8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report: April 6, 2010

Date of earliest event reported: March 31, 2010

Flotek Industries, Inc.

(Exact name of registrant as specified in its charter)

Delaware	001-13270	90-0023731
(State or other jurisdiction of	(Commission	(IRS Employer
incorporation)	File Number)	Identification No.)

2930 W. Sam Houston Pkwy N., Suite 300
Houston, Texas	77043
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (713) 849-9911

Not applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

Exchange Agreement for Convertible Senior Notes

On March 31, 2010, Flotek Industries, Inc. (the “Company”) and certain of the Company’s subsidiaries (the “Guarantors”) entered into an Exchange Agreement (the “Exchange Agreement”) with certain affiliates of Whitebox Advisors, LLC and Gates Capital Management (the “Investors”), pursuant to which the Investors exchanged $40 million in aggregate principal amount of the Company’s 5.25% Convertible Senior Notes due 2028 (the “Old Notes”) for $36 million in aggregate principal amount of the Company’s 5.25% Convertible Senior Secured Notes due 2028 (the “New Secured Notes”) and a total of 1,568,874 shares of the Company’s common stock.

The Old Notes were issued in February 2008. Upon closing of the exchange, the investors received, for each $1,000 principal amount of the Old Notes exchanged, (a) New Secured Notes in a principal amount of $900 and (b) $50 in shares of the Company’s common stock (based on the greater of 95% of the volume-weighted average price of the common stock for the preceding ten trading days or the closing price of the common stock on the day before the closing). The New Secured Notes have the same interest rate, conversion rights, conversion rate, Company redemption rights and guarantees as the Old Notes, except that in addition they are also secured by a second priority lien on substantially all of the Company’s assets. Please see the “New Secured Notes” below.

The Exchange Agreement contains representations, warranties and covenants that are typical for transactions of this nature, including representations and warranties regarding: (1) due incorporation, valid existence and good standing; (2) capitalization; (3) reservation of shares of common stock for the conversion of the New Secured Notes; (4) right, corporate power and authority to enter into the Exchange Agreement and transactions contemplated thereby; (5) litigation; (6) tax matters; (7) compliance with organizational documents; (8) Securities Exchange Act of 1934 compliance; (9) security interests; (10) SEC filings; and (11) New York Stock Exchange listing compliance.

The above description of the Exchange Agreement is a summary only and is qualified in its entirety by reference to the Exchange Agreement which is attached hereto as Exhibit 10.1 and incorporated herein by reference.

The New Secured Notes

In connection with the issuance of the New Secured Notes, the Company, the Guarantors and U.S. Bank National Association (the “Trustee”), entered into a senior indenture (the “Base Indenture”), dated as of March 31, 2010, a copy of which is attached hereto as Exhibit 4.1 and incorporated herein by reference. The Base Indenture includes customary agreements and covenants by the Company and the Guarantors.

On March 31, 2010, the Company, the Guarantors and the Trustee entered into a First Supplemental Indenture to the Base Indenture (the “Supplemental Indenture”, and together with the Base Indenture, the “Indenture”), a copy of which is attached hereto as Exhibit 4.2 and incorporated herein by reference.

The New Secured Notes bear interest at a rate of 5.25% per year, accruing from March 31, 2010 and payable semiannually on February 15 and August 15 of each year, beginning August 15, 2010. The New Secured Notes will also pay contingent interest to their holders semiannually, commencing with the six-month period beginning on February 15, 2013, if the trading price of a New Secured Note for each of the five trading days ending on the third trading day immediately preceding the first day of the relevant six-month period equals 120% or more of the principal amount of the New Secured Note. The amount of contingent interest payable per New Secured Note with respect to any such period will be equal to 0.50% per annum of the average trading price of such New Secured Note for the five trading days referred to above. The New Secured Notes will mature on February 15, 2028, subject to earlier repurchase, redemption or conversion. The New Secured Notes will be convertible, under certain circumstances, into shares of the Company’s common stock, cash, or a combination thereof, at the Company’s option. The New Secured Notes have an initial conversion rate of 43.9560 shares of Company common stock per $1,000 principal amount (equivalent to an initial conversion price of approximately $22.75 per share), subject to adjustment. In addition, in certain circumstances following certain corporate transactions that occur prior to February 15, 2013 and that also constitute a fundamental change, the conversion rate for a holder who elects to convert its New Secured Notes in connection with such corporate transaction will be increased. Holders have the right to require the Company to purchase all or a portion of their New Secured Notes for cash on February 15, 2013, February 15, 2018 and February 15, 2023.

The New Secured Notes are secured by a second priority lien on substantially all of the Company’s assets. The rights to the collateral securing the New Secured Notes is governed by a Lien Subordination and Intercreditor Agreement, a copy of which is attached hereto as Exhibit 10.2 and incorporated herein by reference.

Beginning February 15, 2013, the Company may redeem any or all of the outstanding New Secured Notes in cash at a redemption price equal to 100% of the principal amount of the New Secured Notes being redeemed, plus accrued and unpaid interest, if any. Subject to certain exceptions, if the Company undergoes a “fundamental change”, as described in the Indenture, each holder of New Secured Notes will have the option to require the Company to repurchase all or a portion of such holder’s New Secured Notes on a date specified by the Company that is no later than the 35th calendar day after the date of the Company notice of the occurrence of such fundamental change. The fundamental change repurchase price will be 100% of the principal amount of the New Secured Notes to be purchased, plus accrued and unpaid interest.

If an “event of default”, as described in the Indenture, on the New Secured Notes occurs, either the Trustee or the holders of at least 25% in principal amount of the New Secured Notes may declare the principal amount of New Secured Notes, plus accrued and unpaid interest thereon, if any, to be due and payable, subject to certain conditions set forth in the Indenture.

The above descriptions of the Indenture are summaries only and are qualified in their entirety by reference to the Base Indenture and Supplemental Indenture which are attached hereto as Exhibits 4.1 and 4.2 and incorporated herein by reference.

The Amended and Restated Credit Agreement

On March 31, 2010, the Company entered into an Amended and Restated Credit Agreement with Whitebox Advisors, LLC, as administrative agent for a syndicate of lenders, for a $40 million term loan (the “Amended and Restated Credit Agreement”). This new senior credit facility refinanced the Company’s existing senior credit facility at Wells Fargo Bank and provided net proceeds of approximately $6.1 million to the Company.

The indebtedness under the new senior credit facility matures November 1, 2012 and has scheduled cash principal payments of $750,000 in 2010, $3,750,000 in 2011, $3,000,000 in 2012 prior to the maturity date, with and the remaining unpaid principal balance due at maturity. Interest is payable quarterly. The Company has the option to either pay the total amount of interest due in cash or to pay a portion of the interest in cash and capitalize the balance of the interest, thereby increasing the principal amount of the new senior credit facility. The annualized cash interest rate is 12.5% when the principal balance exceeds $30 million, 11.5% when the principal balance is $20 million or more but not in excess of $30 million, and 10.5% when the principal balance is less than $20 million. If the Company elects to capitalize a portion of the interest, the annualized cash interest rate is 8% and additional interest is capitalized and added to the principal amount of the new senior credit facility at a annualized rate of 6% when the principal balance exceeds $30 million, 4.5% when the principal balance is $20 million or more but not in excess of $30 million, and 3.5% when the principal balance is less than $20 million.

