CREDIT AGREEMENT

TABLE OF CONTENTS

This Credit Agreement dated as of September 18, 2009 is among BRONCO DRILLING COMPANY, INC., a Delaware corporation (the “ Borrower ”), the Guarantors, BANCO INBURSA S.A., INSTITUCIÓN DE BANCA MÚLTIPLE, GRUPO FINANCIERO INBURSA, as Lender (the “ Lender ”) and as Issuing Bank (the “ Issuing Bank ”)

A.           The Borrower, the Guarantors, the lenders party thereto and Fortis Bank SA/NV, New York Branch, as Administrative Agent, are parties to the Amended and Restated Credit Agreement dated as of September 29, 2008, as amended (the “ Existing Credit Agreement ”).

B.           The Borrower has requested the Lender to provide a $75,000,000 senior secured revolving credit facility in order to provide funds to retire the obligations under the Existing Credit Agreement and certain other Indebtedness and to provide funds for working capital and general corporate purposes, subject to the limitations contained in this Agreement.

The Borrower, the Guarantors, the Lender and the Issuing Bank agree as follows:

Section 1.01   Certain Defined Terms .  Any terms used in this Agreement that are defined in Article 9 of the UCC shall have the meanings assigned to those terms by the UCC as of the date of this Agreement.  As used in this Agreement, the terms defined above shall have the meanings set forth therein and the following terms shall have the following meanings (unless otherwise indicated, such meanings to be equally applicable to both the singular and plural forms of the terms defined):

“ Acceptable Security Interest ” in any Property means a Lien which (a) exists in favor of the Lender for the benefit of the Secured Parties; (b) is superior to all other Liens except Excepted Liens; (c) secures the Obligations; and (d) is perfected and enforceable against the Loan Party that created such security interest in preference to any rights of any Person therein, other than Excepted Liens.

“ Account Control Agreement ” shall mean, if any deposit account of the Borrower or any Loan Party is held with a financial institution that is not the Lender, an agreement or agreements in form and substance reasonably acceptable to the Lender between the Lender and such other financial institution governing any such deposit accounts of the Borrower or such Loan Party.

“ Acquisition ” means any transaction, or any series of related transactions, consummated on or after the date of this Agreement, by which the Borrower or any of its Subsidiaries acquires assets (including Rigs and related assets) useful to the business of the Borrower or any of its Subsidiaries (as such business is conducted and operated as of the Closing Date) from another Person (other than a Loan Party), it being specified for the avoidance of doubt that “assets” shall not include Equity Interests.

“ Active Rig ” means any Rig that is currently operating or earning revenues under a contract.

“ Advance ” means an advance by the Lender to the Borrower pursuant to the terms of this Agreement.

“ Affiliate ” of any Person, means any other Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person or any Subsidiary of such Person.  The term “control” (including the terms “controlled by” or “under common control with”) means the possession, directly or indirectly, of the power to (a) vote or direct the voting of 10% or more of the outstanding shares of Voting Stock of such Person or (b) direct or cause the direction of the management and policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.

“ Agreement ” means this Credit Agreement dated as of September 18, 2009 among the Borrower, the Guarantors, the Lender, and the Issuing Bank, as it may be amended or modified and in effect from time to time.

“ Applicable Lending Office ” means the address specified for the Lender and the Issuing Bank, as applicable, on Schedule 9.02 or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the other parties.

“ Applicable Margin ” means 5.80%.

“ Appraisal Report ” means a report of the Complete Rigs from a recognized appraiser of oilfield equipment in form and substance acceptable to the Lender that states the make, model, condition, horsepower or depth rating, Orderly Liquidation Value.  The appraisal required by Section 5.14(a)(i) shall require a physical, on-site inspection by the appraiser.  Each other appraisal shall require a physical, on-site inspection by the appraiser to the extent that the Orderly Liquidation Value of Complete Rigs appraised therein is equal to or less than $150,000,000 and may be performed as a desktop appraiser with respect to other Complete Rigs appraised therein.

“ Asset Disposition ” or “ Dispose ” means the disposition, whether by sale, lease, license, transfer, loss, damage, destruction, condemnation or otherwise, of any or all of the Property of the Borrower or any of its Subsidiaries other than (a) any sale or issuance of Equity Interests of any of the Borrower’s Subsidiaries to any Loan Party, (b) sales of inventory in the ordinary course of business, and (c) dispositions of assets other than Rigs which have become obsolete or no longer useful in the business of any Loan Party.

“ Attributable Indebtedness ” means, on any date, (a) in respect of any Capital Lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a capital lease.

“ Audited Financial Statements ” means the audited consolidated balance sheet of the Borrower and its Subsidiaries for the fiscal year ended December 31, 2008, together with the related consolidated statements of operations, shareholders’ equity and cash flows for such fiscal year of the Borrower and its Subsidiaries, including the notes thereto.

“ Bank ” means Banco Inbursa S.A., Institución de Banca Múltiple, Grupo Financiero Inbursa.

“ Beneficial Owner ” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act.

“ Blocked Accounts ” has the meaning set forth in Section 5.13(b) .

“ Borrowing Base ” means, as of any date of determination, an amount equal to 50% of the aggregate Orderly Liquidation Value of all Pledged Rigs that are valued as Complete Rigs as set forth in the most recently delivered Appraisal Reports.

“ Borrowing Base Availability ” means the excess, if any, of the Borrowing Base over the sum of the Advances and the Letter of Credit Exposure.

“ Borrowing Base Report ” means a borrowing base report in the form of the attached Exhibit H signed by a Responsible Officer of the Borrower.

“ Borrowing Date ” means the date on which any Advance is made hereunder.

“ Bronco Mexico ” means Bronco Drilling MX, S. de R.L. de C.V.

“ Business Day ” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the laws of, or are in fact closed in, Mexico City, Mexico or New York and, if such day relates to any Advance, means any such day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.

“ Capital Expenditures ” means all expenditures of any Person in respect of the purchase or other acquisition, construction or improvement of any fixed or capital assets that are required to be capitalized under GAAP on a balance sheet as property, plant, equipment or other fixed assets or intangibles; provided, however that Capital Expenditures shall in any event exclude (a) normal replacements and maintenance which are properly charged to current operations, (b) amounts expended with the proceeds of insurance to repair or replace fixed or capital assets and (c) leasehold improvement expenditures for which such Person is reimbursed by the lessor, sublessor or sublessee.

“ Capital Lease ” of a Person means any lease of any Property by such Person as lessee that would, in accordance with GAAP, be required to be classified and accounted for as a capital lease on the balance sheet of such Person.

“ Cash Equivalents ” means:

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

(b)   investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, one of the two highest credit ratings obtainable from S&P or from Moody’s;

(c)   investments in deposit accounts, certificates of deposit, banker’s acceptances and time deposits maturing within one year from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, the Lender or any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof that has a combined capital and surplus and undivided profits of not less than $500,000,000.00;

(d)   fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria of clause (c) above;

(e)   investments in “money market funds” within the meaning of Rule 2a-7 of the Investment Company Act of 1940, as amended, substantially all of whose assets are invested in investments of the type described in clauses (a) through (d) above; and

(f)   demand deposit accounts maintained in the ordinary course of business.

“ Challenger ” means Challenger Limited, a company organized under the laws of the Isle of Man.

“ Change in Law ” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption of taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive by any Governmental Authority.

“ Change of Control ” means the occurrence of any of the following events:

(a)   the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Borrower and its Subsidiaries taken as a whole to any “person” (as that term is used in Section 13(d) of the Exchange Act, but excluding (i) any employee benefit plan of the Borrower or any of its Subsidiaries, (ii) any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan and (iii) the Lender and any of its Affiliates other than the Borrower and its Subsidiaries);

(b)   the consummation of any transaction (including any merger or consolidation) the result of which is that any “person” (as defined above) becomes the Beneficial Owner, directly or indirectly, of more than 40% of the Voting Stock of the Borrower, measured by voting power rather than number of shares, but excluding the Lender and any of its Affiliates other than the Borrower and its Subsidiaries;

(c)   the first day on which a majority of the members of the Board of Directors of the Borrower are not Continuing Directors; or

(d)   the Borrower consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, the Borrower, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of the Borrower is converted into or exchanged for cash, securities or other property, other than any such transaction where the Voting Stock of the Borrower outstanding immediately prior to such transaction is converted into or exchanged for Voting Stock of the surviving or transferee Person constituting a majority of the outstanding shares of such Voting Stock of such surviving or transferee Person (immediately after giving effect to such issuance).

“ Closing Date ” means September 18, 2009.

“ Code ” means the United States Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time, and any successor statute and all rules and regulations promulgated thereunder.

“ Collateral ” means all the “Collateral” as defined in any Security Document.

“ Commitment ” means, as to the Lender, its obligation to (a) make Advances to the Borrower pursuant to Section 2.01 , and (b) purchase participation in Letter of Credit Obligations pursuant to Section 2.14(b) , in an aggregate principal amount at any one time outstanding not to exceed $75,000,000.00, as such amount may be adjusted from time to time in accordance with this Agreement, it being specified that any accrued interest, cost or fee payable under this Agreement shall not be computed towards such amount.

“ Commitment Fee ” has the meaning set forth in Section 2.03(a) .

“ Complete Rig ” means any Rig that has been designated as such in the most recently delivered Appraisal Report (for the avoidance of doubt, a Rig undergoing refurbishment will be deemed a Complete Rig for purposes of the Borrowing Base to the extent it is listed as a Complete Rig in the Appraisal Report, valued based on comparable sales versus components in the Appraisal Report and for which the Borrower could certify, if requested, that less than $300,000.00 of expenditures are remaining for the Rig to be able to begin work under a drilling contract) or, only in case of calculating Rig Utilization, which was designated as such in any previous Appraisal Report.

“ Compliance Certificate ” means a Compliance Certificate signed by a Financial Officer of the Borrower in substantially the form of the attached Exhibit A .

“ Confirming Bank ” has the meaning set forth in Section 2.14(a) .

“ Consolidated Debt ” means, for any period, the Debt of the Borrower and its Subsidiaries calculated on a consolidated basis in accordance with GAAP.

“ Consolidated EBITDA ” means, for any period, without duplication, the sum of the following for the Borrower and its Subsidiaries on a consolidated basis, each calculated for such period:

(a)   Consolidated Net Income for such period of determination plus to the extent deducted in determining Consolidated Net Income,

(i)   charges against income for foreign, federal, state, and local taxes plus

(ii)   charges against income for depreciation and amortization expense plus

(iii)   charges against income for other non-cash charges, extraordinary, unusual or non-recurring expenses or losses plus

(iv)   any losses on sales of assets outside the ordinary course of business plus

(v)   Consolidated Interest Expense, including amortization of deferred financing costs and other fees, commissions, charges, expenses, discounts and up-front costs incurred in respect of letters of credit or Debt permitted hereunder and non-cash adjustments to any obligations under Swap Contracts required by GAAP plus

(vi)   all non-cash charges or losses, including (x) non-cash compensation costs in connection with the issuance of Equity Interests of the Borrower to officers and employees of the Borrower and its Subsidiaries and (y) non-cash expenses with respect to the right to repurchase the Equity Interests of the Borrower issued to officers and employees of the Borrower and its Subsidiaries plus

(vii)   transaction costs and other cash expenses incurred in connection with any Investment permitted under Section 6.05 , or the issuance or registration of Equity Interests (in each case, whether or not consummated) plus

(viii)   expenses incurred in connection with any investment permitted under Section 6.05 to the extent actually reimbursed by the obligor under the indemnification provisions of the agreement pursuant to which such Investment was consummated plus

(ix)   to the extent reimbursed by insurance, expenses with respect to liability or casualty events or business interruption,

(b)   minus , to the extent included in calculating such Consolidated Net Income,

(i)   extraordinary or non-recurring gains for such period minus

(ii)   any gain realized upon the sale or other disposition of any assets of the Borrower or any of its Subsidiaries for such period (other than in the ordinary course of business) minus

(iii)   the income of any Person (other than Wholly-Owned Subsidiaries of the Borrower) in which the Borrower or a Wholly-Owned Subsidiary of the Borrower has an ownership interest except to the extent such income is received by the Borrower or such Wholly-Owned Subsidiary in a cash distribution during such period, all as determined on a consolidated basis in accordance with GAAP, plus the loss or minus the income

(iv)   of any Person accrued prior to the date it becomes a Subsidiary of the Borrower or is merged into or consolidated with the Borrower or any of its Subsidiaries, minus

(v)   non-cash gains, losses or adjustments under FASB Statement 133 as a result of changes in the fair market value of derivatives.

“ Consolidated Interest Expense ” means, for any period, the interest expense of the Borrower and its Subsidiaries, but excluding (a) deferred finance charges, (b) any fees, expenses and costs associated with the renegotiation of Debt in existence on the Closing Date, and (c) costs associated with obtaining any Swap Contracts, calculated on a consolidated basis in accordance with GAAP for such period.

