vii) and 6.4(b)(iii), (iv) and (v).

     “Indemnified Persons” has the meaning assigned to such term in Section 7.12(d).

     “Indemnitee” means (a) the General Partner, (b) any Departing Partner, (c) any Person who is
or was an Affiliate of the General Partner or any Departing Partner, (d) any Person who is or was a
member, partner, officer, director, employee, agent or trustee of any Group Member, the General
Partner or any Departing Partner or any Affiliate of any Group Member, the General Partner or any
Departing Partner and (e) any Person who is or was serving at the request of the General Partner or
any Departing Partner or any Affiliate of the General Partner or any Departing Partner as an
officer, director, employee, member, partner, agent, fiduciary or trustee of another Person;
provided, that a Person shall not be an Indemnitee by reason of providing, on a fee-for-services
basis, trustee, fiduciary or custodial services.

     “Initial Common Units” means the Common Units sold in the Initial Offering.

11

 

     “Initial Offering” means the initial offering and sale of Common Units to the public, as
described in the Registration Statement.

     “Initial Unit Price” means (a) with respect to the Common Units and the Subordinated Units,
the initial public offering price per Common Unit at which the Underwriters offered the Common
Units to the public for sale as set forth on the cover page of the prospectus included as part of
the Registration Statement and first issued at or after the time the Registration Statement first
became effective or (b) with respect to any other class or series of Units, the price per Unit at
which such class or series of Units is initially sold by the Partnership, as determined by the
General Partner, in each case adjusted as the General Partner determines to be appropriate to give
effect to any distribution, subdivision or combination of Units.

     “Interim Capital Transactions” means the following transactions if they occur prior to the
Liquidation Date: (a) borrowings, refinancings or refundings of indebtedness and sales of debt
securities (other than Working Capital Borrowings and other than for items purchased on open
account in the ordinary course of business) by any Group Member; (b) sales of equity interests by
any Group Member (including the Common Units sold to the Underwriters pursuant to the exercise of
the Over-Allotment Option); and (c) sales or other voluntary or involuntary dispositions of any
assets of any Group Member other than (i) sales or other dispositions of inventory, accounts
receivable and other assets in the ordinary course of business, and (ii) sales or other
dispositions of assets as part of normal retirements or replacements.

     “Limited Partner” means, unless the context otherwise requires, (a) the Organizational Limited
Partner prior to its withdrawal from the Partnership, each initial Limited Partner, each
Substituted Limited Partner, each Additional Limited Partner and any Departing Partner upon
the change of its status from General Partner to Limited Partner pursuant to Section 11.3 or (b)
solely for purposes of Articles V, VI, VII and IX, each Assignee; provided, however, that when the
term “Limited Partner” is used herein in the context of any vote or other approval, including
without limitation Articles XIII and XIV, such term shall not, solely for such purpose, include any
holder of an Incentive Distribution Right except as may otherwise be required by law.

     “Limited Partner Interest” means the ownership interest of a Limited Partner or Assignee in
the Partnership, which may be evidenced by Common Units, Class B Units, Subordinated Units,
Incentive Distribution Rights or other Partnership Securities or a combination thereof or interest
therein, and includes any and all benefits to which such Limited Partner or Assignee is entitled as
provided in this Agreement, together with all obligations of such Limited Partner or Assignee to
comply with the terms and provisions of this Agreement; provided, however, that when the term
“Limited Partner Interest” is used herein in the context of any vote or other approval, including
without limitation Articles XIII and XIV, such term shall not, solely for such purpose, include any
holder of an Incentive Distribution Right except as may otherwise be required by law.

     “Liquidation Date” means (a) in the case of an event giving rise to the dissolution of the
Partnership of the type described in clauses (a) and (b) of the first sentence of Section 12.2, the
date on which the applicable time period during which the holders of Outstanding Units have the
right to elect to reconstitute the Partnership and continue its business has expired without such
an

12

 

election being made, and (b) in the case of any other event giving rise to the dissolution of
the Partnership, the date on which such event occurs.

     “Liquidator” means one or more Persons selected by the General Partner to perform the
functions described in Section 12.3 as liquidating trustee of the Partnership within the meaning of
the Delaware Act.

     “Merger Agreement” has the meaning assigned to such term in Section 14.1.

     “Minimum Quarterly Distribution” means $0.5125 per Unit per Quarter (or, with respect to the
period commencing on the Closing Date and ending on December 31, 2002, it means the product of
$0.5125 multiplied by a fraction of which the numerator is the number of days in such period and of
which the denominator is 92), subject to adjustment in accordance with Sections 6.6 and 6.9.

     “National Securities Exchange” means an exchange registered with the Commission under Section
6(a) of the Securities Exchange Act of 1934, as amended, supplemented or restated from time to
time, and any successor to such statute, or the Nasdaq Stock Market or any successor thereto.

     “Net Agreed Value” means, (a) in the case of any Contributed Property, the Agreed Value of
such property reduced by any liabilities either assumed by the Partnership upon such contribution
or to which such property is subject when contributed, and (b) in the case of any
property distributed to a Partner or Assignee by the Partnership, the Partnership’s Carrying
Value of such property (as adjusted pursuant to Section 5.5(d)(ii)) at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner or Assignee upon such
distribution or to which such property is subject at the time of distribution, in either case, as
determined under Section 752 of the Code.

     “Net Income” means, for any taxable year, the excess, if any, of the Partnership’s items of
income and gain (other than those items taken into account in the computation of Net Termination
Gain or Net Termination Loss) for such taxable year over the Partnership’s items of loss and
deduction (other than those items taken into account in the computation of Net Termination Gain or
Net Termination Loss) for such taxable year. The items included in the calculation of Net Income
shall be determined in accordance with Section 5.5(b) and shall not include any items specially
allocated under Section 6.1(d); provided that the determination
of the items that have been
specially allocated under Section 6.1(d) shall be made as if Section 6.1(d)(xii) were not in this
Agreement.

     “Net Loss” means, for any taxable year, the excess, if any, of the Partnership’s items of loss
and deduction (other than those items taken into account in the computation of Net Termination Gain
or Net Termination Loss) for such taxable year over the Partnership’s items of income and gain
(other than those items taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year. The items included in the calculation of Net Loss shall be
determined in accordance with Section 5.5(b) and shall not include any items specially allocated
under Section 6.1(d); provided that the determination of the

13

 

items that have been specially
allocated under Section 6.1(d) shall be made as if Section 6.1(d)(xii) were not in this Agreement.

     “Net Positive Adjustments” means, with respect to any Partner, the excess, if any, of the
total positive adjustments over the total negative adjustments made to the Capital Account of such
Partner pursuant to Book-Up Events and Book-Down Events.

     “Net Termination Gain” means, for any taxable year, the sum, if positive, of all items of
income, gain, loss or deduction recognized by the Partnership after the Liquidation Date. The items
included in the determination of Net Termination Gain shall be determined in accordance with
Section 5.5(b) and shall not include any items of income, gain or loss specially allocated under
Section 6.1(d).

     “Net Termination Loss” means, for any taxable year, the sum, if negative, of all items of
income, gain, loss or deduction recognized by the Partnership after the Liquidation Date. The items
included in the determination of Net Termination Loss shall be determined in accordance with
Section 5.5(b) and shall not include any items of income, gain or loss specially allocated under
Section 6.1(d).

     “New Gauley” means New Gauley Coal Corporation, a West Virginia corporation.

     “Non-citizen Assignee” means a Person whom the General Partner has determined in its
discretion does not constitute an Eligible Citizen and as to whose Partnership Interest the General
Partner has become the Substituted Limited Partner, pursuant to Section 4.9.

     “Nonrecourse Built-in Gain” means with respect to any Contributed Properties or Adjusted
Properties that are subject to a mortgage or pledge securing a Nonrecourse Liability, the amount of
any taxable gain that would be allocated to the Partners pursuant to Sections 6.2(b)(i)(A),
6.2(b)(ii)(A) and 6.2(b)(iii) if such properties were disposed of in a taxable transaction in full
satisfaction of such liabilities and for no other consideration.

     “Nonrecourse Deductions” means any and all items of loss, deduction or expenditure (including,
without limitation, any expenditure described in Section 705(a)(2)(B) of the Code) that, in
accordance with the principles of Treasury Regulation Section 1.704-2(b), are attributable to a
Nonrecourse Liability.

     “Nonrecourse Liability” has the meaning set forth in Treasury Regulation Section
1.752-1(a)(2).

     “Notice of Election to Purchase” has the meaning assigned to such term in Section 15.1(b).

     “NRP Investment” means NRP Investment L.P., a Delaware limited partnership.

     “Omnibus Agreement” means that Omnibus Agreement, dated as of the Closing Date, among Arch
Coal, Inc, Ark Land, Great Northern, New Gauley, Western Pocahontas, the General Partner, the
Partnership, the Operating Company and certain other parties.

14

 

     “Operating Company” means NRP (Operating) LLC, a Delaware limited liability company, and any
successors thereto.

     “Operating Company Agreement” means the Amended and Restated Limited Liability Company
Agreement of the Operating Company, as it may be amended, supplemented or restated from time to
time.

     “Operating Expenditures” means all Partnership Group expenditures, including, but not limited
to, taxes, reimbursements of the General Partner, repayment of Working Capital Borrowings, debt
service payments and capital expenditures, subject to the following:

          (c) Payments (including prepayments) of principal of and premium on indebtedness other than
Working Capital Borrowings shall not constitute Operating Expenditures; and

          (d) Operating Expenditures shall not include (i) capital expenditures made for Acquisitions or
for Capital Improvements, (ii) payment of transaction expenses relating to Interim Capital
Transactions or (iii) distributions to Partners. Where capital expenditures are
made in part for Acquisitions or for Capital Improvements and in part for other purposes, the
General Partner’s good faith allocation between the amounts paid for each shall be conclusive.

     “Operating Surplus” means, with respect to any period ending prior to the Liquidation Date, on
a cumulative basis and without duplication,

          (e) the sum of (i) $15.0 million plus all cash and cash equivalents of the Partnership Group
on hand as of the close of business on the Closing Date, (ii) all cash receipts of the Partnership
Group for the period beginning on the Closing Date and ending with the last day of such period,
other than cash receipts from Interim Capital Transactions (except to the extent specified in
Section 6.5) and (iii) all cash receipts of the Partnership Group after the end of such period but
on or before the date of determination of Operating Surplus with respect to such period resulting
from Working Capital Borrowings, less

          (f) the sum of (i) Operating Expenditures for the period beginning on the Closing Date and
ending with the last day of such period and (ii) the amount of cash reserves that is necessary or
advisable in the reasonable discretion of the General Partner to provide funds for future Operating
Expenditures; provided, however, that disbursements made (including contributions to a Group Member
or disbursements on behalf of a Group Member) or cash reserves established, increased or reduced
after the end of such period but on or before the date of determination of Available Cash with
respect to such period shall be deemed to have been made, established, increased or reduced, for
purposes of determining Operating Surplus, within such period if the General Partner so determines.

     Notwithstanding the foregoing, “Operating Surplus” with respect to the Quarter in which the
Liquidation Date occurs and any subsequent Quarter shall equal zero.

15

 

     “Opinion of Counsel” means a written opinion of counsel (who may be regular counsel to the
Partnership or the General Partner or any of its Affiliates) acceptable to the General Partner in
its reasonable discretion.

     “Option Closing Date” means the date or dates on which any Common Units are sold by the
Partnership to the Underwriters upon exercise of the Over-Allotment Option.

     “Organizational Limited Partner” means GP Natural Resource Partners LLC in its capacity as the
organizational limited partner of the Partnership pursuant to this Agreement.

     “Outstanding” means, with respect to Partnership Securities, all Partnership Securities that
are issued by the Partnership and reflected as outstanding on the Partnership’s books and records
as of the date of determination; provided, however, that if at any time any Person or Group (other
than the General Partner or its Affiliates) beneficially owns 20% or more of any Outstanding
Partnership Securities of any class then Outstanding, all Partnership Securities owned by such
Person or Group shall not be voted on any matter and shall not be considered to be Outstanding when
sending notices of a meeting of Limited Partners to vote on any matter (unless otherwise required
by law), calculating required votes, determining the presence of a
quorum or for other similar purposes under this Agreement, except that Common Units so owned
shall be considered to be Outstanding for purposes of Section 11.1(b)(iv) (such Common Units shall
not, however, be treated as a separate class of Partnership Securities for purposes of this
Agreement); provided, further, that the foregoing limitation shall not apply (i) to any Person or
Group who acquired 20% or more of any Outstanding Partnership Securities of any class then
Outstanding directly from the General Partner or its Affiliates, (ii) to any Person or Group who
acquired 20% or more of any Outstanding Partnership Securities of any class then Outstanding
directly or indirectly from a Person or Group described in clause (i) provided that the General
Partner shall have notified such Person or Group in writing that such limitation shall not apply,
or (iii) to any Person or Group who acquired 20% or more of any Partnership Securities issued by
the Partnership with the prior approval of the board of directors of the General Partner.

     “Over-Allotment Option” means the over-allotment option granted to the Underwriters and
described in Section 2 of the Underwriting Agreement.

     “Parity Units” means Common Units and all other Units of any other class or series that have
the right (i) to receive distributions of Available Cash from Operating Surplus pursuant to each of
subclauses (a)(i) and (a)(ii) of Section 6.4 in the same order of priority with respect to the
participation of Common Units in such distributions or (ii) to participate in allocations of Net
Termination Gain pursuant to Section 6.1(c)(i)(B) in the same order of priority with the Common
Units, in each case regardless of whether the amounts or value so distributed or allocated on each
Parity Unit equals the amount or value so distributed or allocated on each Common Unit. Units
whose participation in such (i) distributions of Available Cash from Operating Surplus and (ii)
allocations of Net Termination Gain are subordinate in order of priority to such distributions and
allocations on Common Units shall not constitute Parity Units even if such Units are convertible
under certain circumstances into Common Units or Parity Units.

16

 

     “Partner Nonrecourse Debt” has the meaning set forth in Treasury Regulation Section
1.704-2(b)(4).

     “Partner Nonrecourse Debt Minimum Gain” has the meaning set forth in Treasury Regulation
Section 1.704-2(i)(2).

     “Partner Nonrecourse Deductions” means any and all items of loss, deduction or expenditure
(including, without limitation, any expenditure described in Section 705(a)(2)(B) of the Code)
that, in accordance with the principles of Treasury Regulation Section 1.704-2(i), are attributable
to a Partner Nonrecourse Debt.

     “Partners” means the General Partner and the Limited Partners.

     “Partnership” means Natural Resource Partners L.P., a Delaware limited partnership, and any
successors thereto.

     “Partnership Agreement” has the meaning assigned to such term in the Recitals.

     “Partnership Group” means the Partnership, the Operating Company and any Subsidiary of any
such entity, treated as a single consolidated entity.

     “Partnership Interest” means an interest in the Partnership, which shall include the General
Partner Interest and Limited Partner Interests.

     “Partnership Minimum Gain” means that amount determined in accordance with the principles of
Treasury Regulation Section 1.704-2(d).

     “Partnership Security” means any class or series of equity interest in the Partnership (but
excluding any options, rights, warrants and appreciation rights relating to an equity interest in
the Partnership), including without limitation, Common Units, Class B Units, Subordinated Units and
Incentive Distribution Rights.

     “Per Unit Capital Amount” means, as of any date of determination, the Capital Account, stated
on a per Unit basis, underlying any Unit held by a Person other than the General Partner or any
Affiliate of the General Partner who holds Units.

     “Percentage Interest” means as of any date of determination (a) as to the General Partner (in
its capacity as General Partner without reference to any Limited Partner Interests held by it),
2.0%, (b) as to any Unitholder or Assignee holding Units, the product obtained by multiplying (i)
98.0% less the percentage applicable to paragraph (c) by (ii) the quotient obtained by dividing (A)
the number of Units held by such Unitholder or Assignee by (B) the total number of all Outstanding
Units, and (c) as to the holders of additional Partnership Securities issued by the Partnership in
accordance with Section 5.6, the percentage established as a part of such issuance. The Percentage
Interest with respect to an Incentive Distribution Right shall at all times be zero.

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     “Person” means an individual or a corporation, limited liability company, partnership, joint
venture, trust, unincorporated organization, association, government agency or political
subdivision thereof or other entity.

     “Pro Rata” means (a) when modifying Units or any class thereof, apportioned equally among all
designated Units in accordance with their relative Percentage Interests, (b) when modifying
Partners and Assignees, apportioned among all Partners and Assignees in accordance with their
relative Percentage Interests and (c) when modifying holders of Incentive Distribution Rights,
apportioned equally among all holders of Incentive Distribution Rights in accordance with the
relative number of Incentive Distribution Rights held by each such holder.

     “Purchase Date” means the date determined by the General Partner as the date for purchase of
all Outstanding Units of a certain class (other than Units owned by the General Partner and its
Affiliates) pursuant to Article XV.

     “Quarter” means, unless the context requires otherwise, a fiscal quarter or, with respect to
the first fiscal quarter after the Closing Date, the portion of such fiscal quarter after the
Closing Date, of the Partnership.

     “Recapture Income” means any gain recognized by the Partnership (computed without regard to
any adjustment required by Section 734 or Section 743 of the Code) upon the disposition of any
property or asset of the Partnership, which gain is characterized as ordinary income because it
represents the recapture of deductions previously taken with respect to such property or asset.

     “Record Date” means the date established by the General Partner for determining (a) the
identity of the Record Holders entitled to notice of, or to vote at, any meeting of Limited
Partners or entitled to vote by ballot or give approval of Partnership action in writing without a
meeting or entitled to exercise rights in respect of any lawful action of Limited Partners or (b)
the identity of Record Holders entitled to receive any report or distribution or to participate in
any offer.

     “Record Holder” means the Person in whose name a Common Unit is registered on the books of the
Transfer Agent as of the opening of business on a particular Business Day, or with respect to other
Partnership Securities, the Person in whose name any such other Partnership Security is registered
on the books which the General Partner has caused to be kept as of the opening of business on such
Business Day.

     “Redeemable Interests” means any Partnership Interests for which a redemption notice has been
given, and has not been withdrawn, pursuant to Section 4.10.

     “Registration Statement” means the Registration Statement on Form S-1 (Registration No.
333-86852) as it has been amended or supplemented from time to time, filed by the Partnership with
the Commission under the Securities Act to register the offering and sale of the Common Units in
the Initial Offering.

     “Remaining Net Positive Adjustments” means as of the end of any taxable period, (i) with
respect to the Unitholders holding Common Units, Class B Units or Subordinated Units, the

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excess of
(a) the Net Positive Adjustments of the Unitholders holding Common Units, Class B Units or
Subordinated Units as of the end of such period over (b) the sum of those Partners’ Share of
Additional Book Basis Derivative Items for each prior taxable period, (ii) with respect to the
General Partner (as holder of the General Partner Interest), the excess of (a) the Net Positive
Adjustments of the General Partner as of the end of such period over (b) the sum of the General
Partner’s Share of Additional Book Basis Derivative Items with respect to the General Partner
Interest for each prior taxable period, and (iii) with respect to the holders of Incentive
Distribution Rights, the excess of (a) the Net Positive Adjustments of the holders of Incentive
Distribution Rights as of the end of such period over (b) the sum of the Share of Additional Book
Basis Derivative Items of the holders of the Incentive Distribution Rights for each prior taxable
period.

     “Required Allocations” means (a) any limitation imposed on any allocation of Net Losses or Net
Termination Losses under Section 6.1(b) or 6.1(c)(ii) and (b) any allocation of an item of income,
gain, loss or deduction pursuant to Section 6.1(d)(i), 6.1(d)(ii), 6.1(d)(iv), 6.1(d)(vii) or
6.1(d)(ix).

     “Residual Gain” or “Residual Loss” means any item of gain or loss, as the case may be, of the
Partnership recognized for federal income tax purposes resulting from a sale, exchange or other
disposition of a Contributed Property or Adjusted Property, to the extent such item of gain or loss
is not allocated pursuant to Section 6.2(b)(i)(A) or 6.2(b)(ii)(A), respectively, to eliminate
Book-Tax Disparities.

     “Restricted Business” has the meaning assigned to such term in the Omnibus Agreement.

     “Restricted Business Contribution Agreement” means that Restricted Business Contribution
Agreement, dated as of the date hereof, by and among Cline, Foresight, Adena, the Partnership, the
General Partner, the Organizational Limited Partner and the Operating Company.

     “Second Closing” means the date of the closing of the transactions contemplated by the Second
Contribution Agreement.

     “Second Contribution Agreement” means that certain Second Contribution Agreement, dated as of
the date hereof, by and among Foresight, Adena, the Partnership, the General Partner and the
Operating Company.

     “Second Liquidation Target Amount” has the meaning assigned to such term in Section
6.1(c)(i)(E).

     “Second Target Distribution” means $0.6625 per Unit per Quarter (or, with respect to the
period commencing on the Closing Date and ending on December 31, 2002, it means the product of
$0.6625 multiplied by a fraction of which the numerator is the number of days in such period and of
which the denominator is 92), subject to adjustment in accordance with Sections 6.6 and 6.9.

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     “Securities Act” means the Securities Act of 1933, as amended, supplemented or restated from
time to time and any successor to such statute.

     “Share of Additional Book Basis Derivative Items” means in connection with any allocation of
Additional Book Basis Derivative Items for any taxable period, (i) with respect to the Unitholders
holding Common Units, Class B Units or Subordinated Units, the amount that bears the same ratio to
such Additional Book Basis Derivative Items as the Unitholders’ Remaining Net Positive Adjustments
as of the end of such period bears to the Aggregate Remaining Net Positive Adjustments as of that
time, (ii) with respect to the General Partner (as holder of the General Partner Interest), the
amount that bears the same ratio to such additional Book Basis Derivative Items as the General
Partner’s Remaining Net Positive Adjustments as of the end of such period bears to the Aggregate
Remaining Net Positive Adjustment as of that time, and (iii) with respect to the Partners holding
Incentive Distribution Rights, the amount that bears the same ratio to such Additional Book Basis
Derivative Items as the Remaining Net Positive Adjustments of the Partners holding the Incentive
Distribution Rights as of the end of such period bears to the Aggregate Remaining Net Positive
Adjustments as of that time.

     “Special Approval” means approval by a majority of the members of the Conflicts Committee.

     “Subordinated Unit” means a Unit representing a fractional part of the Partnership Interests
of all Limited Partners and Assignees and having the rights and obligations specified with respect
to Subordinated Units in this Agreement. The term “Subordinated Unit” as used herein does not
include a Common Unit, Class B Unit or Parity Unit. A Subordinated Unit that is convertible into a
Common Unit or a Parity Unit shall not constitute a Common Unit or Parity Unit until such
conversion occurs.

     “Subordination Period” means the period commencing on the Closing Date and ending on the first
to occur of the following dates:

          (a) the first day of any Quarter beginning after September 30, 2007 in respect of which (i)
(A) distributions of Available Cash from Operating Surplus on each of the Outstanding Common Units
and Subordinated Units and any other Outstanding Units that are senior or equal in right of
distribution to the Subordinated Units with respect to each of the three consecutive,
non-overlapping four-Quarter periods immediately preceding such date equaled or exceeded the sum of
the Minimum Quarterly Distribution (or portion thereof for the first fiscal quarter after the
Closing Date) on all Outstanding Common Units and Subordinated Units and any other Outstanding
Units that are senior or equal in right of distribution to the Subordinated Units during such
periods and (B) the Adjusted Operating Surplus generated during each of the three consecutive,
non-overlapping four-Quarter periods immediately preceding such date equaled or exceeded the sum of
the Minimum Quarterly Distribution on all of the Common Units and Subordinated Units and any other
Units that are senior or equal in right of distribution to the Subordinated Units that were
Outstanding during such periods on a Fully Diluted Basis, plus the related distribution on the
General Partner Interest, during such periods, (ii) there are no Cumulative Common Unit Arrearages
and (iii) there are no Cumulative Class B Unit Arrearages; and

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          (b) the date on which the General Partner is removed as general partner of the Partnership
upon the requisite vote by holders of Outstanding Units under circumstances where Cause does not
exist and Units held by the General Partner and its Affiliates are not voted in favor of such
removal.

     “Subsidiary” means, with respect to any Person, (a) a corporation of which more than 50% of
the voting power of shares entitled (without regard to the occurrence of any contingency) to vote
in the election of directors or other governing body of such corporation is owned, directly or
indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such
Person or a combination thereof, (b) a partnership (whether general or limited) in which such
Person or a Subsidiary of such Person is, at the date of determination, a general or limited
partner of such partnership, but only if more than 50% of the partnership interests of such
partnership (considering all of the partnership interests of the partnership as a single class) is
owned, directly or indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such
Person, or a combination thereof, or (c) any other Person (other than a corporation or a
partnership) in which such Person, one or more Subsidiaries of such Person, or a combination
thereof, directly or indirectly, at the date of determination, has (i) at least a majority
ownership interest or (ii) the power to elect or direct the election of a majority of the directors
or other governing body of such Person.

     “Substituted Limited Partner” means a Person who is admitted as a Limited Partner to the
Partnership pursuant to Section 10.2 in place of and with all the rights of a Limited Partner and
who is shown as a Limited Partner on the books and records of the Partnership.

     “Surviving Business Entity” has the meaning assigned to such term in Section 14.2(b).

     “Third Liquidation Target Amount” has the meaning assigned to such term in Section
6.1(c)(i)(F).

     “Third Target Distribution” means $0.7625 per Unit per Quarter (or, with respect to the period
commencing on the Closing Date and ending on December 31, 2002, it means the product of $0.7625
multiplied by a fraction of which the numerator is equal to the number of days in such period and
of which the denominator is 92), subject to adjustment in accordance with Sections 6.6 and 6.9.

     “Trading Day” has the meaning assigned to such term in Section 15.1(a).

     “Transfer” has the meaning assigned to such term in Section 4.4(a).

     “Transfer Agent” means such bank, trust company or other Person (including the General Partner
or one of its Affiliates) as shall be appointed from time to time by the Partnership to act as
registrar and transfer agent for the Common Units; provided that if no Transfer Agent is
specifically designated for any other Partnership Securities, the General Partner shall act in such
capacity.

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     “Transfer Application” means an application and agreement for transfer of Units in the form
set forth on the back of a Certificate or in a form substantially to the same effect in a separate
instrument.

     “Underwriter” means each Person named as an underwriter in Schedule I to the Underwriting
Agreement who purchases Common Units pursuant thereto.

     “Underwriting Agreement” means the Underwriting Agreement dated October 10, 2002 among the
Underwriters, the Partnership, the General Partner, the Operating Company, Western Pocahontas,
Great Northern, New Gauley, Ark Land, Arch Coal, Inc., and certain other parties providing for the
purchase of Common Units by the Underwriters.

     “Unit” means a Partnership Security that is designated as a “Unit” and shall include Common
Units, Class B Units and Subordinated Units but shall not include (i) a General Partner Interest or
(ii) Incentive Distribution Rights.

     “Unitholders” means the holders of Units.

     “Unit Majority” means, during the Subordination Period, at least a majority of the Outstanding
Common Units (excluding Common Units owned by the General Partner and its Affiliates) and the
Outstanding Class B Units (excluding Class B Units owned by the General Partner and its Affiliates)
voting together as a single class and at least a majority of the Outstanding Subordinated Units
voting as a class, and thereafter, at least a majority of the Outstanding Units.

     “Unpaid MQD” has the meaning assigned to such term in Section 6.1(c)(i)(B).

     “Unrealized Gain” attributable to any item of Partnership property means, as of any date of
determination, the excess, if any, of (a) the fair market value of such property as of such date
(as determined under Section 5.5(d)) over (b) the Carrying Value of such property as of such date
(prior to any adjustment to be made pursuant to Section 5.5(d) as of such date).

     “Unrealized Loss” attributable to any item of Partnership property means, as of any date of
determination, the excess, if any, of (a) the Carrying Value of such property as of such date
(prior to any adjustment to be made pursuant to Section 5.5(d) as of such date) over (b) the fair
market value of such property as of such date (as determined under Section 5.5(d)).

     “Unrecovered Capital” means at any time, with respect to a Unit, the Initial Unit Price less
the sum of all distributions constituting Capital Surplus theretofore made in respect of an Initial
Common Unit and any distributions of cash (or the Net Agreed Value of any distributions in kind) in
connection with the dissolution and liquidation of the Partnership theretofore made in respect of
an Initial Common Unit, adjusted as the General Partner determines to be appropriate to give effect
to any distribution, subdivision or combination of such Units.

     “U.S. GAAP” means United States Generally Accepted Accounting Principles consistently applied.

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     “Western Pocahontas” means Western Pocahontas Properties Limited Partnership, a Delaware
limited partnership.

     “Withdrawal Opinion of Counsel” has the meaning assigned to such term in Section 11.1(b).

     “Working Capital Borrowings” means borrowings used solely for working capital purposes or to
pay distributions to Partners made pursuant to a credit facility or other arrangement to the extent
such borrowings are required to be reduced to a relatively small amount each year for an
economically meaningful period of time.

Section 1.2 Construction.

     Unless the context requires otherwise: (a) any pronoun used in this Agreement shall include
the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and
verbs shall include the plural and vice versa; (b) references to Articles and Sections refer to
Articles and Sections of this Agreement; and (c) the term “include” or “includes” means includes,
without limitation, and “including” means including, without limitation.

ARTICLE II

ORGANIZATION

Section 2.1 Formation.

     The General Partner and the Organizational Limited Partner have previously formed the
Partnership as a limited partnership pursuant to the provisions of the Delaware Act and hereby
amend and restate the Amended Partnership Agreement in its entirety. This amendment and restatement
shall become effective on the date of this Agreement. Except as expressly provided to the contrary
in this Agreement, the rights, duties (including fiduciary duties), liabilities and obligations of
the Partners and the administration, dissolution and termination of the Partnership shall be
governed by the Delaware Act. All Partnership Interests shall constitute personal property of the
owner thereof for all purposes and a Partner has no interest in specific Partnership property.

Section 2.2 Name.

     The name of the Partnership shall be “Natural Resource Partners L.P.” The Partnership’s
business may be conducted under any other name or names deemed necessary or appropriate by the
General Partner in its sole discretion, including the name of the General Partner. The words
“Limited Partnership,” “L.P.,” “Ltd.” or similar words or letters shall be included in the
Partnership’s name where necessary for the purpose of complying with the laws of any jurisdiction
that so requires. The General Partner in its discretion may change the name of the Partnership at
any time and from time to time and shall notify the Limited Partners of such change in the next
regular communication to the Limited Partners.

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Section 2.3 Registered Office; Registered Agent; Principal Office; Other Offices

     Unless and until changed by the General Partner, the registered office of the Partnership in
the State of Delaware shall be located at 1209 Orange Street, Wilmington, Delaware 19801, and the
registered agent for service of process on the Partnership in the State of Delaware at such
registered office shall be The Corporation Trust Company. The principal office of the Partnership
shall be located at 601 Jefferson Street, Suite 3600, Houston, Texas 77002 or such other place as
the General Partner may from time to time designate by notice to the Limited Partners. The
Partnership may maintain offices at such other place or places within or outside the
State of Delaware as the General Partner deems necessary or appropriate. The address of the
General Partner shall be 601 Jefferson Street, Suite 3600, Houston, Texas 77002 or such other
place as the General Partner may from time to time designate by notice to the Limited Partners.

Section 2.4 Purpose and Business.

     The purpose and nature of the business to be conducted by the Partnership shall be to (a)
serve as a member of the Operating Company and, in connection therewith, to exercise all the rights
and powers conferred upon the Partnership as a member of the Operating Company pursuant to the
Operating Company Agreement or otherwise, (b) engage directly in, or enter into or form any
corporation, partnership, joint venture, limited liability company or other arrangement to engage
indirectly in, any business activity that the Operating Company is permitted to engage in by the
Operating Company Agreement or that its subsidiaries are permitted to engage in by their limited
liability company or partnership agreements and, in connection therewith, to exercise all of the
rights and powers conferred upon the Partnership pursuant to the agreements relating to such
business activity, (c) engage directly in, or enter into or form any corporation, partnership,
joint venture, limited liability company or other arrangement to engage indirectly in, any business
activity that is approved by the General Partner and which lawfully may be conducted by a limited
partnership organized pursuant to the Delaware Act and, in connection therewith, to exercise all of
the rights and powers conferred upon the Partnership pursuant to the agreements relating to such
business activity; and (d) do anything necessary or appropriate to the foregoing, including the
making of capital contributions or loans to a Group Member; provided, however, that the General
partner shall not cause the Partnership to engage, directly or indirectly, in any business activity
that the General Partner reasonably determines would cause the Partnership to be treated as an
association taxable as a corporation or otherwise taxable as an entity for federal income tax
purposes. The General Partner has no obligation or duty to the Partnership, the Limited Partners
or the Assignees to propose or approve, and in its discretion may decline to propose or approve,
the conduct by the Partnership of any business.