The Amended and Restated Credit Agreement requires additional mandatory principal payments of (a) 50% of EBITDA (earnings before interest, taxes depreciation and amortization) in excess of $4.5 million in any fiscal quarter, (b) 50% of cash proceeds in excess of $5 million and up to $15 million from certain asset disposals, plus 75% of cash proceeds in excess of $15 million from certain asset disposals, (c) 75% of any Federal income tax refunds, and (d) $1 million of principal on quarterly payment dates, when the Company’s stock price is equal to or greater than $1.27 per share, payable by issuing common stock (based on 95% of the volume-weighted average price of the common stock for the preceding ten trading days).

The Amended and Restated Credit Agreement provides for a commitment fee of $7,300,000, payable as follows: (a) $925,975 in cash at closing, (b) $4,374,025 through the issuance of 3,431,127 shares of common stock at closing (based on 95% of the volume-weighted average price of the common stock for the preceding ten trading days), (c) $1,000,000 payable in September 2010 in cash or common stock (based on 90% of the greater of the volume-weighted average price of the common stock for the preceding ten trading days or $1.27 per share), and (d) $1,000,000 payable in March 2011 in cash or common stock (based on 85% of the greater of the volume-weighted average price of the common stock for the preceding ten trading days or $1.27 per share). The election as to whether the commitment fee for (c) and (d) is payable in cash or common stock is made by the Company if the volume-weighted average price of the common stock is $1.00 or more per share and by the lenders if such average is less than $1.00 per share at the payment date.

The Amended and Restated Credit Agreement does not contain a revolving line of credit facility or quarterly and annual financial covenants. The Amended and Restated Credit Agreement restricts the payment of dividends on the Company’s common stock without the prior written consent of the lenders.

In connection with the issuance of common stock to the Investors pursuant to the Amended and Restated Credit Agreement, the warrants issued in August 2009 in connection with the issuance of Series A cumulative convertible preferred stock have been re-priced, effective March 31, 2010. The exercisable warrants and the contingent warrants both contained anti-dilution price protection provisions. As a result of the re-pricing, the Company now has outstanding warrants to purchase up to 10,480,000 shares of the Company’s common stock at an exercise price of $1.2748 per share.

Registration Rights Agreements

On March 31, 2010, the Company entered into a Registration Rights Agreement with the Investors, pursuant to which the Company agreed to file with the Securities and Exchange Commission (the “SEC”) a registration statement with respect to the resale of the New Secured Notes, the common stock issuable upon conversion of the New Secured Notes and any shares of capital stock issuable from time to time in exchange for the New Secured Notes held by the Investors by April 30, 2010. The Company also entered into a second Registration Rights Agreement with the Investors, pursuant to which the Company agreed to file with the SEC a registration statement with respect to the resale of the common stock issued to the Investors as a commitment fee under the Amended and Restated Credit Agreement by April 30, 2010. The Company also agreed to file with the SEC a registration statement with respect to the resale of the common stock issuable to the Investors as repayment of principal of the notes under the Amended and Restated Credit Agreement within 30 days after the date of each issuance of shares of common stock as repayment of the principal of the notes. Both registration rights agreements provide for payments by the Company to the Investors in the event the Company fails to file or have declared effective the registration statements by certain specified deadlines.

The above descriptions of the registration rights agreements are summaries only and are qualified in their entirety by reference to the registration rights agreements, which are attached hereto as Exhibits 10.5 and 10.10 and incorporated herein by reference.

Neither the common stock, the New Secured Notes nor the common stock underlying the New Secured Notes have been registered under the Securities Act of 1933, as amended (the “Securities Act”), and such securities may not be offered or sold in the United States absent a registration statement or exemption from registration.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information in Item 1.01 above regarding the New Secured Notes and the Amended and Restated Credit Agreement is incorporated into this Item 2.03 by reference.

Item 3.02. Unregistered Sales of Equity Securities.

As described in Item 1.01 above, pursuant to the Exchange Agreement and the Amended and Restated Credit Agreement, the Company issued $36 million in aggregate principal amount of the Company’s New Secured Notes and a total of 5,000,001 shares of common stock to the Investors. The Company received net proceeds of approximately $6.1 million in connection with the execution of the Amended and Restated Credit Agreement. The exchange and issuance of the New Secured Notes and the issuance of common stock was made in reliance on an exemption from registration under the Securities Act pursuant to Section 4(2) of the Securities Act and Regulation D promulgated thereunder. The terms of the conversion of the New Secured notes are set forth in Item 1.01 above. The information in Item 1.01 above is incorporated into this Item 3.02 by reference.

Item 3.03. Material Modification of Rights of Security Holders.

The information in Item 1.01 above regarding the New Secured Notes and the Amended and Restated Credit Agreement is incorporated into this Item 3.03 by reference.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number	Description
4.1	Indenture dated as of March 31, 2010
4.2	First Supplemental Indenture dated as of March 31, 2010
4.3	Form of 5.25% Convertible Senior Secured Notes due 2028 (contained in Exhibit A to the First Supplemental Indenture dated as of March 31, 2010)
10.1	Exchange Agreement dated as of March 31, 2010
10.2	Lien Subordination and Intercreditor Agreement dated as of March 31, 2010
10.3	Junior Lien Pledge and Security Agreement dated as of March 31, 2010
10.4	Junior Lien Patent and Trademark Security Agreement dated as of March 31, 2010
10.5	Registration Rights Agreement (5.25% Convertible Senior Secured Notes due 2028) dated March 31, 2010
10.6	Amended and Restated Credit Agreement dated as of March 31, 2010
10.7	Amended and Restated Guaranty Agreement dated as of March 31, 2010
10.8	Amended and Restated Pledge and Security Agreement dated as of March 31, 2010
10.9	Amended and Restated Patent and Trademark Security Agreement dated as of March 31, 2010
10.10	Registration Rights Agreement (Credit Agreement) dated as of March 31, 2010

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	FLOTEK INDUSTRIES, INC.
Date: April 6, 2010	By:	/S/    JESSE E. NEYMAN
		Jesse E. Neyman
		Executive Vice President, Finance and Strategic Planning

EXHIBIT INDEX

Exhibit Number	Description
4.1	Indenture dated as of March 31, 2010
4.2	First Supplemental Indenture dated as of March 31, 2010
4.3	Form of 5.25% Convertible Senior Secured Notes due 2028 (contained in Exhibit A to the First Supplemental Indenture dated as of March 31, 2010)
10.1	Exchange Agreement dated as of March 31, 2010
10.2	Lien Subordination and Intercreditor Agreement dated as of March 31, 2010
10.3	Junior Lien Pledge and Security Agreement dated as of March 31, 2010
10.4	Junior Lien Patent and Trademark Security Agreement dated as of March 31, 2010
10.5	Registration Rights Agreement (5.25% Convertible Senior Secured Notes due 2028) dated March 31, 2010
10.6	Amended and Restated Credit Agreement dated as of March 31, 2010
10.7	Amended and Restated Guaranty Agreement dated as of March 31, 2010
10.8	Amended and Restated Pledge and Security Agreement dated as of March 31, 2010
10.9	Amended and Restated Patent and Trademark Security Agreement dated as of March 31, 2010
10.10	Registration Rights Agreement (Credit Agreement) dated as of March 31, 2010

EX-4.1

Exhibit 4.1

FLOTEK INDUSTRIES, INC.