“ Consolidated Net Income ” means, for any period, the net income of the Borrower and its Subsidiaries calculated on a consolidated basis for such period after taxes, as determined in accordance with GAAP, provided that there shall be (a) included, without duplication, the income (or loss) of any Person (other than an Subsidiary of the Borrower whose net income is consolidated into the net income of the Borrower in accordance with GAAP) in which the Borrower has an ownership interest, whether or not any such net income is actually received by the Borrower or such Subsidiary in the form of dividends to the extent that the indebtedness of such Person is included in the Debt of the Borrower or any of its Subsidiaries for the purpose of this Agreement and (b) provided further that there shall be excluded (x) any one-time increase or decrease to net income which is required to be recorded because of the adoption of new accounting policies, practices or standards required by GAAP, and (y) any non-cash goodwill or other intangible asset impairment charges incurred subsequent to the Closing Date resulting from the application of the Financial Accounting Standards Board’s Statement of Financial Accounting Standards No. 142 (or similar pronouncements).

“ Consolidated Total Net Cash ” means the sum of (i) accounts in accordance with GAAP classified as unrestricted (A) cash or cash equivalents, (B) marketable securities, or (C) other Cash Equivalents less (ii) the Borrowing Base Availability.

“ Continue ”, “ Continuation ”, and “ Continued ” each refers to a continuation of Advances for an additional Interest Period upon the expiration of the Interest Period then in effect for such Advances.

“ Continuing Directors ” means, as of any date of determination, any member of the Board of Directors of the Borrower who (a) was a member of such Board of Directors on the Closing Date or (b) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election.

“ Debt ,” means, for any Person, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

(a)   all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;

(b)   obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business);

(c)   Capital Leases;

(d)   all obligations of such Person in respect of letters of credit, bankers’ acceptances, bank guarantees, surety bonds or similar instruments which are 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;

(e)   net obligations of such Person under any Swap Contract;

(f)   Off-Balance Sheet Liabilities;

(g)   indebtedness secured by a Lien on Property now or hereafter owned or acquired by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse (provided, that if such Person has not assumed or otherwise become liable in respect of such Debt, such Debt shall be deemed to be in a principal amount equal to the lesser of the principal amount of such Debt and the fair market value of the Property encumbered by such Lien); and

(h)   all Guarantees of such Person in respect of any of the foregoing.

For all purposes hereof, the Debt of any Person shall include the Debt of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Debt is expressly made non-recourse to such Person.  The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date.  The amount of any Capital Lease or Off-Balance Sheet Liability as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date.  Notwithstanding the foregoing, it is understood and agreed that Debt shall not include (x) obligations under agreements providing for the adjustment of the purchase price, working capital or similar adjustments in connection with any Investment or Asset Disposition permitted under this Agreement or (y) obligations which are classified as liabilities on a Person’s balance sheet in accordance with GAAP in connection with a non-compete, consulting or other similar agreement entered into after the Closing Date.

“ Debt Incurrence ” means any issuance for cash by any Loan Party or any of its Subsidiaries of any Debt after the Closing Date.

“ Default ” means (a) an Event of Default or (b) any event or condition which with notice or lapse of time or both would, unless cured or waived, become an Event of Default.

“ Disbursement Maturity Date ” has the meaning set forth in Section 2.02(a) .

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

“ Domestic Subsidiary ” means a Subsidiary that is organized or incorporated under the laws of the United States or a State thereof.

“ Effective Date ” means the date on which the conditions precedent set forth in Section 3.01 shall have been satisfied, which date shall not be later than September 30, 2009.

“ Eligible Assignee ” means (a) the Lender or the Issuing Bank, (b) an Affiliate of the Lender or of the Issuing Bank and (c) any other Person (other than a natural person) approved by the Lender in its sole discretion, and, so long as no Event of Default exists, the Borrower, in either case, such approval not to be unreasonably withheld or delayed; provided that notwithstanding the foregoing, “Eligible Assignee” shall not include the Borrower or any of the Borrower’s Affiliates (other than the Lender, the Issuing Bank or their Affiliates) or Subsidiaries.

“ Environmental Claim ” means any notice of violation, action, lawsuit, claim, demand or judgment by any Governmental Authority or any Person for liability or damage, including, without limitation, personal injury, property damage, contribution, indemnity, direct or consequential damages, damage to the environment, nuisance, pollution, or contamination, or for fines, penalties, fees, costs, expenses or restrictions arising under or otherwise related to an obligation under Environmental Law.

“ Environmental Law ” means all Federal, state, local and foreign laws (including common law), treaties, regulations, rules, ordinances, codes, decrees, judgments, directives orders and (including consent orders), relating to protection of the environment, natural resources, human health and safety or the presence, Release of, or exposure to, Hazardous Materials, or the generation, manufacture, processing, distribution, use, treatment, storage, transport, recycling or handling, or the arrangement for disposal of Hazardous Materials.

“ Environmental Liability ” shall mean all liabilities, obligations, damages, losses, claims, actions, suits, judgments, fines, penalties, fees, expenses and costs (including administrative oversight costs, natural resource damages and remediation costs), whether contingent or otherwise, arising out of or relating to (a) compliance or non-compliance with any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

“ Environmental Permit ” means any permit, license, approval or other authorization required under any Environmental Law.

“ Equity Interests ” shall mean shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity interests in any Person, or any obligations convertible into or exchangeable for, or giving any Person a right, option or warrant to acquire, such equity interests or such convertible or exchangeable obligations.

 “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time-to-time, and any successor statute and all rules and regulations promulgated thereunder.

“ ERISA Affiliate ” means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

“ ERISA Event ” means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.

“ Eurocurrency Liabilities ” has the meaning assigned to that term in Regulation D.

“ Eurodollar Rate ” means, with respect to an Advance for the relevant Interest Period, the applicable British Bankers’ Association Interest Settlement Rate for deposits in Dollars appearing on Reuters Reference LIBOR01 as of 11:00 a.m. (London, England 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 Reuters Reference LIBOR01 is not available to the Lender for any reason, then the applicable Eurodollar Rate for the relevant Interest Period shall instead be the rate reasonably determined by the Lender to be the rate at which the Lender or one of its Affiliate banks offers to place deposits in Dollars with first class banks in the London 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 the Lender’s relevant Advance and having a maturity equal to such Interest Period.

“ Eurodollar Rate Reserve Percentage ” of the Lender for the Interest Period for any Advance means the reserve percentage applicable during such Interest Period (or if more than one such percentage shall be so applicable, the daily average of such percentages for those days in such Interest Period during which any such percentage shall be so applicable) under regulations issued from time-to-time by any Governmental Authority of Mexico for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for the Lender with respect to liabilities or assets consisting of or including Eurocurrency Liabilities having a term equal to such Interest Period.  The Eurodollar Rate Reserve Percentage shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

“ Event of Loss ” means, with respect to any Property, any of the following: (a) any loss, destruction or damage of such Property; or (b) any actual condemnation, seizure or taking, by exercise of the power of eminent domain or otherwise, of such Property, or confiscation of such Property or the requisition of the use of such Property, in each case of assets having a book value of $1,000,000.00 or more, either individually or in the aggregate.

“ Events of Default ” has the meaning set forth in Section 7.01 .

“ Excepted Liens ” means the following Liens (provided that none of the following Liens may secure Debt):

(a)   Liens for taxes, assessments or governmental charges or levies on its Property if the same shall not at the time be delinquent or thereafter can be paid without penalty, or are being contested in good faith and by appropriate proceedings diligently conducted and for which adequate reserves in accordance with and to the extent required by GAAP shall have been set aside on its books;

(b)   Liens imposed by law, or arising by contract or operation of law, including, without limitation, carriers’, warehousemen’s, landlord’s, mechanics’, materialmen’s, and other similar liens arising in the ordinary course of business which secure payment of obligations not more than 30 days past due or which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves shall have been set aside on the books of the applicable Person;

(c)   Liens incurred and pledges or deposits made in the ordinary course of business in connection with worker’s compensation, unemployment insurance or other social security or retirement benefits, or similar legislation, other than any Lien imposed by ERISA;

(d)   deposits to secure the performance of bids and leases (other than Debt), statutory obligations, surety or appeal bonds (other than bonds related to judgments or litigation), performance bonds and other obligations of a like nature incurred in the ordinary course of business;

(e)   survey exceptions, easements, rights-of-way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person;

(f)   any (i) interest or title of a lessor or sublessor under any lease not prohibited by this Agreement, (ii) Lien or restriction that the interest or title of such lessor or sublessor may be subject to, or (iii) subordination of the interest of the lessee or sublessee under such lease to any Lien or restriction referred to in the preceding clause (ii), so long as the holder of such Lien or restriction agrees to recognize the rights of such lessee or sublessee under such lease;

(g)   Liens arising from filed UCC financing statements relating solely to leases not prohibited by this Agreement;

(h)   Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;

(i)   any zoning or similar law or right reserved to or vested in any Governmental Authority to control or regulate the use of any real property and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person;

(j)   Liens consisting of an agreement to Dispose of any property in a Asset Disposition permitted under Section 6.04 ;

(k)   Liens arising out of conditional sale or title retention, consignment or similar arrangements for the sale of goods entered into by Borrower or any of its Subsidiaries in the ordinary course of business and not prohibited by this Agreement;

(l)   Liens that are contractual rights of set-off (i) of collecting or payor banks having a right of setoff, revocation, refund or chargeback with respect to money or instruments of the Borrower or any of its Subsidiaries on deposit with or in possession of such bank, (ii) relating to pooled deposit or sweep accounts of Borrower or any Subsidiary to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of Borrower and its Subsidiaries or (iii) relating to purchase orders and other agreements entered into with customers of Borrower or any Subsidiary in the ordinary course of business;

(m)   Liens encumbering reasonable customary initial deposits and margin deposits and similar Liens attaching to commodity trading accounts or other brokerage accounts incurred in the ordinary course of business and not for speculative purposes;

(n)   Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods; and

(o)   Liens imposed by law or order as a result of any proceeding before any court or regulatory body that is being contested in good faith, and Liens that secure a judgment or other court-ordered award or settlement as to which the Borrower or the applicable Subsidiary has not exhausted its appellate rights and that would not otherwise constitute an Event of Default.

“ Excluded Taxes ” means, with respect to the Lender, the Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) taxes imposed on or measured by its overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of the Lender or the Issuing Bank, in which its Applicable Lending Office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which the Borrower is located and  (c) in the case of a Foreign Lender, any withholding tax that (i) is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party hereto (or designates a new lending office), except to the extent (x) such withholding is imposed at a rate that does not exceed 4.9% or (y)  such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.11(a)  or (ii) is attributable to such Foreign Lender’s failure or inability (other than as a result of a Change in Law) to comply with Section 2.11(e) .

“ Existing Credit Agreement ” has the meaning given to it in the recitals.

“ Federal Reserve Board ” means the Board of Governors of the Federal Reserve System or any of its successors.

“ Financial Officer ” for any Person means the chief financial officer, treasurer or senior financial officer of such Person, as applicable.

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

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

“ GAAP ” means United States generally accepted accounting principles applied on a consistent basis.

“ Governmental Authority ” means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank, or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

“ Guarantee ” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Debt or other obligation payable or performable by another Person (the “ primary obligor ”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Debt or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the owner of such Debt or other obligation of the payment or performance of such Debt or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Debt or other obligation, or (iv) entered into for the purpose of assuring in any other manner the owner of such Debt or other obligation of the payment or performance thereof or to protect such owner against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Debt or other obligation of any other Person, whether or not such Debt or other obligation is assumed by such Person; provided , however , that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business.  The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith.  The term “Guarantee” as a verb has a corresponding meaning.

“ Guarantors ” means (a) each of the Borrower’s Domestic Subsidiaries listed on Schedule 1.01(a) and (b) any other Person that becomes a guarantor of all or a portion of the Obligations.

“ Hazardous Material ” means (a) any petroleum products or byproducts and (b) any chemical, material, substance or waste that is prohibited, limited or regulated by or pursuant to any Environmental Law.

“ Initial Holder ” means the Bank.

“ Indemnified Taxes ” means any Taxes other than Excluded Taxes.

“ Initial Pledged Rigs ” means each of the Rigs listed on the attached Schedule 1.01(b) and identified as being pledged to the Lender for the benefit of the Secured Parties.

“ Interest Period ” means, for each Advance comprising part of an Advance, the period commencing on the date of such Advance and ending on the last day of the period selected by the Borrower pursuant to the provisions below and Section 2.02 and, thereafter, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by the Borrower pursuant to the provisions below and Section 2.02 .  The duration of each such Interest Period shall be one, three, or six months, in each case as the Borrower may select; provided , however , that:

(a)   whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, provided that if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day;

(b)   any Interest Period which begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month in which it would have ended if there were a numerically corresponding day in such calendar month; and

(c)   no Borrower may select any Interest Period for any Advance which ends after the Maturity Date.

“ Interim Financial Statements ” means the unaudited consolidated balance sheet of the Borrower and its Subsidiaries as of June 30, 2009, together with the related consolidated statements of income or operations and cash flows for such fiscal quarter of the Borrower and its Subsidiaries.