Section 2.5 Powers.

     The Partnership shall be empowered to do any and all acts and things necessary, appropriate,
proper, advisable, incidental to or convenient for the furtherance and accomplishment of the
purposes and business described in Section 2.4 and for the protection and benefit of the
Partnership.

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Section 2.6 Power of Attorney.

     (a) Each Limited Partner and each Assignee hereby constitutes and appoints the General Partner
and, if a Liquidator shall have been selected pursuant to Section 12.3, the Liquidator (and any
successor to the Liquidator by merger, transfer, assignment, election or otherwise) and each of
their authorized officers and attorneys-in-fact, as the case may be, with full power of
substitution, as his true and lawful agent and attorney-in-fact, with full power and authority in
his name, place and stead, to:

     (i) execute, swear to, acknowledge, deliver, file and record in the appropriate public
offices (A) all certificates, documents and other instruments (including this Agreement and
the Certificate of Limited Partnership and all amendments or restatements hereof or thereof)
that the General Partner or the Liquidator deems necessary or appropriate to form, qualify
or continue the existence or qualification of the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) in the State of Delaware
and in all other jurisdictions in which the Partnership may conduct business or own
property; (B) all certificates, documents and other instruments that the General Partner or
the Liquidator deems necessary or appropriate to reflect, in accordance with its terms, any
amendment, change, modification or restatement of this Agreement; (C) all certificates,
documents and other instruments (including conveyances and a certificate of cancellation)
that the General Partner or the Liquidator deems necessary or appropriate to reflect the
dissolution and liquidation of the Partnership pursuant to the terms of this Agreement; (D)
all certificates, documents and other instruments relating to the admission, withdrawal,
removal or substitution of any Partner pursuant to, or other events described in, Article
IV, X, XI or XII; (E) all certificates, documents and other instruments relating to the
determination of the rights, preferences and privileges of any class or series of
Partnership Securities issued pursuant to Section 5.6; and (F) all certificates, documents
and other instruments (including agreements and a certificate of merger) relating to a
merger or consolidation of the Partnership pursuant to Article XIV; and

     (ii) execute, swear to, acknowledge, deliver, file and record all ballots, consents,
approvals, waivers, certificates, documents and other instruments necessary or appropriate,
in the discretion of the General Partner or the Liquidator, to make, evidence, give, confirm
or ratify any vote, consent, approval, agreement or other action that is made or given by
the Partners hereunder or is consistent with the terms of this Agreement or is necessary or
appropriate, in the discretion of the General Partner or the Liquidator, to effectuate the
terms or intent of this Agreement; provided, that when required by Section 13.3 or any other
provision of this Agreement that establishes a percentage of the Limited Partners or of the
Limited Partners of any class or series required to take any action, the General Partner and
the Liquidator may exercise the power of attorney made in this Section 2.6(a)(ii) only after
the necessary vote, consent or approval of the Limited Partners or of the Limited Partners
of such class or series, as applicable.

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Nothing contained in this Section 2.6(a) shall be construed as authorizing the General Partner to
amend this Agreement except in accordance with Article XIII or as may be otherwise expressly
provided for in this Agreement.

     (b) The foregoing power of attorney is hereby declared to be irrevocable and a power coupled
with an interest, and it shall survive and, to the maximum extent permitted by law, not be affected
by the subsequent death, incompetency, disability, incapacity, dissolution, bankruptcy or
termination of any Limited Partner or Assignee and the transfer of all or any portion of such
Limited Partner’s or Assignee’s Partnership Interest and shall extend to such
Limited Partner’s or Assignee’s heirs, successors, assigns and personal representatives. Each
such Limited Partner or Assignee hereby agrees to be bound by any representation made by the
General Partner or the Liquidator acting in good faith pursuant to such power of attorney; and each
such Limited Partner or Assignee, to the maximum extent permitted by law, hereby waives any and all
defenses that may be available to contest, negate or disaffirm the action of the General Partner or
the Liquidator taken in good faith under such power of attorney. Each Limited Partner or Assignee
shall execute and deliver to the General Partner or the Liquidator, within 15 days after receipt of
the request therefor, such further designation, powers of attorney and other instruments as the
General Partner or the Liquidator deems necessary to effectuate this Agreement and the purposes of
the Partnership.

Section 2.7 Term.

     The term of the Partnership commenced upon the filing of the Certificate of Limited
Partnership in accordance with the Delaware Act and shall continue in existence until the
dissolution of the Partnership in accordance with the provisions of Article XII. The existence of
the Partnership as a separate legal entity shall continue until the cancellation of the Certificate
of Limited Partnership as provided in the Delaware Act.

Section 2.8 Title to Partnership Assets.

     Title to Partnership assets, whether real, personal or mixed and whether tangible or
intangible, shall be deemed to be owned by the Partnership as an entity, and no Partner or
Assignee, individually or collectively, shall have any ownership interest in such Partnership
assets or any portion thereof. Title to any or all of the Partnership assets may be held in the
name of the Partnership, the General Partner, one or more of its Affiliates or one or more
nominees, as the General Partner may determine. The General Partner hereby declares and warrants
that any Partnership assets for which record title is held in the name of the General Partner or
one or more of its Affiliates or one or more nominees shall be held by the General Partner or such
Affiliate or nominee for the use and benefit of the Partnership in accordance with the provisions
of this Agreement; provided, however, that the General Partner shall use reasonable efforts to
cause record title to such assets (other than those assets in respect of which the General Partner
determines that the expense and difficulty of conveyancing makes transfer of record title to the
Partnership impracticable) to be vested in the Partnership as soon as reasonably practicable;
provided, further, that, prior to the withdrawal or removal of the General Partner or as soon
thereafter as practicable, the General Partner shall use reasonable efforts to effect the transfer
of record title to the Partnership and, prior to any such transfer, will provide for the use of
such

26

 

assets in a manner satisfactory to the General Partner. All Partnership assets shall be
recorded as the property of the Partnership in its books and records, irrespective of the name in
which record title to such Partnership assets is held.

ARTICLE III

RIGHTS OF LIMITED PARTNERS

Section 3.1 Limitation of Liability.

     The Limited Partners and the Assignees shall have no liability under this Agreement except as
expressly provided in this Agreement or the Delaware Act.

Section 3.2 Management of Business.

     No Limited Partner or Assignee, in its capacity as such, shall participate in the operation,
management or control (within the meaning of the Delaware Act) of the Partnership’s business,
transact any business in the Partnership’s name or have the power to sign documents for or
otherwise bind the Partnership. Any action taken by any Affiliate of the General Partner or any
officer, director, employee, manager, member, general partner, agent or trustee of the General
Partner or any of its Affiliates, or any officer, director, employee, manager, member, general
partner, agent or trustee of a Group Member, in its capacity as such, shall not be deemed to be
participation in the control of the business of the Partnership by a limited partner of the
Partnership (within the meaning of Section 17-303(a) of the Delaware Act) and shall not affect,
impair or eliminate the limitations on the liability of the Limited Partners or Assignees under
this Agreement.

Section 3.3 Outside Activities of the Limited Partners.

     Subject to the provisions of Section 7.5, the Omnibus Agreement and the Restricted Business
Contribution Agreement, which shall continue to be applicable to the Persons referred to therein,
regardless of whether such Persons shall also be Limited Partners or Assignees, any Limited Partner
or Assignee shall be entitled to and may have business interests and engage in business activities
in addition to those relating to the Partnership, including business interests and activities in
direct competition with the Partnership Group. Neither the Partnership nor any of the other
Partners or Assignees shall have any rights by virtue of this Agreement in any business ventures of
any Limited Partner or Assignee.

Section 3.4 Rights of Limited Partners.

     (a) In addition to other rights provided by this Agreement or by applicable law, and except as
limited by Section 3.4(b), each Limited Partner shall have the right, for a purpose reasonably
related to such Limited Partner’s interest as a limited partner in the Partnership, upon reasonable
written demand and at such Limited Partner’s own expense:

     (i) to obtain true and full information regarding the status of the business and
financial condition of the Partnership;

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     (ii) promptly after becoming available, to obtain a copy of the Partnership’s federal,
state and local income tax returns for each year;

     (iii) to have furnished to him a current list of the name and last known business,
residence or mailing address of each Partner;

     (iv) to have furnished to him a copy of this Agreement and the Certificate of Limited
Partnership and all amendments thereto, together with a copy of the executed copies of all
powers of attorney pursuant to which this Agreement, the Certificate of Limited Partnership
and all amendments thereto have been executed;

     (v) to obtain true and full information regarding the amount of cash and a description
and statement of the Net Agreed Value of any other Capital Contribution by each Partner and
which each Partner has agreed to contribute in the future, and the date on which each became
a Partner; and

     (vi) to obtain such other information regarding the affairs of the Partnership as is
just and reasonable.

     (b) The General Partner may keep confidential from the Limited Partners and Assignees, for
such period of time as the General Partner deems reasonable, (i) any information that the General
Partner reasonably believes to be in the nature of trade secrets or (ii) other information the
disclosure of which the General Partner in good faith believes (A) is not in the best interests of
the Partnership Group, (B) could damage the Partnership Group or (C) that any Group Member is
required by law or by agreement with any third party to keep confidential (other than agreements
with Affiliates of the Partnership the primary purpose of which is to circumvent the obligations
set forth in this Section 3.4).

ARTICLE IV

CERTIFICATES; RECORD HOLDERS; TRANSFER OF PARTNERSHIP INTERESTS;

REDEMPTION OF PARTNERSHIP INTERESTS

Section 4.1 Certificates.

     Upon the Partnership’s issuance of Common Units, Class B Units or Subordinated Units to any
Person, the Partnership shall issue one or more Certificates in the name of such Person evidencing
the number of such Units being so issued. In addition, (a) upon the General Partner’s request, the
Partnership shall issue to it one or more Certificates in the name of the General Partner
evidencing its interests in the Partnership and (b) upon the request of any Person owning Incentive
Distribution Rights or any other Partnership Securities other than Common Units or Subordinated
Units, the Partnership shall issue to such Person one or more certificates evidencing such
Incentive Distribution Rights or other Partnership Securities other than Common Units or
Subordinated Units. Certificates shall be executed on behalf of the Partnership by the Chairman of
the Board, President or any Vice President and the Secretary or any Assistant
Secretary of the General Partner. No Common Unit Certificate shall be valid for any purpose
until it has been countersigned by the Transfer Agent; provided, however, that if the General

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Partner elects to issue Common Units in global form, the Common Unit Certificates shall be valid
upon receipt of a certificate from the Transfer Agent certifying that the Common Units have been
duly registered in accordance with the directions of the Partnership and the Underwriters. Subject
to the requirements of Section 6.7(b), the Partners holding Certificates evidencing Subordinated
Units may exchange such Certificates for Certificates evidencing Common Units on or after the date
on which such Subordinated Units are converted into Common Units pursuant to the terms of Section
5.8.

Section 4.2 Mutilated, Destroyed, Lost or Stolen Certificates.

     (a) If any mutilated Certificate is surrendered to the Transfer Agent, the appropriate
officers of the General Partner on behalf of the Partnership shall execute, and the Transfer Agent
shall countersign and deliver in exchange therefor, a new Certificate evidencing the same number
and type of Partnership Securities as the Certificate so surrendered.

     (b) The appropriate officers of the General Partner on behalf of the Partnership shall execute
and deliver, and the Transfer Agent shall countersign a new Certificate in place of any Certificate
previously issued if the Record Holder of the Certificate:

     (i) makes proof by affidavit, in form and substance satisfactory to the General
Partner, that a previously issued Certificate has been lost, destroyed or stolen;

     (ii) requests the issuance of a new Certificate before the General Partner has notice
that the Certificate has been acquired by a purchaser for value in good faith and without
notice of an adverse claim;

     (iii) if requested by the Partnership, delivers to the General Partner a bond, in form
and substance satisfactory to the General Partner, with surety or sureties and with fixed or
open penalty as the Partnership may reasonably direct, in its sole discretion, to indemnify
the General Partner, the Partnership, the Partners, the General Partner and the Transfer
Agent against any claim that may be made on account of the alleged loss, destruction or
theft of the Certificate; and

     (iv) satisfies any other reasonable requirements imposed by the General Partner.

     If a Limited Partner or Assignee fails to notify the General Partner within a reasonable time
after he has notice of the loss, destruction or theft of a Certificate, and a transfer of the
Limited Partner Interests represented by the Certificate is registered before the Partnership, the
General Partner or the Transfer Agent receives such notification, the Limited Partner or Assignee
shall be precluded from making any claim against the Partnership, the General Partner or the
Transfer Agent for such transfer or for a new Certificate.

     (c) As a condition to the issuance of any new Certificate under this Section 4.2, the General
Partner may require the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the fees and expenses of
the Transfer Agent) reasonably connected therewith.

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Section 4.3 Record Holders.

     The Partnership shall be entitled to recognize the Record Holder as the Partner or Assignee
with respect to any Partnership Interest and, accordingly, shall not be bound to recognize any
equitable or other claim to or interest in such Partnership Interest on the part of any other
Person, regardless of whether the Partnership shall have actual or other notice thereof, except as
otherwise provided by law or any applicable rule, regulation, guideline or requirement of any
National Securities Exchange on which such Partnership Interests are listed for trading. Without
limiting the foregoing, when a Person (such as a broker, dealer, bank, trust company or clearing
corporation or an agent of any of the foregoing) is acting as nominee, agent or in some other
representative capacity for another Person in acquiring and/or holding Partnership Interests, as
between the Partnership on the one hand, and such other Persons on the other, such representative
Person (a) shall be the Partner or Assignee (as the case may be) of record and beneficially, (b)
must execute and deliver a Transfer Application and (c) shall be bound by this Agreement and shall
have the rights and obligations of a Partner or Assignee (as the case may be) hereunder and as, and
to the extent, provided for herein.

Section 4.4 Transfer Generally.

     (a) The term “transfer,” when used in this Agreement with respect to a Partnership Interest,
shall be deemed to refer to a transaction by which the General Partner assigns its General Partner
Interest to another Person who becomes a General Partner, by which the holder of a Limited Partner
Interest assigns such Limited Partner Interest to another Person who is or becomes a Limited
Partner or an Assignee, and includes a sale, assignment, gift, pledge, encumbrance, hypothecation,
mortgage, exchange or any other disposition by law or otherwise.

     (b) No Partnership Interest shall be transferred, in whole or in part, except in accordance
with the terms and conditions set forth in this Article IV. Any transfer or purported transfer of a
Partnership Interest not made in accordance with this Article IV shall be null and void.

     (c) Nothing contained in this Agreement shall be construed to prevent a disposition by any
member of the General Partner of any or all of the membership interests of the General Partner.

Section 4.5 Registration and Transfer of Limited Partner Interests.

     (a) The General Partner shall keep or cause to be kept on behalf of the Partnership a register
in which, subject to such reasonable regulations as it may prescribe and subject to the provisions
of Section 4.5(b), the Partnership will provide for the registration and transfer of
Limited Partner Interests. The Transfer Agent is hereby appointed registrar and transfer agent
for the purpose of registering Common Units and transfers of such Common Units as herein provided.
The Partnership shall not recognize transfers of Certificates evidencing Limited Partner Interests
unless such transfers are effected in the manner described in this Section 4.5. Upon surrender of a
Certificate for registration of transfer of any Limited Partner Interests evidenced by a
Certificate, and subject to the provisions of Section 4.5(b), the appropriate

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officers of the
General Partner on behalf of the Partnership shall execute and deliver, and in the case of Common
Units, the Transfer Agent shall countersign and deliver, in the name of the holder or the
designated transferee or transferees, as required pursuant to the holder’s instructions, one or
more new Certificates evidencing the same aggregate number and type of Limited Partner Interests as
was evidenced by the Certificate so surrendered.

     (b) Except as otherwise provided in Section 4.9, the General Partner shall not recognize any
transfer of Limited Partner Interests until the Certificates evidencing such Limited Partner
Interests are surrendered for registration of transfer and such Certificates are accompanied by a
Transfer Application duly executed by the transferee (or the transferee’s attorney-in-fact duly
authorized in writing). No charge shall be imposed by the General Partner for such transfer;
provided, that as a condition to the issuance of any new Certificate under this Section 4.5, the
General Partner may require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed with respect thereto.

     (c) Limited Partner Interests may be transferred only in the manner described in this Section
4.5 and in Section 4.7. The transfer of any Limited Partner Interests and the admission of any new
Limited Partner shall not constitute an amendment to this Agreement.

     (d) Until admitted as a Substituted Limited Partner pursuant to Section 10.2, the Record
Holder of a Limited Partner Interest shall be an Assignee in respect of such Limited Partner
Interest. Limited Partners may include custodians, nominees or any other individual or entity in
its own or any representative capacity.

     (e) A transferee of a Limited Partner Interest who has completed and delivered a Transfer
Application shall be deemed to have (i) requested admission as a Substituted Limited Partner, (ii)
agreed to comply with and be bound by and to have executed this Agreement, (iii) represented and
warranted that such transferee has the right, power and authority and, if an individual, the
capacity to enter into this Agreement, (iv) granted the powers of attorney set forth in this
Agreement and (v) given the consents and approvals and made the waivers contained in this
Agreement.

     (f) The General Partner and its Affiliates shall have the right at any time to transfer their
Subordinated Units, Class B Units and Common Units (whether issued upon conversion of the
Subordinated Units, the Class B Units or otherwise) to one or more Persons.

Section 4.6 Transfer of the General Partner’s General Partner Interest.

     (a) Subject to Section 4.6(c) below, prior to September 30, 2012, the General Partner shall
not transfer all or any part of its General Partner Interest to a Person unless such transfer (i)
has been approved by the prior written consent or vote of the holders of at least a majority of the
Outstanding Common Units (excluding Common Units held by the General Partner and its Affiliates) or
(ii) is of all, but not less than all, of its General Partner Interest to (A) an Affiliate of the
General Partner (other than an individual) or (B) another Person (other than an individual) in
connection with the merger or consolidation of the General Partner with or into another Person

31

 

(other than an individual) or the transfer by the General Partner of all or substantially all of
its assets to another Person (other than an individual).

     (b) Subject to Section 4.6(c) below, on or after September 30, 2012, the General Partner may
transfer all or any of its General Partner Interest without Unitholder approval.

     (c) Notwithstanding anything herein to the contrary, no transfer by the General Partner of all
or any part of its General Partner Interest to another Person shall be permitted unless (i) the
transferee agrees to assume the rights and duties of the General Partner under this Agreement and
to be bound by the provisions of this Agreement, (ii) the Partnership receives an Opinion of
Counsel that such transfer would not result in the loss of limited liability of any Limited Partner
or of any member of the Operating Company or cause the Partnership or the Operating Company to be
treated as an association taxable as a corporation or otherwise to be taxed as an entity for
federal income tax purposes (to the extent not already so treated or taxed) and (iii) such
transferee also agrees to purchase all (or the appropriate portion thereof, if applicable) of the
partnership or membership interest of the General Partner as the general partner or managing
member, if any, of each other Group Member. In the case of a transfer pursuant to and in
compliance with this Section 4.6, the transferee or successor (as the case may be) shall, subject
to compliance with the terms of Section 10.3, be admitted to the Partnership as the General Partner
immediately prior to the transfer of the Partnership Interest, and the business of the Partnership
shall continue without dissolution.

Section 4.7 Transfer of Incentive Distribution Rights.

     Prior to September 30, 2012, the General Partner or a subsequent holder of its Incentive
Distribution Rights may transfer any or all of such Incentive Distribution Rights without any
consent of the Unitholders (a) to an Affiliate of such holder (other than an individual) or (b) to
another Person (other than an individual) in connection with (i) the merger or consolidation of
such holder of Incentive Distribution Rights with or into such other Person or (ii) the transfer by
such holder of all or substantially all of its assets to such other Person or (iii) the sale of all
or substantially all of the equity interests of such holder to such other Person. Western
Pocahontas, Great Northern, New Gauley and NRP Investment and any subsequent holder of their
Incentive Distribution Rights may transfer any of their Incentive Distribution Rights at any time
without Unitholder approval. Any other transfer of the Incentive Distribution Rights prior to
September 30, 2012, shall require the prior approval of holders of at least a majority of the
Outstanding Common Units (excluding Common Units held by the General Partner and its
Affiliates). On or after September 30, 2012, the General Partner or any other holder of Incentive
Distribution Rights restricted by this Section 4.7 may transfer any or all of its Incentive
Distribution Rights without Unitholder approval. Notwithstanding anything herein to the contrary,
no transfer of Incentive Distribution Rights to another Person shall be permitted unless the
transferee agrees to be bound by the provisions of this Agreement.

Section 4.8 Restrictions on Transfers.

     (a) Except as provided in Section 4.8(d) below, but notwithstanding the other provisions of
this Article IV, no transfer of any Partnership Interests shall be made if such

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transfer would (i)
violate the then applicable federal or state securities laws or rules and regulations of the
Commission, any state securities commission or any other governmental authority with jurisdiction
over such transfer, (ii) terminate the existence or qualification of the Partnership or the
Operating Company under the laws of the jurisdiction of its formation, or (iii) cause the
Partnership or the Operating Company to be treated as an association taxable as a corporation or
otherwise to be taxed as an entity for federal income tax purposes (to the extent not already so
treated or taxed).

     (b) The General Partner may impose restrictions on the transfer of Partnership Interests if a
subsequent Opinion of Counsel determines that such restrictions are necessary to avoid a
significant risk of any Group Member becoming taxable as a corporation or otherwise to be taxed as
an entity for federal income tax purposes. The restrictions may be imposed by making such
amendments to this Agreement as the General Partner may determine to be necessary or appropriate to
impose such restrictions; provided, however, that any amendment that the General Partner believes,
in the exercise of its reasonable discretion, could result in the delisting or suspension of
trading of any class of Limited Partner Interests on the principal National Securities Exchange on
which such class of Limited Partner Interests is then traded must be approved, prior to such
amendment being effected, by the holders of at least a majority of the Outstanding Limited Partner
Interests of such class.

     (c) The transfer of a Subordinated Unit that has converted into a Common Unit shall be subject
to the restrictions imposed by Section 6.7(b). The transfer of a Class B Unit that has converted
into a Common Unit shall be subject to the restrictions imposed by Section 6.7(c).

     (d) Nothing contained in this Article IV, or elsewhere in this Agreement, shall preclude the
settlement of any transactions involving Partnership Interests entered into through the facilities
of any National Securities Exchange on which such Partnership Interests are listed for trading.

Section 4.9 Citizenship Certificates; Non-citizen Assignees.

     (a) If any Group Member is or becomes subject to any federal, state or local law or regulation
that, in the reasonable determination of the General Partner, creates a substantial risk of
cancellation or forfeiture of any property in which the Group Member has an interest based on
the nationality, citizenship or other related status of a Limited Partner or Assignee, the
General Partner may request any Limited Partner or Assignee to furnish to the General Partner,
within 30 days after receipt of such request, an executed Citizenship Certification or such other
information concerning his nationality, citizenship or other related status (or, if the Limited
Partner or Assignee is a nominee holding for the account of another Person, the nationality,
citizenship or other related status of such Person) as the General Partner may request. If a
Limited Partner or Assignee fails to furnish to the General Partner within the aforementioned
30-day period such Citizenship Certification or other requested information or if upon receipt of
such Citizenship Certification or other requested information the General Partner determines, with
the advice of counsel, that a Limited Partner or Assignee is not an Eligible Citizen, the
Partnership Interests owned by such Limited Partner or Assignee shall be subject to redemption in
accordance with the provisions of Section 4.10. In addition, the General Partner may require

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that
the status of any such Partner or Assignee be changed to that of a Non-citizen Assignee and,
thereupon, the General Partner shall be substituted for such Non-citizen Assignee as the Limited
Partner in respect of his Limited Partner Interests.

     (b) The General Partner shall, in exercising voting rights in respect of Limited Partner
Interests held by it on behalf of Non-citizen Assignees, distribute the votes in the same ratios as
the votes of Partners (including without limitation the General Partner) in respect of Limited
Partner Interests other than those of Non-citizen Assignees are cast, either for, against or
abstaining as to the matter.

     (c) Upon dissolution of the Partnership, a Non-citizen Assignee shall have no right to receive
a distribution in kind pursuant to Section 12.4 but shall be entitled to the cash equivalent
thereof, and the Partnership shall provide cash in exchange for an assignment of the Non-citizen
Assignee’s share of the distribution in kind. Such payment and assignment shall be treated for
Partnership purposes as a purchase by the Partnership from the Non-citizen Assignee of his Limited
Partner Interest (representing his right to receive his share of such distribution in kind).

     (d) At any time after he can and does certify that he has become an Eligible Citizen, a
Non-citizen Assignee may, upon application to the General Partner, request admission as a
Substituted Limited Partner with respect to any Limited Partner Interests of such Non-citizen
Assignee not redeemed pursuant to Section 4.10, and upon his admission pursuant to Section 10.2,
the General Partner shall cease to be deemed to be the Limited Partner in respect of the
Non-citizen Assignee’s Limited Partner Interests.

Section 4.10 Redemption of Partnership Interests of Non-citizen Assignees.

     (a) If at any time a Limited Partner or Assignee fails to furnish a Citizenship Certification
or other information requested within the 30-day period specified in Section 4.9(a), or if upon
receipt of such Citizenship Certification or other information the General Partner determines, with
the advice of counsel, that a Limited Partner or Assignee is not an Eligible Citizen, the
Partnership may, unless the Limited Partner or Assignee establishes to the satisfaction of the
General Partner that such Limited Partner or Assignee is an Eligible Citizen or
has transferred his Partnership Interests to a Person who is an Eligible Citizen and who
furnishes a Citizenship Certification to the General Partner prior to the date fixed for redemption
as provided below, redeem the Partnership Interest of such Limited Partner or Assignee as follows:

     (i) The General Partner shall, not later than the 30th day before the date fixed for
redemption, give notice of redemption to the Limited Partner or Assignee, at his last
address designated on the records of the Partnership or the Transfer Agent, by registered or
certified mail, postage prepaid. The notice shall be deemed to have been given when so
mailed. The notice shall specify the Redeemable Interests, the date fixed for redemption,
the place of payment, that payment of the redemption price will be made upon surrender of
the Certificate evidencing the Redeemable Interests and that on and after the date fixed for
redemption no further allocations or distributions to which the Limited Partner or Assignee
would otherwise be entitled in respect of the Redeemable Interests will accrue or be made.

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     (ii) The aggregate redemption price for Redeemable Interests shall be an amount equal
to the Current Market Price (the date of determination of which shall be the date fixed for
redemption) of Limited Partner Interests of the class to be so redeemed multiplied by the
number of Limited Partner Interests of each such class included among the Redeemable
Interests. The redemption price shall be paid, in the discretion of the General Partner, in
cash or by delivery of a promissory note of the Partnership in the principal amount of the
redemption price, bearing interest at the rate of 10% annually and payable in three equal
annual installments of principal together with accrued interest, commencing one year after
the redemption date.

     (iii) Upon surrender by or on behalf of the Limited Partner or Assignee, at the place
specified in the notice of redemption, of the Certificate evidencing the Redeemable
Interests, duly endorsed in blank or accompanied by an assignment duly executed in blank,
the Limited Partner or Assignee or his duly authorized representative shall be entitled to
receive the payment therefor.

     (iv) After the redemption date, Redeemable Interests shall no longer constitute issued
and Outstanding Limited Partner Interests.

     (b) The provisions of this Section 4.10 shall also be applicable to Limited Partner Interests
held by a Limited Partner or Assignee as nominee of a Person determined to be other than an
Eligible Citizen.

     (c) Nothing in this Section 4.10 shall prevent the recipient of a notice of redemption from
transferring his Limited Partner Interest before the redemption date if such transfer is otherwise
permitted under this Agreement. Upon receipt of notice of such a transfer, the General Partner
shall withdraw the notice of redemption, provided the transferee of such Limited Partner Interest
certifies to the satisfaction of the General Partner in a Citizenship Certification delivered in
connection with the Transfer Application that he is an Eligible Citizen. If the transferee fails to
make such certification, such redemption shall be effected from the transferee on the original
redemption date.

ARTICLE V

CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS

Section 5.1 Organizational Contributions.

     In connection with the formation of the Partnership under the Delaware Act, the General
Partner made an initial Capital Contribution to the Partnership in the amount of $20.00, for a 2%
General Partner Interest in the Partnership and has been admitted as the General Partner of the
Partnership, and the Organizational Limited Partner made an initial Capital Contribution to the
Partnership in the amount of $980.00 for a 98% Limited Partner Interest in the Partnership and was
admitted as a Limited Partner of the Partnership. As of the Closing Date, the interest of the
Organizational Limited Partner was redeemed as provided in the Contribution Agreement; the initial
Capital Contributions of the Organizational Limited Partner was refunded; and the

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Organizational
Limited Partner ceased to be a Limited Partner of the Partnership. Ninety-eight percent of any
interest or other profit that may have resulted from the investment or other use of such initial
Capital Contributions was allocated and distributed to the Organizational Limited Partner, and the
balance thereof was allocated and distributed to the General Partner.

Section 5.2 Contributions by the General Partner and its Affiliates.

     (a) On the Closing Date and pursuant to the Contribution and Conveyance Agreement, the General
Partner and its Affiliates made Capital Contributions in accordance with Section 5.2(a) of the
Partnership Agreement.

     (b) Upon the issuance of any additional Limited Partner Interests by the Partnership (other
than the issuance of Limited Partner Interests pursuant to the Underwriting Agreement), the General
Partner shall be required to make additional Capital Contributions equal to 2/98ths of any amount
contributed to the Partnership by the Limited Partners in exchange for such additional Limited
Partner Interests. Except as set forth in the immediately preceding sentence and Article XII, the
General Partner shall not be obligated to make any additional Capital Contributions to the
Partnership.

Section 5.3 Contributions by Initial Limited Partners.

     On the Closing Date and pursuant to the Underwriting Agreement, the initial Limited Partners
made Capital Contributions in accordance with Section 5.3 of the Partnership Agreement.

Section 5.4 Interest and Withdrawal.

     No interest shall be paid by the Partnership on Capital Contributions. No Partner or Assignee
shall be entitled to the withdrawal or return of its Capital Contribution, except to the extent, if
any, that distributions made pursuant to this Agreement or upon termination of the Partnership may
be considered as such by law and then only to the extent provided for in this Agreement. Except to
the extent expressly provided in this Agreement, no Partner or Assignee shall have priority over
any other Partner or Assignee either as to the return of Capital Contributions or as to profits,
losses or distributions. Any such return shall be a compromise to which all Partners and Assignees
agree within the meaning of Section 17-502(b) of the Delaware Act.

Section 5.5 Capital Accounts.

     (a) The Partnership shall maintain for each Partner (or a beneficial owner of Partnership
Interests held by a nominee in any case in which the nominee has furnished the identity of such
owner to the Partnership in accordance with Section 6031(c) of the Code or any other method
acceptable to the General Partner in its sole discretion) owning a Partnership Interest a separate
Capital Account with respect to such Partnership Interest in accordance with the rules of Treasury
Regulation Section 1.704-1(b)(2)(iv). Such Capital Account shall be increased by (i) the amount of
all Capital Contributions made to the Partnership with respect to such Partnership Interest
pursuant to this Agreement and (ii) all items of Partnership income and

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gain (including, without
limitation, income and gain exempt from tax) computed in accordance with Section 5.5(b) and
allocated with respect to such Partnership Interest pursuant to Section 6.1, and decreased by (x)
the amount of cash or Net Agreed Value of all actual and deemed distributions of cash or property
made with respect to such Partnership Interest pursuant to this Agreement and (y) all items of
Partnership deduction and loss computed in accordance with Section 5.5(b) and allocated with
respect to such Partnership Interest pursuant to Section 6.1.

     (b) For purposes of computing the amount of any item of income, gain, loss or deduction which
is to be allocated pursuant to Article VI and is to be reflected in the Partners’ Capital Accounts,
the determination, recognition and classification of any such item shall be the same as its
determination, recognition and classification for federal income tax purposes (including, without
limitation, any method of depreciation, cost recovery or amortization used for that purpose),
provided, that:

     (i) Solely for purposes of this Section 5.5, the Partnership shall be treated as owning
directly its proportionate share (as determined by the General Partner based upon the
provisions of the Operating Company Agreement) of all property owned by the Operating
Company or any other Subsidiary that is classified as a partnership for federal income tax
purposes.

     (ii) All fees and other expenses incurred by the Partnership to promote the sale of (or
to sell) a Partnership Interest that can neither be deducted nor amortized under
Section 709 of the Code, if any, shall, for purposes of Capital Account maintenance, be
treated as an item of deduction at the time such fees and other expenses are incurred and
shall be allocated among the Partners pursuant to Section 6.1.