THE GUARANTORS PARTY HERETO

AND

U.S. BANK NATIONAL ASSOCIATION

Trustee

INDENTURE

DATED AS OF MARCH 31, 2010

SENIOR DEBT SECURITIES

FLOTEK INDUSTRIES, INC.

RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939, AS AMENDED,

AND INDENTURE, DATED AS OF MARCH 31, 2010

TRUST INDENTURE ACT SECTION	INDENTURE SECTION
Section 310(a)(1)	6.9
(a)(2)	6.9
(a)(3)	Not Applicable
(a)(4)	Not Applicable
(a)(5)	6.9
(b)	6.8
Section 311	6.13
Section 312(a)	7.1, 7.2(a)
(b)	7.2(b)
(c)	7.2(c)
Section 313(a)	7.3
(b)	*
(c)	*
(d)	7.3
Section 314(a)	7.4
(a)(4)	10.5
(b)	**
(c)(1)	1.3
(c)(2)	1.3
(c)(3)	Not Applicable
(d)	**
(e)	1.3
Section 315(a)	6.1(a)
(b)	6.2
(c)	6.1(b)
(d)	6.1(c)
(d)(1)	6.1(a)(1)
(d)(2)	6.1(c)(2)
(d)(3)	6.1(c)(3)
(e)	5.14
Section 316(a)	1.1, 1.2
(a)(1)(A)	5.2, 5.12
(a)(1)(B)	5.13
(a)(2)	Not Applicable
(b)	5.8
(c)	1.5(f)

TRUST INDENTURE ACT SECTION	INDENTURE SECTION
Section 317(a)(1)	5.3
(a)(2)	5.4
(b)	10.3
Section 318(a)	1.8

NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture.

* Deemed included pursuant to Section 318(c) of the Trust Indenture Act

** To be included in any supplement to the Indenture, to the extent applicable.

TABLE OF CONTENTS

			Page
PARTIES			1
RECITALS OF THE COMPANY			1
Article One DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION			1
	Section 1.1.	Definitions	1
	Section 1.2.	Incorporation by Reference of Trust Indenture Act	8
	Section 1.3.	Compliance Certificates and Opinions	8
	Section 1.4.	Form of Documents Delivered to Trustee	9
	Section 1.5.	Acts of Holders; Record Dates	9
	Section 1.6.	Notices, Etc., to Trustee, Company and Guarantors	10
	Section 1.7.	Notice to Holders; Waiver	11
	Section 1.8.	Conflict with Trust Indenture Act	11
	Section 1.9.	Effect of Headings and Table of Contents	11
	Section 1.10.	Successors and Assigns	12
	Section 1.11.	Separability Clause	12
	Section 1.12.	Benefits of Indenture	12
	Section 1.13.	Governing Law	12
	Section 1.14.	Legal Holidays	12
	Section 1.15.	Securities in a Composite Currency, Currency Unit or Foreign Currency	12
	Section 1.16.	Payment in Required Currency; Judgment Currency	13
	Section 1.17.	Language of Notices, Etc.	13
	Section 1.18.	Incorporators, Shareholders, Officers and Directors of the Company and the Guarantors Exempt from Individual Liability	13
Article Two SECURITY FORMS			14
	Section 2.1.	Forms Generally	14
	Section 2.2.	Form of Face of Security	14
	Section 2.3.	Form of Reverse of Security	16
	Section 2.4.	Global Securities	21
	Section 2.5.	Form of Trustee’s Certificate of Authentication	22
Article Three THE SECURITIES			22
	Section 3.1.	Amount Unlimited; Issuable in Series	22
	Section 3.2.	Denominations	25
	Section 3.3.	Execution, Authentication, Delivery and Dating	25
	Section 3.4.	Temporary Securities	26
	Section 3.5.	Registration, Registration of Transfer and Exchange	27
	Section 3.6.	Mutilated, Destroyed, Lost and Stolen Securities	29
	Section 3.7.	Payment of Interest; Interest Rights Preserved	30
	Section 3.8.	Persons Deemed Owners	31
	Section 3.9.	Cancellation	31
	Section 3.10.	Computation of Interest	31
	Section 3.11.	CUSIP or CINS Numbers	32
Article Four SATISFACTION AND DISCHARGE			32
	Section 4.1.	Satisfaction and Discharge of Indenture	32
	Section 4.2.	Application of Trust Money	33
Article Five REMEDIES			33
	Section 5.1.	Events of Default	33
	Section 5.2.	Acceleration of Maturity; Rescission and Annulment	34
	Section 5.3.	Collection of Indebtedness and Suits for Enforcement by Trustee	35

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	Section 5.4.	Trustee May File Proofs of Claim	35
	Section 5.5.	Trustee May Enforce Claims Without Possession of Securities	36
	Section 5.6.	Application of Money Collected	36
	Section 5.7.	Limitation on Suits	37
	Section 5.8.	Unconditional Right of Holders to Receive Principal, Premium and Interest	37
	Section 5.9.	Restoration of Rights and Remedies	37
	Section 5.10.	Rights and Remedies Cumulative	38
	Section 5.11.	Delay or Omission Not Waiver	38
	Section 5.12.	Control by Holders	38
	Section 5.13.	Waiver of Past Defaults	38
	Section 5.14.	Undertaking for Costs	39
	Section 5.15.	Waiver of Stay or Extension Laws	39
Article Six THE TRUSTEE			39
	Section 6.1.	Certain Duties and Responsibilities	39
	Section 6.2.	Notice of Defaults	40
	Section 6.3.	Certain Rights of Trustee	41
	Section 6.4.	Not Responsible for Recitals or Issuance of Securities	42
	Section 6.5.	May Hold Securities	42
	Section 6.6.	Money Held in Trust	42
	Section 6.7.	Compensation and Reimbursement	42
	Section 6.8.	Disqualification; Conflicting Interests	43
	Section 6.9.	Corporate Trustee Required; Eligibility	43
	Section 6.10.	Resignation and Removal; Appointment of Successor	43
	Section 6.11.	Acceptance of Appointment by Successor	45
	Section 6.12.	Merger, Conversion, Consolidation or Succession to Business	46
	Section 6.13.	Preferential Collection of Claims Against Company	46
	Section 6.14.	Appointment of Authenticating Agent	46
Article Seven HOLDERS’ LISTS AND REPORTS BY TRUSTEE AND COMPANY			48
	Section 7.1.	Company to Furnish Trustee Names and Addresses of Holders	48
	Section 7.2.	Preservation of Information; Communications to Holders	48
	Section 7.3.	Reports by Trustee	49
	Section 7.4.	Reports by Company	49
Article Eight CONSOLIDATION, AMALGAMATION, MERGER AND SALE			50
	Section 8.1.	Company and Guarantors May Consolidate, Etc., Only on Certain Terms	50
	Section 8.2.	Successor Substituted	51
Article Nine AMENDMENT, SUPPLEMENT AND WAIVER			51
	Section 9.1.	Without Consent of Holders	51
	Section 9.2.	With Consent of Holders	53
	Section 9.3.	Execution of Supplemental Indentures	54
	Section 9.4.	Effect of Supplemental Indentures	54
	Section 9.5.	Conformity with Trust Indenture Act	55
	Section 9.6.	Reference in Securities to Supplemental Indentures	55
Article Ten COVENANTS			55
	Section 10.1.	Payment of Principal, Premium and Interest	55
	Section 10.2.	Maintenance of Office or Agency	55
	Section 10.3.	Money for Securities Payments to Be Held in Trust	56
	Section 10.4.	Existence	57
	Section 10.5.	Statement by Officers as to Default	57
	Section 10.6.	Additional Amounts	57
Article Eleven REDEMPTION OF SECURITIES			58
	Section 11.1.	Applicability of Article	58