“ Investment ” of any Person means any investment of such Person so classified under GAAP, and whether or not so classified, any loan, advance (other than prepayments or deposits made in the ordinary course of business) or extension of credit that constitutes Debt of the Person to whom it is extended or contribution of capital by such Person; and any stocks, bonds, mutual funds, partnership interests, notes (including structured notes), debentures or other securities owned by such Person (but excluding Capital Expenditures).  For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

“ Issuing Bank ” means the Lender or any other lending institution that has issued, or has a commitment to issue, Letters of Credit under this Agreement.

“ LC Cash Collateral Account ” means special interest bearing cash collateral accounts pledged by the Borrower to the Lender for the ratable benefit of the Secured Parties containing cash deposited pursuant to Section 2.14(e) , 7.02 or 7.03 to be maintained at the Lender’s office in accordance with Section 2.14(g) and bear interest or be invested in the Lender’s reasonable discretion.

“ Legal Requirement ” means, as to any Person, any law, statute, ordinance, decree, award, requirement, order, writ, judgment, injunction, rule, regulation (or official interpretation of any of the foregoing) of, and the terms of any license or permit issued by, any Governmental Authority which is binding on such Person.

“ Lender ” means the lender listed on the signature pages of this Agreement and any other person that has become a party hereto pursuant to an assignment pursuant to Section 9.06 .

“ Lender’s Account ” means the account established and maintained at the Bank pursuant to Section 7.07 , in the name of the Borrower but under the sole dominion and control of, and exclusive right of withdrawal at the direction of, the Lender and subject to the terms of this Agreement.

“ Letter of Credit ” means any letter of credit issued hereunder.

“ Letter of Credit Application ” means (a) a request for issuance of a Letter of Credit in substantially the form of the attached Exhibit G and (b) an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the Issuing Bank.

“ Letter of Credit Documents ” means, with respect to any Letter of Credit, such Letter of Credit, the related Letter of Credit Application and any agreements, documents, and instruments entered into in connection with or relating to such Letter of Credit.

“ Letter of Credit Exposure ” means, at any time, the sum of (a) the aggregate undrawn maximum face amount of each Letter of Credit at such time and (b) the aggregate unpaid amount of all Reimbursement Obligations owing with respect to such Letters of Credit at such time.

“ Letter of Credit Obligations ” means any obligations of the Borrower under this Agreement in connection with the Letters of Credit, including the Reimbursement Obligations.

“ Lien ” shall mean, with respect to any asset, (a) any mortgage, deed of trust, lien (statutory or other), pledge, assignment, preference, deposit arrangement, encumbrance, charge, security interest, priority or other security or preferential arrangement of any kind or nature whatsoever, whether voluntary or involuntary in or on such asset, and (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset.

“ Liquidity ” means the sum of (a) Consolidated Total Net Cash and (b) Borrowing Base Availability.

“ Loan Documents ” means this Agreement, any Note issued pursuant to Section 2.02(e) , the Letter of Credit Documents, the Security Documents and each other agreement, instrument or document executed by any Loan Party or any of their respective officers at any time in connection with this Agreement, all as amended, restated, supplemented or modified from time to time.

“ Loan Party ” means the Borrower and any Guarantor.

“ Material Adverse Effect ” shall mean a material adverse effect upon (a) the business, results of operations, Properties or condition (financial or otherwise) of the Borrower and its Subsidiaries taken as a whole, (b) the ability of any Loan Party to perform its obligations under any Loan Document to which it is a party or (c) the validity or enforceability against any Loan Party of any of the Loan Documents or the rights or remedies of the Lender or the Issuing Bank thereunder.

“ Maturity Date ” means September 18, 2014.

“ Maximum Rate ” means the maximum nonusurious interest rate under applicable law (determined under such laws after giving effect to any items which are required by such laws to be construed as interest in making such determination, including without limitation if required by such laws, certain fees and other costs).

“ Multiemployer Plan ” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

“ Net Debt Incurrence Proceeds ” means, with respect to any Debt Incurrence, all cash proceeds received by the Borrower or any of its Subsidiaries from such Debt Incurrence after payment of, or provision for, all brokerage commissions and other reasonable out-of-pocket fees and expenses actually incurred in connection therewith in favor of any Person not an Affiliate of the Borrower or any other Loan Party.

“ Net Equity Issuance Proceeds ” means, in respect of any issuance of Equity Interests of the Borrower or any of its Subsidiaries, cash proceeds received in connection therewith, net of underwriting discounts and commissions and out-of-pocket costs and expenses and disbursements paid or incurred in connection therewith in favor of any Person not an Affiliate of the Borrower or any other Loan Party.

“ Net Proceeds ” means proceeds in cash, checks or other cash equivalent financial instruments (including Cash Equivalents) as and when received by the Person making an Asset Disposition and insurance proceeds received on account of an Event of Loss, net of: (a) in the event of an Asset Disposition (i) the direct costs relating to such Asset Disposition excluding amounts payable to any Loan Party or any Affiliate of a Loan Party, (ii) sale, use or other transaction taxes incurred as a result thereof, and (iii) amounts required to be applied to repay principal, interest and prepayment premiums and penalties on Debt secured by a Lien on the Property which is the subject of such Asset Disposition, (iv) any amounts required to be deposited into escrow in connection with the closing of such Asset Disposition (until any such amounts are released therefrom to Borrower or any of its Subsidiaries), (v) the amount of any reserve for adjustment in respect of the sale price of such asset or assets as determined in accordance with GAAP, (vi) appropriate amounts to be provided by Borrower or any of its Subsidiaries as a reserve against any liabilities associated with such Asset Disposition, as determined in accordance with GAAP, and (vii) all distributions and other payments required to be made to minority interest holders in Subsidiaries or joint ventures as a result of such Asset Disposition and (b) in the event of an Event of Loss, (i) all money actually applied or to be applied to repair or reconstruct the damaged Property or Property affected by the condemnation or taking, (ii) all of the costs and expenses incurred in connection with the collection of such proceeds, award or other payments, and (iii) any amounts retained by or paid to parties having superior rights to such proceeds, awards or other payments.

 “ Note ” means a promissory note made by the Borrower in favor of the Lender evidencing Advances made by the Lender substantially in the form of Exhibit B .

“ Notice of Advance ” means a notice of Advance in the form of the attached Exhibit C signed by a Responsible Officer of the Borrower.

“ Notice of Continuation ” means a notice of continuation in the form of the attached Exhibit F signed by a Responsible Officer of the Borrower.

“ Obligations ” means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document with respect to any Advance, Letter of Credit or any Swap Contract to which the Lender, the Issuing Bank or any of their Affiliates is a party, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any law relating to bankruptcy, insolvency or reorganization or relief of debtors naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.

“ Off-Balance Sheet Liability ” of a Person means (a) any asset or receivable securitization transaction of such Person, or (b) Synthetic Lease Obligations, other than any lease that constitutes an Operating Lease.

“ Operating Lease ” of a Person means any lease of Property (other than a Capital 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.

“ Orderly Liquidation Value ” means with respect to any Complete Rig, the orderly liquidation value thereof as established by the most recent Appraisal Report delivered to the Lender in accordance with Section 5.14(a) hereof, taking into account any Event of Loss or Asset Disposition that has occurred since the most recent Appraisal Report was delivered with respect to such Rig.

“ Other Taxes ” means all present or future stamp or documentary taxes or any other excise, value added (VAT) or property taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

“ PBGC ” means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.

“ Pension Plan ” means any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by the Borrower or any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years.

“ Permitted Liens ” has the meaning set forth in Section 6.01 .

“ Person ” means and includes natural persons, corporations, limited partnerships, general partnerships, limited liability companies, limited liability partnerships, joint stock companies, joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and governments and agencies and political subdivisions thereof.

“ Plan ” means any Pension Plan or any Multiemployer Plan.

“ Pledge Agreement ” means the Pledge Agreement in substantially the form of Exhibit D among one or more of the Loan Parties and the Lender for the benefit of the Secured Parties.

“ Pledged Rigs ” means the Initial Pledged Rigs and Rigs becoming subject to an Acceptable Security Interest pursuant to Section 5.09 .

“ Property ” of any Person means any interest of such Person in any property or asset (whether real, personal or mixed, tangible or intangible).

“ Qualified Investment ” means expenditures incurred to acquire or repair assets owned (or to be owned) by a Loan Party of the same type as those subject to such Reinvestment Event or equipment or real property owned (or to be owned) by and useful in the business of a Loan Party.

“ Regulations T, U, X and D ” means Regulations T, U, X, and D of the Federal Reserve Board, as the same is from time-to-time in effect, and all official rulings and interpretations thereunder or thereof.

“ Reimbursement Obligations ” means all of the obligations of the Borrower to reimburse the Issuing Bank for amounts paid by the Issuing Bank under Letters of Credit as established by the Letter of Credit Applications and Section 2.14(c) .

“ Reinvestment Deferred Amount ” means the aggregate Net Proceeds received by any Loan Party in connection with an Asset Disposition or an Event of Loss that are duly specified in a Reinvestment Notice as not being required to be initially applied to prepay the Advances pursuant to Section 2.07(c)(iii) as a result of the delivery of such Reinvestment Notice.

“ Reinvestment Event ” means any Asset Disposition or Event of Loss in respect of which the Borrower has delivered a Reinvestment Notice.

“ Reinvestment Notice ” means a written notice executed by the Borrower stating that no Default or Event of Default has occurred and is continuing and stating that the Borrower intends and expects to use all or a specified portion of the Net Proceeds of a Reinvestment Event specified in such notice to make a Qualified Investment.

“ Reinvestment Prepayment Amount ” means with respect to any Reinvestment Event, the Reinvestment Deferred Amount relating thereto less the portion, if any, thereof expended prior to the relevant Reinvestment Prepayment Date to make a Qualified Investment.

“ Reinvestment Prepayment Date ” means the earlier of (a) the date occurring six months after such Reinvestment Event and (b) the date on which the Borrower shall have determined not to, or shall have otherwise ceased to, make a Qualified Investment with all or any portion of the relevant Reinvestment Deferred Amount.

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

“ Release ” means any release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching or migration into or through the environment or within or upon any building, structure, facility or fixture.

“ Reportable Event ” means any of the events set forth in Section 4043(c) of ERISA for which notice to the PBGC has not been waived.

“ Responsible Officer ” for any Person means, the Chief Executive Officer, President, Chief Financial Officer, any Executive or Senior Vice President, Vice President, Treasurer or any other member of senior management of such Person.

“ Restricted Payment ” means: (a) the declaration or making by the Borrower or any Subsidiary of any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interest of such Person; (b) any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Equity Interests in the Borrower or any Subsidiary or any option, warrant or other right to acquire any such Equity Interests in the Borrower or any Subsidiary; (c) any payment or prepayment (scheduled or otherwise) of principal of, premium, if any, or interest on, any Subordinated Debt, or the issuance of a notice of an intention to do any of the foregoing of the Borrower or any Subsidiary; and (d) any management fee, consulting fee, advisory fee, investment banking or transaction fee or commission, bonus, salary, or similar remuneration paid or payable, or any loans, advances or similar investments made, to any Affiliate of the Borrower or any payment to any such Affiliate with respect to any allocation of overhead costs and expenses, excluding salaries, bonuses and commissions payable to officers, directors and employees and directors’ fees and executive compensation and benefits, in each case, payable in the ordinary course of business consistent with past practice.

“ Rig ” means a drilling rig and its substructure, engine, braking system, drill pipe, drill collar and related equipment and parts (including spare parts related to such drilling rig).

“ Rig Utilization ” means, at any time of its determination, the percentage obtained by dividing (a) the number of Active Rigs of the Loan Parties by (b) the aggregate number of Complete Rigs of the Loan Parties at such time.

“ Sale and Leaseback Transaction ” means a transaction or series of transactions pursuant to which the Borrower or any Subsidiary shall sell or transfer to any Person (other than the Borrower or a Subsidiary) any Property, whether now owned or hereafter acquired, and, as part of the same transaction or series of transactions, the Borrower or such Subsidiary shall rent or lease as lessee (other than pursuant to a capital lease), or similarly acquire the right to possession or use of, such Property.

“ SEC ” means the Securities and Exchange Commission, and any successor entity.

“ Secured Parties ” means the Lender, the Issuing Bank, the Swap Counterparties and the beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document.

“ Security Agreement ” means the Security Agreement in substantially the form of Exhibit E among one or more of the Loan Parties and the Lender for the benefit of the Secured Parties.

“ Security Documents ” means the Security Agreement, the Pledge Agreement and each other document, instrument or agreement executed in connection therewith or otherwise executed in order to secure all or a portion of the Obligations.

“ Subordinated Debt ” means any Debt of the Borrower or any of its Subsidiaries which is subordinated to their respective obligations under the Loan Documents in a manner satisfactory to the Lender and which is otherwise on terms and conditions satisfactory to the Lender.