     (iii) Except as otherwise provided in Treasury Regulation Section 1.704-1(b)(2)(iv)(m),
the computation of all items of income, gain, loss and deduction shall be made without
regard to any election under Section 754 of the Code which may be made by the Partnership
and, as to those items described in Section 705(a)(1)(B) or 705(a)(2)(B) of the Code,
without regard to the fact that such items are not includable in gross income or are neither
currently deductible nor capitalized for federal income tax purposes. To the extent an
adjustment to the adjusted tax basis of any Partnership asset pursuant to Section 734(b) or
743(b) of the Code is required, pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount
of such adjustment in the Capital Accounts shall be treated as an item of gain or loss.

     (iv) Any income, gain or loss attributable to the taxable disposition of any
Partnership property shall be determined as if the adjusted basis of such property as of
such date of disposition were equal in amount to the Partnership’s Carrying Value with
respect to such property as of such date.

     (v) In accordance with the requirements of Section 704(b) of the Code, any deductions
for depreciation, cost recovery or amortization attributable to any Contributed

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Property
shall be determined as if the adjusted basis of such property on the date it was acquired by
the Partnership were equal to the Agreed Value of such property. Upon an adjustment pursuant
to Section 5.5(d) to the Carrying Value of any Partnership property subject to depreciation,
cost recovery or amortization, any further deductions for such depreciation, cost recovery
or amortization attributable to such property shall be determined (A) as if the adjusted
basis of such property were equal to the Carrying Value of such property immediately
following such adjustment and (B) using a rate of depreciation, cost recovery or
amortization derived from the same method and useful life (or, if applicable, the remaining
useful life) as is applied for federal income tax purposes; provided, however, that, if the
asset has a zero adjusted basis for federal income tax purposes, depreciation, cost recovery
or amortization deductions shall be determined using any reasonable method that the General
Partner may adopt.

     (vi) If the Partnership’s adjusted basis in a depreciable or cost recovery property is
reduced for federal income tax purposes pursuant to Section 48(q)(1) or 48(q)(3) of the
Code, the amount of such reduction shall, solely for purposes hereof, be deemed to be an
additional depreciation or cost recovery deduction in the year such property is placed in
service and shall be allocated among the Partners pursuant to Section 6.1. Any restoration
of such basis pursuant to Section 48(q)(2) of the Code shall, to the extent possible, be
allocated in the same manner to the Partners to whom such deemed deduction was allocated.

     (c) (i) A transferee of a Partnership Interest shall succeed to a pro rata portion of the
Capital Account of the transferor relating to the Partnership Interest so transferred.

     (ii) Immediately prior to the transfer of a Subordinated Unit or of a Subordinated Unit
that has converted into a Common Unit pursuant to Section 5.8 by a holder thereof (other
than a transfer to an Affiliate unless the General Partner elects to have this subparagraph
5.5(c)(ii) apply), the Capital Account maintained for such Person with respect to its
Subordinated Units or converted Subordinated Units will (A) first, be allocated to the
Subordinated Units or converted Subordinated Units to be transferred in an amount equal to
the product of (x) the number of such Subordinated Units or converted Subordinated Units to
be transferred and (y) the Per Unit Capital Amount for a Common Unit, and (B) second, any
remaining balance in such Capital Account will be retained by the transferor, regardless of
whether it has retained any Subordinated Units or converted Subordinated Units. Following
any such allocation, the transferor’s Capital Account, if any, maintained with respect to
the retained Subordinated Units or converted Subordinated Units, if any, will have a balance
equal to the amount allocated under clause (B) hereinabove, and the transferee’s Capital
Account established with respect to the transferred Subordinated Units or converted
Subordinated Units will have a balance equal to the amount allocated under clause (A)
hereinabove.

     (d) (i) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f), on an issuance of
additional Partnership Interests for cash or Contributed Property or the conversion of the General
Partner’s Combined Interest to Common Units pursuant to Section 11.3(b), the Capital Account of all
Partners and the Carrying Value of each Partnership property immediately

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prior to such issuance
shall be adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss attributable
to such Partnership property, as if such Unrealized Gain or Unrealized Loss had been recognized on
an actual sale of each such property immediately prior to such issuance and had been allocated to
the Partners at such time pursuant to Section 6.1 in the same manner as any item of gain or loss
actually recognized during such period would have been allocated. In determining such Unrealized
Gain or Unrealized Loss, the aggregate cash amount and fair market value of all Partnership assets
(including, without limitation, cash or cash equivalents) immediately prior to the issuance of
additional Partnership Interests shall be determined by the General Partner using such reasonable
method of valuation as it may adopt; provided, however, that the General Partner, in arriving at
such valuation, must take fully into account the fair market value of the Partnership Interests of
all Partners at such time. The General Partner shall allocate such aggregate value among the assets
of the Partnership (in such manner as it determines in its discretion to be reasonable) to arrive
at a fair market value for individual properties.

     (ii) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f), immediately
prior to any actual or deemed distribution to a Partner of any Partnership property (other
than a distribution of cash that is not in redemption or retirement of a Partnership
Interest), the Capital Accounts of all Partners and the Carrying Value of all Partnership
property shall be adjusted upward or downward to reflect any Unrealized
Gain or Unrealized Loss attributable to such Partnership property, as if such
Unrealized Gain or Unrealized Loss had been recognized in a sale of such property
immediately prior to such distribution for an amount equal to its fair market value, and had
been allocated to the Partners, at such time, pursuant to Section 6.1 in the same manner as
any item of gain or loss actually recognized during such period would have been allocated.
In determining such Unrealized Gain or Unrealized Loss the aggregate cash amount and fair
market value of all Partnership assets (including, without limitation, cash or cash
equivalents) immediately prior to a distribution shall (A) in the case of an actual
distribution which is not made pursuant to Section 12.4 or in the case of a deemed
distribution, be determined and allocated in the same manner as that provided in Section
5.5(d)(i) or (B) in the case of a liquidating distribution pursuant to Section 12.4, be
determined and allocated by the Liquidator using such reasonable method of valuation as it
may adopt.

Section 5.6 Issuances of Additional Partnership Securities.

     (a) Subject to Section 5.7, the Partnership may issue additional Partnership Securities and
options, rights, warrants and appreciation rights relating to the Partnership Securities for any
Partnership purpose at any time and from time to time to such Persons for such consideration and on
such terms and conditions as shall be established by the General Partner in its sole discretion,
all without the approval of any Limited Partners.

     (b) Each additional Partnership Security authorized to be issued by the Partnership pursuant
to Section 5.6(a) may be issued in one or more classes, or one or more series of any such classes,
with such designations, preferences, rights, powers and duties (which may be senior to existing
classes and series of Partnership Securities), as shall be fixed by the General Partner

39

 

in the
exercise of its sole discretion, including (i) the right to share Partnership profits and losses or
items thereof; (ii) the right to share in Partnership distributions; (iii) rights upon dissolution
and liquidation of the Partnership; (iv) whether, and the terms and conditions upon which, the
Partnership may redeem the Partnership Security; (v) whether such Partnership Security is issued
with the privilege of conversion or exchange and, if so, the terms and conditions of such
conversion or exchange; (vi) the terms and conditions upon which each Partnership Security will be
issued, evidenced by certificates and assigned or transferred; and (vii) the right, if any, of each
such Partnership Security to vote on Partnership matters, including matters relating to the
relative rights, preferences and privileges of such Partnership Security.

     (c) The General Partner is hereby authorized and directed to take all actions that it deems
necessary or appropriate in connection with (i) each issuance of Partnership Securities and
options, rights, warrants and appreciation rights relating to Partnership Securities pursuant to
this Section 5.6, (ii) the conversion of the General Partner Interest or any Incentive Distribution
Rights into Units pursuant to the terms of this Agreement, (iii) the admission of Additional
Limited Partners and (iv) all additional issuances of Partnership Securities. The General Partner
is further authorized and directed to specify the relative rights, powers and duties of the holders
of the Units or other Partnership Securities being so issued. The General Partner shall do all
things necessary to comply with the Delaware Act and is authorized and directed to do all
things it deems to be necessary or advisable in connection with any future issuance of Partnership
Securities or in connection with the conversion of the General Partner Interest or any Incentive
Distribution Rights into Units pursuant to the terms of this Agreement, including compliance with
any statute, rule, regulation or guideline of any federal, state or other governmental agency or
any National Securities Exchange on which the Units or other Partnership Securities are listed for
trading.

Section 5.7 Limitations on Issuance of Additional Partnership Securities.

     Except as otherwise specified in this Section 5.7, the issuance of Partnership Securities
pursuant to Section 5.6 shall be subject to the following restrictions and limitations:

     (a) During the Subordination Period, the Partnership shall not issue (and shall not issue any
options, rights, warrants or appreciation rights relating to) an aggregate of more than 5,676,829
additional Parity Units without the prior approval of the holders of a Unit Majority. In applying
this limitation, there shall be excluded Common Units and other Parity Units issued (A) in
connection with the Underwriting Agreement, (B) in accordance with Sections 5.7(b) and 5.7(c), (C)
upon conversion of Subordinated Units pursuant to Section 5.8, (D) upon conversion of the General
Partner Interest or any Incentive Distribution Rights pursuant to Section 11.3(b), (E) pursuant to
the employee benefit plans of the General Partner, the Partnership or any other Group Member, (F)
upon a conversion or exchange of Parity Units issued after the date hereof into Common Units or
other Parity Units; provided that the total amount of Available Cash required to pay the aggregate
Minimum Quarterly Distribution on all Common Units and all Parity Units does not increase as a
result of this conversion or exchange and (G) in the event of a combination or subdivision of
Common Units. Notwithstanding anything to the contrary in this Section 5.7(a), the issuance of
Common Units upon conversion of the Class B Units pursuant to Section 5.12 shall be subject to the
prior approval of the Unitholders specified in Section 5.12(f).

40

 

     (b) During the Subordination Period, the Partnership may also issue an unlimited number of
Common Units and other Parity Units without the prior approval of the Unitholders, if such issuance
occurs (i) in connection with an Acquisition or a Capital Improvement or (ii) within 365 days of,
and the net proceeds from such issuance are used to repay debt incurred in connection with, an
Acquisition or a Capital Improvement, in each case where such Acquisition or Capital Improvement
involves assets that, if acquired (or in the case of a Capital Improvement, put into commercial
service) by the Partnership as of the date that is one year prior to the first day of the Quarter
in which such Acquisition was consummated or such Capital Improvement was put into commercial
service (“One Year Test Period”), would have resulted, on a pro forma or estimated pro forma basis
(as described below), in an increase in:

     (A) the amount of Adjusted Operating Surplus generated by the Partnership on a
per-Unit basis (for all Outstanding Units) with respect to the One Year Test Period
(on a pro forma or estimated pro forma basis as described below) as compared to

     (B) the actual amount of Adjusted Operating Surplus generated by the
Partnership on a per-Unit basis (for all Outstanding Units) with respect to the One
Year Test Period as adjusted as provided below.

The General Partner’s good faith determination that such an increase would have resulted shall be
conclusive. The amount in clause (A) shall be determined on a pro forma or estimated pro forma
basis assuming that (1) all of the Parity Units to be issued in connection with or within 365 days
of such Acquisition or Capital Improvement had been issued and outstanding as of the commencement
of such One Year Test Period, (2) all indebtedness for borrowed money to be incurred or assumed in
connection with such Acquisition or Capital Improvement (other than any such indebtedness that is
to be repaid with the proceeds of such issuance of Parity Units) had been incurred or assumed, in
each case as of the commencement of the One Year Test Period, (3) the personnel expenses that would
have been incurred by the Partnership in the operation of the acquired assets are the personnel
expenses for employees to be retained by the Partnership in the operation of the acquired assets,
and (4) the personnel expenses that would have been incurred by the Partnership in the operation of
the constructed assets and the non-personnel costs and expenses that would have been incurred by
the Partnership in the operation of the acquired or constructed assets are computed on the same
basis as those incurred by the Partnership in the operation of the Partnership’s business at
similarly situated Partnership facilities or, if there are no such similarly situated facilities,
as estimated by the General Partner in good faith using such assumptions as in its sole discretion
it believes are reasonable. If (1) the Partnership makes a Capital Improvement or (2) the
Partnership makes an Acquisition for which no financial statements are required to be furnished
pursuant to Regulation S-X under the Securities Exchange Act of 1934, then the amount of Adjusted
Operating Surplus in clause (A) attributable to such Acquisition or Capital Improvement shall be
estimated by the General Partner in good faith using such assumptions as in its sole discretion it
believes are reasonable. In determining Adjusted Operating Surplus attributable to an Acquisition
or a Capital Improvement, there shall be excluded from the amount in clause (B) above (i) any
Operating Surplus attributable to such Acquisition or Capital Improvement (regardless of whether
such Operating Surplus is positive or negative), and (ii) for the purpose of calculating the number
of outstanding Units, any Units

41

 

issued to finance the Acquisition or Capital Improvement. The
number of Units, excluding any Common Units or other Parity Units to be issued in connection with
or within 365 days of such Acquisition or Capital Improvement, deemed to be Outstanding for the
purpose of calculating the amounts in clause (A) and clause (B) shall be the weighted average
number of Units Outstanding during the One Year Test Period. For the purposes of this Section
5.7(b), the term “debt” shall be deemed to include the indebtedness used to extend, refinance,
renew, replace or defease debt originally incurred in connection with an Acquisition or Capital
Improvement; provided, that, the amount of such indebtedness does not exceed the principal sum of,
plus accrued interest on, the indebtedness so extended, refinanced, renewed, replaced or defeased.

     (c) During the Subordination Period, without the prior approval of the holders of a Unit
Majority, the Partnership shall not issue any additional Partnership Securities (or options,
rights, warrants or appreciation rights related thereto) (i) that are entitled in any Quarter to
receive in respect of the Subordination Period any distribution of Available Cash from Operating
Surplus before the Common Units and any Parity Units have received (or amounts have been set
aside for payment of) the Minimum Quarterly Distribution and any Cumulative Common Unit Arrearage
for such Quarter or (ii) that are entitled to allocations in respect of the Subordination Period of
Net Termination Gain before the Common Units and any Parity Units have been allocated Net
Termination Gain pursuant to Section 6.1(c)(i)(B).

     (d) During the Subordination Period, without the prior approval of the holders of a Unit
Majority, the Partnership may issue additional Partnership Securities (or options, rights, warrants
or appreciation rights related thereto) (i) that are not entitled in any Quarter during the
Subordination Period to receive any distributions of Available Cash from Operating Surplus until
after the Common Units and any Parity Units have received (or amounts have been set aside for
payment of) the Minimum Quarterly Distribution and any Cumulative Common Unit Arrearage for such
Quarter and (ii) that are not entitled to allocations in respect of the Subordination Period of Net
Termination Gain before the Common Units and Parity Units have been allocated Net Termination Gain
pursuant to Section 6.1(c)(i)(B), even if (A) the amount of Available Cash from Operating Surplus
to which each such Partnership Security is entitled to receive after the Minimum Quarterly
Distribution and any Cumulative Common Unit Arrearage have been paid or set aside for payment on
the Common Units exceeds the Minimum Quarterly Distribution, or (B) the amount of Net Termination
Gain to be allocated to such Partnership Security after Net Termination Gain has been allocated to
any Common Units and Parity Units pursuant to Section 6.1(c)(i)(B) exceeds the amount of such Net
Termination Gain to be allocated to each Common Unit or Parity Unit.

     (e) During the Subordination Period, the Partnership may also issue an unlimited number of
Parity Units without the approval of the Unitholders, if the proceeds from such issuance are used
exclusively to repay up to $25.0 million of indebtedness of a Group Member where the aggregate
amount of distributions that would have been paid with respect to such newly issued Units or
Partnership Securities, plus the related distributions on the General Partner Interest in respect
of the four-Quarter period ending prior to the first day of the Quarter in which the issuance is to
be consummated (assuming such additional Units

42

 

or Partnership Securities had been Outstanding
throughout such period and that distributions equal to the distributions that were actually paid on
the Outstanding Units during the period were paid on such additional Units or Partnership
Securities) would not have exceeded the interest costs actually incurred during such period on the
indebtedness that is to be repaid (or, if such indebtedness was not outstanding throughout the
entire period, would have been incurred had such indebtedness been outstanding for the entire
period). In the event that the Partnership is required to pay a prepayment penalty in connection
with the repayment of such indebtedness, for purposes of the foregoing test the number of Parity
Units issued to repay such indebtedness shall be deemed increased by the number of Parity Units
that would need to be issued to pay such penalty.

     (f) No fractional Units shall be issued by the Partnership.

     (g) During the Subordination Period, the Partnership may also issue an unlimited number of
Common Units and other Parity Units without the prior approval of the Unitholders, if
the net proceeds of such issuance are used to redeem an equal number of Common Units at a
price per unit equal to the net proceeds per unit, before expenses, that the Partnership receives
from such issuance.

Section 5.8 Conversion of Subordinated Units.

     (a) A total of 2,838,415 of the Outstanding Subordinated Units will convert into Common Units
on a one-for-one basis immediately after the distribution of Available Cash to Partners pursuant to
Section 6.3(a) in respect of any Quarter ending on or after September 30, 2005 in respect of which:

     (i) distributions under Section 6.4 in respect of all Outstanding Common Units and
Subordinated Units and any other Outstanding Units that are senior or equal in right of
distribution to the Subordinated Units with respect to each of the three consecutive,
non-overlapping four-Quarter periods immediately preceding such date equaled or exceeded the
sum of the Minimum Quarterly Distribution on all of the Outstanding Common Units and
Subordinated Units and any other Outstanding Units that are senior or equal in right of
distribution to the Subordinated Units during such periods;

     (ii) the Adjusted Operating Surplus generated during each of the three consecutive,
non-overlapping four-Quarter periods immediately preceding such date equaled or exceeded the
sum of the Minimum Quarterly Distribution on all of the Common Units, Subordinated Units and
any other Units that are senior or equal in right of distribution to the Subordinated Units
that were Outstanding during such periods on a Fully Diluted Basis, plus the related
distribution on the General Partner Interest in the Partnership, during such periods;

     (iii) the Cumulative Common Unit Arrearage on all of the Common Units is zero; and

     (iv) the Cumulative Class B Unit Arrearage on all of the Outstanding Class B Units is
zero.

     (b) An additional 2,838,414 of the Outstanding Subordinated Units will convert into Common
Units on a one-for-one basis immediately after the distribution of Available Cash to

43

 

Partners
pursuant to Section 6.3(a) in respect of any Quarter ending on or after September 30, 2006, in
respect of which:

     (i) distributions under Section 6.4 in respect of all Outstanding Common Units and
Subordinated Units and any other Outstanding Units that are senior or equal in right of
distribution to the Subordinated Units with respect to each of the three consecutive,
non-overlapping four-Quarter periods immediately preceding such date equaled or exceeded the
sum of the Minimum Quarterly Distribution on all of the Outstanding Common Units and
Subordinated Units and any other Outstanding Units that are senior or equal in right of
distribution to the Subordinated Units during such periods;

     (ii) the Adjusted Operating Surplus generated during each of the three consecutive,
non-overlapping four-Quarter periods immediately preceding such date equaled or exceeded the
sum of the Minimum Quarterly Distribution on all of the Common Units, Subordinated Units and
any other Units that are senior or equal in right of distribution to the Subordinated Units
that were Outstanding during such periods on a Fully Diluted Basis, plus the related
distribution on the General Partner Interest during such periods;

     (iii) the Cumulative Common Unit Arrearage on all of the Common Units is zero; and

     (iv) the Cumulative Class B Unit Arrearage on all of the Outstanding Class B Units is
zero;

provided, however, that the conversion of Subordinated Units pursuant to this Section 5.8(b) may
not occur until at least one year following the conversion of Subordinated Units pursuant to
Section 5.8(a).

     (c) In the event that less than all of the Outstanding Subordinated Units shall convert into
Common Units pursuant to Section 5.8(a) or 5.8(b) at a time when there shall be more than one
holder of Subordinated Units, then the Subordinated Units that are to be converted into Common
Units shall be allocated among the holders of Subordinated Units pro rata based on the number of
Subordinated Units held by each such holder as of the date on which Available Cash is distributed
to Partners as provided in clauses (a) and (b) above, immediately after which such conversion shall
occur; provided, however, notwithstanding any other provision of this Agreement, to the extent such
conversion of less than all the Outstanding Subordinated Units would result in the issuance of
fractional Common Units to any holder of Subordinated Units, then (i) the number of Common Units
issuable upon conversion of Subordinated Units held by such holder shall be rounded down to the
nearest whole number of Common Units, and the Partnership shall pay to such holder, in lieu of such
fractional Common Unit, cash equal to the product of (A) the last reported sales price of a Common
Unit on the national securities exchange on which the Common Units are listed for trading on the
day before such conversion of less than all the Outstanding Subordinated Units and (B) such
fractional Common Unit and (ii) the number of Subordinated Units retained and not converted by such
holder shall also be rounded down to the nearest whole number of Subordinated Units, and the
Partnership shall pay to such holder, in

44

 

lieu of such fractional Subordinated Unit, cash equal to
the product of (A) the last reported sales price of a Subordinated Unit on the national securities
exchange on which the Subordinated Units are listed for trading on the day before such conversion
of less than all the Outstanding Subordinated Units and (B) such fractional Subordinated Unit.

     (d) Any Subordinated Units that are not converted into Common Units pursuant to Section 5.8(a)
and (b) shall convert into Common Units on a one-for-one basis immediately after the distribution
of Available Cash to Partners pursuant to Section 6.3(a) in respect of the final Quarter of the
Subordination Period.

     (e) Notwithstanding any other provision of this Agreement, all the then Outstanding
Subordinated Units will automatically convert into Common Units on a one-for-one basis as set forth
in, and pursuant to the terms of, Section 11.4.

     (f) A Subordinated Unit that has converted into a Common Unit shall be subject to the
provisions of Section 6.7(b).

Section 5.9 Limited Preemptive Right.

     Except as provided in this Section 5.9 and in Section 5.2, no Person shall have any
preemptive, preferential or other similar right with respect to the issuance of any Partnership
Security, whether unissued, held in the treasury or hereafter created. The General Partner shall
have the right, which it may from time to time assign in whole or in part to any of its Affiliates,
to purchase Partnership Securities from the Partnership whenever, and on the same terms that, the
Partnership issues Partnership Securities to Persons other than the General Partner and its
Affiliates, to the extent necessary to maintain the Percentage Interests of the General Partner and
its Affiliates equal to that which existed immediately prior to the issuance of such Partnership
Securities.

Section 5.10 Splits and Combinations.

     (a) Subject to Sections 5.10(d), 6.6 and 6.9 (dealing with adjustments of distribution
levels), the Partnership may make a Pro Rata distribution of Partnership Securities to all Record
Holders or may effect a subdivision or combination of Partnership Securities so long as, after any
such event, each Partner shall have the same Percentage Interest in the Partnership as before such
event, and any amounts calculated on a per Unit basis (including any Common Unit Arrearage,
Cumulative Common Unit Arrearage, Class B Unit Arrearage or Cumulative Class B Unit Arrearage) or
stated as a number of Units (including the number of Subordinated Units that may convert prior to
the end of the Subordination Period, the number of Common Units into which the Class B Units may
convert and the number of additional Parity Units that may be issued pursuant to Section 5.7
without a Unitholder vote) are proportionately adjusted retroactive to the beginning of the
Partnership.

     (b) Whenever such a distribution, subdivision or combination of Partnership Securities is
declared, the General Partner shall select a Record Date as of which the distribution, subdivision
or combination shall be effective and shall send notice thereof at least 20 days prior to such
Record Date to each Record Holder as of a date not less than 10 days prior to the date of

45

 

such
notice. The General Partner also may cause a firm of independent public accountants selected by it
to calculate the number of Partnership Securities to be held by each Record Holder after giving
effect to such distribution, subdivision or combination. The General Partner shall be entitled to
rely on any certificate provided by such firm as conclusive evidence of the accuracy of such
calculation.

     (c) Promptly following any such distribution, subdivision or combination, the Partnership may
issue Certificates to the Record Holders of Partnership Securities as of the
applicable Record Date representing the new number of Partnership Securities held by such
Record Holders, or the General Partner may adopt such other procedures as it may deem appropriate
to reflect such changes. If any such combination results in a smaller total number of Partnership
Securities Outstanding, the Partnership shall require, as a condition to the delivery to a Record
Holder of such new Certificate, the surrender of any Certificate held by such Record Holder
immediately prior to such Record Date.

     (d) The Partnership shall not issue fractional Units upon any distribution, subdivision or
combination of Units. If a distribution, subdivision or combination of Units would result in the
issuance of fractional Units but for the provisions of Section 5.7(e) and this Section 5.10(d),
each fractional Unit shall be rounded to the nearest whole Unit (and a 0.5 Unit shall be rounded to
the next higher Unit).

Section 5.11 Fully Paid and Non-Assessable Nature of Limited Partner Interests.

     All Limited Partner Interests issued pursuant to, and in accordance with the requirements of,
this Article V shall be fully paid and non-assessable Limited Partner Interests in the Partnership,
except as such non-assessability may be affected by Section 17-607 of the Delaware Act.

Section 5.12 Establishment of Class B Units.

     (a) General. The General Partner hereby designates and creates a class of Units to be
designated as “Class B Units” and consisting of a total of 2,821,960 Class B Units, and fixes the
designations, preferences and relative, participating, optional or other special rights, powers and
duties of holders of the Class B Units as set forth in this Section 5.12.

     (b) Rights of Class B Units. During the period commencing upon issuance of the Class B Units
and ending on the Conversion Effective Date, unless amended pursuant to Section 5.12(g) hereof:

     (i) Allocations. Except as otherwise provided in this Agreement, all items of
Partnership income, gain, loss, deduction and credit shall be allocated to the Class B Units
to the same extent as such items would be so allocated if such Class B Units were Common
Units that were then Outstanding.

     (ii) Distributions of Available Cash from Operating Surplus During Subordination
Period. Notwithstanding anything to the contrary in Section 6.4(a), and subject to Section
5.12(g), Unitholders holding Class B Units shall receive the same

46

 

distribution per Unit
pursuant to Section 6.4(a) as Unitholders holding Common Units receive pursuant to Section
6.4(a); provided that:

     (A) Unitholders holding Class B Units shall not receive any distribution
pursuant to Section 6.4(a)(i) or Section 6.4(a)(ii) in respect of such Class B
Units; and

     (B) following any distribution pursuant to Section 6.4(a)(ii) and prior to any
distribution pursuant to Section 6.4(a)(iii), Available Cash shall be distributed as
follows: (x) 98% to the Unitholders holding Class B Units, Pro Rata, and 2% to the
General Partner, until there has been distributed in respect of each Class B Unit
then Outstanding an amount equal to the Minimum Quarterly Distribution for such
Quarter; and (y) then, 98% to the Unitholders holding Class B Units, Pro Rata, and
2% to the General Partner, until there has been distributed in respect of each Class
B Unit then Outstanding an amount equal to the Cumulative Class B Unit Arrearage, if
any, existing with respect to such Quarter.

     (iii) Distributions of Available Cash from Operating Surplus After Subordination
Period. Notwithstanding anything to the contrary in Section 6.4(b), and subject to Section
5.12(g), Unitholders holding Class B Units shall receive the same distribution per Unit
pursuant to Section 6.4(b) as other Unitholders receive pursuant to Section 6.4(b);
provided, that:

     (A) Unitholders holding Class B Units shall not receive any distributions
pursuant to Section 6.4(b)(i) in respect of such Class B Units; and

     (B) following any distribution pursuant to Section 6.4(b)(i) (subject to
Section 5.12(b)(iii)(A)), and prior to any distribution pursuant to Section
6.4(b)(ii), Available Cash shall be distributed 98% to the Unitholders holding Class
B Units, Pro Rata, and 2% to the General Partner until there has been distributed in
respect of each Class B Unit then Outstanding an amount equal to the Minimum
Quarterly Distribution for such Quarter.

     (iv) Allocation of Net Termination Gain to Class B Unitholders. Notwithstanding
anything to the contrary in Section 6.1(c)(i), Unitholders holding Class B Units shall be
allocated Net Termination Gain in accordance with Section 6.1(c)(i); provided, that:

     (A) Unitholders holding Class B Units shall not receive any allocation pursuant
to Section 6.1(c)(i)(B) or Section 6.1(c)(i)(C) in respect of such Class B Units;
and

     (B) following any allocation made pursuant to Section 6.1(c)(i)(B) and prior to
any allocation made pursuant to Section 6.1(c)(i)(C), any remaining Net Termination
Gain shall be allocated 98% to all Unitholders holding Class B Units, Pro Rata, and
2% to the General Partner, until the Capital Account in respect of each Class B Unit
then Outstanding is equal to the sum of (1) its Unrecovered

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Capital, determined for
the taxable year (or portion thereof) to which this allocation of gain relates, plus
(2) the Minimum Quarterly Distribution for the Quarter during which the Liquidation
Date occurs, reduced by any distribution pursuant to Section 5.12(b)(ii)(B)(x) with
respect to such Class B Unit for such Quarter, plus (3) any then existing Cumulative
Class B Unit Arrearage.

     (v) Allocation of Net Termination Loss to Class B Unitholders. Notwithstanding
anything to the contrary in Section 6.1(c)(ii), with respect to allocations made in
accordance with Section 6.1(c)(ii), Unitholders holding Class B Units shall be allocated Net
Termination Loss in accordance with Section 6.1(c)(ii)(B) in the same manner as Unitholders
holding Common Units.

     (vi) Elimination of Cumulative Class B Unit Arrearages Upon Conversion. If a Cumulative
Class B Unit Arrearage exists on the Conversion Effective Date, Available Cash shall be
distributed 98% to the Unitholders holding Class B Units, Pro Rata, and 2% to the General
Partner, until there has been distributed in respect of each Class B Unit then Outstanding
an amount equal to the Cumulative Class B Unit Arrearage as of such date. This distribution
shall not be deemed a distribution on a Common Unit, but the satisfaction of prior
entitlements of the holders of Class B Units as of the Conversion Effective Date. For the
taxable year in which the distribution is made, if not previously allocated, each Person
receiving such distribution shall be allocated items of gross income in an amount equal to
such distribution as provided in Section 6.1(d)(iii)(A).

     (c) Voting Rights. The Class B Units will have such voting rights pursuant to the Agreement as
such Class B Units would have if they were Common Units that were then Outstanding, except that (i)
with respect to Conversion Approval, none of the Class B Units shall be deemed Outstanding as of
the record date for such vote or be entitled to vote thereon and (ii) other than with respect to
Conversion Approval, the Class B Units shall be entitled to vote together with the Common Units as
a single class on any matter on which Common Units are entitled to vote. Each Class B Unit will be
entitled to the number of votes equal to the number of Common Units into which a Class B Unit is
convertible at the time of the record date for the vote or written consent on the matter.

     (d) Certificates. The Class B Units will be evidenced by certificates in such form as the
General Partner may approve and, subject to the satisfaction of any applicable legal and regulatory
requirements, may be assigned or transferred in a manner identical to the assignment and transfer
of other Units. The certificates will initially include a restrictive legend to the effect that the
Class B Units have not been registered under the Securities Act or any state securities laws.

     (e) Registrar and Transfer Agent. The General Partner will act as registrar and transfer agent
of the Class B Units.

     (f) Conversion. Except as provided in Section 5.12(i) and in this Section 5.12(f), the Class B
Units are not convertible into Common Units. The Partnership shall take such actions as may be
necessary or appropriate to submit to a vote or consent of the Unitholders (other than

48

 

holders of
Class B Units) the approval of a change in the terms of the Class B Units to provide that each
Class B Unit shall automatically convert into one Common Unit (subject to appropriate adjustment in
the event of any split-up, combination or similar event affecting the Common Units that occurs
prior to the conversion of the Class B Units) effective immediately upon receipt
of such approval from such Unitholders (the “Conversion Approval”) without any further action
by the holders thereof. The vote or consent required for the Conversion Approval will be the
requisite vote required under the rules or staff interpretations of the National Securities
Exchange on which the Common Units are listed or admitted for trading, provided, the issuance of
Common Units upon conversion of Class B Units must comply with Section 5.7(a) of this Agreement.
Upon receipt of the Conversion Approval and compliance with Section 5.12(h), the terms of the Class
B Units will be changed, automatically and without further action, so that each Class B Unit is
converted into one Common Unit (subject to appropriate adjustment in the event of any split-up,
combination or similar event affecting the Common Units that occurs prior to the conversion of the
Class B Units) and, immediately thereafter, none of the Class B Units shall be Outstanding. The
date that Conversion Approval is obtained is herein referred to as the “Conversion Approval Date.”