ii

	Section 11.2.	Election to Redeem; Notice to Trustee	58
	Section 11.3.	Selection by Trustee of Securities to Be Redeemed	58
	Section 11.4.	Notice of Redemption	59
	Section 11.5.	Deposit of Redemption Price	59
	Section 11.6.	Securities Payable on Redemption Date	59
	Section 11.7.	Securities Redeemed in Part	60
Article Twelve SINKING FUNDS			60
	Section 12.1.	Applicability of Article	60
	Section 12.2.	Satisfaction of Sinking Fund Payments with Securities	60
	Section 12.3.	Redemption of Securities for Sinking Fund	61
Article Thirteen DEFEASANCE			61
	Section 13.1.	Option to Effect Legal Defeasance or Covenant Defeasance	61
	Section 13.2.	Legal Defeasance and Discharge	61
	Section 13.3.	Covenant Defeasance	62
	Section 13.4.	Conditions to Legal or Covenant Defeasance	62
	Section 13.5.	Deposited Money and U.S. Government Obligations to be Held in Trust, Other Miscellaneous Provisions	64
	Section 13.6.	Repayment	64
	Section 13.7.	Reinstatement	64
Article Fourteen GUARANTEE OF SECURITIES			65
	Section 14.1.	Securities Guarantee	65
	Section 14.2.	Limitation on Guarantor Liability	66
	Section 14.3.	Execution and Delivery of Securities Guarantee Notation	66

NOTE: This table of contents shall not, for any purpose, be deemed to be a part of the Indenture.

iii

PARTIES

INDENTURE, dated as of March 31, 2010, among FLOTEK INDUSTRIES, INC., a corporation duly organized and existing under the laws of the State of Delaware (herein called the “Company”), the GUARANTORS (as defined hereinafter) and U.S. BANK NATIONAL ASSOCIATION, as trustee (the “Trustee”).

RECITALS OF THE COMPANY:

The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its secured or unsecured senior debentures, notes or other evidences of indebtedness (herein called the “Securities”), which may but are not required to be guaranteed by any Guarantor, to be issued in one or more series as provided in this Indenture.

All things necessary to make this Indenture a valid agreement of the Company and of the Guarantors, in accordance with its terms, have been done.

This Indenture is subject to the provisions of the Trust Indenture Act that are required to be a part of this Indenture and, to the extent applicable, shall be governed by such provisions.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities or of series thereof, as follows:

ARTICLE ONE

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

Section 1.1. Definitions.

For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:

(a) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular;

(b) all terms used in this Indenture that are defined in the Trust Indenture Act, defined by a Trust Indenture Act reference to another statute or defined by an SEC rule under the Trust Indenture Act have the meanings so assigned to them;

(c) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP;

(d) the words “herein”, “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision;

(e) the words “Article” and “Section” refer to an Article and Section, respectively, of this Indenture; and

(f) the word “includes” and its derivatives means “includes, but is not limited to” and corresponding derivative definitions.

Certain terms, used principally in Article Six, are defined in that Article.

“Act”, when used with respect to any Holder, has the meaning specified in Section 1.5.

“Additional Defeasible Provision” means a covenant or other provision contained that is (a) made part of this Indenture pursuant to a supplemental indenture hereto, a Board Resolution or an Officer’s Certificate delivered pursuant to Section 3.1, and (b) pursuant to the terms set forth in such supplemental indenture, Board Resolution or Officer’s Certificate, made subject to the provisions of Article Thirteen.

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control,” as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” have correlative meanings.

“Authenticating Agent” means any Person authorized by the Trustee to act on behalf of the Trustee to authenticate Securities.

“Banking Day” means, in respect of any city, any date on which commercial banks are open for business in that city.

“Bankruptcy Law” means any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law.

“Board of Directors” means either the board of directors of the Company or of a Guarantor, as applicable, or any duly authorized committee of that board to which the powers of that board have been lawfully delegated.

“Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company, the principal financial officer of the Company or a Guarantor, any other authorized officer of the Company or a Guarantor, or a person duly authorized by any of them, in each case as applicable, to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee. Where any provision of this Indenture refers to action to be taken pursuant to a Board Resolution (including the establishment of any series of the Securities and the forms and terms thereof), such action may be taken by any committee, officer or employee of the Company or a Guarantor, as applicable, authorized to take such action by the Board of Directors as evidenced by a Board Resolution.

“Business Day”, when used with respect to any Place of Payment or other location, means, except as otherwise provided as contemplated by Section 3.1 with respect to any series of Securities, each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in that Place of Payment or other location are authorized or obligated by law, executive order or regulation to close.

“CINS” means CUSIP International Numbering System.

“Code” means the United States Internal Revenue Code of 1986, as amended.

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“Company” means the Person named as the “Company” in the first paragraph of this instrument until a successor or resulting corporation shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Company” shall mean such successor or resulting corporation.

“Company Request” or “Company Order” means, in the case of the Company, a written request or order signed in the name of the Company by its Chairman of the Board, its Chief Executive Officer, its Chief Financial Officer, its Chief Operating Officer, its President, any of its Vice Presidents or any other duly authorized officer of the Company or any person duly authorized by any of them, and delivered to the Trustee and, in the case of a Guarantor, a written request or order signed in the name of such Guarantor by its Chairman of the Board, its Chief Executive Officer, its President, any of its Vice Presidents or any other duly authorized officer of such Guarantor or any person duly authorized by any of them, and delivered to the Trustee.

“Corporate Trust Office” means the office of the Trustee at its address specified in Section 1.6 or such other address as to which the Trustee may give notice to the Company.