“ Subsidiary ” of a Person means any corporation, association, partnership or other business entity of which more than 50% of the outstanding Equity Interests having by the terms thereof ordinary voting power under ordinary circumstances to elect a majority of the board of directors or Persons performing similar functions (or, if there are no such directors or Persons, having general voting power) of such entity (irrespective of whether at the time Equity Interests of any other class or classes of such entity shall or might have voting power upon the occurrence of any contingency) is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more Subsidiaries of such Person or by one or more Subsidiaries of such Person.  Unless otherwise indicated herein, each reference to the term “Subsidiary” shall mean a Subsidiary of the Borrower.

“ Swap Contract ” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “ Master Agreement ”), including any such obligations or liabilities under any Master Agreement.

“ Swap Counterparty ” means the Lender, the Issuing Bank or any of their respective Affiliates that is party to a Swap Contract with the Borrower or one of its Subsidiaries.

“ Swap Termination Value ” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include the Lender, the Issuing Bank or any of their respective Affiliates).

“ Synthetic Lease Obligation ” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of Property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).

“ Taxes ” means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“ Total Leverage Ratio ” means, as of the last day of any fiscal quarter of the Borrower, the ratio of (a) Consolidated Debt (other than all obligations in respect of letters of credit) to (b) Consolidated EBITDA for the four fiscal quarters then ended (or such other period as provided for in the definition thereof).

“ UCC ” means the Uniform Commercial Code as in effect on the date hereof in the State of New York, as amended from time to time, and any successor statute.

“ Unfunded Pension Liability ” means the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year.

“ Upfront Fee ” has the meaning set forth in Section 2.03(b) .

“ Voting Stock ” means, with respect to any Person, Equity Interests of such Person of any class or classes, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of members of the Board of Directors (or Persons performing similar functions) of such Person.

“ Warrant ” means the Warrant dated as of the date hereof to purchase shares of common stock, par value $.01 per share, of the Borrower, which Warrant was initially issued to the Initial Holder.

“ Warrant Agreement ” means the Warrant Agreement dated as of the date hereof between the Borrower and the Initial Holder.

“ Wholly-Owned Subsidiary ” of any Person shall mean a subsidiary of such Person of which Equity Interests representing 100% of the Equity Interests (other than directors’ qualifying shares, if any) are, at the time any determination is being made, owned, controlled or held 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.

Section 1.02   Computation of Time Periods .  In this Agreement in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to but excluding”.

Section 1.03   Accounting Terms .

(a)   For purposes of this Agreement, all accounting terms not otherwise defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Annual Financial Statements.

(b)   If at any time any Accounting Change (as defined below) would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Lender shall so request, the Lender and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP; provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Lender financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.  “Accounting Changes” means: (A) changes in accounting principles required by GAAP and implemented by the Borrower; (B) changes in accounting principles recommended by the Borrower’s accountants; and (C) changes in carrying value of the Borrower’s or any of its Subsidiaries’ assets, liabilities or equity accounts resulting from any adjustments that, in each case, were applicable to, but not included in, the Audited Financial Statements.

(c)   In addition, all calculations and defined accounting terms used herein shall, unless expressly provided otherwise, when referring to any Person, refer to such Person on a consolidated basis and mean such Person and its consolidated subsidiaries.

Section 1.04   Miscellaneous .  The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (e) any reference to any law or regulation herein shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time and (f) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

Section 2.01   The Advances .  The Lender agrees, on the terms and conditions set forth in this Agreement, to make Advances to the Borrower from time to time on any Business Day before the Maturity Date in an aggregate amount up to but not to exceed at any time outstanding (i) the lesser of (A) its Commitment and (B) the Borrowing Base, minus (ii) the Letter of Credit Exposure.  Each Advance shall be in an aggregate amount not less than $1,000,000.00 and in integral multiples of $1,000,000.00 in excess thereof.  Within the limits of the Lender’s Commitment, the Borrower may from time to time borrow, prepay pursuant to Section 2.07(b) and reborrow under this Section 2.01 .

Section 2.02   Method of Advance .

(a)   Notice .  Each Advance shall be made pursuant to a Notice of Advance, given not later than (i) except as set forth in subsection (a)(ii) below, 1:00 p.m. (New York time) on the second Business Day before the requested Advance Date and (ii) if the Advance is the first Advance after the Closing Date, 1:00 p.m. (New York time) at least one Business Day in advance of the requested Advance Date, in each case to the Lender’s Applicable Lending Office.  The Notice of Advance shall be in writing specifying (A) the Advance Date (which shall be a Business Day), (B) the aggregate amount of such Advance, (C) a maturity date (a “ Disbursement Maturity Date ”) for such Advance which shall be the same as the last day of the requested Interest Period and shall in no event be a date later than the Maturity Date, and (D) the requested Interest Period.  After fulfillment of the applicable conditions set forth in Article III, the Lender will promptly make the amount of the Advance available to the Borrower not later than 2:00 p.m. (New York time) at such account as the Borrower shall specify in writing to the Lender.

(b)   Extension of Disbursement Maturity Date .  The Borrower may elect to extend the Disbursement Maturity Date for any Advance by delivery of an irrevocable Notice of Continuation to the Lender at its Applicable Lending Office no later than 2:00 p.m. (New York time) at least two Business Days in advance of the applicable Disbursement Maturity Date for such Advance.  Each such Notice of Continuation shall be in writing or by telex, telecopier or telephone, confirmed promptly in writing specifying (a) the new requested Disbursement Maturity Date for such Advance (which shall be a Business Date) and which shall be the same as the last day of the requested Interest Period and shall in no event be a date later than the Maturity Date, and (b) the requested Interest Period.  The Continuation shall be subject to the fulfillment of the applicable conditions set forth in Article III.

(c)   Certain Limitations .  Notwithstanding anything in paragraphs (a) and (b) above:

(i)   at no time shall there be more than five Interest Periods applicable to outstanding Advances;

(ii)   if the Lender shall, at least one Business Day before the date of any requested Advance, notify the Borrower that any Change in Law makes it unlawful for the Lender or any of its Applicable Lending Offices to perform its obligations under this Agreement to make Advances, or to fund or maintain Advances, the right of the Borrower to obtain Advances from the Lender shall be suspended until the Lender shall notify the Borrower that the circumstances causing such suspension no longer exist;

(iii)   if the Lender is unable to determine the Eurodollar Rate for any requested Advance and the Lender gives telephonic or telecopy notice thereof to the Borrower as soon as practicable, the right of the Borrower to obtain Advances from the Lender and the obligation of the Lender to make such Advances shall be suspended until the Lender shall notify the Borrower that the circumstances causing such suspension no longer exist;

(iv)   if the Lender shall determine prior to the date of any requested Advance, that the Eurodollar Rate will not adequately reflect the cost to the Lender of making or funding the Advance and the Lender gives telephonic or telecopy notice thereof to the Borrower as soon as practicable, the right of the Borrower to obtain Advances and the obligation of the Lender to make Advances shall be suspended until the Lender shall notify the Borrower that the circumstances causing such suspension no longer exist;

(v)   if the Borrower shall fail to select the duration or Continuation of any Interest Period for any Advances in accordance with the provisions contained in the definition of “Interest Period” in Section 1.01 and paragraphs (a) and (b) above or shall fail to deliver a Notice of Continuation, the Lender will forthwith so notify the Borrower and such Advances will be made available to the Borrower on the date of such Advance as Advances with a one month Interest Period; and

(vi)   no Advance may be Continued as an Advance at any time when a Default or an Event of Default has occurred and is continuing.

(d)   Notices Irrevocable .  Each Notice of Advance and each Notice of Continuation delivered by the Borrower shall be irrevocable and binding on the Borrower.  The Borrower shall indemnify the Lender against any loss, out-of-pocket cost or expense actually incurred by the Lender as a result of any failure to fulfill on or before the Advance Date or the date specified in such Notice of Continuation for such Advance the applicable conditions set forth in Article III , including, without limitation, any loss, cost or expense actually incurred by reason of the liquidation or reemployment of deposits or other funds acquired by the Lender to fund the Advance to be made by the Lender when such Advance, as a result of such failure, is not made on such date.

(e)   Notes; Evidence of Indebtedness .

(i)   The Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to the Lender resulting from the Advances made by the Lender from time to time, including the amounts of principal and interest payable and paid to the Lender from time to time hereunder.

(ii)   The Lender shall also maintain accounts in which it will record (A) the amount of each Advance made hereunder, the Disbursement Maturity Date applicable thereto and the Interest Period with respect thereto, (B) the amount of any principal or interest due and payable or to become due and payable from the Borrower to the Lender hereunder and (C) the amount of any sum received by the Lender hereunder from the Borrower.

(iii)   The entries maintained in the accounts maintained pursuant to paragraphs (i) and (ii) above shall be conclusive evidence of the existence and amounts of the Obligations therein recorded absent manifest error; provided , however , that the failure of the Lender to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Obligations in accordance with their terms.

(iv)   Each Advance owing to the Lender shall be evidenced by a Note.  The Borrower shall execute and deliver to the Lender a Note payable to the order of the Lender and its registered assigns.  Thereafter, the Advances evidenced by such Note and interest thereon shall at all times (including after any assignment pursuant to Section 9.06 ) be represented by one or more Notes payable to the order of the payee named therein or any assignee pursuant to Section 9.06 , except to the extent that the Lender or assignee subsequently returns any such Note for cancellation and requests that such Advances once again be evidenced as described in paragraphs (i) and (ii) above.

Section 2.03   Fees .

(a)   Commitment Fees .  The Borrower agrees to pay to the Lender a commitment fee (a “ Commitment Fee ”) on the average daily amount by which the Lender’s Commitment exceeds the sum of (i) the aggregate principal amount of the Lender’s outstanding Advances and (ii) the Letter of Credit Exposure, from the Closing Date until the Maturity Date at a rate per annum equal to 0.50%.  The Commitment Fee payable pursuant to this clause (a) is due quarterly in arrears on the last Business Day of each March, June, September and December commencing September 30, 2009, and on the Maturity Date.

(b)   Upfront Fee .  The Borrower agrees to pay to the Lender an upfront fee (the “ Upfront Fee ”) equal to 1.50% of the aggregate Commitment (i.e., $1,125,000.00).  The Upfront Fee payable pursuant to this clause (b) is due on the Closing Date. The Upfront Fee shall be netted against the initial Advance.

(c)   Letter of Credit Fees .

(i)   The Borrower agrees to pay to the Issuing Bank a letter of credit fee at a per annum rate equal to 1.50%.  Each such fee shall be based on the maximum amount available to be drawn from time to time under such Letter of Credit from the date of issuance of the Letter of Credit until its expiration date and shall be payable quarterly in arrears on the last Business Day of each March, June, September and December until the earlier of its expiration date or the Maturity Date.  All such fees shall be computed on the basis of the actual number of days elapsed in a year of 360 days.

(ii)   In addition, the Borrower agrees to pay to the Issuing Bank all customary transaction costs and fees charged by the Issuing Bank in connection with the issuance of a Letter of Credit for the Borrower’s account, as well as any costs and expenses payable under Section 2.14(a) in respect of confirmations of Letters of Credit, all such costs and fees to be due and payable on the date specified by the Issuing Bank in the invoice for such costs and fees.

(d)   Generally .  All such fees shall be paid on the dates due, in immediately available Dollars to the Lender, except that the fees payable pursuant to Section 2.03(c) shall be paid directly to the Issuing Bank.  Once paid, absent manifest error, none of these fees shall be refundable under any circumstances.

Section 2.04   Reduction of the Commitment .

(a)   The Borrower shall have the right, upon at least five Business Days’ irrevocable notice to the Lender, to terminate in whole or reduce ratably in part the unused portion of the Commitment; provided that each partial reduction of Commitment shall be in the minimum aggregate amount of $5,000,000.00 and in integral multiples of $1,000,000.00 in excess thereof (or such lesser amount as may then be outstanding); and provided further that the aggregate amount of the Commitment may not be reduced below the sum of the aggregate principal amount of the outstanding Advances and the Letter of Credit Exposure.

(b)   Any reduction or termination of the Commitment pursuant to this Section 2.04 shall be permanent, with no obligation of the Lender to reinstate such Commitment and the Commitment Fee provided for in Section 2.03(a) shall thereafter be computed on the basis of the Commitment as so reduced.

Section 2.05   Repayment .  The Borrower shall repay the outstanding principal amount of each Advance on the applicable Disbursement Maturity Date therefor, provided, however, that, in all events the Borrower shall repay the outstanding principal amount of the Advances on the Maturity Date.

Section 2.06   Interest .  The Borrower shall pay interest on the unpaid principal amount of each Advance made by the Lender to it from the date of such Advance until such principal amount shall be paid in full, at the following rates per annum:

(a)   Advances .  The Borrower shall pay interest on Advances at a rate per annum equal to the Eurodollar Rate for such Interest Period plus the Applicable Margin in effect on each day of such Interest Period, payable in arrears on the last day of such Interest Period, and, in the case of Interest Periods of greater than three months, on each Business Day which occurs at three month intervals from the first day of such Interest Period.