     (g) Automatic Provisions. If the Conversion Effective Date has not occurred on or prior to the
180th day after the earlier to occur of (1) the Second Closing and (2) March 31, 2008,
then, effective as of the next succeeding day after such 180th day (the “Class B
Distribution Increase Date”) until the Conversion Effective Date, Section 5.12(b) will be deemed to
be amended in its entirety, automatically and without further action, as follows:

     “(b) Rights of Class B Units. Prior to the Conversion Effective Date (or the later date
specified in this Section 5.12(b)):

         (i) Allocations. Except as otherwise provided in this Agreement, all items of
Partnership income, gain, loss, deduction and credit shall be allocated to the Class B Units
to the same extent as such items would be so allocated if such Class B Units were Common
Units that were then Outstanding.

         (ii) Distributions of Available Cash from Operating Surplus During Subordination
Period. Notwithstanding anything to the contrary in Section 6.4(a), Unitholders holding
Class B Units shall receive distributions per Unit pursuant to Section 6.4(a) equal to 110%
of the distribution per Unit received by Unitholders holding Common Units pursuant to
Section 6.4(a); provided that:

     (A) Unitholders holding Class B Units shall not receive any distribution
pursuant to Section 6.4(a)(i) or Section 6.4(a)(ii); and

     (B) following any distribution pursuant to Section 6.4(a)(ii), and prior to any
distribution pursuant to Section 6.4(a)(iii), Available Cash shall be distributed
(x) 98% to the Unitholders holding Class B Units, Pro Rata, and 2% to the General
Partner, until there has been distributed in respect of each Class B Unit then
Outstanding an amount equal to 110% of the Minimum Quarterly Distribution for such
Quarter (provided, further, that the portion of such

49

 

distribution attributable to
the additional 10% above the Minimum Quarterly Distribution shall be pro rated in
the Quarter in which the Class B Distribution Increase Date occurs); and (y) then,
98% to the Unitholders holding Class B
Units, Pro Rata, and 2% to the General Partner, until there has been
distributed in respect of each Class B Unit then Outstanding an amount equal to the
Cumulative Class B Unit Arrearage, if any, existing with respect to such Quarter.

     (iii) Distributions of Available Cash from Operating Surplus After Subordination
Period. Notwithstanding anything to the contrary in Section 6.4(b), Unitholders holding
Class B Units shall receive distributions per Unit pursuant to Section 6.4(b) equal to 110%
of the distribution per Unit received by other Unitholders pursuant to Section 6.4(b);
provided, that:

     (A) Unitholders holding Class B Units shall not receive any distributions
pursuant to Section 6.4(b)(i); and

     (B) following any distribution pursuant to Section 6.4(b)(i) (subject to
Section 5.12(b)(iii)(A)) and prior to any distribution pursuant to Section
6.4(b)(ii), Available Cash shall be distributed 98% to the Unitholders holding Class
B Units, Pro Rata, and 2% to the General Partner, until there has been distributed
in respect of each Class B Unit then Outstanding an amount equal to 110% of the
Minimum Quarterly Distribution for such Quarter.

     (iv) Allocation of Net Termination Gain to Class B Unitholders. Notwithstanding
anything to the contrary in Section 6.1(c)(i), Unitholders holding Class B Units shall be
allocated Net Termination Gain in accordance with Section 6.1(c)(i); provided, that:

     (A) Unitholders holding Class B Units shall not receive any allocation pursuant
to Section 6.1(c)(i)(B) or Section 6.1(c)(i)(C);

     (B) following any allocation made pursuant to Section 6.1(c)(i)(B) and prior to
any allocation made pursuant to Section 6.1(c)(i)(C), any remaining Net Termination
Gain shall be allocated 98% to all Unitholders holding Class B Units, Pro Rata, and
2% to the General Partner, until the Capital Account in respect of each Class B Unit
then Outstanding is equal to the sum of (1) its Unrecovered Capital, determined for
the taxable year (or portion thereof) to which this allocation of gain relates, plus
(2) 110% of the Minimum Quarterly Distribution for the Quarter during which the
Liquidation Date occurs, reduced by any distribution pursuant to Section
5.12(b)(ii)(B)(x) with respect to such Class B Unit for such Quarter, plus (3) any
then existing Cumulative Class B Unit Arrearage;

     (C) the amount allocated to Unitholders holding Class B Units pursuant to
Section 6.1(c)(i)(D), Section 6.1(c)(i)(E), Section 6.1(c)(i)(F) and Section
6.1(c)(i)(G) shall be the amount required to make the Per Unit Capital

50

 

Amount of
each Class B Unit equal to 110% of the Per Unit Capital Amount of a Common Unit.

     (v) Allocation of Net Termination Loss to Class B Unitholders. Notwithstanding
anything to the contrary in Section 6.1(c)(ii), with respect to allocations made in
accordance with Section 6.1(c)(ii), Unitholders holding Class B Units shall be allocated Net
Termination Loss in accordance with Section 6.1(c)(ii)(B) in the same manner as Unitholders
holding Common Units.

     (vi) Elimination of Cumulative Class B Unit Arrearages Upon Conversion; Excess
Payments. If the Conversion Effective Date occurs after the Class B Distribution Increase
Date, on the Conversion Effective Date (or the later date specified in Section
5.12(b)(vi)(B) below):

     (A) if a Cumulative Class B Unit Arrearage exists on the Conversion Effective
Date, Available Cash shall be distributed 98% to the Unitholders holding Class B
Units, Pro Rata, and 2% to the General Partner, until there has been distributed in
respect of each Class B Unit then Outstanding an amount equal to the Cumulative
Class B Unit Arrearage as of the Conversion Effective Date. This distribution shall
not be deemed a distribution on a Common Unit, but the satisfaction of prior
entitlements of the holders of Class B Units as of the Conversion Effective Date.
For the taxable year in which such distribution is made, if not previously
allocated, each Person receiving such cash distribution shall be allocated items of
gross income in an amount equal to such distribution as provided in Section
6.1(d)(iii)(A); and

     (B) for the Quarter in which such conversion occurs, concurrently with the
distribution of Available Cash in respect of such Quarter in accordance with Section
6.4 hereof (subject to this Section 5.12), a distribution shall be paid to each
holder of record of Class B Units as of the Conversion Effective Date, with the
amount of such distribution for each such Class B Unit to be equal to the product of
(a) 10% of the amount to be distributed in respect of such Quarter to each Common
Unit times (b) a fraction, of which (I) the numerator is the number of days in such
Quarter up to but excluding the Conversion Effective Date and (II) the denominator
is the total number of days in such Quarter (such amount, the “Excess Payment”).
For the taxable year in which an Excess Payment is made, if not previously
allocated, each holder of a Class B Unit shall be allocated items of gross income in
an amount equal to the Excess Payment distributed to it as provided in Section
6.1(d)(iii)(A). For the avoidance of doubt, each Common Unit issued upon conversion
of a Class B Unit shall be entitled to receive the full distribution payable to the
holder of a Common Unit concurrently with the distribution of such Excess Payment.”

     (h) Surrender of Certificates. Upon receipt of the Conversion Approval in accordance with
Section 5.12(f) or a change in rules of the National Securities Exchange as described in Section
5.12(i), the General Partner shall give the holders of the Class B Units

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prompt notice of such
Conversion Approval or change in rules and, subject to the requirements
of Section 6.7(c), each holder of Class B Units shall promptly surrender the Class B Unit
Certificates therefor, duly endorsed, at the office of the General Partner. In the case of any
such conversion, the Partnership shall, as soon as practicable thereafter, issue and deliver at
such office to such holder of Class B Units one or more Common Unit Certificates, registered in the
name of such holder, for the number of Common Units to which such holder shall be entitled. Such
conversion shall be deemed to have been made as of the Conversion Approval Date or, in the case of
Section 5.12(i), the date of the effectiveness of such rule change (the “Conversion Effective
Date”), and the Person entitled to receive the Common Units issuable upon such conversion shall be
treated for all purposes as the record holder of such Common Units as of such date.

     (i) Change in Rules of National Securities Exchange. If at any time (i) the rules of the
National Securities Exchange on which the Common Units are listed or admitted to trading or the
staff interpretations of such rules are changed or (ii) facts or circumstances arise so that no
vote or consent of Unitholders is required as a condition to the listing or admission to trading of
the Common Units that would be issued upon any conversion of any Class B Units into Common Units as
provided in Section 5.12(f), the terms of such Class B Units will be changed so that each Class B
Unit is converted (without further action or any vote of any Unitholders other than compliance with
Section 5.12(h)) into one Common Unit (subject to appropriate adjustment in the event of any
split-up, combination or similar event affecting the Common Units that occurs prior to the
conversion of the Class B Units) and, immediately thereafter, none of the Class B Units shall be
Outstanding.

ARTICLE VI

ALLOCATIONS AND DISTRIBUTIONS

Section 6.1 Allocations for Capital Account Purposes.

     For purposes of maintaining the Capital Accounts and in determining the rights of the Partners
among themselves, the Partnership’s items of income, gain, loss and deduction (computed in
accordance with Section 5.5(b)) shall be allocated among the Partners in each taxable year (or
portion thereof) as provided herein below.

     (a) Net Income. After giving effect to the special allocations set forth in Section 6.1(d),
Net Income for each taxable year and all items of income, gain, loss and deduction taken into
account in computing Net Income for such taxable year shall be allocated as follows:

     (i) First, 100% to the General Partner, in an amount equal to the aggregate Net Losses
allocated to the General Partner pursuant to Section 6.1(b)(iii) for all previous taxable
years until the aggregate Net Income allocated to the General Partner pursuant to this
Section 6.1(a)(i) for the current taxable year and all previous taxable years is equal to
the aggregate Net Losses allocated to the General Partner pursuant to Section 6.1(b)(iii)
for all previous taxable years;

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     (ii) Second, 2% to the General Partner, in an amount equal to the aggregate Net Losses
allocated to the General Partner pursuant to Section 6.1(b)(ii) for all previous taxable
years and 98% to the Unitholders, Pro Rata, until the aggregate Net Income allocated to such
Partners pursuant to this Section 6.1(a)(ii) for the current taxable year and all previous
taxable years is equal to the aggregate Net Losses allocated to such Partners pursuant to
Section 6.1(b)(ii) for all previous taxable years; and

     (iii) Third, 2% to the General Partner, and 98% to the Unitholders, Pro Rata.

     (b) Net Losses. After giving effect to the special allocations set forth in Section 6.1(d),
Net Losses for each taxable period and all items of income, gain, loss and deduction taken into
account in computing Net Losses for such taxable period shall be allocated as follows:

     (i) First, 2% to the General Partner, and 98% to the Unitholders, Pro Rata, until the
aggregate Net Losses allocated pursuant to this Section 6.1(b)(i) for the current taxable
year and all previous taxable years is equal to the aggregate Net Income allocated to such
Partners pursuant to Section 6.1(a)(iii) for all previous taxable years, provided that the
Net Losses shall not be allocated pursuant to this Section 6.1(b)(i) to the extent that such
allocation would cause any Unitholder to have a deficit balance in its Adjusted Capital
Account at the end of such taxable year (or increase any existing deficit balance in its
Adjusted Capital Account);

     (ii) Second, 2% to the General Partner, and 98% to the Unitholders, Pro Rata; provided,
that Net Losses shall not be allocated pursuant to this Section 6.1(b)(ii) to the extent
that such allocation would cause any Unitholder to have a deficit balance in its Adjusted
Capital Account at the end of such taxable year (or increase any existing deficit balance in
its Adjusted Capital Account);

     (iii) Third, the balance, if any, 100% to the General Partner.

     (c) Net Termination Gains and Losses. After giving effect to the special allocations set forth
in Section 6.1(d), all items of income, gain, loss and deduction taken into account in computing
Net Termination Gain or Net Termination Loss for such taxable period shall be allocated in the same
manner as such Net Termination Gain or Net Termination Loss is allocated hereunder. All allocations
under this Section 6.1(c) shall be made after Capital Account balances have been adjusted by all
other allocations provided under this Section 6.1 and after all distributions of Available Cash
provided under Sections 6.4 and 6.5 have been made; provided, however, that solely for purposes of
this Section 6.1(c), Capital Accounts shall not be adjusted for distributions made pursuant to
Section 12.4.

     (i) If a Net Termination Gain is recognized (or deemed recognized pursuant to Section
5.5(d)), such Net Termination Gain shall be allocated among the Partners in the following
manner (and the Capital Accounts of the Partners shall be increased by the
amount so allocated in each of the following subclauses, in the order listed, before an
allocation is made pursuant to the next succeeding subclause):

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     (A) First, to each Partner having a deficit balance in its Capital Account, in
the proportion that such deficit balance bears to the total deficit balances in the
Capital Accounts of all Partners, until each such Partner has been allocated Net
Termination Gain equal to any such deficit balance in its Capital Account;

     (B) Second, 98% to all Unitholders holding Common Units, Pro Rata, and 2% to
the General Partner, until the Capital Account in respect of each Common Unit then
Outstanding is equal to the sum of (1) its Unrecovered Capital plus (2) the Minimum
Quarterly Distribution for the Quarter during which the Liquidation Date occurs,
reduced by any distribution pursuant to Section 6.4(a)(i) or (b)(i) with respect to
such Common Unit for such Quarter (the amount determined pursuant to this clause (2)
is hereinafter defined as the “Unpaid MQD”) plus (3) any then existing Cumulative
Common Unit Arrearage;

     (C) Third, if such Net Termination Gain is recognized (or is deemed to be
recognized) prior to the expiration of the Subordination Period, 98% to all
Unitholders holding Subordinated Units, Pro Rata, and 2% to the General Partner,
until the Capital Account in respect of each Subordinated Unit then Outstanding
equals the sum of (1) its Unrecovered Capital, determined for the taxable year (or
portion thereof) to which this allocation of gain relates, plus (2) the Minimum
Quarterly Distribution for the Quarter during which the Liquidation Date occurs,
reduced by any distribution pursuant to Section 6.4(a)(iii) with respect to such
Subordinated Unit for such Quarter;

     (D) Fourth, 98% to all Unitholders, Pro Rata, and 2% to the General Partner,
until the Capital Account in respect of each Common Unit then Outstanding is equal
to the sum of (1) its Unrecovered Capital, plus (2) the Unpaid MQD, plus (3) any
then existing Cumulative Common Unit Arrearage, plus (4) the excess of (aa) the
First Target Distribution less the Minimum Quarterly Distribution for each Quarter
of the Partnership’s existence over (bb) the cumulative per Unit amount of any
distributions of Available Cash that is deemed to be Operating Surplus made pursuant
to Sections 6.4(a)(iv) and 6.4(b)(ii) (the sum of (1) plus (2) plus (3) plus (4) is
hereinafter defined as the “First Liquidation Target Amount”);

     (E) Fifth, 85% to all Unitholders, Pro Rata, 13% to the holders of the
Incentive Distribution Rights, Pro Rata, and 2% to the General Partner, until the
Capital Account in respect of each Common Unit then Outstanding is equal to the sum
of (1) the First Liquidation Target Amount, plus (2) the excess of (aa) the Second
Target Distribution less the First Target Distribution for each Quarter of
the Partnership’s existence over (bb) the cumulative per Unit amount of any
distributions of Available Cash that is deemed to be Operating Surplus made pursuant
to Sections 6.4(a)(v) and 6.4(b)(iii) (the sum of (1) plus (2) is hereinafter
defined as the “Second Liquidation Target Amount”);

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     (F) Sixth, 75% to all Unitholders, Pro Rata, 23% to the holders of the
Incentive Distribution Rights, Pro Rata, and 2% to the General Partner, until the
Capital Account in respect of each Common Unit then Outstanding is equal to the sum
of (1) the Second Liquidation Target Amount, plus (2) the excess of (aa) the Third
Target Distribution less the Second Target Distribution for each Quarter of the
Partnership’s existence over (bb) the cumulative per Unit amount of any
distributions of Available Cash that is deemed to be Operating Surplus made pursuant
to Sections 6.4(a)(vi)and 6.4(b)(iv) (the sum of (1) plus (2) is hereinafter defined
as the “Third Liquidation Target Amount”); and

     (G) Finally, any remaining amount 50% to all Unitholders, Pro Rata, 48% to the
holders of the Incentive Distribution Rights, Pro Rata, and 2% to the General
Partner.

     (ii) If a Net Termination Loss is recognized (or deemed recognized pursuant to Section
5.5(d)), such Net Termination Loss shall be allocated among the Partners in the following
manner:

     (A) First, if such Net Termination Loss is recognized (or is deemed to be
recognized) prior to the conversion of the last Outstanding Subordinated Unit, 98%
to the Unitholders holding Subordinated Units, Pro Rata, and 2% to the General
Partner, until the Capital Account in respect of each Subordinated Unit then
Outstanding has been reduced to zero;

     (B) Second, 98% to all Unitholders holding Common Units, Pro Rata, and 2% to
the General Partner, until the Capital Account in respect of each Common Unit then
Outstanding has been reduced to zero; and

     (C) Third, the balance, if any, 100% to the General Partner.

     (d) Special Allocations. Notwithstanding any other provision of this Section 6.1, the
following special allocations shall be made for such taxable period:

     (i) Partnership Minimum Gain Chargeback. Notwithstanding any other provision of this
Section 6.1, if there is a net decrease in Partnership Minimum Gain during any Partnership
taxable period, each Partner shall be allocated items of Partnership income and gain for
such period (and, if necessary, subsequent periods) in the manner and amounts provided in
Treasury Regulation Sections 1.704-2(f)(6), 1.704-2(g)(2) and 1.704-2(j)(2)(i), or any
successor provision. For purposes of this Section 6.1(d), each Partner’s Adjusted Capital
Account balance shall be determined, and
the allocation of income or gain required hereunder shall be effected, prior to the
application of any other allocations pursuant to this Section 6.1(d) with respect to such
taxable period (other than an allocation pursuant to Sections 6.1(d)(vi) and 6.1(d)(vii)).
This Section 6.1(d)(i) is intended to comply with the Partnership Minimum Gain chargeback
requirement in Treasury Regulation Section 1.704-2(f) and shall be interpreted consistently
therewith.

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     (ii) Chargeback of Partner Nonrecourse Debt Minimum Gain. Notwithstanding the other
provisions of this Section 6.1 (other than Section 6.1(d)(i)), except as provided in
Treasury Regulation Section 1.704-2(i)(4), if there is a net decrease in Partner Nonrecourse
Debt Minimum Gain during any Partnership taxable period, any Partner with a share of Partner
Nonrecourse Debt Minimum Gain at the beginning of such taxable period shall be allocated
items of Partnership income and gain for such period (and, if necessary, subsequent periods)
in the manner and amounts provided in Treasury Regulation Sections 1.704-2(i)(4) and
1.704-2(j)(2)(ii), or any successor provisions. For purposes of this Section 6.1(d), each
Partner’s Adjusted Capital Account balance shall be determined, and the allocation of income
or gain required hereunder shall be effected, prior to the application of any other
allocations pursuant to this Section 6.1(d), other than Section 6.1(d)(i) and other than an
allocation pursuant to Sections 6.1(d)(vi) and 6.1(d)(vii), with respect to such taxable
period. This Section 6.1(d)(ii) is intended to comply with the chargeback of items of income
and gain requirement in Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted
consistently therewith.

     (iii) Priority Allocations.

     (A) If the amount of cash or the Net Agreed Value of any property distributed
(except cash or property distributed pursuant to Section 12.4) to any Unitholder
with respect to its Units for a taxable year is greater (on a per Unit basis) than
the amount of cash or the Net Agreed Value of property distributed to the other
Unitholders with respect to their Units (on a per Unit basis), then (1) each
Unitholder receiving such greater cash or property distribution shall be allocated
gross income in an amount equal to the product of (aa) the amount by which the
distribution (on a per Unit basis) to such Unitholder exceeds the distribution (on a
per Unit basis) to the Unitholders receiving the smallest distribution and (bb) the
number of Units owned by the Unitholder receiving the greater distribution; and (2)
the General Partner shall be allocated gross income in an aggregate amount equal to
2/98ths of the sum of the amounts allocated in clause (1) above.

     (B) After the application of Section 6.1(d)(iii)(A), all or any portion of the
remaining items of Partnership gross income or gain for the taxable period, if any,
shall be allocated 100% to the holders of Incentive Distribution Rights, Pro Rata,
until the aggregate amount of such items allocated to the holders of
Incentive Distribution Rights pursuant to this paragraph 6.1(d)(iii)(B) for the
current taxable year and all previous taxable years is equal to the cumulative
amount of all Incentive Distributions made to the holders of Incentive Distribution
Rights from the Closing Date to a date 45 days after the end of the current taxable
year.

     (iv) Qualified Income Offset. In the event any Partner unexpectedly receives any
adjustments, allocations or distributions described in Treasury Regulation Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items

56

 

of
Partnership income and gain shall be specially allocated to such Partner in an amount and
manner sufficient to eliminate, to the extent required by the Treasury Regulations
promulgated under Section 704(b) of the Code, the deficit balance, if any, in its Adjusted
Capital Account created by such adjustments, allocations or distributions as quickly as
possible unless such deficit balance is otherwise eliminated pursuant to Section 6.1(d)(i)
or (ii).

     (v) Gross Income Allocations. In the event any Partner has a deficit balance in its
Capital Account at the end of any Partnership taxable period in excess of the sum of (A) the
amount such Partner is required to restore pursuant to the provisions of this Agreement and
(B) the amount such Partner is deemed obligated to restore pursuant to Treasury Regulation
Sections 1.704-2(g) and 1.704-2(i)(5), such Partner shall be specially allocated items of
Partnership gross income and gain in the amount of such excess as quickly as possible;
provided, that an allocation pursuant to this Section 6.1(d)(v) shall be made only if and to
the extent that such Partner would have a deficit balance in its Capital Account as adjusted
after all other allocations provided for in this Section 6.1 have been tentatively made as
if this Section 6.1(d)(v) were not in this Agreement.

     (vi) Nonrecourse Deductions. Nonrecourse Deductions for any taxable period shall be
allocated to the Partners in accordance with their respective Percentage Interests. If the
General Partner determines in its good faith discretion that the Partnership’s Nonrecourse
Deductions must be allocated in a different ratio to satisfy the safe harbor requirements of
the Treasury Regulations promulgated under Section 704(b) of the Code, the General Partner
is authorized, upon notice to the other Partners, to revise the prescribed ratio to the
numerically closest ratio that does satisfy such requirements.

     (vii) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions for any taxable
period shall be allocated 100% to the Partner that bears the Economic Risk of Loss with
respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions are
attributable in accordance with Treasury Regulation Section 1.704-2(i). If more than one
Partner bears the Economic Risk of Loss with respect to a Partner Nonrecourse Debt, such
Partner Nonrecourse Deductions attributable thereto shall be allocated between or among such
Partners in accordance with the ratios in which they share such Economic Risk of Loss.

     (viii) Nonrecourse Liabilities. For purposes of Treasury Regulation Section
1.752-3(a)(3), the Partners agree that Nonrecourse Liabilities of the Partnership in excess
of the sum of (A) the amount of Partnership Minimum Gain and (B) the total amount of
Nonrecourse Built-in Gain shall be allocated among the Partners in accordance with their
respective Percentage Interests.

     (ix) Code Section 754 Adjustments. To the extent an adjustment to the adjusted tax
basis of any Partnership asset pursuant to Section 734(b) or 743(c) of the Code is required,
pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in
determining Capital Accounts, the amount of such adjustment to the

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Capital Accounts shall be
treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis), and such item of gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner in which their Capital
Accounts are required to be adjusted pursuant to such Section of the Treasury Regulations.

     (x) Economic Uniformity.

     (A) At the election of the General Partner with respect to any taxable period
ending upon, or after, the termination of the Subordination Period, all or a portion
of the remaining items of Partnership gross income or gain for such taxable period,
after taking into account allocations pursuant to Section 6.1(d)(iii), shall be
allocated 100% to each Partner holding Subordinated Units that are Outstanding as of
the termination of the Subordination Period (“Final Subordinated Units”) in the
proportion of the number of Final Subordinated Units held by such Partner to the
total number of Final Subordinated Units then Outstanding, until each such Partner
has been allocated an amount of gross income or gain which increases the Capital
Account maintained with respect to such Final Subordinated Units to an amount equal
to the product of (A) the number of Final Subordinated Units held by such Partner
and (B) the Per Unit Capital Amount for a Common Unit. The purpose of this
allocation is to establish uniformity between the Capital Accounts underlying Final
Subordinated Units and the Capital Accounts underlying Common Units held by Persons
other than the General Partner and its Affiliates immediately prior to the
conversion of such Final Subordinated Units into Common Units. This allocation
method for establishing such economic uniformity will only be available to the
General Partner if the method for allocating the Capital Account maintained with
respect to the Subordinated Units between the transferred and retained Subordinated
Units pursuant to Section 5.5(c)(ii) does not otherwise provide such economic
uniformity to the Final Subordinated Units.

     (B) At the election of the General Partner with respect to any taxable period
ending upon, or after, the conversion of the Class B Units pursuant to Section 5.12,
all or a portion of the remaining items of Partnership gross income
or gain for such taxable period, after taking into account allocations pursuant
to Section 6.1(d)(iii) and Section 6.1(d)(x)(A), shall be allocated 100% to the
Partners holding such Common Units resulting from the conversion pursuant to Section
5.12 in the proportion of the number of converted Class B Units held by such Partner
to the total number of converted Class B Units then Outstanding, until each such
Partner has been allocated an amount of gross income or gain which increases the
Capital Account maintained with respect to such converted Class B Units to an amount
equal to the product of (A) the number of converted Class B Units held by such
Partner and (B) the Per Unit Capital Amount for a Common Unit. The purpose of this
allocation is to establish uniformity between the Capital Accounts underlying
converted Class B Units and the Capital Accounts underlying Common Units held by
Persons other than the General

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Partner and its Affiliates immediately prior to the
conversion of such converted Class B Units into Common Units.

     (xi) Curative Allocation.

     (A) Notwithstanding any other provision of this Section 6.1, other than the
Required Allocations, the Required Allocations shall be taken into account in making
the Agreed Allocations so that, to the extent possible, the net amount of items of
income, gain, loss and deduction allocated to each Partner pursuant to the Required
Allocations and the Agreed Allocations, together, shall be equal to the net amount
of such items that would have been allocated to each such Partner under the Agreed
Allocations had the Required Allocations and the related Curative Allocation not
otherwise been provided in this Section 6.1. Notwithstanding the preceding sentence,
Required Allocations relating to (1) Nonrecourse Deductions shall not be taken into
account except to the extent that there has been a decrease in Partnership Minimum
Gain and (2) Partner Nonrecourse Deductions shall not be taken into account except
to the extent that there has been a decrease in Partner Nonrecourse Debt Minimum
Gain. Allocations pursuant to this Section 6.1(d)(xi)(A) shall only be made with
respect to Required Allocations to the extent the General Partner reasonably
determines that such allocations will otherwise be inconsistent with the economic
agreement among the Partners. Further, allocations pursuant to this Section
6.1(d)(xi)(A) shall be deferred with respect to allocations pursuant to clauses (1)
and (2) hereof to the extent the General Partner reasonably determines that such
allocations are likely to be offset by subsequent Required Allocations.

     (B) The General Partner shall have reasonable discretion, with respect to each
taxable period, to (1) apply the provisions of Section 6.1(d)(xi)(A) in whatever
order is most likely to minimize the economic distortions that might otherwise
result from the Required Allocations, and (2) divide all allocations pursuant to
Section 6.1(d)(xi)(A) among the Partners in a manner that is likely to minimize such
economic distortions.

     (xii) Corrective Allocations. In the event of any allocation of Additional Book Basis
Derivative Items or any Book-Down Event or any recognition of a Net Termination Loss, the
following rules shall apply:

     (A) In the case of any allocation of Additional Book Basis Derivative Items
(other than an allocation of Unrealized Gain or Unrealized Loss under Section 5.5(d)
hereof), the General Partner shall allocate additional items of gross income and
gain away from the holders of Incentive Distribution Rights to the Unitholders and
the General Partner, or additional items of deduction and loss away from the
Unitholders and the General Partner to the holders of Incentive Distribution Rights,
to the extent that the Additional Book Basis Derivative Items allocated to the
Unitholders or the General Partner exceed their Share of Additional Book Basis
Derivative Items. For this purpose, the Unitholders and the

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General Partner shall be
treated as being allocated Additional Book Basis Derivative Items to the extent that
such Additional Book Basis Derivative Items have reduced the amount of income that
would otherwise have been allocated to the Unitholders or the General Partner under
the Partnership Agreement (e.g., Additional Book Basis Derivative Items taken into
account in computing cost of goods sold would reduce the amount of book income
otherwise available for allocation among the Partners). Any allocation made pursuant
to this Section 6.1(d)(xii)(A) shall be made after all of the other Agreed
Allocations have been made as if this Section 6.1(d)(xii) were not in this Agreement
and, to the extent necessary, shall require the reallocation of items that have been
allocated pursuant to such other Agreed Allocations.

     (B) In the case of any negative adjustments to the Capital Accounts of the
Partners resulting from a Book-Down Event or from the recognition of a Net
Termination Loss, such negative adjustment (1) shall first be allocated, to the
extent of the Aggregate Remaining Net Positive Adjustments, in such a manner, as
reasonably determined by the General Partner, that to the extent possible the
aggregate Capital Accounts of the Partners will equal the amount which would have
been the Capital Account balance of the Partners if no prior Book-Up Events had
occurred, and (2) any negative adjustment in excess of the Aggregate Remaining Net
Positive Adjustments shall be allocated pursuant to Section 6.1(c) hereof.

     (C) In making the allocations required under this Section 6.1(d)(xii), the
General Partner, in its sole discretion, may apply whatever conventions or other
methodology it deems reasonable to satisfy the purpose of this Section 6.1(d)(xii).

Section 6.2 Allocations for Tax Purposes.

     (a) Except as otherwise provided herein, for federal income tax purposes, each item of income,
gain, loss and deduction shall be allocated among the Partners in the same manner as its
correlative item of “book” income, gain, loss or deduction is allocated pursuant to Section 6.1.

     (b) In an attempt to eliminate Book-Tax Disparities attributable to a Contributed Property or
Adjusted Property, items of income, gain, loss, depreciation, amortization and cost recovery
deductions shall be allocated for federal income tax purposes among the Partners as follows:

     (i) (A) In the case of a Contributed Property, such items attributable thereto shall be
allocated among the Partners in the manner provided under Section 704(c) of the Code that
takes into account the variation between the Agreed Value of such property and its adjusted
basis at the time of contribution; and (B) any item of Residual Gain or Residual Loss
attributable to a Contributed Property shall be allocated among the Partners in the same
manner as its correlative item of “book” gain or loss is allocated pursuant to Section 6.1.

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     (ii) (A) In the case of an Adjusted Property, such items shall (1) first, be allocated
among the Partners in a manner consistent with the principles of Section 704(c) of the Code
to take into account the Unrealized Gain or Unrealized Loss attributable to such property
and the allocations thereof pursuant to Section 5.5(d)(i) or 5.5(d)(ii), and (2) second, in
the event such property was originally a Contributed Property, be allocated among the
Partners in a manner consistent with Section 6.2(b)(i)(A); and (B) any item of Residual Gain
or Residual Loss attributable to an Adjusted Property shall be allocated among the Partners
in the same manner as its correlative item of “book” gain or loss is allocated pursuant to
Section 6.1.

     (iii) The General Partner shall apply the principles of Treasury Regulation Section
1.704-3(d) to eliminate Book-Tax Disparities.

     (c) For the proper administration of the Partnership and for the preservation of uniformity of
the Limited Partner Interests (or any class or classes thereof), the General Partner shall have
sole discretion to (i) adopt such conventions as it deems appropriate in determining the amount of
depreciation, amortization and cost recovery deductions; (ii) make special allocations for federal
income tax purposes of income (including, without limitation, gross income) or deductions; and
(iii) amend the provisions of this Agreement as appropriate (x) to reflect the proposal or
promulgation of Treasury Regulations under Section 704(b) or Section 704(c) of the Code or (y)
otherwise to preserve or achieve uniformity of the Limited Partner Interests (or any class or
classes thereof). The General Partner may adopt such conventions, make such allocations and make
such amendments to this Agreement as provided in this Section 6.2(c) only if such conventions,
allocations or amendments would not have a material adverse effect on the Partners, the holders of
any class or classes of Limited Partner
Interests issued and Outstanding or the Partnership, and if such allocations are consistent
with the principles of Section 704 of the Code.

     (d) The General Partner in its discretion may determine to depreciate or amortize the portion
of an adjustment under Section 743(b) of the Code attributable to unrealized appreciation in any
Adjusted Property (to the extent of the unamortized Book-Tax Disparity) using a predetermined rate
derived from the depreciation or amortization method and useful life applied to the Partnership’s
common basis of such property, despite any inconsistency of such approach with Treasury Regulation
Section 1.167(c)-l(a)(6) or any successor regulations thereto. If the General Partner determines
that such reporting position cannot reasonably be taken, the General Partner may adopt depreciation
and amortization conventions under which all purchasers acquiring Limited Partner Interests in the
same month would receive depreciation and amortization deductions, based upon the same applicable
rate as if they had purchased a direct interest in the Partnership’s property. If the General
Partner chooses not to utilize such aggregate method, the General Partner may use any other
reasonable depreciation and amortization conventions to preserve the uniformity of the intrinsic
tax characteristics of any Limited Partner Interests that would not have a material adverse effect
on the Limited Partners or the Record Holders of any class or classes of Limited Partner Interests.