“corporation” includes corporations, companies, associations, partnerships, limited partnerships, limited liability companies, joint-stock companies and trusts.

“Covenant Defeasance” has the meaning specified in Section 13.3.

“CUSIP” means the Committee on Uniform Securities Identification Procedures.

“Custodian” means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.

“Debt” means any obligation created or assumed by any Person for the repayment of money borrowed and any purchase money obligation created or assumed by such Person and any guarantee of the foregoing.

“Default” means, with respect to a series of Securities, any event that is, or after notice or lapse of time or both would be, an Event of Default.

“Defaulted Interest” has the meaning specified in Section 3.7.

“Definitive Security” means a security other than a Global Security or a temporary Security.

“Depositary” means, with respect to the Securities of any series issuable or issued in whole or in part in the form of one or more Global Securities, a clearing agency registered under the Exchange Act that is designated to act as Depositary for such Securities as contemplated by Section 3.1, until a successor Depositary shall have become such pursuant to the applicable provisions of this Indenture, and thereafter shall mean or include each Person which is a Depositary hereunder, and if at any time there is more than one such Person, shall be a collective reference to such Persons.

“Dollar” or “$” means the coin or currency of the United States of America, which at the time of payment is legal tender for the payment of public and private debts.

“Event of Default” has the meaning specified in Section 5.1.

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

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“Foreign Currency” means a currency used by the government of a country other than the United States of America.

“GAAP” means generally accepted accounting principles in the United States of America as in effect from time to time, including those set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as approved by a significant segment of the accounting profession. All ratios and computations based on GAAP contained in this Indenture will be computed in conformity with GAAP.

“Global Security” means a Security in global form that evidences all or part of a series of Securities and is authenticated and delivered to, and registered in the name of, the Depositary for the Securities of such series or its nominee.

“Guarantor” means each Person that becomes a guarantor of any Securities pursuant to the applicable provisions of this Indenture.

“Holder” means a Person in whose name a Security is registered in the Security Register.

“Indenture” means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, including, for all purposes of this instrument, and any such supplemental indenture, the provisions of the Trust Indenture Act that are deemed to be part of and govern this instrument and any such supplemental indenture, respectively. The term “Indenture” also shall include the terms of particular series of Securities established as contemplated by Section 3.1.

“Intercreditor Agreements” means any intercreditor or similar agreements establishing the priority of liens granted on any property or assets securing the Securities of any series or the Securities Guarantee thereof and the relative rights, limitations of rights, obligations and duties of the holders of such liens with respect to such property or assets.

“interest”, when used with respect to an Original Issue Discount Security which by its terms bears interest only after Maturity, means interest payable after Maturity.

“Interest Payment Date”, when used with respect to any Security, means the Stated Maturity of an installment of interest on such Security.

“Judgment Currency” has the meaning specified in Section 1.16.

“Legal Defeasance” has the meaning specified in Section 13.2.

“mandatory sinking fund payment” has the meaning specified in Section 12.1.

“Maturity”, when used with respect to any Security, means the date on which the principal of such Security or an installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.

“Notice of Default” means a written notice of the kind specified in Section 5.1(e).

“Officer’s Certificate” means, in the case of the Company, a certificate signed by the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer, the Chief Operating Officer, the

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President, any Vice President or any other duly authorized officer of the Company, or a person duly authorized by any of them, and delivered to the Trustee and, in the case of a Guarantor, a certificate signed by the Chairman of the Board, the Chief Executive Officer, the President, any Vice President or any other duly authorized officer of such Guarantor, or a person duly authorized by any of them, and delivered to the Trustee.

“Opinion of Counsel” means a written opinion of counsel, who may be an employee of or counsel for the Company or a Guarantor, as the case may be, and who shall be reasonably acceptable to the Trustee.

“optional sinking fund payment” has the meaning specified in Section 12.1.

“Original Issue Discount Security” means any Security which provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 5.2.

“Outstanding”, when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except:

(a) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation;

(b) Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; provided, however, that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made;

(c) Securities which have been paid pursuant to Section 3.6 or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Company; and

(d) Securities, except to the extent provided in Section 13.2 and Section 13.3, with respect to which the Company has effected Legal Defeasance or Covenant Defeasance as provided in Article Thirteen, which Legal Defeasance or Covenant Defeasance then continues in effect;

provided, however, that in determining whether the Holders of the requisite principal amount of the Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, (i) the principal amount of an Original Issue Discount Security that shall be deemed to be Outstanding shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon acceleration of the Maturity thereof on such date pursuant to Section 5.2, (ii) the principal amount of a Security denominated in one or more currencies or currency units other than U.S. dollars shall be the U.S. dollar equivalent of such currencies or currency units, determined in the manner provided as contemplated by Section 3.1 on the date of original issuance of such Security or by Section 1.15, if not otherwise so provided pursuant to Section 3.1, of the principal amount (or, in the case of an Original Issue Discount Security, the U.S. dollar equivalent (as so determined) on the date of original issuance of such Security of the amount determined as provided in clause (i) above) of such

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Security, and (iii) Securities owned by the Company, any Guarantor or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which the Trustee knows to be so owned shall be so disregarded. Securities so owned as described in clause (iii) of the immediately preceding sentence which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right to act with respect to such Securities and that the pledgee is not the Company, a Guarantor or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor.

“Paying Agent” means any Person authorized by the Company to pay the principal of and any premium or interest on any Securities on behalf of the Company.

“Periodic Offering” means an offering of Securities of a series from time to time, the specific terms of which Securities, including, without limitation, the rate or rates of interest or formula for determining the rate or rates of interest thereon, if any, the Stated Maturity or Stated Maturities thereof, the original issue date or dates thereof, the redemption provisions, if any, with respect thereto, and any other terms specified as contemplated by Section 3.1 with respect thereto, are to be determined by the Company upon the issuance of such Securities.

“Person” means any individual, corporation, company, limited liability company, partnership, limited partnership, joint venture, association, joint-stock company, trust, other entity, unincorporated organization or government or any agency or political subdivision thereof.

“Place of Payment”, when used with respect to the Securities of any series, means, unless otherwise specifically provided for with respect to such series as contemplated by Section 3.1, the office or agency of the Company in the City of New York and such other place or places where, subject to the provisions of Section 10.2, the principal of and any premium and interest on the Securities of that series are payable as contemplated by Section 3.1.

“Predecessor Security” of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 3.6 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.

“Redemption Date”, when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture.

“Redemption Price”, when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture.

“Regular Record Date” for the interest payable on any Interest Payment Date on the Securities of any series means the date specified for that purpose as contemplated by Section 3.1.

“Required Currency” has the meaning specified in Section 1.16.

“Responsible Officer” when used with respect to the Trustee, means any officer within the Corporate Trust Administration of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject.

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“SEC” means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this instrument such commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time.

“Securities” has the meaning stated in the first recital of this Indenture and more particularly means any Securities authenticated and delivered under this Indenture.