(b)   Additional Interest on Advances .  The Borrower shall pay to the Lender, so long as the Lender shall be required under regulations of any Governmental Authority having jurisdiction over it to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency Liabilities, additional interest on the unpaid principal amount of the Advances of the Lender, from the effective date of such Advance until such principal amount is paid in full, at an interest rate per annum equal at all times to the remainder obtained by subtracting (i) the Eurodollar Rate for the Interest Period for such Advance from (ii) the rate obtained by dividing such Eurodollar Rate by a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage of the Lender for such Advances for such Interest Period, payable on each date on which interest is payable on such Advance.  Such additional interest payable to the Lender shall be determined by the Lender and notified to the Borrower by the Lender (such notice to include the calculation of such additional interest, which calculation shall be conclusive absent manifest error, and be accompanied by any evidence indicating the need for such additional interest as the Borrower may reasonably request).

(c)   Usury Recapture .  In the event the rate of interest chargeable under this Agreement at any time (calculated after giving affect to all items charged which constitute “interest” under applicable laws, including fees and margin amounts, if applicable) is greater than the Maximum Rate, the unpaid principal amount of the Advances shall bear interest at the Maximum Rate until the total amount of interest paid or accrued on the Advances equals the amount of interest which would have been paid or accrued on the Advances if the stated rates of interest set forth in this Agreement had at all times been in effect.

In the event, upon payment in full of the Advances, the total amount of interest paid or accrued under the terms of this Agreement and the Advances is less than the total amount of interest which would have been paid or accrued if the rates of interest set forth in this Agreement had, at all times, been in effect, then the Borrower shall, to the extent permitted by applicable law, pay the Lender an amount equal to the difference between (i) the lesser of (A) the amount of interest which would have been charged on its Advances if the Maximum Rate had, at all times, been in effect and (B) the amount of interest which would have accrued on its Advances if the rates of interest set forth in this Agreement had at all times been in effect and (ii) the amount of interest actually paid under this Agreement on its Advances.

In the event the Lender ever receives, collects or applies as interest any sum in excess of the Maximum Rate, such excess amount shall, to the extent permitted by law, be applied to the reduction of the principal balance of the Advances, and if no such principal is then outstanding, such excess or part thereof remaining shall be paid to the Borrower.

(d)   Default Interest .  If the Borrower shall default in the payment of the principal of or interest on any Advance or any other amount becoming due hereunder, by acceleration or otherwise, or under any other Loan Document, the Borrower shall on demand from time to time pay interest, to the extent permitted by law, on the outstanding Advances to but excluding the date of actual payment (after as well as before judgment) (a) in the case of overdue principal, at the rate otherwise applicable to such Advance pursuant to Section 2.06 plus 2.50% per annum and (b) in all other cases, at a rate per annum (computed on the basis of the actual number of days elapsed over a year of 360 days) equal to the rate that would be applicable to an Advance with an Interest Period of one month plus 2.50%.

Section 2.07   Prepayments .

(a)   Right to Prepay .  The Borrower shall have no right to prepay any principal amount of any Advance except as provided in this Section 2.07 .  The Borrower shall pay any amount required under Section 2.08 in connection with any prepayment under this Section 2.07 .

(b)   Optional .  The Borrower may elect to prepay, in whole or in part, any of the Advances owing by it to the Lender, after giving prior written notice of such election by 2:00 p.m. (New York time) at least two Business Days before such prepayment to the Lender stating the proposed date and aggregate principal amount of such prepayment.  If any such notice is given, the Borrower shall prepay Advances comprising part of the same Advance in whole or ratably in part in an aggregate principal amount equal to the amount specified in such notice, together with accrued and unpaid interest to the date of such prepayment on the principal amount prepaid and amounts, if any, required to be paid pursuant to Section 2.08 as a result of such prepayment being made on such date; provided , however , that each partial prepayment shall be in an aggregate principal amount not less than $1,000,000.00 and in integral multiples of $1,000,000.00 in excess thereof (or such lesser amount as may then be outstanding).

(c)   Mandatory Prepayments of Advances .

(i)   Deficiency .  On any date on which the outstanding principal amount of the Advances plus the Letter of Credit Exposure exceeds the lesser of (A) the aggregate Commitment and (B) the Borrowing Base, the Borrower agrees to make a mandatory prepayment of the Advances, together with accrued and unpaid interest to the date of such prepayment on the principal amount prepaid and amounts, if any, required to be paid pursuant to Section 2.08 as a result of such prepayment being made on such date, in the amount of such excess, or, if the Advances have been repaid in full, make deposits into the LC Cash Collateral Account in the remaining amount of such excess to provide cash collateral for the Letter of Credit Exposure.

(ii)   Reduction of Commitment .  On the date of each reduction of the aggregate Commitment pursuant to Section 2.04 , the Borrower agrees to make a prepayment in respect of the outstanding amount of the Advances to the extent, if any, that the aggregate unpaid principal amount of all Advances plus the Letter of Credit Exposure exceeds the lesser of (i) the Commitment and (ii) the Borrowing Base.

(iii)   Asset Dispositions .  If any Loan Party or any of its Subsidiaries shall at any time or from time to time:

(A)   make or agree to make an Asset Disposition; or

(B)   suffer an Event of Loss;

then (A) Borrower shall promptly notify the Lender of such proposed Asset Disposition or Event of Loss (including the amount of the estimated Net Proceeds to be received by any Loan Party and/or any of its Subsidiaries in respect thereof) and (B) promptly upon receipt by such Loan Party and/or any of its Subsidiaries of the Net Proceeds of such Asset Disposition or Event of Loss, Borrower shall deliver, or cause to be delivered, such Net Proceeds to the Lender as a prepayment of the Advances, together with accrued and unpaid interest to the date of such prepayment on the principal amount prepaid and amounts, if any, required to be paid pursuant to Section 2.08 as a result of such prepayment being made on such date, or if the Advances have been repaid in full, make deposits into the LC Cash Collateral Account in the remaining amount of such excess to provide cash collateral for the Letter of Credit Exposure; provided, however, that notwithstanding the foregoing, in the case of any Net Proceeds constituting the Reinvestment Deferred Amount with respect to a Reinvestment Event, Borrower shall repay the Advances in an amount equal to the Reinvestment Prepayment Amount applicable to such Reinvestment Event, if any, on the Reinvestment Prepayment Date with respect to such Reinvestment Event.

(iv)   Equity Issuance .

(A)   If an Event of Default has occurred and is continuing, promptly upon the receipt by any Loan Party or any of their respective Subsidiaries of the Net Equity Issuance Proceeds of the issuance of equity securities other than to the Borrower or any of its Subsidiaries, Borrower shall deliver, or cause to be delivered, to the Lender an amount equal to such Net Equity Issuance Proceeds for application to the prepayment of the Advances in the manner described in (B) below.

(B)   Provided that no Default or Event of Default has occurred and is continuing, promptly upon the receipt by any Loan Party or any of their respective Subsidiaries of the Net Equity Issuance Proceeds of the issuance of equity securities other than to the Borrower or any of its Subsidiaries, Borrower shall (1) if any Subordinated Debt permitted pursuant to Section 6.02(g) is then outstanding, prepay such Subordinated Debt by an amount equal to such Net Equity Issuance Proceeds and (2) to the extent of any remaining Net Equity Issuance Proceeds or if no Subordinated Debt is then outstanding, deliver, or cause to be delivered, to the Lender an amount equal to such Net Equity Issuance Proceeds, for application to the Advances, together with accrued interest to the date of such prepayment on the principal amount prepaid and amounts, if any, required to be paid pursuant to Section 2.08 as a result of such prepayment being made on such date, or if the Advances have been repaid in full, make deposits into the LC Cash Collateral Account in the remaining amount of such excess to provide cash collateral for the Letter of Credit Exposure; provided, however, that notwithstanding the foregoing, if no Default or Event of Default has occurred and is continuing, the Borrower may use the Net Equity Issuance Proceeds as cash consideration for any Acquisition permitted by Section 6.05(a) occurring on or before 90 days after the receipt thereof.  In the event, the Borrower shall have determined not to, or shall have otherwise ceased to, make an Acquisition during such 90-day period, the Borrower shall apply such Net Equity Issuance Proceeds to the prepayment of Advances as described above.

(C)           Notwithstanding the provisions of paragraph (B) above, unless the Lender otherwise consents the Net Equity Issuance Proceeds resulting from the exercise of the Warrants shall be applied to the prepayment of the Revolving Advances, together with accrued interest to the date of such prepayment on the principal amount prepaid and amounts, if any, required to be paid pursuant to Section 2.08 as a result of such prepayment being made on such date, or if the Revolving Advances have been repaid in full, make deposits into the LC Cash Collateral Account in the remaining amount of such excess to provide cash collateral for the Letter of Credit Exposure.

(v)   Debt Incurrence .  Promptly upon the receipt by any Loan Party or any of their respective Subsidiaries of the Net Debt Incurrence Proceeds from any Debt Incurrence, Borrower shall deliver, or cause to be delivered, such Net Debt Incurrence Proceeds to the Lender for distribution to the Lender as a prepayment of the Advances, together with accrued and unpaid interest to the date of such prepayment on the principal amount prepaid.

(vi)   Application of Prepayments .  Each prepayment pursuant to this Section 2.07(c) shall be accompanied by accrued interest on the amount prepaid to the date of such prepayment and amounts, if any, required to be paid pursuant to Section 2.08 as a result of such prepayment being made on such date.

(d)   Illegality .  If the Lender shall notify the Borrower that any Change in Law makes it unlawful for the Lender or its Applicable Lending Office to perform its obligations under this Agreement or to make or maintain Advances then outstanding hereunder, the Borrower shall, no later than 2:00 p.m. (New York time) (i) (A) if not prohibited by any Legal Requirement to maintain such Advances for the duration of the Interest Period, on the last day of the Interest Period for each outstanding Advance or (B) if prohibited by any Legal Requirement to maintain such Advances for the duration of the Interest Period, on the second Business Day following its receipt of such notice, prepay all Advances of the Lender then outstanding, together with accrued and unpaid interest on the principal amount prepaid to the date of such prepayment and amounts, if any, required to be paid pursuant to Section 2.08 as a result of such prepayment being made on such date, and (ii) the right of the Borrower to obtain Advances shall be suspended until the Lender shall notify the Borrower that the circumstances causing such suspension no longer exist.  The Lender agrees to use commercially reasonable efforts (consistent with its internal policies and subject to legal and regulatory restrictions) to designate a different Applicable Lending Office if the making of such designation would avoid the effect of this paragraph and would not, in the reasonable judgment of the Lender, be otherwise disadvantageous to the Lender.

(e)   Effect of Notice .  All notices given pursuant to this Section 2.07 shall be irrevocable and binding upon the Borrower.

Section 2.08   Funding Losses .  If (a) any payment of principal of any Advance is made other than on the last day of the Interest Period for such Advance as a result of any payment pursuant to Section 2.07 or the acceleration of the maturity of the Advances pursuant to Article VII or (b) if the Borrower fails to make a principal or interest payment with respect to any Advance on the date such payment is due and payable, the Borrower shall, within three Business Days of any written demand sent by the Lender to the Borrower, pay to the Lender any amounts (without duplication of any other amounts payable in respect of breakage costs) required to compensate the Lender for any additional losses, out-of-pocket costs or expenses which it may reasonably incur as a result of such payment or nonpayment, including, without limitation, any loss, cost or expense actually incurred by reason of the liquidation or reemployment of deposits or other funds acquired by the Lender to fund or maintain such Advance.  A certificate of the Lender setting forth any amount or amounts that the Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error.

Section 2.09   Increased Costs .

(a)   Increased Costs Generally .  If any Change in Law shall:

(i)   impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, the Lender (except any reserve requirement reflected in the Eurodollar Rate Reserve Percentage) or the Issuing Bank;

(ii)   subject the Lender or the Issuing Bank to any tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any participation in a Letter of Credit or any Advance made by it, or change the basis of taxation of payments to the Lender or the Issuing Bank in respect thereof (except for Indemnified Taxes or Other Taxes covered by Section 2.11 and the imposition of, or any change in the rate of, any Excluded Tax incurred by the Lender or the Issuing Bank); or

(iii)   impose on the Lender, the Issuing Bank, or the London interbank market any other condition, cost or expense affecting this Agreement or Advances made by the Lender, the Issuing Bank, or any Letter of Credit or participation therein;

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

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

(c)   Certificates for Reimbursement .  A certificate of the Lender or the Issuing Bank setting forth the amount or amounts necessary to compensate the Lender or the Issuing Bank or any of their respective holding companies, as the case may be, as specified in paragraph (a) or (b) of this Section and delivered to the Borrower shall be conclusive absent manifest error.  The Borrower shall pay the Lender or the Issuing Bank, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.

(d)   Delay in Requests .  Failure or delay on the part of the Lender or the Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of the Lender’s or the Issuing Bank’s right to demand such compensation, provided that the Borrower shall not be required to compensate the Lender or the Issuing Bank pursuant to this Section for any increased costs incurred or reductions suffered more than nine months prior to the date that the Lender or the Issuing Bank, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of the Lender’s or the Issuing Bank’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).