     (e) Any gain allocated to the Partners upon the sale or other taxable disposition of any
Partnership asset shall, to the extent possible, after taking into account other required

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allocations of gain pursuant to this Section 6.2, be characterized as Recapture Income in the same
proportions and to the same extent as such Partners (or their predecessors in interest) have been
allocated any deductions directly or indirectly giving rise to the treatment of such gains as
Recapture Income.

     (f) All items of income, gain, loss, deduction and credit recognized by the Partnership for
federal income tax purposes and allocated to the Partners in accordance with the provisions hereof
shall be determined without regard to any election under Section 754 of the Code which may be made
by the Partnership; provided, however, that such allocations, once made, shall be adjusted as
necessary or appropriate to take into account those adjustments permitted or required by Sections
734 and 743 of the Code.

     (g) Each item of Partnership income, gain, loss and deduction shall for federal income tax
purposes, be determined on an annual basis and prorated on a monthly basis and shall be allocated
to the Partners as of the opening of the New York Stock Exchange on the first Business Day of each
month; provided, however, that (i) such items for the period beginning on the Closing Date and
ending on the last day of the month in which the Option Closing Date or the expiration of the
Over-Allotment Option occurs shall be allocated to the Partners as of the opening of the New York
Stock Exchange on the first Business Day of the next succeeding month; and provided, further, that
gain or loss on a sale or other disposition of any assets of the Partnership or any other
extraordinary item of income or loss realized and recognized other than in the ordinary course of
business, as determined by the General Partner in its sole discretion, shall be allocated to the
Partners as of the opening of the New York Stock Exchange on the first
Business Day of the month in which such gain or loss is recognized for federal income tax
purposes. The General Partner may revise, alter or otherwise modify such methods of allocation as
it determines necessary or appropriate in its sole discretion, to the extent permitted or required
by Section 706 of the Code and the regulations or rulings promulgated thereunder.

     (h) Allocations that would otherwise be made to a Limited Partner under the provisions of this
Article VI shall instead be made to the beneficial owner of Limited Partner Interests held by a
nominee in any case in which the nominee has furnished the identity of such owner to the
Partnership in accordance with Section 6031(c) of the Code or any other method acceptable to the
General Partner in its sole discretion.

			
	Section 6.3	 	Requirement and Characterization of Distributions; Distributions to Record
Holders.

     (a) Within 45 days following the end of each Quarter commencing with the Quarter ending on
December 31, 2002, an amount equal to 100% of Available Cash with respect to such Quarter shall,
subject to Section 17-607 of the Delaware Act, be distributed in accordance with this Article VI by
the Partnership to the Partners as of the Record Date selected by the General Partner in its
reasonable discretion. All amounts of Available Cash distributed by the Partnership on any date
from any source shall be deemed to be Operating Surplus until the sum of all amounts of Available
Cash theretofore distributed by the Partnership to the Partners pursuant to Section 6.4 equals the
Operating Surplus from the Closing Date through the close of the immediately preceding Quarter. Any
remaining amounts of Available Cash distributed by the

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Partnership on such date shall, except as
otherwise provided in Section 6.5, be deemed to be “Capital Surplus.” All distributions required to
be made under this Agreement shall be made subject to Section 17-607 of the Delaware Act.

     (b) Notwithstanding Section 6.3(a), in the event of the dissolution and liquidation of the
Partnership, all receipts received during or after the Quarter in which the Liquidation Date
occurs, other than from borrowings described in (a)(ii) of the definition of Available Cash, shall
be applied and distributed solely in accordance with, and subject to the terms and conditions of,
Section 12.4.

     (c) The General Partner shall have the discretion to treat taxes paid by the Partnership on
behalf of, or amounts withheld with respect to, all or less than all of the Partners, as a
distribution of Available Cash to such Partners.

     (d) Each distribution in respect of a Partnership Interest shall be paid by the Partnership,
directly or through the Transfer Agent or through any other Person or agent, only to the Record
Holder of such Partnership Interest as of the Record Date set for such distribution. Such payment
shall constitute full payment and satisfaction of the Partnership’s liability in respect of such
payment, regardless of any claim of any Person who may have an interest in such payment by reason
of an assignment or otherwise.

Section 6.4 Distributions of Available Cash from Operating Surplus.

     (a) During Subordination Period. Available Cash with respect to any Quarter within the
Subordination Period that is deemed to be Operating Surplus pursuant to the provisions of Section
6.3 or 6.5 shall, subject to Section 17-607 of the Delaware Act, be distributed as follows, except
as otherwise required by Section 5.6(b) in respect of additional Partnership Securities issued
pursuant thereto:

     (i) First, 98% to the Unitholders holding Common Units, Pro Rata, and 2% to the General
Partner, until there has been distributed in respect of each Common Unit then Outstanding an
amount equal to the Minimum Quarterly Distribution for such Quarter;

     (ii) Second, 98% to the Unitholders holding Common Units, Pro Rata, and 2% to the
General Partner, until there has been distributed in respect of each Common Unit then
Outstanding an amount equal to the Cumulative Common Unit Arrearage existing with respect to
such Quarter;

     (iii) Third, 98% to the Unitholders holding Subordinated Units, Pro Rata, and 2% to the
General Partner, until there has been distributed in respect of each Subordinated Unit then
Outstanding an amount equal to the Minimum Quarterly Distribution for such Quarter;

     (iv) Fourth, 98% to all Unitholders, Pro Rata, and 2% to the General Partner, until
there has been distributed in respect of each Unit then Outstanding an amount equal to the
excess of the First Target Distribution over the Minimum Quarterly Distribution for such
Quarter;

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     (v) Fifth, 85% to all Unitholders, Pro Rata, 13% to the holders of the Incentive
Distribution Rights, Pro Rata, and 2% to the General Partner, until there has been
distributed in respect of each Unit then Outstanding an amount equal to the excess of the
Second Target Distribution over the First Target Distribution for such Quarter;

     (vi) Sixth, 75% to all Unitholders, Pro Rata, 23% to the holders of the Incentive
Distribution Rights, Pro Rata, and 2% to the General Partner, until there has been
distributed in respect of each Unit then Outstanding an amount equal to the excess of the
Third Target Distribution over the Second Target Distribution for such Quarter; and

     (vii) Thereafter, 50% to all Unitholders, Pro Rata, 48% to the holders of the Incentive
Distribution Rights, Pro Rata, and 2% to the General Partner;

provided, however, if the Minimum Quarterly Distribution, the First Target Distribution, the Second
Target Distribution and the Third Target Distribution have been reduced to zero pursuant to the
second sentence of Section 6.6(a), the distribution of Available Cash that is deemed to be
Operating Surplus with respect to any Quarter will be made solely in accordance with Section
6.4(a)(vii).

     (b) After Subordination Period. Available Cash with respect to any Quarter after the
Subordination Period that is deemed to be Operating Surplus pursuant to the provisions of Section
6.3 or 6.5, subject to Section 17-607 of the Delaware Act, shall be distributed as follows, except
as otherwise required by Section 5.6(b) in respect of additional Partnership Securities issued
pursuant thereto:

     (i) First, 98% to all Unitholders, Pro Rata, and 2% to the General Partner, until there
has been distributed in respect of each Unit then Outstanding an amount equal to the Minimum
Quarterly Distribution for such Quarter;

     (ii) Second, 98% to all Unitholders, Pro Rata, and 2% to the General Partner, until
there has been distributed in respect of each Unit then Outstanding an amount equal to the
excess of the First Target Distribution over the Minimum Quarterly Distribution for such
Quarter;

     (iii) Third, 85% to all Unitholders, Pro Rata, 13% to the holders of the Incentive
Distribution Rights, Pro Rata, and 2% to the General Partner, until there has been
distributed in respect of each Unit then Outstanding an amount equal to the excess of the
Second Target Distribution over the First Target Distribution for such Quarter;

     (iv) Fourth, 75% to all Unitholders Pro Rata, 23% to the holders of the Incentive
Distribution Rights, Pro Rata, and 2% to the General Partner, until there has been
distributed in respect of each Unit then Outstanding an amount equal to the excess of the
Third Target Distribution over the Second Target Distribution for such Quarter; and

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     (v) Thereafter, 50% to all Unitholders, Pro Rata, 48% to the holders of the Incentive
Distribution Rights, Pro Rata, and 2% to the General Partner;

provided, however, if the Minimum Quarterly Distribution, the First Target Distribution, the Second
Target Distribution and the Third Target Distribution have been reduced to zero pursuant to the
second sentence of Section 6.6(a), the distribution of Available Cash that is deemed to be
Operating Surplus with respect to any Quarter will be made solely in accordance with Section
6.4(b)(v).

Section 6.5 Distributions of Available Cash from Capital Surplus.

     Available Cash that is deemed to be Capital Surplus pursuant to the provisions of Section
6.3(a) shall, subject to Section 17-607 of the Delaware Act, be distributed, unless the provisions
of Section 6.3 require otherwise, 98% to all Unitholders, Pro Rata, and 2% to the General Partner,
until a hypothetical holder of a Common Unit acquired on the Closing Date has received with respect
to such Common Unit, during the period since the Closing Date through
such date, distributions of Available Cash that are deemed to be Capital Surplus in an
aggregate amount equal to the Initial Unit Price. Available Cash that is deemed to be Capital
Surplus shall then be distributed 98% to all Unitholders holding Common Units, Pro Rata, and 2% to
the General Partner, until there has been distributed in respect of each Common Unit then
Outstanding an amount equal to the Cumulative Common Unit Arrearage. Available Cash that is deemed
to be Capital Surplus shall then be distributed 98% to all Unitholders holding Class B Units, Pro
Rata, and 2% to the General Partner, until there has been distributed in respect of each Class B
Unit then Outstanding an amount equal to the Cumulative Class B Unit Arrearage. Thereafter, all
Available Cash shall be distributed as if it were Operating Surplus and shall be distributed in
accordance with Section 6.4.

Section 6.6 Adjustment of Minimum Quarterly Distribution and Target Distribution Levels.

     (a) The Minimum Quarterly Distribution, First Target Distribution, Second Target Distribution,
Third Target Distribution, Common Unit Arrearages, Cumulative Common Unit Arrearages, Class B Unit
Arrearages and Cumulative Class B Unit Arrearages shall be proportionately adjusted in the event of
any distribution, combination or subdivision (whether effected by a distribution payable in Units
or otherwise) of Units or other Partnership Securities in accordance with Section 5.10. In the
event of a distribution of Available Cash that is deemed to be from Capital Surplus, the then
applicable Minimum Quarterly Distribution, First Target Distribution, Second Target Distribution
and Third Target Distribution, shall be adjusted proportionately downward to equal the product
obtained by multiplying the otherwise applicable Minimum Quarterly Distribution, First Target
Distribution, Second Target Distribution and Third Target Distribution, as the case may be, by a
fraction of which the numerator is the Unrecovered Capital of the Common Units immediately after
giving effect to such distribution and of which the denominator is the Unrecovered Capital of the
Common Units immediately prior to giving effect to such distribution.

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     (b) The Minimum Quarterly Distribution, First Target Distribution, Second Target Distribution
and Third Target Distribution, shall also be subject to adjustment pursuant to Section 6.9.

			
	Section 6.7	 	Special Provisions Relating to the Holders of Subordinated Units and Class B
Units.

     (a) Except with respect to the right to vote on or approve matters requiring the vote or
approval of a percentage of the holders of Outstanding Common Units and the right to participate in
allocations of income, gain, loss and deduction and distributions made with respect to Common
Units, the holder of a Subordinated Unit shall have all of the rights and obligations of a
Unitholder holding Common Units hereunder; provided, however, that immediately upon the conversion
of Subordinated Units into Common Units pursuant to Section 5.8, the Unitholder holding a
Subordinated Unit shall possess all of the rights and obligations of a Unitholder holding Common
Units hereunder, including the right to vote as a Common Unitholder and the
right to participate in allocations of income, gain, loss and deduction and distributions made
with respect to Common Units; provided, however, that such converted Subordinated Units shall
remain subject to the provisions of Sections 5.5(c)(ii), 6.1(d)(x) and 6.7(b).

     (b) The Unitholder holding a Subordinated Unit which has converted into a Common Unit pursuant
to Section 5.8 shall not be issued a Common Unit Certificate pursuant to Section 4.1, and shall not
be permitted to transfer its converted Subordinated Units to a Person which is not an Affiliate of
the holder until such time as the General Partner determines, based on advice of counsel, that a
converted Subordinated Unit should have, as a substantive matter, like intrinsic economic and
federal income tax characteristics, in all material respects, to the intrinsic economic and federal
income tax characteristics of an Initial Common Unit. In connection with the condition imposed by
this Section 6.7(b), the General Partner may take whatever reasonable steps are required to provide
economic uniformity to the converted Subordinated Units in preparation for a transfer of such
converted Subordinated Units, including the application of Sections 5.5(c)(ii) and 6.1(d)(x);
provided, however, that no such steps may be taken that would have a material adverse effect on the
Unitholders holding Common Units represented by Common Unit Certificates.

     (c) A Unitholder holding a Class B Unit that has converted into a Common Unit pursuant to
Section 5.12 shall not be issued a Common Unit Certificate pursuant to Section 4.1, and shall not
be permitted to transfer such Common Units until such time as the General Partner determines, based
on advice of counsel, that the converted Class B Unit should have, as a substantive matter, like
intrinsic economic and federal income tax characteristics of an Initial Common Unit. In connection
with the condition imposed by this Section 6.7(c), the General Partner shall take whatever steps
are required to provide economic uniformity to the converted Class B Units in preparation for a
transfer of such Units, including the application of Section 6.1(d)(x)(B); provided, however, that
no such steps may be taken that would have a material adverse effect on the Unitholders holding
Common Units represented by Common Unit Certificates.

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Section 6.8 Special Provisions Relating to the Holders of Incentive Distribution Rights.

     Notwithstanding anything to the contrary set forth in this Agreement, the holders of the
Incentive Distribution Rights (a) shall (i) possess the rights and obligations provided in this
Agreement with respect to a Limited Partner pursuant to Articles III and VII and (ii) have a
Capital Account as a Partner pursuant to Section 5.5 and all other provisions related thereto and
(b) shall not (i) be entitled to vote on any matters requiring the approval or vote of the holders
of Outstanding Units, (ii) be entitled to any distributions other than as provided in Sections
6.4(a)(v), (vi) and (vii), 6.4(b)(iii), (iv) and (v), and 12.4 or (iii) be allocated items of
income, gain, loss or deduction other than as specified in this Article VI.

Section 6.9 Entity-Level Taxation.

     If legislation is enacted or the interpretation of existing language is modified by the
relevant governmental authority which causes a Group Member to be treated as an association taxable
as a corporation or otherwise subjects a Group Member to entity-level taxation for federal, state
or local income tax purposes, the then applicable Minimum Quarterly Distribution, First Target
Distribution, Second Target Distribution and Third Target Distribution, shall be adjusted to equal
the product obtained by multiplying (a) the amount thereof by (b) one minus the sum of (i) the
highest marginal federal corporate (or other entity, as applicable) income tax rate of the Group
Member for the taxable year of the Group Member in which such Quarter occurs (expressed as a
percentage) plus (ii) the effective overall state and local income tax rate (expressed as a
percentage) applicable to the Group Member for the calendar year next preceding the calendar year
in which such Quarter occurs (after taking into account the benefit of any deduction allowable for
federal income tax purposes with respect to the payment of state and local income taxes), but only
to the extent of the increase in such rates resulting from such legislation or interpretation. Such
effective overall state and local income tax rate shall be determined for the taxable year next
preceding the first taxable year during which the Group Member is taxable for federal income tax
purposes as an association taxable as a corporation or is otherwise subject to entity-level
taxation by determining such rate as if the Group Member had been subject to such state and local
taxes during such preceding taxable year.

ARTICLE VII

MANAGEMENT AND OPERATION OF BUSINESS

Section 7.1 Management.

     (a) The General Partner shall conduct, direct and manage all activities of the Partnership.
Except as otherwise expressly provided in this Agreement, all management powers over the business
and affairs of the Partnership shall be exclusively vested in the General Partner, and no Limited
Partner or Assignee shall have any management power over the business and affairs of the
Partnership. In addition to the powers now or hereafter granted a general partner of a limited
partnership under applicable law or which are granted to the General Partner under any other
provision of this Agreement, the General Partner, subject to Section 7.3, shall have full

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power and
authority to do all things and on such terms as it, in its sole discretion, may deem necessary or
appropriate to conduct the business of the Partnership, to exercise all powers set forth in Section
2.5 and to effectuate the purposes set forth in Section 2.4, including the following:

     (i) the making of any expenditures, the lending or borrowing of money, the assumption
or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance
of evidences of indebtedness, including indebtedness that is convertible into Partnership
Securities, and the incurring of any other obligations;

     (ii) the making of tax, regulatory and other filings, or rendering of periodic or other
reports to governmental or other agencies having jurisdiction over the business or assets of
the Partnership;

     (iii) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or
exchange of any or all of the assets of the Partnership or the merger or other combination
of the Partnership with or into another Person (the matters described in this clause (iii)
being subject, however, to any prior approval that may be required by Section 7.3);

     (iv) the use of the assets of the Partnership (including cash on hand) for any purpose
consistent with the terms of this Agreement, including the financing of the conduct of the
operations of the Partnership Group; subject to Section 7.6(a), the lending of funds to
other Persons (including other Group Members), the repayment or guarantee of obligations of
the Partnership Group and the making of capital contributions to any member of the
Partnership Group;

     (v) the negotiation, execution and performance of any contracts, conveyances or other
instruments (including instruments that limit the liability of the Partnership under
contractual arrangements to all or particular assets of the Partnership, with the other
party to the contract to have no recourse against the General Partner or its assets other
than its interest in the Partnership, even if same results in the terms of the transaction
being less favorable to the Partnership than would otherwise be the case);

     (vi) the distribution of Partnership cash;

     (vii) the selection and dismissal of employees (including employees having titles such
as “president,” “vice president,” “secretary” and “treasurer”) and agents, outside
attorneys, accountants, consultants and contractors and the determination of their
compensation and other terms of employment or hiring;

     (viii) the maintenance of such insurance for the benefit of the Partnership Group and
the Partners as it deems necessary or appropriate;

     (ix) the formation of, or acquisition of an interest in, and the contribution of
property and the making of loans to, any further limited or general partnerships, joint
ventures, corporations, limited liability companies or other
relationships (including the

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acquisition of interests in, and the contributions of property to, any Group Member from
time to time) subject to the restrictions set forth in Section 2.4;

     (x) the control of any matters affecting the rights and obligations of the Partnership,
including the bringing and defending of actions at law or in equity and otherwise engaging
in the conduct of litigation and the incurring of legal expense and the settlement of claims
and litigation;

     (xi) the indemnification of any Person against liabilities and contingencies to the
extent permitted by law;

     (xii) the entering into of listing agreements with any National Securities Exchange and
the delisting of some or all of the Limited Partner Interests from, or requesting that
trading be suspended on, any such exchange (subject to any prior approval that may be
required under Section 4.8);

     (xiii) unless restricted or prohibited by Section 5.7, the purchase, sale or other
acquisition or disposition of Partnership Securities, or the issuance of additional options,
rights, warrants and appreciation rights relating to Partnership Securities; and

     (xiv) the undertaking of any action in connection with the Partnership’s participation
in any Group Member as a member or partner.

     (b) Notwithstanding any other provision of this Agreement, the Operating Company Agreement,
the Delaware Act or any applicable law, rule or regulation, each of the Partners and the Assignees
and each other Person who may acquire an interest in Partnership Securities hereby (i) approves,
ratifies and confirms the execution, delivery and performance by the parties thereto of the
Operating Company Agreement, any other limited liability company or partnership agreement of any
other Group Member, the Underwriting Agreement, the Omnibus Agreement, the Contribution Agreement
and the other agreements described in or filed as exhibits to the Registration Statement that are
related to the transactions contemplated by the Registration Statement; (ii) agrees that the
General Partner (on its own or through any officer of the Partnership) is authorized to execute,
deliver and perform the agreements referred to in clause (i) of this sentence and the other
agreements, acts, transactions and matters described in or contemplated by the Registration
Statement on behalf of the Partnership without any further act, approval or vote of the Partners or
the Assignees or the other Persons who may acquire an interest in Partnership Securities; and (iii)
agrees that the execution, delivery or performance by the General Partner, any Group Member or any
Affiliate of any of them, of this Agreement or any agreement authorized or permitted under this
Agreement (including the exercise by the General Partner or any Affiliate of the General Partner of
the rights accorded pursuant to Article XV), shall not constitute a breach by the General Partner
of any duty that the General Partner may owe the Partnership or the Limited Partners or any other
Persons under this Agreement (or any other agreements) or of any duty stated or implied by law or
equity.

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Section 7.2
Certificate of Limited Partnership.

     The General Partner has caused the Certificate of Limited Partnership to be filed with the Secretary of State of the State
of Delaware as required by the Delaware Act. The General Partner shall use all reasonable efforts to cause to be filed such other
certificates or documents as may be determined by the General Partner in its sole discretion to be reasonable and necessary or
appropriate for the formation, continuation, qualification and operation of a limited partnership (or a partnership in which the
limited partners have limited liability) in the State of Delaware or any other state in which the Partnership may elect to do
business or own property. To the extent that such action is determined by the General Partner in its sole discretion to be reasonable
and necessary or appropriate, the General Partner shall file amendments to and restatements of the Certificate of Limited Partnership
and do all things to maintain the Partnership as a limited partnership (or a partnership or other entity in which the limited
partners have limited liability) under the laws of the State of Delaware or of any other state in which the Partnership may elect to
do business or own property. Subject to the terms of Section 3.4(a), the General Partner shall not be required, before or after
filing, to deliver or mail a copy of the Certificate of Limited Partnership, any qualification document or any amendment thereto to
any Limited Partner.

Section 7.3
Restrictions on the General Partner’s Authority.

     (a) The General Partner may not, without written approval of the specific act by holders of all of the Outstanding
Limited Partner Interests or by other written instrument executed and delivered by holders of all of the Outstanding Limited Partner
Interests subsequent to the date of this Agreement, take any action in contravention of this Agreement, including, except as
otherwise provided in this Agreement, (i) committing any act that would make it impossible to carry on the ordinary business of the
Partnership; (ii) possessing Partnership property, or assigning any rights in specific Partnership property, for other than a
Partnership purpose; (iii) admitting a Person as a Partner; (iv) amending this Agreement in any manner; or (v) transferring its
interest as a general partner of the Partnership.

     (b) Except as provided in Articles XII and XIV, the General Partner may not sell, exchange or otherwise dispose of all
or substantially all of the Partnership’s assets in a single transaction or a series of related transactions (including by way of
merger, consolidation or other combination) or approve on behalf of the Partnership the sale, exchange or other disposition of all or
substantially all of the assets of the Operating Company and its Subsidiaries taken as a whole without the approval of holders of a
Unit Majority; provided however that this provision shall not preclude or limit the General Partner’s ability to mortgage, pledge,
hypothecate or grant a security interest in all or substantially all of the assets of the Partnership or the Operating Company and
shall not apply to any forced sale of any or all of the assets of the Partnership or the Operating Company pursuant to the
foreclosure of, or other realization upon, any such encumbrance. Without the approval of holders of a Unit Majority, the General
Partner shall not, on behalf of the Partnership, (i) consent to any amendment to the Operating Company Agreement or, except as
expressly permitted by Section 7.9(d), take any action permitted to be taken by a member of the Operating Company, in either case,
that would adversely affect the Limited Partners (including any particular class of Partnership Interests as compared to any other
class of Partnership Interests) in any material respect or (ii) except as permitted under Sections

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4.6, 11.1 and 11.2, elect or cause the Partnership to elect a successor general partner
of the Partnership.

			
	Section 7.4	 	Reimbursement of the General Partner.

     (a) Except as provided in this Section 7.4 and elsewhere in this Agreement, the General
Partner shall not be compensated for its services as a general partner or managing member of any
Group Member.

     (b) The General Partner shall be reimbursed on a monthly basis, or such other reasonable basis
as the General Partner may determine in its sole discretion, for (i) all direct and indirect
expenses it incurs or payments it makes on behalf of the Partnership (including salary, bonus,
incentive compensation and other amounts paid to any Person including Affiliates of the General
Partner to perform services for the Partnership or for the General Partner in the discharge of its
duties to the Partnership), and (ii) all other necessary or appropriate expenses allocable to the
Partnership or otherwise reasonably incurred by the General Partner in connection with operating
the Partnership’s business (including expenses allocated to the General Partner by its Affiliates).
The General Partner shall determine the expenses that are allocable to the Partnership in any
reasonable manner determined by the General Partner in its sole discretion. Reimbursements pursuant
to this Section 7.4 shall be in addition to any reimbursement to the General Partner as a result of
indemnification pursuant to Section 7.7.

     (c) Subject to Section 5.7, the General Partner, in its sole discretion and without the
approval of the Limited Partners (who shall have no right to vote in respect thereof), may propose
and adopt on behalf of the Partnership employee benefit plans, employee programs and employee
practices (including plans, programs and practices involving the issuance of Partnership Securities
or options to purchase, or rights, warrants or appreciation rights relating to, Partnership
Securities), or cause the Partnership to issue Partnership Securities in connection with, or
pursuant to, any employee benefit plan, employee program or employee practice maintained or
sponsored by the General Partner or any of its Affiliates, in each case for the benefit of
employees of the General Partner, any Group Member or any Affiliate, or any of them, in respect of
services performed, directly or indirectly, for the benefit of the Partnership Group. The
Partnership agrees to issue and sell to the General Partner or any of its Affiliates any
Partnership Securities that the General Partner or such Affiliates are obligated to provide to any
employees pursuant to any such employee benefit plans, employee programs or employee practices.
Expenses incurred by the General Partner in connection with any such plans, programs and practices
(including the net cost to the General Partner or such Affiliates of Partnership Securities
purchased by the General Partner or such Affiliates from the Partnership to fulfill options or
awards under such plans, programs and practices) shall be reimbursed in accordance with Section
7.4(b). Any and all obligations of the General Partner under any employee benefit plans, employee
programs or employee practices adopted by the General Partner as permitted by this Section 7.4(c)
shall constitute obligations of the General Partner hereunder and shall be assumed by any successor
General Partner approved pursuant to Section 11.1 or 11.2 or the transferee of or successor to all
of the General Partner’s General Partner Interest pursuant to Section 4.6.

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	Section 7.5	 	Outside Activities.

     (a) After the Closing Date, the General Partner, for so long as it is the General Partner of
the Partnership (i) agrees that its sole business will be to act as a general partner or managing
member, as the case may be, of the Partnership and any other partnership or limited liability
company of which the Partnership or the Operating Company is, directly or indirectly, a partner or
member and to undertake activities that are ancillary or related thereto (including being a limited
partner in the Partnership), (ii) shall not engage in any business or activity or incur any debts
or liabilities except in connection with or incidental to (A) its performance as general partner or
managing member of one or more Group Members or as described in or contemplated by the Registration
Statement, or (B) the acquiring, owning or disposing of debt or equity securities in any Group
Member and (iii) except to the extent permitted in the Omnibus Agreement, shall not, and shall
cause its Affiliates (other than the Adena Group, which shall be subject to the Restricted Business
Contribution Agreement) not to, engage in any Restricted Business.

     (b) On the Closing Date, Arch Coal, Inc., Ark Land, Great Northern, New Gauley, Western
Pocahontas and certain of their respective Affiliates entered into the Omnibus Agreement with the
General Partner, the Partnership and the Operating Company. As of the date of this Agreement, the
Omnibus Agreement sets forth certain restrictions on the ability of Great Northern, New Gauley,
Western Pocahontas and such Affiliates to engage in Restricted Businesses. Cline, Foresight and
Adena have entered into the Restricted Business Contribution Agreement with the General Partner,
the Partnership, the Organizational General Partner and the Operating Company, which agreement sets
forth certain restrictions on the ability of the Adena Group to engage in Adena Restricted
Businesses.

     (c) Except as specifically restricted by Section 7.5(a), the Omnibus Agreement and the
Restricted Business Contribution Agreement, each Indemnitee (other than the General Partner) shall
have the right to engage in businesses of every type and description and other activities for
profit and to engage in and possess an interest in other business ventures of any and every type or
description, whether in businesses engaged in or anticipated to be engaged in by any Group Member,
independently or with others, including business interests and activities in direct competition
with the business and activities of any Group Member, and none of the same shall constitute a
breach of this Agreement or any duty express or implied by law to any Group Member or any Partner
or Assignee. Neither any Group Member, any Limited Partner nor any other Person shall have any
rights by virtue of this Agreement, the Operating Company Agreement, any other limited liability
company or partnership agreement of any other Group Member, or the partnership relationship
established hereby or thereby in any business ventures of any Indemnitee.

     (d) Subject to the terms of Section 7.5(a), Section 7.5(b), Section 7.5(c), the Omnibus
Agreement and the Restricted Business Contribution Agreement, but otherwise notwithstanding
anything to the contrary in this Agreement, (i) the engaging in competitive activities by any
Indemnitees (other than the General Partner) in accordance with the provisions of this Section 7.5
is hereby approved by the Partnership and all Partners, (ii) it shall be deemed not to be a breach
of the General Partner’s fiduciary duty or any other obligation of any type whatsoever of

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the General Partner for the Indemnitees (other than the General Partner) to engage in such
business interests and activities in preference to or to the exclusion of the Partnership and
(iii) except as set forth in the Omnibus Agreement or the Restricted Business Contribution
Agreement, the General Partner and the Indemnitees shall have no obligation to present business
opportunities to the Partnership.

     (e) The General Partner and any of its Affiliates may acquire Units or other Partnership
Securities in addition to those acquired on the Closing Date and, except as otherwise provided in
this Agreement, shall be entitled to exercise all rights of the General Partner or Limited Partner,
as applicable, relating to such Units or Partnership Securities.

     (f) The term “Affiliates” when used in Section 7.5(a) and Section 7.5(e) with respect to the
General Partner shall not include any Group Member or any Subsidiary of the Group Member.

     (g) Anything in this Agreement to the contrary notwithstanding, to the extent that provisions
of Sections 7.7, 7.8, 7.9, 7.10 or other Sections of this Agreement purport or are interpreted to
have the effect of restricting the fiduciary duties that might otherwise, as a result of Delaware
or other applicable law, be owed by the General Partner to the Partnership and its Limited
Partners, or to constitute a waiver or consent by the Limited Partners to any such restriction,
such provisions shall be inapplicable and have no effect in determining whether the General Partner
has complied with its fiduciary duties in connection with determinations made by it under this
Section 7.5.

			
	Section 7.6	 	Loans from the General Partner; Loans or Contributions from the Partnership;
Contracts with Affiliates; Certain Restrictions on the General Partner.

     (a) The General Partner or any of its Affiliates may lend to any Group Member, and any Group
Member may borrow from the General Partner or any of its Affiliates, funds needed or desired by the
Group Member for such periods of time and in such amounts as the General Partner may determine;
provided, however, that in any such case the lending party may not charge the borrowing party
interest at a rate greater than the rate that would be charged the borrowing party or impose terms
less favorable to the borrowing party than would be charged or imposed on the borrowing party by
unrelated lenders on comparable loans made on an arm’s-length basis (without reference to the
lending party’s financial abilities or guarantees). The borrowing party shall reimburse the lending
party for any costs (other than any additional interest costs) incurred by the lending party in
connection with the borrowing of such funds. For purposes of this Section 7.6(a) and Section
7.6(b), the term “Group Member” shall include any Affiliate of a Group Member that is controlled by
the Group Member. No Group Member may lend funds to the General Partner or any of its Affiliates
(other than another Group Member).

     (b) The Partnership may lend or contribute to any Group Member, and any Group Member may
borrow from the Partnership, funds on terms and conditions established in the sole discretion of
the General Partner; provided, however, that the Partnership may not charge the Group Member
interest at a rate less than the rate that would be charged to the Group Member

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(without reference to the General Partner’s financial abilities or guarantees) by unrelated
lenders on comparable loans. The foregoing authority shall be exercised by the General Partner in
its sole discretion and shall not create any right or benefit in favor of any Group Member or any
other Person.