“Securities Guarantee” means each guarantee of the obligations of the Company under this Indenture and the Securities of any series by a Guarantor in accordance with the provisions hereof.

“Security Documents” means the security agreements, pledge agreements, mortgages, deeds of trust and collateral assignments defining the terms of the liens, if any, that secure the Securities of any series or the Securities Guarantee thereof.

“Security Register” and “Security Registrar” have the respective meanings specified in Section 3.5.

“Significant Subsidiary” means any Subsidiary that would be a “Significant Subsidiary” of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.

“Special Record Date” for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 3.7.

“Stated Maturity”, when used with respect to any Security or any installment of principal thereof or interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security or such installment of principal or interest is due and payable.

“Subsidiary” means (a) a corporation more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries or (b) any partnership or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be so owned. For the purposes of this definition, “voting stock” means capital stock or equity interests which ordinarily have voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency.

“Trustee” means the Person named as the “Trustee” in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Trustee” shall mean or include each Person who is then a Trustee hereunder, and if at any time there is more than one such Person, “Trustee” as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series.

“Trust Indenture Act” means the Trust Indenture Act of 1939, as amended, as in force at the date as of which this instrument was executed, except as provided in Section 9.5; provided, however, that if the Trust Indenture Act of 1939 is amended after such date, “Trust Indenture Act” means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended.

“U.S. Person” shall have the meaning assigned to such term in Section 7701(a)(30) of the Code.

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“U.S. Government Obligations” means securities which are (a) direct obligations of the United States for the payment of which its full faith and credit is pledged, or (b) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States, the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States, each of which are not callable or redeemable at the option of the issuer thereof.

“Vice President”, when used with respect to the Company, the Guarantor or the Trustee, means any vice president, regardless of whether designated by a number or a word or words added before or after the title “vice president.”

Section 1.2. Incorporation by Reference of Trust Indenture Act.

Whenever this Indenture refers to a provision of the Trust Indenture Act, the provision is incorporated by reference in and made a part of this Indenture. The following Trust Indenture Act terms used in this Indenture have the following meanings:

“commission” means the SEC.

“indenture securities” means the Securities.

“indenture security holder” means a Holder.

“indenture to be qualified” means this Indenture.

“indenture trustee” or “institutional trustee” means the Trustee.

“obligor” on the indenture securities means the Company, a Guarantor (if applicable) or any other obligor on the indenture securities.

All terms used in this Indenture that are defined by the Trust Indenture Act, defined by a Trust Indenture Act reference to another statute or defined by an SEC rule under the Trust Indenture Act have the meanings so assigned to them.

Section 1.3. Compliance Certificates and Opinions.

Upon any application or request by the Company or a Guarantor to the Trustee to take any action under any provision of this Indenture, the Company or such Guarantor, as the case may be, shall furnish to the Trustee an Officer’s Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished except as required under Section 314(c) of the Trust Indenture Act.

Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (except for certificates provided for in Section 10.5) shall include:

(a) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto;

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(b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

(c) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether such covenant or condition has been complied with; and

(d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with.

Section 1.4. Form of Documents Delivered to Trustee.

In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

Any certificate or opinion of an officer of the Company or a Guarantor may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows or, in the exercise of reasonable care, should know that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or opinion of counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company or a Guarantor, as the case may be, stating that the information with respect to such factual matters is in the possession of the Company or such Guarantor, as the case may be, unless such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous.

Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

Section 1.5. Acts of Holders; Record Dates.

(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed (either physically or by means of a facsimile or an electronic transmission, provided that such electronic transmission is transmitted through the facilities of a Depositary) by such Holders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company or the Guarantors. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 315 of the Trust Indenture Act) conclusive in favor of the Trustee, the Company and, if applicable, the Guarantors, if made in the manner provided in this Section.

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(b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient.

(c) The ownership, principal amount and serial numbers of Securities held by any Person, and the date of commencement of such Person’s holding of same, shall be proved by the Security Register.

(d) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee, the Company or, if applicable, the Guarantors in reliance thereon, regardless of whether notation of such action is made upon such Security.

(e) Without limiting the foregoing, a Holder entitled to give or take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any different part of such principal amount.

(f) The Company may set any day as the record date for the purpose of determining the Holders of Outstanding Securities of any series entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other Act provided or permitted by this Indenture to be given or taken by Holders of Securities of such series, but the Company shall have no obligation to do so. With regard to any record date set pursuant to this paragraph, the Holders of Outstanding Securities of the relevant series on such record date (or their duly appointed agents), and only such Persons, shall be entitled to give or take the relevant action, regardless of whether such Holders remain Holders after such record date.

Section 1.6. Notices, Etc., to Trustee, Company and Guarantors.

(a) Any notice or communication by the Company, any of the Guarantors or the Trustee to the others is duly given if in writing and delivered in Person or mailed by first class mail (registered or certified, return receipt requested), telecopier or overnight air courier guaranteeing next day delivery, to the others’ address:

If to the Company and/or any Guarantor:

c/o Flotek Industries, Inc.

2930 W. Sam Houston Pkwy. N., Suite 300

Houston, TX 77043

Facsimile: (713) 466-8386

Attention: Chief Financial Officer

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If to the Trustee:

U.S. Bank National Association

5555 San Felipe Street, Suite 1150

Houston, TX 77056

Facsimile: (713) 235-9213

Attention: Corporate Trust Services

(b) The Company, the Guarantors or the Trustee, by notice to the others, may designate additional or different addresses for subsequent notices or communications.

(c) All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; three Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery.

Section 1.7. Notice to Holders; Waiver.

Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at his address as it appears in the Security Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Any notice mailed to a Holder in the manner herein prescribed shall be conclusively deemed to have been received by such Holder, regardless of whether such Holder actually receives such notice.

Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.

In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder.

Section 1.8. Conflict with Trust Indenture Act.

If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under such Act to be a part of and govern this Indenture, the latter provision shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or excluded, as the case may be.

Section 1.9. Effect of Headings and Table of Contents.

The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.

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Section 1.10. Successors and Assigns.

All covenants and agreements in this Indenture by each of the Company and the Guarantors shall bind their respective successors and assigns, whether so expressed or not.

Section 1.11. Separability Clause.

In case any provision in this Indenture or in the Securities or, if applicable, the Securities Guarantee shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Section 1.12. Benefits of Indenture.

Nothing in this Indenture or in the Securities or, if applicable, the Securities Guarantee, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture.

Section 1.13. Governing Law.

THIS INDENTURE, THE SECURITIES AND THE SECURITIES GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

Section 1.14. Legal Holidays.

In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day at any Place of Payment, then (notwithstanding any other provision of this Indenture or of the Securities or, if applicable, the Securities Guarantee (other than a provision of the Securities of any series or, if applicable, the Securities Guarantee that specifically states that such provision shall apply in lieu of this Section 1.14)) payment of interest or principal and any premium need not be made at such Place of Payment on such date, but may be made on the next succeeding Business Day at such Place of Payment with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at the Stated Maturity, provided that no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be.