Section 2.10   Payments and Computations .

(a)   Payment Procedures .  The Borrower shall make each payment under this Agreement not later than 1:00 p.m. (New York time) on the day when due to the Lender at the Lender’s Applicable Lending Office in immediately available funds.  Each Advance shall be repaid and each payment of interest thereon shall be paid in Dollars.  All payments shall be made without setoff, deduction, or counterclaim.

(b)   Computations .  All computations of interest and of fees shall be made by the Lender, on the basis of a year of 360 days, in each case for the actual number of days (including the first day, but excluding the last day) occurring in the period for which such interest or fees are payable.  Each determination by the Lender of an interest rate shall be conclusive and binding for all purposes, absent manifest error.

(c)   Non-Business Day Payments .  Whenever any payment shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or fees, as the case may be.

Section 2.11   Taxes .

(a)   Payments Free of Taxes .  Any and all payments by or on account of any obligation of any Loan Party hereunder or under any other Loan Document shall be made free and clear of and without reduction or withholding for any Indemnified Taxes or Other Taxes, provided that if any Loan Party shall be required by any Legal Requirement to deduct any Indemnified Taxes (including any Other Taxes) from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Lender or the Issuing Bank, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with Legal Requirements.

(b)   Payment of Other Taxes by the Borrower .  Without limiting the provisions of paragraph (a) above, the Borrower shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

(c)   Indemnification by the Borrower .  The Borrower shall indemnify the Lender and the Issuing Bank, within 10 days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by the Lender or the Issuing Bank, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to the Borrower by the Lender or the Issuing Bank (with a copy to the Lender), or by the Lender on its own behalf or on behalf of the Issuing Bank, shall be conclusive absent manifest error.

(d)   Evidence of Payments .  As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Lender the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Lender.

(e)   Status of Lenders .  Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is resident for tax purposes, or any treaty to which such jurisdiction is a party, with respect to payments hereunder or under any other Loan Document shall deliver to the Borrower (with a copy to the Lender), at the time or times prescribed by applicable law or reasonably requested by the Borrower or the Lender or the Issuing Bank, 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 of withholding.  In addition, the Lender or the Issuing Bank, if requested by the Borrower, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower as will enable the Borrower to determine whether or not the Lender or the Issuing Bank is subject to backup withholding or information reporting requirements.

Without limiting the generality of the foregoing, in the event that the Borrower is resident for tax purposes in the United States of America, any Foreign Lender shall deliver to the Borrower, the Lender and the Issuing Bank (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes the Lender or the Issuing Bank under this Agreement (and from time to time thereafter upon the request of the Borrower, the Lender or the Issuing Bank, but only if such Foreign Lender is legally entitled to do so), whichever of the following is applicable:

(i)   two duly completed copies of Internal Revenue Service Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States of America is a party,

(ii)   two duly completed copies of Internal Revenue Service Form W-8ECI,

(iii)   in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, (x) a certificate to the effect that such Foreign Lender is not (A) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrower within the meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code and (y) two duly completed copies of Internal Revenue Service Form W-8BEN, or

(iv)   any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in United States Federal withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower to determine the withholding or deduction required to be made.

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

Section 2.12   Reserved .

Section 2.13   Applicable Lending Offices .  The Lender may book its Advances at any Applicable Lending Office selected by it and may change its Applicable Lending Office from time to time.  All terms of this Agreement shall apply to any such Applicable Lending Office and the Advances shall be deemed held by the Lender for the benefit of such Applicable Lending Office.  The Lender may, by written notice to the Borrower, designate replacement or additional Applicable Lending Offices through which Advances will be made by it and for whose account repayments are to be made.

Section 2.14   Letters of Credit .

(a)   Issuance and Confirmation .  Subject to the terms of this Agreement, from time to time from the Closing Date until 15 Business Days before the Maturity Date, at the request of the Borrower, the Issuing Bank shall, on the terms and conditions hereinafter set forth, issue, increase, or extend the expiration date of Letters of Credit for the account of the Borrower or for the account of any Subsidiary of the Borrower (in which case the Borrower and such Subsidiary shall be co-applicants with respect to such Letter of Credit) on any Business Day.  No Letter of Credit will be issued, increased, or extended:

(i)   if such issuance, increase, or extension would cause the Letter of Credit Exposure to exceed the lesser of (A) $15,000,000 and (B) the lesser of (1) the aggregate Commitment minus the aggregate outstanding principal amount of all Advances and (2) the Borrowing Base minus the aggregate outstanding principal amount of all Advances;

(ii)   unless such Letter of Credit has an expiration date not later than the earlier of (A) one year after the date of issuance thereof and (B) the Maturity Date; provided that, any such Letter of Credit with a one-year tenor may expressly provide that it is renewable at the option of the Issuing Bank for additional one-year periods (which shall in no event extend beyond the Maturity Date), provided that such Letter of Credit is cancelable upon at least 30 days’ notice given by the Issuing Bank to the beneficiary of such Letter of Credit;

(iii)   unless such Letter of Credit is in form and substance acceptable to the Issuing Bank in its reasonable discretion;

(iv)   unless the Borrower has delivered to the Issuing Bank a completed and executed Letter of Credit Application; and

(v)   unless such Letter of Credit is governed by any of (A) the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce Publication No. 500, (B) the Uniform Customs and Practice for Documentary Credits (2007 Revision), International Chamber of Commerce Publication No. 600 or (C) the International Standby Practices, International Chamber of Commerce Commission Publication No. 590, or any successor to such publications.  If the terms of any Letter of Credit Application referred to in the foregoing clause (iv) conflicts with the terms of this Agreement, the terms of this Agreement shall control.

The Borrower may request that the Issuing Bank arrange for any Letter of Credit issued to be confirmed by a bank identified by the Borrower in the Letter of Credit Application so long as such bank is willing to provide such confirmation (a “ Confirming Bank ”).  The Issuing Bank will endeavor to obtain such confirmation to the extent reasonably practicable, provided, that (a) all costs and expenses (including letter of credit confirmation fees) shall be the expense of the Borrower and neither the Issuing Bank nor any Lender shall be obligated to provide any collateral or other credit support to the Confirming Bank in respect of any such confirmation.

(b)   Participations .  Upon the date of the issuance or increase of a Letter of Credit occurring on or after the Closing Date, the Issuing Bank shall be deemed to have sold to the Lender and the Lender shall have been deemed to have purchased from the Issuing Bank a 100% participation in the related Letter of Credit Obligations.  In consideration and in furtherance of the foregoing, the Lender hereby absolutely and unconditionally agrees to pay to the Issuing Bank, 100% of each payment or disbursement made by the Issuing Bank pursuant to a Letter of Credit and not reimbursed by the Borrower (or, if applicable, another party pursuant to its obligations under any other Loan Document) forthwith on the date due as provided in Section 2.14(c) .  The Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or an Event of Default, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.  The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit.  The Issuing Bank shall as promptly as possible give telephonic notification, confirmed by fax, to the Lender and the Borrower of such demand for payment and whether the Issuing Bank has made or will make disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Bank and the Lender with respect to any such payment or disbursement.

(c)   Reimbursement .  The Borrower hereby agrees to pay on demand to the Issuing Bank in respect of each Letter of Credit issued for either of their account an amount equal to any amount paid by the Issuing Bank under or in respect of such Letter of Credit.  In the event the Issuing Bank makes a payment pursuant to a request for draw presented under a Letter of Credit and such payment is not promptly reimbursed by the Borrower on the same Business Day, the Issuing Bank shall give notice of such failure to pay to the Lender, and the Lender shall promptly reimburse the Issuing Bank for 100% of such payment, and such reimbursement shall be deemed for all purposes of this Agreement to constitute an Advance with a one month Interest Period to the Borrower from the Lender.  If such reimbursement is not made by the Lender to the Issuing Bank on the same day on which the Issuing Bank shall have made payment on any such draw, the Lender shall pay interest thereon to the Issuing Bank at a rate per annum equal to a rate determined by the Lender in accordance with banking industry rules on interbank compensation.  The Borrower hereby unconditionally and irrevocably authorizes, empowers, and directs the Lender to record and otherwise treat such payment under a Letter of Credit not immediately reimbursed by the Borrower as an Advance comprised of Advance with a one month Interest Period.

(d)   Obligations Unconditional .  The obligations of the Borrower under this Agreement in respect of each Letter of Credit shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, notwithstanding the following circumstances:

(i)   any lack of validity or enforceability of any Letter of Credit Documents, any Loan Document, or any term or provision therein;

(ii)   any amendment or waiver of or any consent to departure from all or any of the provisions of any Letter of Credit Document or any Loan Document;

(iii)   the existence of any claim, set-off, defense or other right that the Borrower, any other party guaranteeing or otherwise obligated with the Borrower, any subsidiary or other Affiliate thereof or any other Person may have at any time against any beneficiary or transferee of such Letter of Credit (or any Persons for whom any such beneficiary or any such transferee may be acting), the Issuing Bank, the Lender or any other Person, whether in connection with this Agreement, any other Loan Document, the transactions contemplated in this Agreement or in any Letter of Credit Documents or any unrelated transaction;

(iv)   any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect;

(v)   payment by the Issuing Bank under such Letter of Credit against presentation of a draft or other document that complies on its face with the terms of such Letter of Credit but in fact does not comply with the terms of such Letter of Credit; or

(vi)   any other act or omission to act or delay of any kind of the Issuing Bank, the Lender or any other Person in the absence of gross negligence or willful misconduct or any other event, circumstance or happening whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of the Borrower’s obligations hereunder;

provided that nothing in this Agreement shall be construed to excuse the Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by such Issuing Bank’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof.

(e)   Prepayments of Letters of Credit .  In the event that any Letters of Credit shall be outstanding or shall be drawn and not reimbursed 30 days prior to the Maturity Date, the Borrower shall pay to the Lender an amount equal to 105% of the Letter of Credit Exposure allocable to such Letters of Credit to be held in the LC Cash Collateral Account and applied in accordance with paragraph (g) below.

(f)   Liability of Issuing Bank .  The Borrower assumes all risks of the acts or omissions of any beneficiary or transferee of any Letter of Credit with respect to its use of such Letter of Credit.  Neither the Issuing Bank nor any of its officers or directors shall be liable or responsible for:

(i)   the use which may be made of any Letter of Credit or any acts or omissions of any beneficiary or transferee in connection therewith; or

(ii)   the validity or genuineness of documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged;

except that the Borrower shall have a claim against the Issuing Bank, and the Issuing Bank shall be liable to, and shall promptly pay to, the Borrower, to the extent of any direct, as opposed to consequential (claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law), damages suffered by the Borrower which the Borrower prove were caused by the Issuing Bank’s willful misconduct or gross negligence in determining whether documents presented under a Letter of Credit strictly comply with the terms of such Letter of Credit.  It is understood that the Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary and, in making any payment under any Letter of Credit (A) the Issuing Bank’s exclusive reliance on the documents presented to it under such Letter of Credit as to any and all matters set forth therein, including reliance on the amount of any draft presented under such Letter of Credit, whether or not the amount due to the beneficiary thereunder equals the amount of such draft and whether or not any document presented pursuant to such Letter of Credit proves to be insufficient in any respect, if such document on its face appears to be in order, and whether or not any other statement or any other document presented pursuant to such Letter of Credit proves to be forged or invalid or any statement therein proves to be inaccurate or untrue in any respect whatsoever and (B) any noncompliance in any immaterial respect of the documents presented under such Letter of Credit with the terms thereof shall, in each case, be deemed not to constitute willful misconduct or gross negligence of the Issuing Bank.

(g)   LC Cash Collateral Account .

(i)   If the Borrower is required to deposit funds in the LC Cash Collateral Account pursuant to Sections 2.07(c) , 2.14(e) , 7.02(b) or 7.03(b) , then the Borrower and the Lender shall establish the LC Cash Collateral Account and the Borrower shall execute any documents and agreements, including the Lender’s standard form assignment of deposit accounts, that the Lender requests in connection therewith to establish the LC Cash Collateral Account and grant the Lender an Acceptable Security Interest in such account and the funds therein.  The Borrower hereby pledges to the Lender and grants the Lender a security interest in the LC Cash Collateral Account, whenever established, all funds held in the LC Cash Collateral Account from time to time and all proceeds thereof as security for the payment of the Obligations.

(ii)   Funds held in the LC Cash Collateral Account shall be held as cash collateral for obligations with respect to Letters of Credit and promptly applied by the Lender at the request of the Issuing Bank to any reimbursement or other obligations under Letters of Credit that exist or occur.  To the extent that any surplus funds are held in the LC Cash Collateral Account above 105% of the Letter of Credit Exposure during the existence of an Event of Default the Lender may (A) hold such surplus funds in the LC Cash Collateral Account as cash collateral for the Obligations or (B) apply such surplus funds to any Obligations in any manner directed by the Lender.  If no Default or Event of Default exists, the Lender shall release to the Borrower at the Borrower’s written request any funds held in the LC Cash Collateral Account above the amounts required by Section 2.14(e) or otherwise.