     (c) The General Partner may itself, or may enter into an agreement with any of its Affiliates
to, render services to a Group Member or to the General Partner in the discharge of its duties as
General Partner of the Partnership. Any services rendered to a Group Member by the General Partner
or any of its Affiliates shall be on terms that are fair and reasonable to the Partnership;
provided, however, that the requirements of this Section 7.6(c) shall be deemed satisfied as to (i)
any transaction approved by Special Approval, (ii) any transaction, the terms of which are no less
favorable to the Partnership Group than those generally being provided to or available from
unrelated third parties or (iii) any transaction that, taking into account the totality of the
relationships between the parties involved (including other transactions that may be particularly
favorable or advantageous to the Partnership Group), is equitable to the Partnership Group. The
provisions of Section 7.4 shall apply to the rendering of services described in this Section
7.6(c).

     (d) The Partnership Group may transfer assets to joint ventures, other partnerships,
corporations, limited liability companies or other business entities in which it is or thereby
becomes a participant upon such terms and subject to such conditions as are consistent with this
Agreement and applicable law.

     (e) Neither the General Partner nor any of its Affiliates shall sell, transfer or convey any
property to, or purchase any property from, the Partnership, directly or indirectly, except
pursuant to transactions that are fair and reasonable to the Partnership; provided, however, that
the requirements of this Section 7.6(e) shall be deemed to be satisfied as to (i) the transactions
effected pursuant to Sections 5.2 and 5.3, the Contribution Agreement and any other transactions
described in or contemplated by the Registration Statement, (ii) any transaction approved by
Special Approval, (iii) any transaction, the terms of which are no less favorable to the
Partnership than those generally being provided to or available from unrelated third parties, or
(iv) any transaction that, taking into account the totality of the relationships between the
parties involved (including other transactions that may be particularly favorable or advantageous
to the Partnership), is equitable to the Partnership. With respect to any contribution of assets to
the Partnership in exchange for Partnership Securities, the Conflicts Committee, in determining
whether the appropriate number of Partnership Securities are being issued, may take into account,
among other things, the fair market value of the assets, the liquidated and contingent liabilities
assumed, the tax basis in the assets, the extent to which tax-only allocations to the transferor
will protect the existing partners of the Partnership against a low tax basis, and such other
factors as the Conflicts Committee deems relevant under the circumstances.

     (f) The General Partner and its Affiliates will have no obligation to permit any Group Member
to use any facilities or assets of the General Partner and its Affiliates, except as may be
provided in contracts entered into from time to time specifically dealing with such use, nor shall
there be any obligation on the part of the General Partner or its Affiliates to enter into such
contracts.

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     (g) Without limitation of Sections 7.6(a) through 7.6(f), and notwithstanding anything to the
contrary in this Agreement, the existence of the conflicts of interest described in the
Registration Statement are hereby approved by all Partners.

			
	Section 7.7	 	Indemnification.

     (a) To the fullest extent permitted by law but subject to the limitations expressly provided
in this Agreement, all Indemnitees shall be indemnified and held harmless by the Partnership from
and against any and all losses, claims, damages, liabilities, joint or several, expenses (including
legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts
arising from any and all claims, demands, actions, suits or proceedings, whether civil, criminal,
administrative or investigative, in which any Indemnitee may be involved, or is threatened to be
involved, as a party or otherwise, by reason of its status as an Indemnitee; provided, that in each
case the Indemnitee acted in good faith and in a manner that such Indemnitee reasonably believed to
be in, or (in the case of a Person other than the General Partner) not opposed to, the best
interests of the Partnership and, with respect to any criminal proceeding, had no reasonable cause
to believe its conduct was unlawful; provided, further, no indemnification pursuant to this Section
7.7 shall be available to the General Partner or its Affiliates (other than a Group Member) with
respect to its or their obligations incurred pursuant to the Underwriting Agreement, the Omnibus
Agreement, the Restricted Business Contribution Agreement, the Contribution Agreement or the Adena
Contribution Agreements (other than obligations incurred by the General Partner on behalf of the
Partnership). The termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere, or its equivalent, shall not create a presumption
that the Indemnitee acted in a manner contrary to that specified above. Any indemnification
pursuant to this Section 7.7 shall be made only out of the assets of the Partnership, it being
agreed that the General Partner shall not be personally liable for such indemnification and shall
have no obligation to contribute or loan any monies or property to the Partnership to enable it to
effectuate such indemnification.

     (b) To the fullest extent permitted by law, expenses (including legal fees and expenses)
incurred by an Indemnitee who is indemnified pursuant to Section 7.7(a) in defending any claim,
demand, action, suit or proceeding shall, from time to time, be advanced by the Partnership prior
to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the
Partnership of any undertaking by or on behalf of the Indemnitee to repay such amount if it shall
be determined that the Indemnitee is not entitled to be indemnified as authorized in this Section
7.7.

     (c) The indemnification provided by this Section 7.7 shall be in addition to any other rights
to which an Indemnitee may be entitled under any agreement, pursuant to any vote of the holders of
Outstanding Limited Partner Interests, as a matter of law or otherwise, both as to actions in the
Indemnitee’s capacity as an Indemnitee and as to actions in any other capacity (including any
capacity under the Underwriting Agreement), and shall continue as to an Indemnitee who has ceased
to serve in such capacity and shall inure to the benefit of the heirs, successors, assigns and
administrators of the Indemnitee.

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     (d) The Partnership may purchase and maintain (or reimburse the General Partner or its
Affiliates for the cost of) insurance, on behalf of the General Partner, its Affiliates and such
other Persons as the General Partner shall determine, against any liability that may be
asserted against or expense that may be incurred by such Person in connection with the
Partnership’s activities or such Person’s activities on behalf of the Partnership, regardless of
whether the Partnership would have the power to indemnify such Person against such liability under
the provisions of this Agreement.

     (e) For purposes of this Section 7.7, the Partnership shall be deemed to have requested an
Indemnitee to serve as fiduciary of an employee benefit plan whenever the performance by it of its
duties to the Partnership also imposes duties on, or otherwise involves services by, it to the plan
or participants or beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall constitute “fines” within the meaning
of Section 7.7(a); and action taken or omitted by it with respect to any employee benefit plan in
the performance of its duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose which is in, or not
opposed to, the best interests of the Partnership.

     (f) In no event may an Indemnitee subject the Limited Partners to personal liability by reason
of the indemnification provisions set forth in this Agreement.

     (g) An Indemnitee shall not be denied indemnification in whole or in part under this Section
7.7 because the Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by the terms of this Agreement.

     (h) The provisions of this Section 7.7 are for the benefit of the Indemnitees, their heirs,
successors, assigns and administrators and shall not be deemed to create any rights for the benefit
of any other Persons.

     (i) No amendment, modification or repeal of this Section 7.7 or any provision hereof shall in
any manner terminate, reduce or impair the right of any past, present or future Indemnitee to be
indemnified by the Partnership, nor the obligations of the Partnership to indemnify any such
Indemnitee under and in accordance with the provisions of this Section 7.7 as in effect immediately
prior to such amendment, modification or repeal with respect to claims arising from or relating to
matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless
of when such claims may arise or be asserted.

			
	Section 7.8	 	Liability of Indemnitees.

     (a) Notwithstanding anything to the contrary set forth in this Agreement, no Indemnitee shall
be liable for monetary damages to the Partnership, the Limited Partners, the Assignees or any other
Persons who have acquired interests in the Partnership Securities, for losses sustained or
liabilities incurred as a result of any act or omission if such Indemnitee acted in good faith.

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     (b) Subject to its obligations and duties as General Partner set forth in Section 7.1(a), the
General Partner may exercise any of the powers granted to it by this Agreement and perform any of
the duties imposed upon it hereunder either directly or by or through its agents, and the
General Partner shall not be responsible for any misconduct or negligence on the part of any
such agent appointed by the General Partner in good faith.

     (c) To the extent that, at law or in equity, an Indemnitee has duties (including fiduciary
duties) and liabilities relating thereto to the Partnership or to the Partners, the General Partner
and any other Indemnitee acting in connection with the Partnership’s business or affairs shall not
be liable to the Partnership or to any Partner for its good faith reliance on the provisions of
this Agreement. The provisions of this Agreement, to the extent that they restrict or otherwise
modify the duties and liabilities of an Indemnitee otherwise existing at law or in equity, are
agreed by the Partners to replace such other duties and liabilities of such Indemnitee.

     (d) Any amendment, modification or repeal of this Section 7.8 or any provision hereof shall be
prospective only and shall not in any way affect the limitations on the liability to the
Partnership, the Limited Partners, the General Partner, and the Partnership’s and General Partner’s
directors, officers and employees under this Section 7.8 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from or relating to matters
occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when
such claims may arise or be asserted.

			
	Section 7.9	 	Resolution of Conflicts of Interest.

     (a) Unless otherwise expressly provided in this Agreement, the Operating Company Agreement, or
any other limited liability company or partnership agreement of any other Group Member, whenever a
potential conflict of interest exists or arises between the General Partner or any of its
Affiliates, on the one hand, and the Partnership, the Operating Company, any other Group Member,
any Partner or any Assignee, on the other, any resolution or course of action by the General
Partner or its Affiliates in respect of such conflict of interest shall be permitted and deemed
approved by all Partners, and shall not constitute a breach of this Agreement, of the Operating
Company Agreement, of any agreement contemplated herein or therein, or of any duty stated or
implied by law or equity, if the resolution or course of action is, or by operation of this
Agreement is deemed to be, fair and reasonable to the Partnership. The General Partner shall be
authorized but not required in connection with its resolution of such conflict of interest to seek
Special Approval of such resolution. Any conflict of interest and any resolution of such conflict
of interest shall be conclusively deemed fair and reasonable to the Partnership if such conflict of
interest or resolution is (i) approved by Special Approval (as long as the material facts known to
the General Partner or any of its Affiliates regarding any proposed transaction were disclosed to
the Conflicts Committee at the time it gave its approval), (ii) on terms no less favorable to the
Partnership than those generally being provided to or available from unrelated third parties or
(iii) fair to the Partnership, taking into account the totality of the relationships between the
parties involved (including other transactions that may be particularly favorable or advantageous
to the Partnership). The General Partner may also adopt a resolution or course of action that has
not received Special Approval. The General Partner (including the Conflicts Committee in connection
with Special Approval) shall be authorized in connection with its determination of

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what is “fair and reasonable” to the Partnership and in connection with its resolution of any
conflict of interest to consider (A) the relative interests of any party to such conflict,
agreement, transaction or situation and the benefits and burdens relating to such interest; (B) any
customary or accepted industry practices and any customary or historical dealings with a particular
Person; (C) any applicable generally accepted accounting practices or principles; and (D) such
additional factors as the General Partner (including the Conflicts Committee) determines in its
sole discretion to be relevant, reasonable or appropriate under the circumstances. Nothing
contained in this Agreement, however, is intended to nor shall it be construed to require the
General Partner (including the Conflicts Committee) to consider the interests of any Person other
than the Partnership. In the absence of bad faith by the General Partner, the resolution, action or
terms so made, taken or provided by the General Partner with respect to such matter shall not
constitute a breach of this Agreement or any other agreement contemplated herein or a breach of any
standard of care or duty imposed herein or therein or, to the extent permitted by law, under the
Delaware Act or any other law, rule or regulation.

     (b) Whenever this Agreement or any other agreement contemplated hereby provides that the
General Partner or any of its Affiliates is permitted or required to make a decision (i) in its
“sole discretion” or “discretion,” that it deems “necessary or appropriate” or “necessary or
advisable” or under a grant of similar authority or latitude, except as otherwise provided herein,
the General Partner or such Affiliate shall be entitled to consider only such interests and factors
as it desires and shall have no duty or obligation to give any consideration to any interest of, or
factors affecting, the Partnership, any other Group Member, any Limited Partner or any Assignee,
(ii) it may make such decision in its sole discretion (regardless of whether there is a reference
to “sole discretion” or “discretion”) unless another express standard is provided for, or (iii) in
“good faith” or under another express standard, the General Partner or such Affiliate shall act
under such express standard and shall not be subject to any other or different standards imposed by
this Agreement, the Operating Company Agreement, any other limited liability company or partnership
agreement of any other Group Member, any other agreement contemplated hereby or under the Delaware
Act or any other law, rule or regulation. In addition, any actions taken by the General Partner or
such Affiliate consistent with the standards of “reasonable discretion” set forth in the
definitions of Available Cash or Operating Surplus shall not constitute a breach of any duty of the
General Partner to the Partnership or the Limited Partners. The General Partner shall have no duty,
express or implied, to sell or otherwise dispose of any asset of the Partnership Group other than
in the ordinary course of business. No borrowing by any Group Member or the approval thereof by the
General Partner shall be deemed to constitute a breach of any duty of the General Partner to the
Partnership or the Limited Partners by reason of the fact that the purpose or effect of such
borrowing is directly or indirectly to (A) enable distributions to the General Partner or its
Affiliates (including in their capacities as Limited Partners) to exceed 2% of the total amount
distributed to all partners or (B) hasten the expiration of the Subordination Period or the
conversion of any Subordinated Units into Common Units.

     (c) Whenever a particular transaction, arrangement or resolution of a conflict of interest is
required under this Agreement to be “fair and reasonable” to any Person, the fair and reasonable
nature of such transaction, arrangement or resolution shall be considered in the context of all
similar or related transactions.

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     (d) The Unitholders hereby authorize the General Partner, on behalf of the Partnership as a
partner or member of a Group Member, to approve of actions by the general partner or managing
member of such Group Member similar to those actions permitted to be taken by the General Partner
pursuant to this Section 7.9.

			
	Section 7.10	 	Other Matters Concerning the General Partner.

     (a) The General Partner may rely and shall be protected in acting or refraining from acting
upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture or other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties.

     (b) The General Partner may consult with legal counsel, accountants, appraisers, management
consultants, investment bankers and other consultants and advisers selected by it, and any act
taken or omitted to be taken in reliance upon the opinion (including an Opinion of Counsel) of such
Persons as to matters that the General Partner reasonably believes to be within such Person’s
professional or expert competence shall be conclusively presumed to have been done or omitted in
good faith and in accordance with such opinion.

     (c) The General Partner shall have the right, in respect of any of its powers or obligations
hereunder, to act through any of its duly authorized officers, a duly appointed attorney or
attorneys-in-fact or the duly authorized officers of the Partnership.

     (d) Any standard of care and duty imposed by this Agreement or under the Delaware Act or any
applicable law, rule or regulation shall be modified, waived or limited, to the extent permitted by
law, as required to permit the General Partner to act under this Agreement or any other agreement
contemplated by this Agreement and to make any decision pursuant to the authority prescribed in
this Agreement, so long as such action is reasonably believed by the General Partner to be in, or
not inconsistent with, the best interests of the Partnership.

			
	Section 7.11	 	Purchase or Sale of Partnership Securities.

     The General Partner may cause the Partnership to purchase or otherwise acquire Partnership
Securities; provided that, except as permitted pursuant to Section 4.10, the General Partner may
not cause any Group Member to purchase Subordinated Units during the Subordination Period. As long
as Partnership Securities are held by any Group Member, such Partnership Securities shall not be
considered Outstanding for any purpose, except as otherwise provided herein. The General Partner or
any of Affiliate of the General Partner may also purchase or otherwise acquire and sell or
otherwise dispose of Partnership Securities for its own account, subject to the provisions of
Articles IV and X.

			
	Section 7.12	 	Registration Rights of the General Partner and its Affiliates.

     (a) If (i) the General Partner or any Affiliate of the General Partner (including for purposes
of this Section 7.12, any Person that was an Affiliate of the General Partner at the Closing Date,
notwithstanding that it may later cease to be an Affiliate of the General Partner or Adena) holds
Partnership Securities that it desires to sell and (ii) Rule 144 of the Securities Act

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(or any successor rule or regulation to Rule 144) or another exemption from registration is
not available to enable such holder of Partnership Securities (the “Holder”) to dispose of the
number of Partnership Securities it desires to sell at the time it desires to do so without
registration under the Securities Act, then at the option and upon the request of the Holder, the
Partnership shall file with the Commission as promptly as practicable after receiving such request,
and use all commercially reasonable efforts to cause to become effective and remain effective for a
period of not less than six months following its effective date or such shorter period as shall
terminate when all Partnership Securities covered by such registration statement have been sold, a
registration statement under the Securities Act registering the offering and sale of the number of
Partnership Securities specified by the Holder; provided, however, that the Partnership shall not
be required to effect more than two registrations pursuant to Section 7.12(a) and Section 7.12(b)
at the request of Adena or more than one registration pursuant to Section 7.12(a) and Section
7.12(b) at the request of each of Western Pocahontas, Great Northern and New Gauley; and provided
further, however, that if the Conflicts Committee determines that the requested registration would
be materially detrimental to the Partnership and its Partners because such registration would (x)
materially interfere with a significant acquisition, reorganization or other similar transaction
involving the Partnership, (y) require premature disclosure of material information that the
Partnership has a bona fide business purpose for preserving as confidential or (z) render the
Partnership unable to comply with requirements under applicable securities laws, then the
Partnership shall have the right to postpone such requested registration for a period of not more
than three months after receipt of the Holder’s request, such right pursuant to this Section
7.12(a) or Section 7.12(b) not to be utilized more than twice in any twelve-month period. Except as
provided in the preceding sentence, the Partnership shall be deemed not to have used all
commercially reasonable efforts to keep the registration statement effective during the applicable
period if it voluntarily takes any action that would result in Holders of Partnership Securities
covered thereby not being able to offer and sell such Partnership Securities at any time during
such period, unless such action is required by applicable law. In connection with any registration
pursuant to the first sentence of this Section 7.12(a), the Partnership shall (i) promptly prepare
and file (A) such documents as may be necessary to register or qualify the securities subject to
such registration under the securities laws of such states as the Holder shall reasonably request;
provided, however, that no such qualification shall be required in any jurisdiction where, as a
result thereof, the Partnership would become subject to general service of process or to taxation
or qualification to do business as a foreign corporation or partnership doing business in such
jurisdiction solely as a result of such registration, and (B) such documents as may be necessary to
apply for listing or to list the Partnership Securities subject to such registration on such
National Securities Exchange as the Holder shall reasonably request, and (ii) do any and all other
acts and things that may reasonably be necessary or appropriate to enable the Holder to consummate
a public sale of such Partnership Securities in such states. Except as set forth in Section
7.12(d), all costs and expenses of any such registration and offering (other than the underwriting
discounts and commissions, if any) shall be paid by the Partnership, without reimbursement by the
Holder.

     (b) If any Holder holds Partnership Securities that it desires to sell and Rule 144 of the
Securities Act (or any successor rule or regulation to Rule 144) or another exemption from
registration is not available to enable such Holder to dispose of the number of Partnership
Securities it desires to sell at the time it desires to do so without registration under the
Securities

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Act, then at the option and upon the request of the Holder, the Partnership shall file with
the Commission as promptly as practicable after receiving such request, and use all reasonable
efforts to cause to become effective and remain effective for a period of not less than six months
following its effective date or such shorter period as shall terminate when all Partnership
Securities covered by such shelf registration statement have been sold, a “shelf” registration
statement covering the Partnership Securities specified by the Holder on an appropriate form under
Rule 415 under the Securities Act, or any similar rule that may be adopted by the
Commission; provided, however, that the Partnership shall not be required to effect more than
two registrations pursuant to Section 7.12(a) and Section 7.12(b) at the request of Adena or more
than one registration pursuant to Section 7.12(a) and Section 7.12(b) at the request of each of
Western Pocahontas, Great Northern and New Gauley; and provided further, however, that if the
Conflicts Committee determines in good faith that any offering under, or the use of any prospectus
forming a part of, the shelf registration statement would be materially detrimental to the
Partnership and its Partners because such offering or use would (x) materially interfere with a
significant acquisition, reorganization or other similar transaction involving the Partnership, (y)
require premature disclosure of material information that the Partnership has a bona fide business
purpose for preserving as confidential or (z) render the Partnership unable to comply with
requirements under applicable securities laws, then the Partnership shall have the right to suspend
such offering or use for a period of not more than six months after receipt of the Holder’s
request, such right pursuant to Section 7.12(a) or this Section 7.12(b) not to be utilized more
than twice in any twelve-month period. Except as provided in the preceding sentence, the
Partnership shall be deemed not to have used all reasonable efforts to keep the shelf registration
statement effective during the applicable period if it voluntarily takes any action that would
result in Holders of Partnership Securities covered thereby not being able to offer and sell such
Partnership Securities at any time during such period, unless such action is required by applicable
law. In connection with any shelf registration pursuant to this Section 7.12(b), the Partnership
shall (i) promptly prepare and file (A) such documents as may be necessary to register or qualify
the securities subject to such shelf registration under the securities laws of such states as the
Holder shall reasonably request; provided, however, that no such qualification shall be required in
any jurisdiction where, as a result thereof, the Partnership would become subject to general
service of process or to taxation or qualification to do business as a foreign corporation or
partnership doing business in such jurisdiction solely as a result of such shelf registration, and
(B) such documents as may be necessary to apply for listing or to list the Partnership Securities
subject to such shelf registration on such National Securities Exchange as the Holder shall
reasonably request, and (ii) do any and all other acts and things that may be necessary or
appropriate to enable the Holder to consummate a public sale of such Partnership Securities in such
states. Except as set forth in Section 7.12(d), all costs and expenses of any such shelf
registration and offering (other than the underwriting discounts and commissions, if any) shall be
paid by the Partnership, without reimbursement by the Holder.

     (c) If the Partnership shall at any time propose to file a registration statement under the
Securities Act for an offering of equity securities of the Partnership for cash (other than an
offering relating solely to an employee benefit plan), the Partnership shall use all reasonable
efforts to provide notice of its intention to file such registration statement and shall use all
reasonable efforts to include such number or amount of securities held by the Holder in such
registration statement as the Holder shall request; provided, that the Partnership is not required
to

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make any effort or take any action to so include the securities of the Holder once the
registration statement is declared effective by the Commission, including any registration
statement providing for the offering from time to time of securities pursuant to Rule 415 of the
Securities Act or any similar rule that may be adopted by the Commission. If the proposed offering
pursuant to this Section 7.12(c) shall be an underwritten offering, then, in the event that the
managing underwriter or managing underwriters of such offering advise the Partnership and the
Holder in writing that in their opinion the inclusion of all or some of the Holder’s Partnership
Securities would adversely and materially affect the success of the offering, the Partnership shall
include in such offering only that number or amount, if any, of securities held by the Holder
that, in the opinion of the managing underwriter or managing underwriters, will not so adversely
and materially affect the offering. Except as set forth in Section 7.12(d), all costs and expenses
of any such registration and offering (other than the underwriting discounts and commissions) shall
be paid by the Partnership, without reimbursement by the Holder.

     (d) If underwriters are engaged in connection with any registration referred to in this
Section 7.12, the Partnership shall provide indemnification, representations, covenants, opinions
and other assurance to the underwriters in form and substance reasonably satisfactory to such
underwriters. Further, in addition to and not in limitation of the Partnership’s obligation under
Section 7.7, the Partnership shall, to the fullest extent permitted by law, indemnify and hold
harmless the Holder, its officers, directors and each Person who controls the Holder (within the
meaning of the Securities Act) and any agent thereof (collectively, “Indemnified Persons”) from and
against any and all losses, claims, damages, liabilities, joint or several, expenses (including
legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts
arising from any and all claims, demands, actions, suits or proceedings, whether civil, criminal,
administrative or investigative, in which any Indemnified Person may be involved, or is threatened
to be involved, as a party or otherwise under the Securities Act or otherwise (hereinafter referred
to in this Section 7.12(d) as a “claim” and in the plural as “claims”) based upon, arising out of
or resulting from any untrue statement or alleged untrue statement of any material fact contained
in any registration statement under which any Partnership Securities were registered under the
Securities Act or any state securities or Blue Sky laws, in any preliminary prospectus (if used
prior to the effective date of such registration statement), or in any summary or final prospectus
or in any amendment or supplement thereto (if used during the period the Partnership is required to
keep the registration statement current), or arising out of, based upon or resulting from the
omission or alleged omission to state therein a material fact required to be stated therein or
necessary to make the statements made therein not misleading; provided, however, that the
Partnership shall not be liable to any Indemnified Person to the extent that any such claim arises
out of, is based upon or results from an untrue statement or alleged untrue statement or omission
or alleged omission made in such registration statement, such preliminary, summary or final
prospectus or such amendment or supplement, in reliance upon and in conformity with written
information furnished to the Partnership by or on behalf of such Indemnified Person specifically
for use in the preparation thereof.

     (e) The provisions of Section 7.12(a), Section 7.12(b) and Section 7.12(c) shall continue to
be applicable with respect to the General Partner (and any of the General Partner’s Affiliates)
after it ceases to be a general partner of the Partnership, during a period of two years subsequent
to the effective date of such cessation and for so long thereafter as is required for the

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Holder to sell all of the Partnership Securities with respect to which it has requested during
such two-year period inclusion in a registration statement otherwise filed or that a registration
statement be filed; provided, however, that the Partnership shall not be required to file
successive registration statements covering the same Partnership Securities for which registration
was demanded during such two-year period. The provisions of Section 7.12(d) shall continue in
effect thereafter.

     (f) The rights to cause the Partnership to register Partnership Securities pursuant to this
Section 7.12 may be assigned (but only with all related obligations) by a Holder to a
transferee or assignee of such Partnership Securities, provided (i) the Partnership is, within
a reasonable time after such transfer, furnished with written notice of the name and address of
such transferee or assignee and the Partnership Securities with respect to which such registration
rights are being assigned; and (ii) such transferee or assignee agrees in writing to be bound by
and subject to the terms set forth in this Section 7.12.

     (g) Any request to register Partnership Securities pursuant to this Section 7.12 shall (i)
specify the Partnership Securities intended to be offered and sold by the Person making the
request, (ii) express such Person’s present intent to offer such Partnership Securities for
distribution, (iii) describe the nature or method of the proposed offer and sale of Partnership
Securities, and (iv) contain the undertaking of such Person to provide all such information and
materials and take all action as may be required in order to permit the Partnership to comply with
all applicable requirements in connection with the registration of such Partnership Securities.

			
	Section 7.13	 	Reliance by Third Parties.

     Notwithstanding anything to the contrary in this Agreement, any Person dealing with the
Partnership shall be entitled to assume that the General Partner and any officer of the General
Partner authorized by the General Partner to act on behalf of and in the name of the Partnership
has full power and authority to encumber, sell or otherwise use in any manner any and all assets of
the Partnership and to enter into any authorized contracts on behalf of the Partnership, and such
Person shall be entitled to deal with the General Partner or any such officer as if it were the
Partnership’s sole party in interest, both legally and beneficially. Each Limited Partner hereby
waives any and all defenses or other remedies that may be available against such Person to contest,
negate or disaffirm any action of the General Partner or any such officer in connection with any
such dealing. In no event shall any Person dealing with the General Partner or any such officer or
its representatives be obligated to ascertain that the terms of this Agreement have been complied
with or to inquire into the necessity or expedience of any act or action of the General Partner or
any such officer or its representatives. Each and every certificate, document or other instrument
executed on behalf of the Partnership by the General Partner or its representatives shall be
conclusive evidence in favor of any and every Person relying thereon or claiming thereunder that
(a) at the time of the execution and delivery of such certificate, document or instrument, this
Agreement was in full force and effect, (b) the Person executing and delivering such certificate,
document or instrument was duly authorized and empowered to do so for and on behalf of the
Partnership and (c) such certificate, document or instrument was duly executed and delivered in
accordance with the terms and provisions of this Agreement and is binding upon the Partnership.

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ARTICLE
VIII

BOOKS,
RECORDS, ACCOUNTING AND REPORTS

			
	Section 8.1	 	Records and Accounting.

     The General Partner shall keep or cause to be kept at the principal office of the Partnership
appropriate books and records with respect to the Partnership’s business, including all books and
records necessary to provide to the Limited Partners any information required to be
provided pursuant to Section 3.4(a). Any books and records maintained by or on behalf of the
Partnership in the regular course of its business, including the record of the Record Holders and
Assignees of Units or other Partnership Securities, books of account and records of Partnership
proceedings, may be kept on, or be in the form of, computer disks, hard drives, punch cards,
magnetic tape, photographs, micrographics or any other information storage device; provided, that
the books and records so maintained are convertible into clearly legible written form within a
reasonable period of time. The books of the Partnership shall be maintained, for financial
reporting purposes, on an accrual basis in accordance with U.S. GAAP.

			
	Section 8.2	 	Fiscal Year.

     The fiscal year of the Partnership shall be a fiscal year ending December 31.

			
	Section 8.3	 	Reports.

     (a) As soon as practicable, but in no event later than 120 days after the close of each fiscal
year of the Partnership, the General Partner shall cause to be mailed or made available to each
Record Holder of a Unit as of a date selected by the General Partner in its discretion, an annual
report containing financial statements of the Partnership for such fiscal year of the Partnership,
presented in accordance with U.S. GAAP, including a balance sheet and statements of operations,
Partnership equity and cash flows, such statements to be audited by a firm of independent public
accountants selected by the General Partner.

     (b) As soon as practicable, but in no event later than 90 days after the close of each Quarter
except the last Quarter of each fiscal year, the General Partner shall cause to be mailed or made
available to each Record Holder of a Unit, as of a date selected by the General Partner in its
discretion, a report containing unaudited financial statements of the Partnership and such other
information as may be required by applicable law, regulation or rule of any National Securities
Exchange on which the Units are listed for trading, or as the General Partner determines to be
necessary or appropriate.

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ARTICLE
IX

TAX
MATTERS

			
	Section 9.1	 	Tax Returns and Information.

     The Partnership shall timely file all returns of the Partnership that are required for
federal, state and local income tax purposes on the basis of the accrual method and a taxable year
ending on December 31. The tax information reasonably required by Record Holders for federal and
state income tax reporting purposes with respect to a taxable year shall be furnished to them
within 90 days of the close of the calendar year in which the Partnership’s taxable year ends. The
classification, realization and recognition of income, gain, losses and deductions and other items
shall be on the accrual method of accounting for federal income tax purposes.

			
	Section 9.2	 	Tax Elections.

     (a) The Partnership shall make the election under Section 754 of the Code in accordance with
applicable regulations thereunder, subject to the reservation of the right to seek to revoke any
such election upon the General Partner’s determination that such revocation is in the best
interests of the Limited Partners. Notwithstanding any other provision herein contained, for the
purposes of computing the adjustments under Section 743(b) of the Code, the General Partner shall
be authorized (but not required) to adopt a convention whereby the price paid by a transferee of a
Limited Partner Interest will be deemed to be the lowest quoted closing price of the Limited
Partner Interests on any National Securities Exchange on which such Limited Partner Interests are
traded during the calendar month in which such transfer is deemed to occur pursuant to Section
6.2(g) without regard to the actual price paid by such transferee.

     (b) The Partnership shall elect to deduct expenses incurred in organizing the Partnership
ratably over a sixty-month period as provided in Section 709 of the Code.

     (c) Except as otherwise provided herein, the General Partner shall determine whether the
Partnership should make any other elections permitted by the Code.

			
	Section 9.3	 	Tax Controversies.

     Subject to the provisions hereof, the General Partner is designated as the Tax Matters Partner
(as defined in the Code) and is authorized and required to represent the Partnership (at the
Partnership’s expense) in connection with all examinations of the Partnership’s affairs by tax
authorities, including resulting administrative and judicial proceedings, and to expend Partnership
funds for professional services and costs associated therewith. Each Partner agrees to cooperate
with the General Partner and to do or refrain from doing any or all things reasonably required by
the General Partner to conduct such proceedings.

			
	Section 9.4	 	Withholding.

     Notwithstanding any other provision of this Agreement, the General Partner is authorized to
take any action that it determines in its discretion to be necessary or appropriate to cause the

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Partnership and the other Group Members to comply with any withholding requirements
established under the Code or any other federal, state or local law including, without limitation,
pursuant to Sections 1441, 1442, 1445 and 1446 of the Code. To the extent that the Partnership is
required or elects to withhold and pay over to any taxing authority any amount resulting from the
allocation or distribution of income to any Partner or Assignee (including, without limitation, by
reason of Section 1446 of the Code), the amount withheld may at the discretion of the General
Partner be treated by the Partnership as a distribution of cash pursuant to Section 6.3 in the
amount of such withholding from such Partner.

ARTICLE
X

ADMISSION
OF PARTNERS

			
	Section 10.1	 	Intentionally Omitted.

			
	Section 10.2	 	Admission of Substituted Limited Partner.