Section 1.15. Securities in a Composite Currency, Currency Unit or Foreign Currency.

Unless otherwise specified in an Officer’s Certificate delivered pursuant to Section 3.1 of this Indenture with respect to a particular series of Securities, whenever for purposes of this Indenture any action may be taken by the Holders of a specified percentage in aggregate principal amount of Securities of all series or all series affected by a particular action at the time Outstanding and, at such time, there are Outstanding Securities of any series which are denominated in a coin, currency or currencies other than Dollars (including, but not limited to, any composite currency, currency units or Foreign Currency), then the principal amount of Securities of such series which shall be deemed to be Outstanding for the purpose of taking such action shall be that amount of Dollars that could be obtained for such amount at the Market Exchange Rate. For purposes of this Section 1.15, the term “Market Exchange Rate” shall mean the noon Dollar buying rate in The City of New York for cable transfers of such currency or currencies as published by the Federal Reserve Bank of New York, as of the most recent available date. If such Market Exchange Rate is not so available for any reason with respect to such currency, the Trustee shall use, in its sole discretion and without liability on its part, such quotation of the Federal Reserve Bank of New York as of the most recent available date, or quotations or rates of exchange from one or more major

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banks in The City of New York or in the country of issue of the currency in question, which for purposes of euros shall be Brussels, Belgium, or such other quotations or rates of exchange as the Trustee shall deem appropriate. The provisions of this paragraph shall apply in determining the equivalent principal amount in respect of Securities of a series denominated in a currency other than Dollars in connection with any action taken by Holders of Securities pursuant to the terms of this Indenture.

All decisions and determinations of the Trustee regarding the Market Exchange Rate or any alternative determination provided for in the preceding paragraph shall be in its sole discretion and shall, in the absence of manifest error, be conclusive to the extent permitted by law for all purposes and irrevocably binding upon the Company and all Holders.

Section 1.16. Payment in Required Currency; Judgment Currency.

Each of the Company and the Guarantors agrees, to the fullest extent that it may effectively do so under applicable law, that (a) if for the purpose of obtaining judgment in any court it is necessary to convert the sum due in respect of the principal of or interest on the Securities of any series (the “Required Currency”) into a currency in which a judgment will be rendered (the “Judgment Currency”), the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Trustee could purchase in The City of New York the Required Currency with the Judgment Currency on the day on which final unappealable judgment is entered, unless such day is not a Banking Day, then, to the extent permitted by applicable law, the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Trustee could purchase in The City of New York the Required Currency with the Judgment Currency on the Banking Day next preceding the day on which final unappealable judgment is entered and (b) its obligations under this Indenture to make payments in the Required Currency (i) shall not be discharged or satisfied by any tender, or any recovery pursuant to any judgment (regardless of whether entered in accordance with subclause (a)), in any currency other than the Required Currency, except to the extent that such tender or recovery shall result in the actual receipt, by the payee, of the full amount of the Required Currency expressed to be payable in respect of such payments, (ii) shall be enforceable as an alternative or additional cause of action for the purpose of recovering in the Required Currency the amount, if any, by which such actual receipt shall fall short of the full amount of the Required Currency so expressed to be payable and (iii) shall not be affected by judgment being obtained for any other sum due under this Indenture.

Section 1.17. Language of Notices, Etc.

Any request, demand, authorization, direction, notice, consent, waiver or Act required or permitted under this Indenture shall be in the English language, except that any published notice may be in an official language of the country of publication.

Section 1.18. Incorporators, Shareholders, Officers and Directors of the Company and the Guarantors Exempt from Individual Liability.

No recourse under or upon any obligation, covenant or agreement of or contained in this Indenture or of or contained in any Security or, if applicable, the Securities Guarantee, or for any claim based thereon or otherwise in respect thereof, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, shareholder, member, officer, manager or director, as such, past, present or future, of the Company, any Guarantor or any successor Person, either directly or through the Company, any Guarantor or any successor Person, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, it being expressly understood that all such liability is hereby expressly waived and released as a condition of, and as a part of the consideration for, the execution of this Indenture and the issue of the Securities.

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ARTICLE TWO

SECURITY FORMS

Section 2.1. Forms Generally.

The Securities of each series and, if applicable, the notation thereon relating to the Securities Guarantee, shall be in substantially the form set forth in this Article Two, or in such other form or forms as shall be established by or pursuant to a Board Resolution or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Securities and, if applicable, the Securities Guarantee, as evidenced by their execution thereof.

The definitive Securities shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Securities, as evidenced by their execution thereof. If the form of Securities of any series is established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by an authorized officer or other authorized person on behalf of the Company and delivered to the Trustee at or prior to the delivery of the Company Order contemplated by Section 3.3 for the authentication and delivery of such Securities.

The forms of Global Securities of any series shall have such provisions and legends as are customary for Securities of such series in global form, including without limitation any legend required by the Depositary for the Securities of such series.

Section 2.2. Form of Face of Security.

[If the Security is an Original Issue Discount Security, insert—FOR PURPOSES OF SECTION 1275 OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED, THE AMOUNT OF THE ORIGINAL ISSUE DISCOUNT IS . . . . . . . ., THE ISSUE DATE IS . . . . . ., 20. . . [AND] [,] THE YIELD TO MATURITY IS . . . . . . . . [,] [AND THE ORIGINAL ISSUE DISCOUNT FOR THE SHORT ACCRUAL PERIOD IS . . . . . . . . AND THE METHOD USED TO DETERMINE THE YIELD THEREFOR IS . . . . .]]

[Insert any other legend required by the Code or the regulations thereunder.]

[If a Global Security,—insert legend required by Section 2.4 of the Indenture] [If applicable, insert —UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

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FLOTEK INDUSTRIES, INC.

[TITLE OF SECURITY]

No . . . . . . .	U.S. $. . . . . .
[CUSIP No. ]

FLOTEK INDUSTRIES, INC., a company duly incorporated under the laws of the State of Delaware (herein called the “Company”, which term includes any successor or resulting Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to . . . . . . . . . . . . . . . . . . . . . . ., or registered assigns, the principal sum of . . . . . . . . . . . . . . . . . . . . . . . United States Dollars on . . . . . . . . . . . . . . . . . . . . . . . . [If the Security is to bear interest prior to Maturity, insert—, and to pay interest thereon from . . .. . . . . . . . or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on . . . . . . and . . . . . . in each year, commencing . . . . . ., at the rate of . . . . % per annum, until the principal hereof is paid or made available for payment [if applicable, insert—, and at the rate of     % per annum on any overdue principal and premium and on any installment of interest (to the extent that the payment of such interest shall be legally enforceable)]. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the . . . . or . . . . (regardless of whether a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture].