(iii)   Funds held in the LC Cash Collateral Account shall be invested in Cash Equivalents maintained with, and under the sole dominion and control of, the Lender or in another investment if mutually agreed upon by the Borrower and the Lender, but the Lender shall have no other obligation to make any other investment of the funds therein.  The Lender shall exercise reasonable care in the custody and preservation of any funds held in the LC Cash Collateral Account and shall be deemed to have exercised such care if such funds are accorded treatment substantially equivalent to that which the Lender accords its own property, it being understood that the Lender shall not have any responsibility for taking any necessary steps to preserve rights against any parties with respect to any such funds.

(h)   Resignation or Removal of the Issuing Bank .  The Issuing Bank may resign at any time by giving written notice to the Lender and the Borrower, such resignation to be effective upon the appointment of a successor Issuing Bank, or, if no successor Issuing Bank has been appointed, 60 days after the retiring Issuing Bank gives notice of its intention to resign or receives notice of its removal.  Upon any such resignation or removal, the Lender shall have the right to appoint, and provided that no Default or Event of Default exists, with the consent of the Borrower (which consent shall not be unreasonably withheld or delayed), a successor Issuing Bank.  If no successor Issuing Bank shall have been so appointed by the Lender within such time period, then the Issuing Bank may appoint, and provided that no Default or Event of Default exists, with the consent of the Borrower (which consent shall not be unreasonably withheld or delayed), a successor Issuing Bank.  Subject to the next succeeding sentence, upon the acceptance of any appointment as the Issuing Bank hereunder by the Lender that shall agree to serve as successor Issuing Bank, such successor shall succeed to and become vested with all the interests, rights and obligations of the retiring Issuing Bank and the retiring Issuing Bank shall be discharged from its obligations to issue additional Letters of Credit hereunder.  At the time such resignation shall become effective, the Borrower shall pay all accrued and unpaid fees pursuant to Sections 2.03(c) .  The acceptance of any appointment as the Issuing Bank hereunder by a successor Lender shall be evidenced by an agreement entered into by such successor, in a form satisfactory to the retiring Issuing Bank and the Lender, and, from and after the effective date of such agreement, (i) such successor Lender shall have all the rights and obligations of the previous Issuing Bank under this Agreement and the other Loan Documents and (ii) references herein and in the other Loan Documents to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require.  After the resignation or removal of the Issuing Bank hereunder, the retiring Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of the Issuing Bank under this Agreement and the other Loan Documents with respect to Letters of Credit issued by it prior to such resignation, but shall not be required to issue additional Letters of Credit.

Section 2.15   Mitigation Obligations .  If the Lender requires the Borrower to pay any additional amount to the Lender or any Governmental Authority for the account of the Lender pursuant to Section 2.11 , then the Lender shall use reasonable efforts to designate a different lending office for funding or booking its Advances hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of the Lender, such designation or assignment (a) would eliminate or reduce amounts payable pursuant to Section 2.11 in the future and (b) would not subject the Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to the Lender.  The Borrower hereby agrees to pay all reasonable costs and expenses incurred by the Lender in connection with any such designation or assignment.  This Section shall not apply to any request for amounts payable under Section 2.09 .

Section 3.01   Initial Conditions Precedent .  The obligation of the Lender to make its initial Advance is subject to the following conditions precedent:

(a)   Documentation .  On or before the day on which the initial Advance is made, the Lender shall have received the following, each dated on or before such day, duly executed by all the parties thereto, each in form and substance satisfactory to the Lender:

(i)   this Agreement and all attached Exhibits and Schedules;

(ii)   a Note in the amount of the initial Advance payable to the order of the Lender and its registered assigns;

(iii)   the Security Agreement executed the Borrower and each of its Domestic Subsidiaries, together with UCC-1 financing statements and any other documents, agreements or instruments necessary to create an Acceptable Security Interest in the Collateral described therein;

(iv)   the Pledge Agreement executed by the Borrower and each of its Subsidiaries that has a Subsidiary pledging to the Lender for the benefit of the Secured Parties all of the Equity Interests of the Domestic Subsidiaries and sixty-five percent (65%) of the Equity Interests of any Foreign Subsidiary directly owned by such Loan Party, together with certificates, powers executed in blank, UCC-1 financing statements and any other documents, agreements or instruments necessary to create an Acceptable Security Interest in such Equity Interests and all action set forth on Schedule 3.01(a) shall have been taken in connection with the pledge of the interests in Bronco Mexico (including the consent thereto by Bronco Mexico);

(v)   if required by the Lender, an Account Control Agreement among the Borrower, the Lender and each institution at which the Borrower or any of its Subsidiaries maintains a deposit account to the extent required by Section 5.13(b) ;

(vi)   a certificate dated as of the Closing Date from a Responsible Officer of the Borrower stating that (A) all representations and warranties of such Person set forth in this Agreement and in the other Loan Documents to which it is a party are true and correct in all material respects; (B) no Default has occurred and is continuing; (C) the conditions in this Section 3.01 have been met and (D) any Advances to be made on the Closing Date will not exceed the lesser of (i) the Commitment and (ii) the Borrowing Base Availability.

(vii)   copies of the certificate or articles of incorporation or other equivalent organizational documents, including all amendments thereto, of each Loan Party, certified as of a recent date by the Secretary of State of the state of its organization;

(viii)   a certificate of the Secretary or Assistant Secretary of each Loan Party dated the Closing Date and certifying (A) that attached thereto is a true and complete copy of the organizational documents of such Loan Party as in effect on the Closing Date and at all times since a date prior to the date of the resolutions described in clause (B) below, (B) that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors of such Loan Party authorizing the execution, delivery and performance of the Loan Documents to which such Loan Party is a party and, in the case of the Borrower, the Advances hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect, (C) that the certificate or articles of incorporation or other organizational documents of such Loan Party have not been amended since the date of the last amendment thereto shown on the certified copy thereof furnished pursuant to clause (vii) above, and (D) as to the incumbency and specimen signature of each officer executing any Loan Document, Notices of Advance or any other document delivered in connection herewith on behalf of such Loan Party;

(ix)   a certificate of another officer of each Loan Party as to the incumbency and specimen signature of the Secretary or Assistant Secretary executing the certificate pursuant to (viii) above;

(x)   certificates from the appropriate Governmental Authority certifying as to the good standing, existence and authority of each of the Loan Parties in all jurisdictions where required by the Lender;

(xi)   a favorable opinion dated as of the Closing Date of (A) David Treadwell, general counsel to the Loan Parties and (B) Willkie Farr & Gallagher LLP, New York counsel to the Lender, as to enforceability of loan documents governed by New York law;

(xii)   a certificate from a Financial Officer of the Borrower dated as of the Closing Date addressed to the Lender and the Issuing Bank regarding the matters set forth in Section 4.20 ;

(xiii)   [reserved];

(xiv)   a copy of, or a certificate as to coverage under, the insurance policies required by Section 5.04 and the applicable provisions of the Security Documents, each of which shall be endorsed or otherwise amended to include a customary lender’s loss payable endorsement and to name the Lender as an additional insured;

(xv)   the April 2009 Appraisal Report on a fair market value and an Orderly Liquidation Value basis of the Complete Rigs effective April 29, 2009, to include the Lender as an additional addressee and that affirms that after giving effect to the initial Advance on the Closing Date a Borrowing Base Deficiency will not exist; and

(xvi)   an acknowledgment from C T Corporation System as of the Closing Date with respect to its irrevocable appointment by each Loan Party pursuant to Section 9.13(b) .

(b)   Payment of Fees .  On the Closing Date, the Borrower shall have paid the fees required to be paid to the Lender and the Issuing Bank on the Closing Date, including, without limitation, the Upfront Fee, and all other costs and expenses which have been invoiced (which invoice has been delivered to the Borrower at least 24 hours prior to the Closing Date) and are payable pursuant to Section 9.04 .

(c)   Due Diligence; Corporate Structure .  The Lender shall have completed a satisfactory due diligence review of the assets, liabilities, business, operations and condition (financial or otherwise) of the Borrower and its Subsidiaries, and all legal, financial, accounting, governmental, tax and regulatory matters, and fiduciary aspects of the proposed financing and the terms and conditions of all material obligations of the Loan Parties.  The documentation reflecting the ownership, capital, corporate, tax, organizational and legal structure of the Loan Parties shall be acceptable to the Lender.

(d)   Security Documents .  The Lender shall have received all appropriate evidence required by the Lender in its reasonable discretion necessary to determine that arrangements have been made for the Lender for the benefit of Secured Parties to have an Acceptable Security Interest in the Collateral, including, without limitation, (i) the delivery to the Lender of such financing statements under the UCC for filing in such jurisdictions as the Lender may reasonably require, (ii) lien, tax and judgment searches conducted on the Loan Parties reflecting no Liens other than Permitted Liens against any of the Collateral as to which perfection of a Lien is accomplished by the filing of a financing statement and (iii) lien releases with respect to any Collateral currently subject to a Lien other than Permitted Liens.

(e)   Financial Statements .  The Lender shall have received true and correct copies of (i) the Audited Financial Statements, (ii) the Interim Financial Statements, and (iii) such other financial information as the Lender may reasonably request.

(f)   Authorizations and Approvals .  All Governmental Authorities and Persons shall have approved or consented to the transactions contemplated hereby, including, without limitation, those material approvals or consents required in connection with the continued operation of the Borrower and its Subsidiaries, to the extent required, and such approvals shall be in full force and effect, and all applicable waiting periods shall have expired without any action being taken or threatened that would restrain, prevent or otherwise impose adverse conditions on this Agreement and the actions contemplated hereby and thereby.

(g)   No Proceeding or Litigation; No Injunctive Relief .  No action, suit, investigation or other proceeding (including, without limitation, the enactment or promulgation of a statute or rule) by or before any arbitrator or any Governmental Authority shall be threatened or pending and no preliminary or permanent injunction or order by a state or federal court shall have been entered (i) in connection with this Agreement or any transaction contemplated hereby or (ii) which, in any case, in the reasonable judgment of the Lender, could reasonably be expected to cause a Material Adverse Effect.

(h)   No Default .  No Default shall have occurred and be continuing or would result from such Advance or from the application of the proceeds therefrom.

(i)   Representations and Warranties .  The representations and warranties contained in Article IV hereof and in each other Loan Document shall be true and correct before and after giving effect to the Advances and to the application of the proceeds from such Advances from the date of the Advances, as though made on and as of such date (it being understood and agreed that any representation or warranty which by its terms is expressly made as of an earlier date shall be required to be true and correct only as of such earlier date).

(j)   No Material Adverse Change .  Since December 31, 2008, there has been no material adverse change in the condition (financial or otherwise), results of operations, assets, properties, business or prospects of the Borrower and its Subsidiaries, taken as a whole other than as set forth on Schedule 3.01(j) .

(k)   Additional Information .  The Lender shall have received such additional information which the Lender shall have reasonably requested, and such information shall be reasonably satisfactory in form and substance to the Lender and its counsel.

(l)   Evidence of Termination of Existing Credit Agreement and Liens .  The Lender shall have received evidence of termination of the Existing Credit Agreement and related loan documents, termination of all liens thereunder and repayment of obligations thereunder, including receipt of an executed payoff letter from applicable parties in form and substance satisfactory to the Lender.

(m)            Warrant Agreement, Warrant and Registration Rights Agreement .  The Warrant Agreement and the Registration Rights Agreement (as defined in the Warrant Agreement) shall have been executed and delivered by the  parties thereto and the Warrant shall have been executed and delivered by the Borrower to the Initial Holder.

(n)            Closing of the JV Transaction .  The closing of the transactions contemplated in that certain membership interest purchase agreement dated on or about the date hereof between the Borrower, CARSO INFRAESTRUCTURA Y CONSTRUCCIÓN S.A.B DE C.V. and Bronco Mexico shall have occurred.

Section 3.02   Conditions Precedent to Each Advance .  The obligation of the Lender to make an Advance (including the initial Advance) or Continue an Advance and the obligation of the Issuing Bank to issue, extend or increase Letters of Credit shall be subject to the further conditions precedent that on the Advance Date or the date of Continuation, or issuance, extension or increase date of such Letters of Credit, the following statements shall be true (and each of the giving of the applicable Notice of Advance or Notice of Continuation and the acceptance by the Borrower of the proceeds of such Advance or the request for the issuance, extension or increase of a Letter of Credit shall constitute a representation and warranty by the Borrower that on the date of such Advance or the date of such Continuation, or the date of such issuance, extension or increase such statements are true):

(a)   the representations and warranties contained in Article IV and in each other Loan Document are correct on and as of the date of such Advance or Continuation, or the issuance, extension or increase of such Letter of Credit before and after giving effect to such Advance and to the application of the proceeds from such Advance or such Continuation, or to the issuance, extension or increase of such Letter of Credit, as applicable, as though made on, and as of such date (it being understood and agreed that any representation or warranty which by its terms is expressly made as of an earlier date shall be required to be true and correct only as of such earlier date);

(b)   no Default or Event of Default has occurred and is continuing or would result from such Advance or from the application of the proceeds therefrom or from such issuance, extension or increase of such Letter of Credit;

(c)   the Borrowing Base Availability is greater than or equal to zero after giving effect to such Advance or the issuance, increase, or extension of such Letter of Credit;

(d)   no material adverse change has occurred and is continuing with respect to the Rigs detailed in the most recently delivered Appraisal Report pursuant to Section 5.14 or in the most recent Borrowing Base Report pursuant to Section 5.06(d) ;

(e)   the making of an Advance (including the initial Advance) or the Continuation of an Advance by the Lender or the issuance, extension or increase of a Letter of Credit by the Issuing Bank shall not be contrary to any Legal Requirement and the Lender and the Issuing Bank shall have funding available to so make an Advance (including the initial Advance) or Continue an Advance or issue, extend or increase Letters of Credit; and

(f)   the Borrower shall execute and deliver to the Lender a Note in relation to such Advance.