     By transfer of a Limited Partner Interest in accordance with Article IV, the transferor shall
be deemed to have given the transferee the right to seek admission as a Substituted Limited Partner
subject to the conditions of, and in the manner permitted under, this Agreement. A transferor of a
Certificate representing a Limited Partner Interest shall, however, only have the authority to
convey to a purchaser or other transferee who does not execute and deliver a Transfer Application
(a) the right to negotiate such Certificate to a purchaser or other transferee and (b) the right to
transfer the right to request admission as a Substituted Limited Partner to such purchaser or other
transferee in respect of the transferred Limited Partner Interests. Each transferee of a Limited
Partner Interest (including any nominee holder or an agent acquiring such Limited Partner Interest
for the account of another Person) who executes and delivers a Transfer Application shall, by
virtue of such execution and delivery, be an Assignee and be deemed to have applied to become a
Substituted Limited Partner with respect to the Limited Partner Interests so transferred to such
Person. Such Assignee shall be admitted to the Partnership as a Substituted Limited Partner when
any such admission is reflected on the books and records of the Partnership, which the General
Partner shall cause to be done no less frequently than quarterly. An Assignee shall have an
interest in the Partnership equivalent to that of a Limited Partner with respect to allocations and
distributions, including liquidating distributions, of the Partnership. With respect to voting
rights attributable to Limited Partner Interests that are held by Assignees, the General Partner
shall be deemed to be the Limited Partner with respect thereto and shall, in exercising the voting
rights in respect of such Limited Partner Interests on any matter, vote such Limited Partner
Interests at the written direction of the Assignee who is the Record Holder of such Limited Partner
Interests. If no such written direction is received, such Limited Partner Interests will not be
voted. An Assignee shall have no other rights of a Limited Partner.

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	Section 10.3	 	Admission of Successor General Partner.

     A successor General Partner approved pursuant to Section 11.1 or 11.2 or the transferee of or
successor to all of the General Partner Interest pursuant to Section 4.6 who is proposed to be
admitted as a successor General Partner shall be admitted to the Partnership as the General
Partner, effective immediately prior to the withdrawal or removal of the predecessor or
transferring General Partner, pursuant to Section 11.1 or 11.2 or the transfer of the General
Partner Interest pursuant to Section 4.6, provided, however, that no such successor shall be
admitted to the Partnership until compliance with the terms of Section 4.6 has occurred and such
successor has executed and delivered such other documents or instruments as may be required to
effect such admission. Any such successor shall, subject to the terms hereof, carry on the business
of the members of the Partnership Group without dissolution.

			
	Section 10.4	 	Admission of Additional Limited Partners.

     (a) A Person (other than the General Partner or a Substituted Limited Partner) who makes a
Capital Contribution to the Partnership in accordance with this Agreement shall be admitted to the
Partnership as an Additional Limited Partner only upon furnishing to the General Partner

     (i) evidence of acceptance in form satisfactory to the General Partner of all of the
terms and conditions of this Agreement, including the power of attorney granted in Section
2.6, and

     (ii) such other documents or instruments as may be required in the discretion of the
General Partner to effect such Person’s admission as an Additional Limited Partner.

     (b) Notwithstanding anything to the contrary in this Section 10.4, no Person shall be admitted
as an Additional Limited Partner without the consent of the General Partner, which consent may be
given or withheld in the General Partner’s discretion. The admission of any Person as an Additional
Limited Partner shall become effective on the date upon which the name of such Person is recorded
as such in the books and records of the Partnership, following the consent of the General Partner
to such admission.

			
	Section 10.5	 	Amendment of Agreement and Certificate of Limited Partnership.

     To effect the admission to the Partnership of any Partner, the General Partner shall take all
steps necessary and appropriate under the Delaware Act to amend the records of the Partnership to
reflect such admission and, if necessary, to prepare as soon as practicable an amendment to this
Agreement and, if required by law, the General Partner shall prepare and file an amendment to the
Certificate of Limited Partnership, and the General Partner may for this purpose, among others,
exercise the power of attorney granted pursuant to Section 2.6.

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ARTICLE
XI

WITHDRAWAL
OR REMOVAL OF PARTNERS

			
	Section 11.1	 	Withdrawal of the General Partner.

     (a) The General Partner shall be deemed to have withdrawn from the Partnership upon the
occurrence of any one of the following events (each such event herein referred to as an “Event of
Withdrawal”);

     (i) The General Partner voluntarily withdraws from the Partnership by giving written
notice to the other Partners;

     (ii) The General Partner transfers all of its rights as General Partner pursuant to
Section 4.6;

     (iii) The General Partner is removed pursuant to Section 11.2;

     (iv) The General Partner (A) makes a general assignment for the benefit of creditors;
(B) files a voluntary bankruptcy petition for relief under Chapter 7 of the United States
Bankruptcy Code; (C) files a petition or answer seeking for itself a liquidation,
dissolution or similar relief (but not a reorganization) under any law; (D) files an answer
or other pleading admitting or failing to contest the material allegations of a petition
filed against the General Partner in a proceeding of the type described in clauses (A)-(C)
of this Section 11.1(a)(iv); or (E) seeks, consents to or acquiesces in the appointment of a
trustee (but not a debtor-in-possession), receiver or liquidator of the General Partner or
of all or any substantial part of its properties;

     (v) A final and non-appealable order of relief under Chapter 7 of the United States
Bankruptcy Code is entered by a court with appropriate jurisdiction pursuant to a voluntary
or involuntary petition by or against the General Partner; or

     (vi) (A) in the event the General Partner is a corporation, a certificate of
dissolution or its equivalent is filed for the General Partner, or 90 days expire after the
date of notice to the General Partner of revocation of its charter without a reinstatement
of its charter, under the laws of its state of incorporation; (B) in the event the General
Partner is a partnership or a limited liability company, the dissolution and commencement of
winding up of the General Partner; (C) in the event the General Partner is acting in such
capacity by virtue of being a trustee of a trust, the termination of the trust; (D) in the
event the General Partner is a natural person, his death or adjudication of incompetency;
and (E) otherwise in the event of the termination of the General Partner.

If an Event of Withdrawal specified in Section 11.1(a)(iv), (v) or (vi)(A), (B), (C) or (E) occurs,
the withdrawing General Partner shall give notice to the Limited Partners within 30 days after such
occurrence. The Partners hereby agree that only the Events of Withdrawal described in this Section
11.1 shall result in the withdrawal of the General Partner from the Partnership.

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     (b) Withdrawal of the General Partner from the Partnership upon the occurrence of an Event of
Withdrawal shall not constitute a breach of this Agreement under the following circumstances: (i)
at any time during the period beginning on the Closing Date and ending at 12:00 midnight, Eastern
Standard Time, on September 30, 2012, the General Partner voluntarily withdraws by giving at least
90 days advance notice of its intention to withdraw to the Limited Partners; provided that prior to
the effective date of such withdrawal, the withdrawal is approved by Unitholders holding at least a
majority of the Outstanding Common Units and Class B Units (excluding Common Units and Class B
Units held by the General Partner and its Affiliates) and the General Partner delivers to the
Partnership an Opinion of Counsel (“Withdrawal Opinion of Counsel”) that such withdrawal (following
the selection of the successor General Partner) would not result in the loss of the limited
liability of any Limited Partner or any Group Member or cause any Group Member to be treated as an
association taxable as a corporation or otherwise to be taxed as an entity for federal income tax
purposes (to the extent not previously treated as such); (ii) at any time after 12:00 midnight,
Eastern Standard Time, on September 30, 2012, the General Partner voluntarily withdraws by giving
at least 90 days advance notice to the Unitholders, such withdrawal to take effect on the date
specified in such notice; (iii) at any time that the General Partner ceases to be the General
Partner pursuant to Section 11.1(a)(ii) or is
removed pursuant to Section 11.2; or (iv) notwithstanding clause (i) of this sentence, at any
time that the General Partner voluntarily withdraws by giving at least 90 days advance notice of
its intention to withdraw to the Limited Partners, such withdrawal to take effect on the date
specified in the notice, if at the time such notice is given one Person and its Affiliates (other
than the General Partner and its Affiliates) own beneficially or of record or control at least 50%
of the Outstanding Units. The withdrawal of the General Partner from the Partnership upon the
occurrence of an Event of Withdrawal shall also constitute the withdrawal of the General Partner as
general partner or managing member, to the extent applicable, of the other Group Members. If the
General Partner gives a notice of withdrawal pursuant to Section 11.1(a)(i), the holders of a Unit
Majority, may, prior to the effective date of such withdrawal, elect a successor General Partner.
The Person so elected as successor General Partner shall automatically become the successor general
partner or managing member, to the extent applicable, of the other Group Members of which the
General Partner is a general partner or a managing member. If, prior to the effective date of the
General Partner’s withdrawal, a successor is not selected by the Unitholders as provided herein or
the Partnership does not receive a Withdrawal Opinion of Counsel, the Partnership shall be
dissolved in accordance with Section 12.1. Any successor General Partner elected in accordance with
the terms of this Section 11.1 shall be subject to the provisions of Section 10.3.

			
	Section 11.2	 	Removal of the General Partner.

     The General Partner may be removed if such removal is approved by the Unitholders holding at
least 66 2/3% of the Outstanding Units (including Units held by the General Partner and its
Affiliates). Any such action by such holders for removal of the General Partner must also provide
for the election of a successor General Partner by the Unitholders holding a majority of the
outstanding Common Units voting as a class and a majority of the outstanding Subordinated Units
voting as a class (including Units held by the General Partner and its Affiliates). Such removal
shall be effective immediately following the admission of a successor General Partner pursuant to
Section 10.3. The removal of the General Partner shall also automatically constitute

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the removal of the General Partner as general partner or managing member, to the extent
applicable, of the other Group Members of which the General Partner is a general partner or a
managing member. If a Person is elected as a successor General Partner in accordance with the terms
of this Section 11.2, such Person shall, upon admission pursuant to Section 10.3, automatically
become a successor general partner or managing member, to the extent applicable, of the other Group
Members of which the General Partner is a general partner or a managing member. The right of the
holders of Outstanding Units to remove the General Partner shall not exist or be exercised unless
the Partnership has received an opinion opining as to the matters covered by a Withdrawal Opinion
of Counsel. Any successor General Partner elected in accordance with the terms of this Section 11.2
shall be subject to the provisions of Section 10.3.

			
	Section 11.3	 	Interest of Departing Partner and Successor General Partner.

     (a) In the event of (i) withdrawal of the General Partner under circumstances where such
withdrawal does not violate this Agreement or (ii) removal of the General Partner by the holders of
Outstanding Units under circumstances where Cause does not exist, if the successor General Partner
is elected in accordance with the terms of Section 11.1 or 11.2, the Departing Partner shall have
the option, exercisable prior to the effective date of the departure of such
Departing Partner, to require its successor to purchase its General Partner Interest and its
general partner interest (or equivalent interest), if any, in the other Group Members and all of
its Incentive Distribution Rights (collectively, the “Combined Interest”) in exchange for an amount
in cash equal to the fair market value of such Combined Interest, such amount to be determined and
payable as of the effective date of its departure. If the General Partner is removed by the
Unitholders under circumstances where Cause exists or if the General Partner withdraws under
circumstances where such withdrawal violates this Agreement, and if a successor General Partner is
elected in accordance with the terms of Section 11.1 or 11.2, such successor shall have the option,
exercisable prior to the effective date of the departure of such Departing Partner, to purchase the
Combined Interest for such fair market value of such Combined Interest of the Departing Partner. In
either event, the Departing Partner shall be entitled to receive all reimbursements due such
Departing Partner pursuant to Section 7.4, including any employee-related liabilities (including
severance liabilities), incurred in connection with the termination of any employees employed by
the Departing Partner for the benefit of the Partnership or the other Group Members.

     For purposes of this Section 11.3(a), the fair market value of the Departing Partner’s
Combined Interest shall be determined by agreement between the Departing Partner and its successor
or, failing agreement within 30 days after the effective date of such Departing Partner’s
departure, by an independent investment banking firm or other independent expert selected by the
Departing Partner and its successor, which, in turn, may rely on other experts, and the
determination of which shall be conclusive as to such matter. If such parties cannot agree upon one
independent investment banking firm or other independent expert within 45 days after the effective
date of such departure, then the Departing Partner shall designate an independent investment
banking firm or other independent expert, the Departing Partner’s successor shall designate an
independent investment banking firm or other independent expert, and such firms or experts shall
mutually select a third independent investment banking firm or independent expert, which third
independent investment banking firm or other independent expert shall determine the

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fair market value of the Combined Interest of the Departing Partner. In making its
determination, such third independent investment banking firm or other independent expert may
consider the then current trading price of Units on any National Securities Exchange on which Units
are then listed, the value of the Partnership’s assets, the rights and obligations of the Departing
Partner and other factors it may deem relevant.

     (b) If the Combined Interest is not purchased in the manner set forth in Section 11.3(a), the
Departing Partner (or its transferee) shall become a Limited Partner and its Combined Interest
shall be converted into Common Units pursuant to a valuation made by an investment banking firm or
other independent expert selected pursuant to Section 11.3(a), without reduction in such
Partnership Interest (but subject to proportionate dilution by reason of the admission of its
successor). Any successor General Partner shall indemnify the Departing Partner (or its transferee)
as to all debts and liabilities of the Partnership arising on or after the date on which the
Departing Partner (or its transferee) becomes a Limited Partner. For purposes of this Agreement,
conversion of the Combined Interest of the Departing Partner to Common Units will be characterized
as if the Departing Partner (or its transferee) contributed its Combined Interest to the
Partnership in exchange for the newly issued Common Units.

     (c) If a successor General Partner is elected in accordance with the terms of Section 11.1 or
11.2 and the option described in Section 11.3(a) is not exercised by the party entitled to do so,
the successor General Partner shall, at the effective date of its admission to the Partnership,
contribute to the Partnership cash in the amount equal to 2/98ths of the Net Agreed Value of the
Partnership’s assets on such date. In such event, such successor General Partner shall, subject to
the following sentence, be entitled to 2% of all Partnership allocations and distributions to which
the Departing Partner was entitled. In addition, the successor General Partner shall cause this
Agreement to be amended to reflect that, from and after the date of such successor General
Partner’s admission, the successor General Partner’s interest in all Partnership distributions and
allocations shall be 2%.

			
	Section 11.4	 	Termination of Subordination Period, Conversion of Subordinated Units and
Extinguishment of Cumulative Common Unit Arrearages.

     Notwithstanding any provision of this Agreement, if the General Partner is removed as general
partner of the Partnership under circumstances where Cause does not exist and Units held by the
General Partner and its Affiliates are not voted in favor of such removal, (i) the Subordination
Period will end and all Outstanding Subordinated Units will immediately and automatically convert
into Common Units on a one-for-one basis and (ii) all Cumulative Common Unit Arrearages on the
Common Units will be extinguished.

			
	Section 11.5	 	Withdrawal of Limited Partners.

     No Limited Partner shall have any right to withdraw from the Partnership; provided, however,
that when a transferee of a Limited Partner’s Limited Partner Interest becomes a Record Holder of
the Limited Partner Interest so transferred, such transferring Limited Partner shall cease to be a
Limited Partner with respect to the Limited Partner Interest so transferred.

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ARTICLE
XII

DISSOLUTION
AND LIQUIDATION

			
	Section 12.1	 	Dissolution.

     The Partnership shall not be dissolved by the admission of Substituted Limited Partners or
Additional Limited Partners or by the admission of a successor General Partner in accordance with
the terms of this Agreement. Upon the removal or withdrawal of the General Partner, if a successor
General Partner is elected pursuant to Section 11.1 or 11.2, the Partnership shall not be dissolved
and such successor General Partner shall continue the business of the Partnership. The Partnership
shall dissolve, and (subject to Section 12.2) its affairs shall be wound up, upon:

     (a) an Event of Withdrawal of the General Partner as provided in Section 11.1(a) (other than
Section 11.1(a)(ii)), unless a successor is elected and an Opinion of Counsel is received as
provided in Section 11.1(b) or 11.2 and such successor is admitted to the Partnership pursuant to
Section 10.3;

     (b) an election to dissolve the Partnership by the General Partner that is approved by the
holders of a Unit Majority;

     (c) the entry of a decree of judicial dissolution of the Partnership pursuant to the
provisions of the Delaware Act; or

     (d) the sale, exchange or disposition of all or substantially all of the assets and properties
of the Partnership Group.

			
	Section 12.2	 	Continuation of the Business of the Partnership After Dissolution.

     Upon (a) dissolution of the Partnership following an Event of Withdrawal caused by the
withdrawal or removal of the General Partner as provided in Section 11.1(a)(i) or (iii) and the
failure of the Partners to select a successor to such Departing Partner pursuant to Section 11.1 or
11.2, then within 90 days thereafter, or (b) dissolution of the Partnership upon an event
constituting an Event of Withdrawal as defined in Section 11.1(a)(iv), (v) or (vi), then, to the
maximum extent permitted by law, within 180 days thereafter, the holders of a Unit Majority may
elect to reconstitute the Partnership and continue its business on the same terms and conditions
set forth in this Agreement by forming a new limited partnership on terms identical to those set
forth in this Agreement and having as the successor General partner a Person approved by the
holders of a Unit Majority. Unless such an election is made within the applicable time period as
set forth above, the Partnership shall conduct only activities necessary to wind up its affairs. If
such an election is so made, then:

     (i) the reconstituted Partnership shall continue unless earlier dissolved in accordance
with this Article XII;

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     (ii) if the successor General Partner is not the former General Partner, then the
interest of the former General Partner shall be treated in the manner provided in Section
11.3; and

     (iii) all necessary steps shall be taken to cancel this Agreement and the Certificate
of Limited Partnership and to enter into and, as necessary, to file a new partnership
agreement and certificate of limited partnership, and the successor General Partner may for
this purpose exercise the powers of attorney granted the General Partner pursuant to Section
2.6; provided, that the right of the holders of a Unit Majority to approve a successor
General Partner and to reconstitute and to continue the business of the Partnership shall
not exist and may not be exercised unless the Partnership has received an Opinion of Counsel
that (x) the exercise of the right would not result in the loss of limited liability of any
Limited Partner and (y) neither the Partnership, the reconstituted limited partnership nor
the Operating Company or any other Group Member would be treated as an association taxable
as a corporation or otherwise be taxable as an entity for federal income tax purposes upon
the exercise of such right to continue.

			
	Section 12.3	 	Liquidator.

     Upon dissolution of the Partnership, unless the Partnership is continued under an election to
reconstitute and continue the Partnership pursuant to Section 12.2, the General Partner shall
select one or more Persons to act as Liquidator. The Liquidator (if other than the General Partner)
shall be entitled to receive such compensation for its services as may be approved by holders of at
least a majority of the Outstanding Common Units and Subordinated Units voting
as a single class. The Liquidator (if other than the General Partner) shall agree not to
resign at any time without 15 days’ prior notice and may be removed at any time, with or without
cause, by notice of removal approved by holders of at least a majority of the Outstanding Common
Units and Subordinated Units voting as a single class. Upon dissolution, removal or resignation of
the Liquidator, a successor and substitute Liquidator (who shall have and succeed to all rights,
powers and duties of the original Liquidator) shall within 30 days thereafter be approved by
holders of at least a majority of the Outstanding Common Units and Subordinated Units voting as a
single class. The right to approve a successor or substitute Liquidator in the manner provided
herein shall be deemed to refer also to any such successor or substitute Liquidator approved in the
manner herein provided. Except as expressly provided in this Article XII, the Liquidator approved
in the manner provided herein shall have and may exercise, without further authorization or consent
of any of the parties hereto, all of the powers conferred upon the General Partner under the terms
of this Agreement (but subject to all of the applicable limitations, contractual and otherwise,
upon the exercise of such powers, other than the limitation on sale set forth in Section 7.3(b)) to
the extent necessary or desirable in the good faith judgment of the Liquidator to carry out the
duties and functions of the Liquidator hereunder for and during such period of time as shall be
reasonably required in the good faith judgment of the Liquidator to complete the winding up and
liquidation of the Partnership as provided for herein.

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	Section 12.4	 	Liquidation.

     The Liquidator shall proceed to dispose of the assets of the Partnership, discharge its
liabilities, and otherwise wind up its affairs in such manner and over such period as the
Liquidator determines to be in the best interest of the Partners, subject to Section 17-804 of the
Delaware Act and the following:

     (a) The assets may be disposed of by public or private sale or by distribution in kind to one
or more Partners on such terms as the Liquidator and such Partner or Partners may agree. If any
property is distributed in kind, the Partner receiving the property shall be deemed for purposes of
Section 12.4(c) to have received cash equal to its fair market value; and contemporaneously
therewith, appropriate cash distributions must be made to the other Partners. The Liquidator may,
in its absolute discretion, defer liquidation or distribution of the Partnership’s assets for a
reasonable time if it determines that an immediate sale or distribution of all or some of the
Partnership’s assets would be impractical or would cause undue loss to the Partners. The Liquidator
may, in its absolute discretion, distribute the Partnership’s assets, in whole or in part, in kind
if it determines that a sale would be impractical or would cause undue loss to the Partners.

     (b) Liabilities of the Partnership include amounts owed to the Liquidator as compensation for
serving in such capacity (subject to the terms of Section 12.3) and amounts to Partners otherwise
than in respect of their distribution rights under Article VI. With respect to any liability that
is contingent, conditional or unmatured or is otherwise not yet due and payable, the Liquidator
shall either settle such claim for such amount as it thinks appropriate or establish a reserve of
cash or other assets to provide for its payment. When paid, any unused portion of the reserve shall
be distributed as additional liquidation proceeds.

     (c) All property and all cash in excess of that required to discharge liabilities as provided
in Section 12.4(b) shall be distributed to the Partners in accordance with, and to the extent of,
the positive balances in their respective Capital Accounts, as determined after taking into account
all Capital Account adjustments (other than those made by reason of distributions pursuant to this
Section 12.4(c)) for the taxable year of the Partnership during which the liquidation of the
Partnership occurs (with such date of occurrence being determined pursuant to Treasury Regulation
Section 1.704-1(b)(2)(ii)(g)), and such distribution shall be made by the end of such taxable year
(or, if later, within 90 days after said date of such occurrence).

			
	Section 12.5	 	Cancellation of Certificate of Limited Partnership.

     Upon the completion of the distribution of Partnership cash and property as provided in
Section 12.4 in connection with the liquidation of the Partnership, the Partnership shall be
terminated and the Certificate of Limited Partnership and all qualifications of the Partnership as
a foreign limited partnership in jurisdictions other than the State of Delaware shall be canceled
and such other actions as may be necessary to terminate the Partnership shall be taken.

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	Section 12.6	 	Return of Contributions.

     The General Partner shall not be personally liable for, and shall have no obligation to
contribute or loan any monies or property to the Partnership to enable it to effectuate, the return
of the Capital Contributions of the Limited Partners or Unitholders, or any portion thereof, it
being expressly understood that any such return shall be made solely from Partnership assets.

			
	Section 12.7	 	Waiver of Partition.

     To the maximum extent permitted by law, each Partner hereby waives any right to partition of
the Partnership property.

			
	Section 12.8	 	Capital Account Restoration.

     No Limited Partner shall have any obligation to restore any negative balance in its Capital
Account upon liquidation of the Partnership. The General Partner shall be obligated to restore any
negative balance in its Capital Account upon liquidation of its interest in the Partnership by the
end of the taxable year of the Partnership during which such liquidation occurs, or, if later,
within 90 days after the date of such liquidation.

ARTICLE
XIII

AMENDMENT
OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE

			
	Section 13.1	 	Amendment to be Adopted Solely by the General Partner.

     Each Partner agrees that the General Partner, without the approval of any Partner or Assignee,
may amend any provision of this Agreement and execute, swear to, acknowledge, deliver, file and
record whatever documents may be required in connection therewith, to reflect:

     (a) a change in the name of the Partnership, the location of the principal place of business
of the Partnership, the registered agent of the Partnership or the registered office of the
Partnership;

     (b) admission, substitution, withdrawal or removal of Partners in accordance with this
Agreement;

     (c) a change that, in the sole discretion of the General Partner, is necessary or advisable to
qualify or continue the qualification of the Partnership as a limited partnership or a partnership
in which the Limited Partners have limited liability under the laws of any state or to ensure that
the Group Members will not be treated as associations taxable as corporations or otherwise taxed as
entities for federal income tax purposes;

     (d) a change that, in the discretion of the General Partner, (i) does not adversely affect the
Limited Partners (including any particular class of Partnership Interests as compared to other
classes of Partnership Interests) in any material respect, (ii) is necessary or advisable to (A)
satisfy any requirements, conditions or guidelines contained in any opinion, directive, order,

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ruling or regulation of any federal or state agency or judicial authority or contained in any
federal or state statute (including the Delaware Act) or (B) facilitate the trading of the Units
(including the division of any class or classes of Outstanding Units into different classes to
facilitate uniformity of tax consequences within such classes of Units) or comply with any rule,
regulation, guideline or requirement of any National Securities Exchange on which the Units are or
will be listed for trading, compliance with any of which the General Partner determines in its
discretion to be in the best interests of the Partnership and the Limited Partners, (iii) is
necessary or advisable in connection with action taken by the General Partner pursuant to Section
5.10 or (iv) is required to effect the intent expressed in the Registration Statement or the intent
of the provisions of this Agreement or is otherwise contemplated by this Agreement;

     (e) a change in the fiscal year or taxable year of the Partnership and any changes that, in
the discretion of the General Partner, are necessary or advisable as a result of a change in the
fiscal year or taxable year of the Partnership including, if the General Partner shall so
determine, a change in the definition of “Quarter” and the dates on which distributions are to be
made by the Partnership;

     (f) an amendment that is necessary, in the Opinion of Counsel, to prevent the Partnership, or
the General Partner or its directors, officers, trustees or agents from in any manner being
subjected to the provisions of the Investment Company Act of 1940, as amended, the Investment
Advisers Act of 1940, as amended, or “plan asset” regulations adopted under the Employee Retirement
Income Security Act of 1974, as amended, regardless of whether such are substantially similar to
plan asset regulations currently applied or proposed by the United States Department of Labor;

     (g) subject to the terms of Section 5.7, an amendment that, in the discretion of the General
Partner, is necessary or advisable in connection with the authorization of issuance of any class or
series of Partnership Securities pursuant to Section 5.6;

     (h) any amendment expressly permitted in this Agreement to be made by the General Partner
acting alone;

     (i) an amendment effected, necessitated or contemplated by a Merger Agreement approved in
accordance with Section 14.3;

     (j) an amendment that, in the discretion of the General Partner, is necessary or advisable to
reflect, account for and deal with appropriately the formation by the Partnership of, or investment
by the Partnership in, any corporation, partnership, joint venture, limited liability company or
other entity, in connection with the conduct by the Partnership of activities permitted by the
terms of Section 2.4;

     (k) a merger or conveyance pursuant to Section 14.3(d); or

     (l) any other amendments substantially similar to the foregoing.

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	Section 13.2	 	Amendment Procedures.

     Except as provided in Sections 13.1 and 13.3, all amendments to this Agreement shall be made
in accordance with the following requirements. Amendments to this Agreement may be proposed only by
or with the consent of the General Partner which consent may be given or withheld in its sole
discretion. A proposed amendment shall be effective upon its approval by the holders of a Unit
Majority, unless a greater or different percentage is required under this Agreement or by Delaware
law. Each proposed amendment that requires the approval of the holders of a specified percentage of
Outstanding Units shall be set forth in a writing that contains the text of the proposed amendment.
If such an amendment is proposed, the General Partner shall seek the written approval of the
requisite percentage of Outstanding Units or call a meeting of the Unitholders to consider and vote
on such proposed amendment. The General Partner shall notify all Record Holders upon final adoption
of any such proposed amendments.

			
	Section 13.3	 	Amendment Requirements.

     (a) Notwithstanding the provisions of Sections 13.1 and 13.2, no provision of this Agreement
that establishes a percentage of Outstanding Units (including Units deemed owned by the General
Partner) required to take any action shall be amended, altered, changed, repealed or rescinded in
any respect that would have the effect of reducing such voting percentage unless such amendment is
approved by the written consent or the affirmative vote of holders of Outstanding Units whose
aggregate Outstanding Units constitute not less than the voting requirement sought to be reduced.

     (b) Notwithstanding the provisions of Sections 13.1 and 13.2, no amendment to this Agreement
may (i) enlarge the obligations of any Limited Partner without its consent, unless such shall be
deemed to have occurred as a result of an amendment approved pursuant to Section 13.3(c), (ii)
enlarge the obligations of, restrict in any way any action by or rights of, or reduce in any way
the amounts distributable, reimbursable or otherwise payable to, the General Partner or any of its
Affiliates without its consent, which consent may be given or withheld in its sole discretion,
(iii) change Section 12.1(b), or (iv) change the term of the Partnership or, except as set forth in
Section 12.1(b), give any Person the right to dissolve the Partnership.

     (c) Except as provided in Section 14.3, and without limitation of the General Partner’s
authority to adopt amendments to this Agreement without the approval of any Partners or Assignees
as contemplated in Section 13.1, any amendment that would have a material adverse effect on the
rights or preferences of any class of Partnership Interests in relation to other classes of
Partnership Interests must be approved by the holders of not less than a majority of the
Outstanding Partnership Interests of the class affected.

     (d) Notwithstanding any other provision of this Agreement, except for amendments pursuant to
Section 13.1 and except as otherwise provided by Section 14.3(b), no amendments shall become
effective without the approval of the holders of at least 90% of the Outstanding Units voting as a
single class unless the Partnership obtains an Opinion of Counsel to the effect that such amendment
will not affect the limited liability of any Limited Partner under applicable law.

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     (e) Except as provided in Section 13.1, this Section 13.3 shall only be amended with the
approval of the holders of at least 90% of the Outstanding Units.

			
	Section 13.4	 	Special Meetings.

     All acts of Limited Partners to be taken pursuant to this Agreement shall be taken in the
manner provided in this Article XIII. Special meetings of the Limited Partners may be called by the
General Partner or by Limited Partners owning 20% or more of the Outstanding Units of the class or
classes for which a meeting is proposed. Limited Partners shall call a special meeting by
delivering to the General Partner one or more requests in writing stating that the signing Limited
Partners wish to call a special meeting and indicating the general or specific purposes for which
the special meeting is to be called. Within 60 days after receipt of such a call from Limited
Partners or within such greater time as may be reasonably necessary for the Partnership to comply
with any statutes, rules, regulations, listing agreements or similar requirements governing the
holding of a meeting or the solicitation of proxies for use at such a meeting, the General Partner
shall send a notice of the meeting to the Limited Partners either directly or indirectly through
the Transfer Agent. A meeting shall be held at a time and place determined by the General Partner
on a date not less than 10 days nor more than 60 days after the mailing of notice of the meeting.
Limited Partners shall not vote on matters that would cause the Limited Partners to be deemed to be
taking part in the management and control of the business and affairs of the Partnership so as to
jeopardize the Limited Partners’ limited liability under the Delaware Act or the law of any other
state in which the Partnership is qualified to do business.

			
	Section 13.5	 	Notice of a Meeting.

     Notice of a meeting called pursuant to Section 13.4 shall be given to the Record Holders of
the class or classes of Units for which a meeting is proposed in writing by mail or other means of
written communication in accordance with Section 16.1. The notice shall be deemed to have been
given at the time when deposited in the mail or sent by other means of written communication.

			
	Section 13.6	 	Record Date.

     For purposes of determining the Limited Partners entitled to notice of or to vote at a meeting
of the Limited Partners or to give approvals without a meeting as provided in Section 13.11 the
General Partner may set a Record Date, which shall not be less than 10 nor more than 60 days before
(a) the date of the meeting (unless such requirement conflicts with any rule, regulation, guideline
or requirement of any National Securities Exchange on which the Units are listed for trading, in
which case the rule, regulation, guideline or requirement of such exchange shall govern) or (b) in
the event that approvals are sought without a meeting, the date by which Limited Partners are
requested in writing by the General Partner to give such approvals.

			
	Section 13.7	 	Adjournment.

     When a meeting is adjourned to another time or place, notice need not be given of the
adjourned meeting and a new Record Date need not be fixed, if the time and place thereof are

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announced at the meeting at which the adjournment is taken, unless such adjournment shall be
for more than 45 days. At the adjourned meeting, the Partnership may transact any business which
might have been transacted at the original meeting. If the adjournment is for more than 45 days or
if a new Record Date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given in accordance with this Article XIII.

			
	Section 13.8	 	Waiver of Notice; Approval of Meeting; Approval of Minutes.

     The transactions of any meeting of Limited Partners, however called and noticed, and whenever
held, shall be as valid as if it had occurred at a meeting duly held after regular call and notice,
if a quorum is present either in person or by proxy, and if, either before or after the meeting,
Limited Partners representing such quorum who were present in person or by proxy and entitled to
vote, sign a written waiver of notice or an approval of the holding of the meeting or an approval
of the minutes thereof. All waivers and approvals shall be filed with the Partnership records or
made a part of the minutes of the meeting. Attendance of a Limited Partner at a meeting shall
constitute a waiver of notice of the meeting, except when the Limited Partner does not approve, at
the beginning of the meeting, of the transaction of any business because the meeting is not
lawfully called or convened; and except that attendance at a meeting is not a waiver of any right
to disapprove the consideration of matters required to be included in the notice of the meeting,
but not so included, if the disapproval is expressly made at the meeting.