Each Loan Party jointly and severally represents and warrants as follows:

Section 4.01   Existence .  Each of the Company and its Subsidiaries is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation or formation and in good standing and qualified to do business in each jurisdiction where its ownership or lease of Property or conduct of its business requires such qualification and where a failure to be qualified would reasonably be expected to have a Material Adverse Effect.

Section 4.02   Power and Authority .  Each of the Loan Parties has the requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (a) own its assets and carry on its business, and (b) execute, deliver and perform the Loan Documents to which it is a party and to perform its obligations thereunder.  The execution, delivery, and performance by each Loan Party of this Agreement and the other Loan Documents to which it is a party and the consummation of the transactions contemplated hereby (a) have been duly authorized by all necessary organizational action, (b) do not and will not (i) contravene the terms of any such Person’s organizational documents, (ii) violate any Legal Requirement, or (iii) conflict with or result in any breach or contravention of, or the creation of any Lien under (A) the provisions of any indenture, instrument or agreement to which such Loan Party is a party or is subject, or by which it, or its Property is bound or (B) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject.

Section 4.03   Authorization and Approvals .  No authorization, approval, consent, exemption, or other action by, or notice to or filing with, any Governmental Authority or any other Person is necessary or required on the part of any Loan Party in connection with (a) the execution, delivery and performance by, or enforcement against, any Loan Party of this Agreement and the other Loan Documents to which it is a party or the transactions contemplated hereby or thereby, (b) the grant by any Loan Party of the Liens granted by it pursuant to the Loan Documents, or (c) the perfection or maintenance of the Liens created under the Loan Documents (including the first priority nature thereof) (other than the filing of UCC-1 Financing Statements), all of which have been duly obtained, taken, given or made and are in full force and effect, except actions by, and notices to or filings with, Governmental Authorities (including, without limitation, the SEC) that may be required in the ordinary course of business from time to time or that may be required to comply with the express requirements of the Loan Documents (including, without limitation, to release existing Liens on the Collateral or to comply with requirements to perfect, and/or maintain the perfection of, Liens created for the benefit of the Secured Parties).

Section 4.04   Enforceable Obligations .  This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is a party thereto.  This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms, except as such enforceability may be limited by any applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium, or similar law affecting creditors’ rights generally or general principles of equity.

Section 4.05   Financial Statements; No Material Adverse Effect .

(a)   The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present, in all material respects, the financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show all material indebtedness and other liabilities, direct or contingent, of the Borrower and its Subsidiaries as of the date thereof, including liabilities for Taxes, material commitments and Debt.

(b)   The Interim Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present the financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes and to normal year-end audit adjustments.

(c)   Since December 31, 2008, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect, other than as set forth on Schedule 3.01(j).

Section 4.06   True and Complete Disclosure .  Each Loan Party has disclosed to the Lender all material agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect.  No information, report, financial statement, exhibit or schedule furnished by or on behalf of any Loan Party to the Lender in connection with the negotiation of any Loan Document or included therein or delivered pursuant thereto contained, contains or will contain as of the respective dates any material misstatement of fact or as of the respective dates, omitted, omits or will omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were, are or will be made, not misleading.

Section 4.07   Litigation .  There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of any Responsible Officer of a Loan Party after due and diligent investigation, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against any Loan Party or any of their Subsidiaries or against any of their Property or revenues that (a) purport to affect or pertain to this Agreement, any other Loan Document or the Collateral, or any of the transactions contemplated thereby, or (b) either individually or in the aggregate, if determined adversely, would reasonably be expected to have a Material Adverse Effect.  To the knowledge of any Responsible Officer, no regulatory commission is currently conducting or has conducted within the five-year period immediately preceding the date hereof, an investigation of the Borrower or any of its Subsidiaries, other than an investigation conducted by such regulatory commission in its routine general administrative practice.

Section 4.08   Compliance with Laws .  None of the Loan Parties or any of the Subsidiaries or any of their respective material properties is in violation of, nor will the continued operation of their material Property as currently conducted violate, any Legal Requirement (including any Environmental Law) or is in default with respect to any judgment, writ, injunction, decree or order of any Governmental Authority.

Section 4.09   No Default .  None of the Loan Parties or any of its Subsidiaries is a party to any agreement or instrument or subject to any corporate restriction that has resulted or would, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  None of the Borrower or any of its Subsidiaries is in default in any manner under any provision of any indenture or other agreement or instrument evidencing Debt, or any other material agreement or instrument to which it is a party or by which it or any of its Property is or may be bound, where such default could reasonably be expected to result in a Material Adverse Effect.  No Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.

Section 4.10   Subsidiaries; Corporate Structure .   Schedule 4.10 sets forth as of the Closing Date a list of all Subsidiaries of the Borrower and, as to each such Subsidiary, the jurisdiction of formation and the outstanding Equity Interests therein and the percentage of each class of such Equity Interests owned by the Borrower and the Subsidiaries.  The Equity Interests indicated to be owned by the Borrower and the Subsidiaries on Schedule 4.10 are fully paid and non-assessable and are owned by the persons indicated on such Schedule, free and clear of all Liens (other than Permitted Liens).  Except as shown on Schedule 4.10 , as of the Closing Date, none of the Loan Parties owns any Equity Interests in Foreign Subsidiaries.

Section 4.11   Liens; Condition of Properties .

(a)   None of the Property of the Borrower or any of the Guarantors is subject to any Lien other than Permitted Liens.  On the date of this Agreement, all governmental actions and all other filings, recordings, registrations, third party consents and other actions which are necessary to create and perfect the Liens provided for in the Security Documents will have been made, obtained and taken in all relevant jurisdictions.  None of the Borrower or any of the Guarantors is a party to any indenture, loan or credit or similar agreement, instrument, or any other material agreement or arrangement (other than this Agreement and the Security Documents), or subject to any order, judgment, writ or decree, which either restricts or purports to restrict its ability to grant Liens to secure the Obligations against their respective Property.

(b)   Each Loan Party has good record and indefeasible title in fee simple to, or valid leasehold interests in, all real property necessary or of material importance in the ordinary conduct of its business, except for such minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such Property for its intended purposes.  None of the Property of Loan Parties is subject to Liens, other than Permitted Liens.

(c)   Each Loan Party has complied with all obligations under all material leases to which it is a party and all such leases are in full force and effect.  Each Loan Party enjoys peaceful and undisturbed possession under all such material leases.

(d)   Neither the business nor the material Property of any Loan Party has been affected as a result of any fire, explosion, earthquake, flood, drought, windstorm, accident, strike or other labor disturbance, embargo, requisition or taking of Property or cancellation of contracts, permits or concessions by a Governmental Authority, riot, activities of armed forces or acts of God or of any public enemy, in each case where such act or event has had or would reasonably be expected to result in a Material Adverse Effect.

Section 4.12   Environmental Condition .

(a)   The Loan Parties (i) have obtained all material Environmental Permits necessary for the ownership and operation of their respective material Property and the conduct of their respective businesses; (ii) to their knowledge, have been and are in material compliance with all terms and conditions of such Environmental Permits and with all other material requirements of applicable Environmental Laws; (iii) have not received notice of any material violation or alleged violation of any Environmental Law or Environmental Permit; and (iv) are not subject to any material Environmental Claim.

(b)   None of the present or previously owned or operated Property of the Loan Parties or of any of their present or former Subsidiaries, wherever located, (i) has been placed on or, to their knowledge, proposed to be placed on the National Priorities List or state or local analogs, nor has the Borrower or any of its Subsidiaries been otherwise notified of the designation, listing or identification of any Property of such Loan Party or any of its present or former Subsidiaries as a potential site for removal, remediation, cleanup, closure, restoration, reclamation, or other response activity (“ Response ”) under any Environmental Laws (except as such activities may be required by permit conditions or could not reasonably be executed to have a Material Adverse Effect); (ii) is subject to a Lien, arising under or in connection with any Environmental Laws, that attaches to any revenues or to any Property owned or operated by the Loan Parties or any of their present or former Subsidiaries, wherever located; or (iii) to the Loan Parties’ knowledge, has been the site of any Release of Hazardous Material from present or past operations which has resulted in or could reasonably be expected to result in the need for Response and none of the Loan Parties or any of their present or former Subsidiaries has generated or transported or has caused to be generated or transported Hazardous Materials to any third party site which would reasonably be expected to result in the need for Response, in each case which would reasonably be expected to have a Material Adverse Effect.

(c)   Without limiting the foregoing, the known present and future liability, if any, of the Borrower or any of its Subsidiaries, which could reasonably be expected to arise under Environmental Laws is not reasonably expected to have a Material Adverse Effect.

Section 4.13   Insurance .

(a)   Schedule 4.13 sets forth a true, complete and correct description of all insurance maintained by the Loan Parties as of the Closing Date.  As of such date, such insurance is in full force and effect and all premiums have been duly paid.

(b)   The Property of the Loan Parties is (i) insured with financially sound and reputable insurance companies (A) not Affiliates of any Loan Party and (B) having a A.M. Best policyholders rating of at least A, (ii) in such amounts as are, when considered in their entirety, prudent and customary in the businesses in which it is engaged, with such deductibles and covering such risks as specified on Schedule 4.13 including as are reasonably required by the Lender.

(c)   The Borrower shall cause all such insurance to name the Lender, for the ratable benefit of the Secured Parties, as “loss payee” under its property loss policies and as “additional insured” on its comprehensive and general liability policies.

Section 4.14   Taxes .  Each Loan Party has filed all Federal, state and other tax returns and reports required to be filed, and have paid all Taxes except those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP.  There is no proposed tax assessment against the Borrower or any Subsidiary thereof that would, if made, have a Material Adverse Effect.

Section 4.15   ERISA Compliance .

(a)   Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state Laws.  Each Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and, to the best knowledge of the Borrower, nothing has occurred which would prevent, or cause the loss of, such qualification.  The Borrower and each ERISA Affiliate have made all required contributions to each Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.

(b)   (i) No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events, could reasonably be expected to result in material liability of the Borrower or any of its ERISA Affiliates; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither the Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA.

Section 4.16   Security Interests .

(a)   The Pledge Agreement is effective to create in favor of the Lender, for the ratable benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral (as defined in such Pledge Agreement) and, when such Collateral (to the extent such Collateral constitutes an instrument under the applicable Uniform Commercial Code) is delivered to the Lender, such Pledge Agreement shall constitute a fully perfected first priority Lien on, and security interest in, all right, title and interest of the pledgors thereunder in such Collateral, in each case prior and superior in right to any other person.

(b)   The Security Agreement is effective to create in favor of the Lender, for the ratable benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral (as defined in such Security Agreement) and, when financing statements in appropriate form are filed in the offices specified on Schedule I to the Security Agreement, such Security Agreement shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the grantors thereunder in such portion of the Collateral in which a security interest may be perfected by the filing of a financing statement under the applicable UCC, in each case prior and superior in right to any other person, other than Permitted Liens.

Section 4.17   Bank Accounts .   Schedule 4.17 sets forth the account numbers and locations of all bank accounts of the Loan Parties as of the Closing Date.

Section 4.18   Labor Relations .  There (a) is no unfair labor practice complaint pending against the Borrower or any of its Subsidiaries or, to the knowledge of any Responsible Officer of a Loan Party, threatened against any of them, before the National Labor Relations Board (or any successor United States federal agency that administers the National Labor Relations Act), and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement is so pending against the Borrower or any of its Subsidiaries or, to the knowledge of any Responsible Officer of a Loan Party, threatened against any of them, (b) are no strikes, lockouts, slowdowns or stoppage against the Borrower or any Subsidiary pending or, to the knowledge of any Loan Party, threatened and (c) no union representation petition existing with respect to the employees of the Borrower or any of its Subsidiaries and no union organizing activities are taking place, in each case that has had or would reasonably be expected to result in a Material Adverse Effect.  The hours worked by and payments made to employees of the Borrower and the Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable federal, state, provincial, local or foreign law dealing with such matters, except where such violation, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.