			
	Section 13.9	 	Quorum.

     The holders of a majority of the Outstanding Units of the class or classes for which a meeting
has been called (including Outstanding Units deemed owned by the General Partner) represented in
person or by proxy shall constitute a quorum at a meeting of Limited Partners of such class or
classes unless any such action by the Limited Partners requires approval by holders of a greater
percentage of such Units, in which case the quorum shall be such greater percentage. At any meeting
of the Limited Partners duly called and held in accordance with this Agreement at which a quorum is
present, the act of Limited Partners holding Outstanding Units that in the aggregate represent a
majority of the Outstanding Units entitled to vote and be present in person
or by proxy at such meeting shall be deemed to constitute the act of all Limited Partners,
unless a greater or different percentage is required with respect to such action under the
provisions of this Agreement, in which case the act of the Limited Partners holding Outstanding
Units that in the aggregate represent at least such greater or different percentage shall be
required. The Limited Partners present at a duly called or held meeting at which a quorum is
present may continue to transact business until adjournment, notwithstanding the withdrawal of
enough Limited Partners to leave less than a quorum, if any action taken (other than adjournment)
is approved by the required percentage of Outstanding Units specified in this Agreement (including
Outstanding Units deemed owned by the General Partner). In the absence of a quorum any meeting of
Limited Partners may be adjourned from time to time by the affirmative vote of holders of at least
a majority of the Outstanding Units entitled to vote at such meeting (including Outstanding Units
deemed owned by the General Partner) represented either in person or by proxy, but no other
business may be transacted, except as provided in Section 13.7.

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	Section 13.10	 	Conduct of a Meeting.

     The General Partner shall have full power and authority concerning the manner of conducting
any meeting of the Limited Partners or solicitation of approvals in writing, including the
determination of Persons entitled to vote, the existence of a quorum, the satisfaction of the
requirements of Section 13.4, the conduct of voting, the validity and effect of any proxies and the
determination of any controversies, votes or challenges arising in connection with or during the
meeting or voting. The General Partner shall designate a Person to serve as chairman of any meeting
and shall further designate a Person to take the minutes of any meeting. All minutes shall be kept
with the records of the Partnership maintained by the General Partner. The General Partner may make
such other regulations consistent with applicable law and this Agreement as it may deem advisable
concerning the conduct of any meeting of the Limited Partners or solicitation of approvals in
writing, including regulations in regard to the appointment of proxies, the appointment and duties
of inspectors of votes and approvals, the submission and examination of proxies and other evidence
of the right to vote, and the revocation of approvals in writing.

			
	Section 13.11	 	Action Without a Meeting.

     If authorized by the General Partner, any action that may be taken at a meeting of the Limited
Partners may be taken without a meeting if an approval in writing setting forth the action so taken
is signed by Limited Partners owning not less than the minimum percentage of the Outstanding Units
(including Units deemed owned by the General Partner) that would be necessary to authorize or take
such action at a meeting at which all the Limited Partners were present and voted (unless such
provision conflicts with any rule, regulation, guideline or requirement of any National Securities
Exchange on which the Units are listed for trading, in which case the rule, regulation, guideline
or requirement of such exchange shall govern). Prompt notice of the taking of action without a
meeting shall be given to the Limited Partners who have not approved in writing. The General
Partner may specify that any written ballot submitted to Limited Partners for the purpose of taking
any action without a meeting shall be returned to the Partnership within the time period, which
shall be not less than 20 days, specified by the General Partner. If a ballot returned to the
Partnership does not vote all of the Units held by the Limited Partners, the Partnership shall be
deemed to have failed to receive a ballot for the Units that were not voted. If approval of the
taking of any action by the Limited Partners is solicited by any
Person other than by or on behalf of the General Partner, the written approvals shall have no
force and effect unless and until (a) they are deposited with the Partnership in care of the
General Partner, (b) approvals sufficient to take the action proposed are dated as of a date not
more than 90 days prior to the date sufficient approvals are deposited with the Partnership and (c)
an Opinion of Counsel is delivered to the General Partner to the effect that the exercise of such
right and the action proposed to be taken with respect to any particular matter (i) will not cause
the Limited Partners to be deemed to be taking part in the management and control of the business
and affairs of the Partnership so as to jeopardize the Limited Partners’ limited liability, and
(ii) is otherwise permissible under the state statutes then governing the rights, duties and
liabilities of the Partnership and the Partners.

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	Section 13.12	 	Voting and Other Rights.

     (a) Only those Record Holders of the Units on the Record Date set pursuant to Section 13.6
(and also subject to the limitations contained in the definition of “Outstanding”) shall be
entitled to notice of, and to vote at, a meeting of Limited Partners or to act with respect to
matters as to which the holders of the Outstanding Units have the right to vote or to act. All
references in this Agreement to votes of, or other acts that may be taken by, the Outstanding Units
shall be deemed to be references to the votes or acts of the Record Holders of such Outstanding
Units.

     (b) With respect to Units that are held for a Person’s account by another Person (such as a
broker, dealer, bank, trust company or clearing corporation, or an agent of any of the foregoing),
in whose name such Units are registered, such other Person shall, in exercising the voting rights
in respect of such Units on any matter, and unless the arrangement between such Persons provides
otherwise, vote such Units in favor of, and at the direction of, the Person who is the beneficial
owner, and the Partnership shall be entitled to assume it is so acting without further inquiry. The
provisions of this Section 13.12(b) (as well as all other provisions of this Agreement) are subject
to the provisions of Section 4.3.

ARTICLE
XIV

MERGER

			
	Section 14.1	 	Authority.

     The Partnership may merge or consolidate with one or more corporations, limited liability
companies, business trusts or associations, real estate investment trusts, common law trusts or
unincorporated businesses, including a general partnership or limited partnership, formed under the
laws of the State of Delaware or any other state of the United States of America, pursuant to a
written agreement of merger or consolidation (“Merger Agreement”) in accordance with this Article
XIV.

			
	Section 14.2	 	Procedure for Merger or Consolidation.

     Merger or consolidation of the Partnership pursuant to this Article XIV requires the prior
approval of the General Partner. If the General Partner shall determine, in the exercise of its
discretion, to consent to the merger or consolidation, the General Partner shall approve the
Merger Agreement, which shall set forth:

     (a) the names and jurisdictions of formation or organization of each of the business entities
proposing to merge or consolidate;

     (b) the name and jurisdiction of formation or organization of the business entity that is to
survive the proposed merger or consolidation (the “Surviving Business Entity”);

     (c) the terms and conditions of the proposed merger or consolidation;

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     (d) the manner and basis of exchanging or converting the equity securities of each constituent
business entity for, or into, cash, property or general or limited partner interests, rights,
securities or obligations of the Surviving Business Entity; and (i) if any general or limited
partner interests, securities or rights of any constituent business entity are not to be exchanged
or converted solely for, or into, cash, property or general or limited partner interests, rights,
securities or obligations of the Surviving Business Entity, the cash, property or general or
limited partner interests, rights, securities or obligations of any limited partnership,
corporation, trust or other entity (other than the Surviving Business Entity) which the holders of
such general or limited partner interests, securities or rights are to receive in exchange for, or
upon conversion of their general or limited partner interests, securities or rights, and (ii) in
the case of securities represented by certificates, upon the surrender of such certificates, which
cash, property or general or limited partner interests, rights, securities or obligations of the
Surviving Business Entity or any general or limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity), or evidences thereof, are to be delivered;

     (e) a statement of any changes in the constituent documents or the adoption of new constituent
documents (the articles or certificate of incorporation, articles of trust, declaration of trust,
certificate or agreement of limited partnership or other similar charter or governing document) of
the Surviving Business Entity to be effected by such merger or consolidation;

     (f) the effective time of the merger, which may be the date of the filing of the certificate
of merger pursuant to Section 14.4 or a later date specified in or determinable in accordance with
the Merger Agreement (provided, that if the effective time of the merger is to be later than the
date of the filing of the certificate of merger, the effective time shall be fixed no later than
the time of the filing of the certificate of merger and stated therein); and

     (g) such other provisions with respect to the proposed merger or consolidation as are deemed
necessary or appropriate by the General Partner.

			
	Section 14.3	 	Approval by Limited Partners of Merger or Consolidation.

     (a) Except as provided in Section 14.3(d), the General Partner, upon its approval of the
Merger Agreement, shall direct that the Merger Agreement be submitted to a vote of Limited
Partners, whether at a special meeting or by written consent, in either case in accordance with the
requirements of Article XIII. A copy or a summary of the Merger Agreement shall be included in or
enclosed with the notice of a special meeting or the written consent.

     (b) Except as provided in Section 14.3(d), the Merger Agreement shall be approved upon
receiving the affirmative vote or consent of the holders of a Unit Majority unless the Merger
Agreement contains any provision that, if contained in an amendment to this Agreement, the
provisions of this Agreement or the Delaware Act would require for its approval the vote or consent
of a greater percentage of the Outstanding Units or of any class of Limited Partners, in which case
such greater percentage vote or consent shall be required for approval of the Merger Agreement.

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     (c) Except as provided in Section 14.3(d), after such approval by vote or consent of the
Limited Partners, and at any time prior to the filing of the certificate of merger pursuant to
Section 14.4, the merger or consolidation may be abandoned pursuant to provisions therefor, if any,
set forth in the Merger Agreement.

     (d) Notwithstanding anything else contained in this Article XIV or in this Agreement, the
General Partner is permitted, in its discretion, without Limited Partner approval, to convert the
Partnership or any Group Member into a new limited liability entity, to merge the Partnership or
any Group Member into, or convey all of the Partnership’s assets to, another limited liability
entity which shall be newly formed and shall have no assets, liabilities or operations at the time
of such Merger other than those it receives from the Partnership or other Group Member if (i) the
General Partner has received an Opinion of Counsel that the conversion, merger or conveyance, as
the case may be, would not result in the loss of the limited liability of any Limited Partner or
any Group Member or cause the Partnership or any Group Member to be treated as an association
taxable as a corporation or otherwise to be taxed as an entity for federal income tax purposes (to
the extent not previously treated as such), (ii) the sole purpose of such conversion, merger or
conveyance is to effect a mere change in the legal form of the Partnership into another limited
liability entity and (iii) the governing instruments of the new entity provide the Limited Partners
and the General Partner with the same rights and obligations as are herein contained.

			
	Section 14.4	 	Certificate of Merger.

     Upon the required approval by the General Partner and the Unitholders of a Merger Agreement, a
certificate of merger shall be executed and filed with the Secretary of State of the State of
Delaware in conformity with the requirements of the Delaware Act.

			
	Section 14.5	 	Effect of Merger.

     (a) At the effective time of the certificate of merger:

     (i) all of the rights, privileges and powers of each of the business entities that has
merged or consolidated, and all property, real, personal and mixed, and all debts due to any
of those business entities and all other things and causes of action belonging to each of
those business entities, shall be vested in the Surviving Business Entity and after the
merger or consolidation shall be the property of the Surviving Business Entity to the extent
they were of each constituent business entity;

     (ii) the title to any real property vested by deed or otherwise in any of those
constituent business entities shall not revert and is not in any way impaired because of the
merger or consolidation;

     (iii) all rights of creditors and all liens on or security interests in property of any
of those constituent business entities shall be preserved unimpaired; and

     (iv) all debts, liabilities and duties of those constituent business entities shall
attach to the Surviving Business Entity and may be enforced against it to the same extent as
if the debts, liabilities and duties had been incurred or contracted by it.

103

 

     (b) A merger or consolidation effected pursuant to this Article shall not be deemed to result
in a transfer or assignment of assets or liabilities from one entity to another.

ARTICLE
XV

RIGHT
TO ACQUIRE LIMITED PARTNER INTERESTS

			
	Section 15.1	 	Right to Acquire Limited Partner Interests.

     (a) Notwithstanding any other provision of this Agreement, if at any time the General Partner
and its Affiliates hold more than 80% of the total Limited Partner Interests of any class then
Outstanding, the General Partner shall then have the right, which right it may assign and transfer
in whole or in part to the Partnership or any Affiliate of the General Partner, exercisable in its
sole discretion, to purchase all, but not less than all, of such Limited Partner Interests of such
class then Outstanding held by Persons other than the General Partner and its Affiliates, at the
greater of (x) the Current Market Price as of the date three days prior to the date that the notice
described in Section 15.1(b) is mailed and (y) the highest price paid by the General Partner or any
of its Affiliates for any such Limited Partner Interest of such class purchased during the 90-day
period preceding the date that the notice described in Section 15.1(b) is mailed. As used in this
Agreement, (i) “Current Market Price” as of any date of any class of Limited Partner Interests
means the average of the daily Closing Prices (as hereinafter defined) per Limited Partner Interest
of such class for the 20 consecutive Trading Days (as hereinafter defined) immediately prior to
such date; (ii) “Closing Price” for any day means the last sale price on such day, regular way, or
in case no such sale takes place on such day, the average of the closing bid and asked prices on
such day, regular way, in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted for trading on the principal
National Securities Exchange (other than the Nasdaq Stock Market) on which such Limited Partner
Interests of such class are listed or admitted to trading or, if such Limited Partner Interests of
such class are not listed or admitted to trading on any National Securities Exchange (other than
the Nasdaq Stock Market), the last quoted price on such day or, if not so quoted, the average of
the high bid and low asked prices on such day in the over-the-counter market, as reported by the
Nasdaq Stock Market or such other system then in use, or, if on any such day such Limited Partner
Interests of such class are not quoted by any such organization, the average of the closing bid and
asked prices on such day as furnished by a professional market maker making a market in such
Limited Partner Interests of such class selected by the General Partner, or if on any such day no
market maker is making a market in such Limited Partner Interests of such class, the fair value of
such Limited Partner Interests on such day as determined reasonably and in good faith by the
General Partner; and (iii) “Trading Day” means a day on which the principal National Securities
Exchange on which such Limited Partner Interests of any class are listed or admitted to trading is
open for the transaction of business or, if Limited Partner
Interests of a class are not listed or admitted to trading on any National Securities
Exchange, a day on which banking institutions in New York City generally are open.

     (b) If the General Partner, any Affiliate of the General Partner or the Partnership elects to
exercise the right to purchase Limited Partner Interests granted pursuant to Section 15.1(a), the
General Partner shall deliver to the Transfer Agent notice of such election to

104

 

purchase (the “Notice of Election to Purchase”) and shall cause the Transfer Agent to mail a
copy of such Notice of Election to Purchase to the Record Holders of Limited Partner Interests of
such class (as of a Record Date selected by the General Partner) at least 10, but not more than 60,
days prior to the Purchase Date. Such Notice of Election to Purchase shall also be published for a
period of at least three consecutive days in at least two daily newspapers of general circulation
printed in the English language and published in the Borough of Manhattan, New York. The Notice of
Election to Purchase shall specify the Purchase Date and the price (determined in accordance with
Section 15.1(a)) at which Limited Partner Interests will be purchased and state that the General
Partner, its Affiliate or the Partnership, as the case may be, elects to purchase such Limited
Partner Interests, upon surrender of Certificates representing such Limited Partner Interests in
exchange for payment, at such office or offices of the Transfer Agent as the Transfer Agent may
specify, or as may be required by any National Securities Exchange on which such Limited Partner
Interests are listed or admitted to trading. Any such Notice of Election to Purchase mailed to a
Record Holder of Limited Partner Interests at his address as reflected in the records of the
Transfer Agent shall be conclusively presumed to have been given regardless of whether the owner
receives such notice. On or prior to the Purchase Date, the General Partner, its Affiliate or the
Partnership, as the case may be, shall deposit with the Transfer Agent cash in an amount sufficient
to pay the aggregate purchase price of all of such Limited Partner Interests to be purchased in
accordance with this Section 15.1. If the Notice of Election to Purchase shall have been duly given
as aforesaid at least 10 days prior to the Purchase Date, and if on or prior to the Purchase Date
the deposit described in the preceding sentence has been made for the benefit of the holders of
Limited Partner Interests subject to purchase as provided herein, then from and after the Purchase
Date, notwithstanding that any Certificate shall not have been surrendered for purchase, all rights
of the holders of such Limited Partner Interests (including any rights pursuant to Articles IV, V,
VI, and XII) shall thereupon cease, except the right to receive the purchase price (determined in
accordance with Section 15.1(a)) for Limited Partner Interests therefor, without interest, upon
surrender to the Transfer Agent of the Certificates representing such Limited Partner Interests,
and such Limited Partner Interests shall thereupon be deemed to be transferred to the General
Partner, its Affiliate or the Partnership, as the case may be, on the record books of the Transfer
Agent and the Partnership, and the General Partner or any Affiliate of the General Partner, or the
Partnership, as the case may be, shall be deemed to be the owner of all such Limited Partner
Interests from and after the Purchase Date and shall have all rights as the owner of such Limited
Partner Interests (including all rights as owner of such Limited Partner Interests pursuant to
Articles IV, V, VI and XII).

     (c) At any time from and after the Purchase Date, a holder of an Outstanding Limited Partner
Interest subject to purchase as provided in this Section 15.1 may surrender his Certificate
evidencing such Limited Partner Interest to the Transfer Agent in exchange for payment of the
amount described in Section 15.1(a), therefor, without interest thereon.

105

 

ARTICLE XVI

GENERAL PROVISIONS

Section 16.1 Addresses and Notices.

     Any notice, demand, request, report or proxy materials required or permitted to be given or
made to a Partner or Assignee under this Agreement shall be in writing and shall be deemed given or
made when delivered in person or when sent by first class United States mail or by other means of
written communication to the Partner or Assignee at the address described below. Any notice,
payment or report to be given or made to a Partner or Assignee hereunder shall be deemed
conclusively to have been given or made, and the obligation to give such notice or report or to
make such payment shall be deemed conclusively to have been fully satisfied, upon sending of such
notice, payment or report to the Record Holder of such Partnership Securities at his address as
shown on the records of the Transfer Agent or as otherwise shown on the records of the Partnership,
regardless of any claim of any Person who may have an interest in such Partnership Securities by
reason of any assignment or otherwise. An affidavit or certificate of making of any notice, payment
or report in accordance with the provisions of this Section 16.1 executed by the General Partner,
the Transfer Agent or the mailing organization shall be prima facie evidence of the giving or
making of such notice, payment or report. If any notice, payment or report addressed to a Record
Holder at the address of such Record Holder appearing on the books and records of the Transfer
Agent or the Partnership is returned by the United States Postal Service marked to indicate that
the United States Postal Service is unable to deliver it, such notice, payment or report and any
subsequent notices, payments and reports shall be deemed to have been duly given or made without
further mailing (until such time as such Record Holder or another Person notifies the Transfer
Agent or the Partnership of a change in his address) if they are available for the Partner or
Assignee at the principal office of the Partnership for a period of one year from the date of the
giving or making of such notice, payment or report to the other Partners and Assignees. Any notice
to the Partnership shall be deemed given if received by the General Partner at the principal office
of the Partnership designated pursuant to Section 2.3. The General Partner may rely and shall be
protected in relying on any notice or other document from a Partner, Assignee or other Person if
believed by it to be genuine.

Section 16.2 Further Action.

     The parties shall execute and deliver all documents, provide all information and take or
refrain from taking action as may be necessary or appropriate to achieve the purposes of this
Agreement.

Section 16.3 Binding Effect.

     This Agreement shall be binding upon and inure to the benefit of the parties hereto and their
heirs, executors, administrators, successors, legal representatives and permitted assigns.

106

 

Section 16.4 Integration.

     This Agreement constitutes the entire agreement among the parties hereto pertaining to the
subject matter hereof and supersedes all prior agreements and understandings pertaining thereto.

Section 16.5 Creditors.

     None of the provisions of this Agreement shall be for the benefit of, or shall be enforceable
by, any creditor of the Partnership.

Section 16.6 Waiver.

     No failure by any party to insist upon the strict performance of any covenant, duty, agreement
or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof
shall constitute waiver of any such breach of any other covenant, duty, agreement or condition.

Section 16.7 Counterparts.

     This Agreement may be executed in counterparts, all of which together shall constitute an
agreement binding on all the parties hereto, notwithstanding that all such parties are not
signatories to the original or the same counterpart. Each party shall become bound by this
Agreement immediately upon affixing its signature hereto or, in the case of a Person acquiring a
Unit, upon accepting the certificate evidencing such Unit or executing and delivering a Transfer
Application as herein described, independently of the signature of any other party.

Section 16.8 Applicable Law.

     This Agreement shall be construed in accordance with and governed by the laws of the State of
Delaware, without regard to the principles of conflicts of law.

Section 16.9 Invalidity of Provisions.

     If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions contained herein
shall not be affected thereby.

Section 16.10 Consent of Partners.

     Each Partner hereby expressly consents and agrees that, whenever in this Agreement it is
specified that an action may be taken upon the affirmative vote or consent of less than all of the
Partners, such action may be so taken upon the concurrence of less than all of the Partners and
each Partner shall be bound by the results of such action.

107

 

     IN WITNESS WHEREOF, the General Partner has executed this Agreement as of the date first
written above.

	 	 	 	 	 
	 	GENERAL PARTNER:

NRP (GP) LP

 	 
	 	By:	GP Natural Resource Partners LLC, its general
partner	 
	 
	 	By:  	/s/ Nick Carter	 
	 	 	Nick Carter 	 
	 	 	President and Chief Operating Officer 	 
	 

NATURAL RESOURCE PARTNERS L.P.

SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP

 

 

EXHIBIT A

to the Second Amended and

Restated Agreement of Limited Partnership of

Natural Resource Partners L.P.

Certificate Evidencing Common Units

Representing Limited Partner Interests in

Natural Resource Partners L.P.

			
	 	 	 
	No.                     
	 	                     Common Units

     In accordance with Section 4.1 of the Second Amended and Restated Agreement of Limited
Partnership of Natural Resource Partners L.P., as amended, supplemented or restated from time to
time (the “Partnership Agreement”), Natural Resource Partners L.P., a Delaware limited partnership
(the “Partnership”), hereby certifies that                                          (the “Holder”) is the registered
owner of Common Units representing limited partner interests in the Partnership (the “Common
Units”) transferable on the books of the Partnership, in person or by duly authorized attorney,
upon surrender of this Certificate properly endorsed and accompanied by a properly executed
application for transfer of the Common Units represented by this Certificate. The rights,
preferences and limitations of the Common Units are set forth in, and this Certificate and the
Common Units represented hereby are issued and shall in all respects be subject to the terms and
provisions of, the Partnership Agreement. Copies of the Partnership Agreement are on file at, and
will be furnished without charge on delivery of written request to the Partnership at, the
principal office of the Partnership located at 601 Jefferson Street, Suite 3600, Houston, Texas
77002. Capitalized terms used herein but not defined shall have the meanings given them in the
Partnership Agreement.

     The Holder, by accepting this Certificate, is deemed to have (i) requested admission as, and
agreed to become, a Limited Partner and to have agreed to comply with and be bound by and to have
executed the Partnership Agreement, (ii) represented and warranted that the Holder has all right,
power and authority and, if an individual, the capacity necessary to enter into the Partnership
Agreement, (iii) granted the powers of attorney provided for in the Partnership Agreement and (iv)
made the waivers and given the consents and approvals contained in the Partnership Agreement.

 

 

     This Certificate shall not be valid for any purpose unless it has been countersigned and
registered by the Transfer Agent and Registrar.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Dated:	 	 	 	 	 	Natural Resource Partners L.P.	 	 
	 

	 	 	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Countersigned and Registered by:	 	 	 	By:	 	 	 	NRP (GP) LP, its General Partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	By:
	 	GP Natural Resource Partners LLC, its General Partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	By: 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	as Transfer Agent and Registrar	 	Name:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By: 

	 	 	 	 	 	 	 	By: 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	Authorized Signature	 	 	 	 	 	 	 	Secretary	 	 

2

 

[Reverse of Certificate]

ABBREVIATIONS

     The following abbreviations, when used in the inscription on the face of this Certificate,
shall be construed as follows according to applicable laws or regulations:

	 	 	 	 	 	 	 	 	 	 	 
	TEN COM –	 	as tenants in common	 	 	 	UNIF GIFT/TRANSFERS MIN ACT
	TEN ENT –

	 	as tenants by the entireties
	 	 	 	 	 	Custodian 	 	 
	 

	 	 	 	 	 	 
	 	 	 
	 

	 	 	 	 	 	(Cust)
	 	 	(Minor)
	JT TEN –	 	as joint tenants with right of 

survivorship and not as

tenants in common	 	 	 	under Uniform Gifts/Transfers to CD 

Minors Act (State)
	 

	 	 	 	 	 	 	 	 	 

Additional abbreviations, though not in the above list, may also be used.

ASSIGNMENT OF COMMON UNITS

in

NATURAL RESOURCE PARTNERS L.P.

IMPORTANT NOTICE REGARDING INVESTOR RESPONSIBILITIES

DUE TO TAX SHELTER STATUS OF

NATURAL RESOURCE PARTNERS L.P.

     You have acquired an interest in Natural Resource Partners L.P., 601 Jefferson Street, Suite
3600, Houston Texas 77002, whose taxpayer identification number is 32-2164875. The Internal
Revenue Service has issued Natural Resource Partners L.P. the following tax shelter registration
number:                                         .

     YOU MUST REPORT THIS REGISTRATION NUMBER TO THE INTERNAL REVENUE SERVICE IF YOU CLAIM ANY
DEDUCTION, LOSS, CREDIT OR OTHER TAX BENEFIT OR REPORT ANY INCOME BY REASON OF YOUR INVESTMENT IN
NATURAL RESOURCE PARTNERS L.P.

     You must report the registration number as well as the name and taxpayer identification number
of Natural Resource Partners L.P. on Form 8271. FORM 8271 MUST BE ATTACHED TO THE RETURN ON WHICH
YOU CLAIM THE DEDUCTION, LOSS, CREDIT OR OTHER TAX BENEFIT OR REPORT ANY INCOME BY REASON OF YOUR
INVESTMENT IN NATURAL RESOURCE PARTNERS L.P.

     If you transfer your interest in Natural Resource Partners L.P. to another person, you are
required by the Internal Revenue Service to keep a list containing (a) that person’s name, address
and taxpayer identification number, (b) the date on which you transferred the interest and (c) the
name, address and tax shelter registration number of Natural Resource Partners L.P. If you do not
want to keep such a list, you must (1) send the information specified above to the Partnership,
which will keep the list for this tax shelter, and (2) give a copy of this notice to the person to
whom you transfer your interest. Your failure to comply with any of the above-

3

 

described responsibilities could result in the imposition of a penalty under Section 6707(b)
or 6708(a) of the Internal Revenue Code of 1986, as amended, unless such failure is shown to be due
to reasonable cause.

     ISSUANCE OF A REGISTRATION NUMBER DOES NOT INDICATE THAT THIS INVESTMENT OR THE CLAIMED TAX
BENEFITS HAVE BEEN REVIEWED, EXAMINED OR APPROVED BY THE INTERNAL REVENUE SERVICE.

     FOR VALUE RECEIVED,                      hereby assigns, conveys, sells and transfers unto

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	(Please print or typewrite name
and 

address of Assignee)

	 	 	(Please insert Social Security or other
identifying number of Assignee)	 	 
	 
	 	 	 	 	 	 
	                     Common Units representing limited partner interests evidenced by this Certificate, subject to the Partnership Agreement, and does hereby irrevocably constitute and appoint             
         as its attorney-in-fact with full power of substitution to transfer the same on the books of Natural Resource Partners L.P.
	 
	 	 	 	 	 	 
	Date:                     	 	NOTE:	 	The signature to any endorsement hereon must correspond with the name as written upon the face of this Certificate in every particular, without alteration, enlargement or change.
	 
	 	 	 	 	 	 
	SIGNATURE(S) MUST BE
GUARANTEED BY A MEMBER FIRM OF
THE NATIONAL ASSOCIATION OF
SECURITIES DEALERS, INC. OR BY
A COMMERCIAL BANK OR TRUST
COMPANY SIGNATURE(S)
GUARANTEED

	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	(Signature)	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	(Signature)	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 

     No transfer of the Common Units evidenced hereby will be registered on the books of the
Partnership, unless the Certificate evidencing the Common Units to be transferred is surrendered
for registration or transfer and an Application for Transfer of Common Units has been executed by a
transferee either (a) on the form set forth below or (b) on a separate application that the
Partnership will furnish on request without charge. A transferor of the Common Units shall have no
duty to the transferee with respect to execution of the transfer application in order for such
transferee to obtain registration of the transfer of the Common Units.

4

 

APPLICATION FOR TRANSFER OF COMMON UNITS

     The undersigned (“Assignee”) hereby applies for transfer to the name of the Assignee of the
Common Units evidenced hereby.

     The Assignee (a) requests admission as a Substituted Limited Partner and agrees to comply with
and be bound by, and hereby executes, the Amended and Restated Agreement of Limited Partnership of
Natural Resource Partners L.P. (the “Partnership”), as amended, supplemented or restated to the
date hereof (the “Partnership Agreement”), (b) represents and warrants that the Assignee has all
right, power and authority and, if an individual, the capacity necessary to enter into the
Partnership Agreement, (c) appoints the General Partner of the Partnership and, if a Liquidator
shall be appointed, the Liquidator of the Partnership as the Assignee’s attorney-in-fact to
execute, swear to, acknowledge and file any document, including, without limitation, the
Partnership Agreement and any amendment thereto and the Certificate of Limited Partnership of the
Partnership and any amendment thereto, necessary or appropriate for the Assignee’s admission as a
Substituted Limited Partner and as a party to the Partnership Agreement, (d) gives the powers of
attorney provided for in the Partnership Agreement, and (e) makes the waivers and gives the
consents and approvals contained in the Partnership Agreement. Capitalized terms not defined herein
have the meanings assigned to such terms in the Partnership Agreement.

Date:                     

	 	 	 
	 

	 	 
	Social Security or other identifying number

	 	Signature of Assignee
	 
	 	 
	 

	 	 
	Purchase Price including commissions, if any

	 	Name and Address of Assignee

Type of Entity (check one):

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 ̈
	 	Individual
	 	 ̈
	 	Partnership
	 	 ̈
	 	Corporation
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 ̈
	 	Trust
	 	 ̈
	 	Other (specify)	 	 	 	 

Nationality (check one):

	 	 	 	 	 	 	 	 	 	 
	 	 	 ̈	 	U.S. Citizen, Resident or Domestic Entity
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 ̈
	 	Foreign Corporation
	 	 ̈
	 	Non-resident Alien	 	 

     If the U.S. Citizen, Resident or Domestic Entity box is checked, the following certification
must be completed.

     Under Section 1445(e) of the Internal Revenue Code of 1986, as amended (the “Code”), the
Partnership must withhold tax with respect to certain transfers of property if a holder of an
interest in the Partnership is a foreign person. To inform the Partnership that no withholding is

5

 

required with respect to the undersigned interestholder’s interest in it, the undersigned
hereby certifies the following (or, if applicable, certifies the following on behalf of the
interestholder).

Complete Either A or B:

	A.	 	Individual Interestholder

	 	1.	 	I am not a non-resident alien for purposes of U.S. income taxation.
	 
	 	2.	 	My U.S. taxpayer identification number (Social Security Number) is             .
	 
	 	3.	 	My home address is          
              
               
              
              
               .

	B.	 	Partnership, Corporation or Other Interestholder

	 	1.	 	                     is not a foreign corporation, foreign partnership, foreign
trust (Name of Interestholder) or foreign estate (as those terms are defined in the
Code and Treasury Regulations).
	 
	 	2.	 	The interestholder’s U.S. employer identification number is          
           .
	 
	 	3.	 	The interestholder’s office address and place of incorporation (if applicable)
is                     .

     The interestholder agrees to notify the Partnership within sixty (60) days of the date the
interestholder becomes a foreign person.

     The interestholder understands that this certificate may be disclosed to the Internal Revenue
Service by the Partnership and that any false statement contained herein could be punishable by
fine, imprisonment or both.

     Under penalties of perjury, I declare that I have examined this certification and to the best
of my knowledge and belief it is true, correct and complete and, if applicable, I further declare
that I have authority to sign this document on behalf of:

 

Name of Interestholder
 

Signature and Date

 

Title (if applicable)

     Note: If the Assignee is a broker, dealer, bank, trust company, clearing corporation, other
nominee holder or an agent of any of the foregoing, and is holding for the account of any other
person, this application should be completed by an officer thereof or, in the case of a broker or
dealer, by a registered representative who is a member of a registered national securities exchange
or a member of the National Association of Securities Dealers, Inc., or, in the case of

6

 

any other nominee holder, a person performing a similar function. If the Assignee is a
broker, dealer, bank, trust company, clearing corporation, other nominee owner or an agent of any
of the foregoing, the above certification as to any person for whom the Assignee will hold the
Common Units shall be made to the best of the Assignee’s knowledge.

7

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