[If the Security is not to bear interest prior to Maturity, insert—The principal of this Security shall not bear interest except in the case of a default in payment of principal upon acceleration, upon redemption or at Stated Maturity and in such case the overdue principal of this Security shall bear interest at the rate of . . . .% per annum (to the extent that the payment of such interest shall be legally enforceable), which shall accrue from the date of such default in payment to the date payment of such principal has been made or duly provided for. Interest on any overdue principal shall be payable on demand. Any such interest on any overdue principal that is not so paid on demand shall bear interest at the rate of . . . . % per annum (to the extent that the payment of such interest shall be legally enforceable), which shall accrue from the date of such demand for payment to the date payment of such interest has been made or duly provided for, and such interest shall also be payable on demand.]

[If a Global Security, insert—Payment of the principal of (and premium, if any) and [if applicable, insert—any such] interest on this Security will be made by transfer of immediately available funds to a bank account in                      designated by the Holder in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts [state other currency].]

[If a Definitive Security, insert—Payment of the principal of (and premium, if any) and [if applicable, insert—any such] interest on this Security will be made at the office or agency of the Company maintained for that purpose in                     , in such coin or currency of the United States of

15

America as at the time of payment is legal tender for payment of public and private debts] [state other currency] [or subject to any laws or regulations applicable thereto and to the right of the Company (as provided in the Indenture) to rescind the designation of any such Paying Agent, at the [main] offices of                              in                             , or at such other offices or agencies as the Company may designate, by [United States Dollar] [state other currency] check drawn on, or transfer to a [United States Dollar] account maintained by the payee with, a bank in The City of New York (so long as the applicable Paying Agency has received proper transfer instructions in writing at least      days prior to the payment date)] [if applicable, insert—; provided, however, that payment of interest may be made at the option of the Company by [United States Dollar] [state other currency] check mailed to the addresses of the Persons entitled thereto as such addresses shall appear in the Security Register] [or by transfer to a [United States Dollar] [state other currency] account maintained by the payee with a bank in The City of New York [state other Place of Payment] (so long as the applicable Paying Agent has received proper transfer instructions in writing by the record date prior to the applicable Interest Payment Date)].]

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

Dated:

FLOTEK INDUSTRIES, INC.

By:

Section 2.3. Form of Reverse of Security.

This Security is one of a duly authorized issue of senior securities of the Company (herein called the “Securities”), issued and to be issued in one or more series under an Indenture, dated as of                     , 20     (herein called the “Indenture”), between the Company, the Guarantors and                             , as Trustee (herein called the “Trustee”, which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement, of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Guarantors, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. As provided in the Indenture, the Securities may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest, if any, at different rates, may be subject to different redemption provisions, if any, may be subject to different sinking, purchase or analogous funds, if any, may be subject to different covenants and Events of Default and may otherwise vary as in the Indenture provided or permitted. This Security is one of the series designated on the face hereof [, limited in aggregate principal amount to $ . . . . . . . . . . ].

This security is the senior obligation of the Company [if applicable, insert—and is guaranteed pursuant to a guarantee (the “Securities Guarantee”) by [insert name of each Guarantor] (the “Guarantors”). The Securities Guarantee is the senior obligation of each Guarantor.]

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[If applicable, insert—The Securities of this series [if applicable, insert—and the Securities Guarantee] are secured by [insert description of collateral].]

[If applicable, insert—The Securities of this series [if applicable, insert—and the Securities Guarantee] are unsecured.]

[If applicable, insert—The Securities of this series are subject to redemption upon not less than . . . days’ notice by mail, [if applicable, insert, —(1) on . . . . . . . . . . . . . . in any year commencing with the year . . . . and ending with the year . . . . through operation of the sinking fund for this series at a Redemption Price equal to 100% of the principal amount, and (2) ] at any time [on or after . . . . . . . . . ., 20. . . ], as a whole or in part, at the election of the Company, at the following Redemption Prices (expressed as percentages of the principal amount): If redeemed [on or before . . . . . . . . . . . . . . . , . . . . . %, and if redeemed] during the 12-month period beginning . . . . . . . . of the years indicated,

Year Redemption Price Year Redemption Price

and thereafter at a Redemption Price equal to . . . . . % of the principal amount, together in the case of any such redemption [if applicable, insert—(whether through operation of the sinking fund or otherwise)] with accrued interest to the Redemption Date, but interest installments whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant record dates referred to on the face hereof, all as provided in the Indenture.]

[If applicable, insert—The Securities of this series are subject to redemption upon not less than. . . nor more than . . . days’ notice by mail, (1) on . . . . . . . . in any year commencing with the year . . . . and ending with the year . . . . through operation of the sinking fund for this series at the Redemption Prices for redemption through operation of the sinking fund (expressed as percentages of the principal amount) set forth in the table below, and (2) at anytime [on or after . . . . . . . . . . ], as a whole or in part, at the election of the Company, at the Redemption Prices for redemption otherwise than through operation of the sinking fund (expressed as percentages of the principal amount) set forth in the table below: If redeemed during the 12-month period beginning . . . . . . . . . . . . . . of the years indicated,

Year Redemption Price for
Redemption Through
Operation of the Sinking Fund Redemption Price for
Redemption Otherwise Than
Through Operation of the
Sinking Fund

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and thereafter at a Redemption Price equal to . . . . % of the principal amount, together in the case of any such redemption (whether through operation of the sinking fund or otherwise) with accrued interest to the Redemption Date, but interest installments whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant record dates referred to on the face hereof, all as provided in the Indenture.]

[If applicable, insert—Notwithstanding the foregoing, the Company may not, prior to . . . . . . . . . ., redeem any Securities of this series as contemplated by [clause (2) of] the preceding paragraph as a part of, or in anticipation of, any refunding operation by the application, directly or indirectly, of moneys borrowed having an interest cost to the Company (calculated in accordance with generally accepted financial practice) of less than . . . .% per annum.]

[If applicable, insert—The sinking fund for this series provides for the redemption on . . . . . . . . . . . . in each year beginning with the year . . . . and ending with the year . . . . of [not less than] $ . . . . . . . . . . . . [ (“mandatory sinking fund”) and not more than $ . . . . . . . . . . . . ] aggregate principal amount of Securities of this series. [Securities of this series acquired or redeemed by the Company otherwise than through [mandatory] sinking fund payments may be credited against subsequent [mandatory] sinking fund payments otherwise required to be made [If applicable, insert— in the inverse order in which they become due].]

[If the Securities are subject to redemption in part of any kind, insert—In the event of redemption of this Security in part only, a new Security or Securities of this series and of like tenor for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof.]

[If applicable, insert—The Securities of this series are not redeemable prior to Stated Maturity.]

[If the Security is not an Original Issue Discount Security,—If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.]

[If the Security is an Original Issue Discount Security,—If an Event of Default with respect to Securities of this series shall occur and be continuing, an amount of principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. Such amount shall be equal to —insert formula for determining the amount. Upon payment (i) of the amount of principal so declared due and payable and (ii) of interest on any overdue principal and overdue interest (in each case to the extent that the payment of such interest shall be legally enforceable), all of the Company’s obligations in respect of the payment of the principal of and interest, if any, on the Securities of this series shall terminate.]

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company [If applicable, insert—and the Guarantors] and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company [If applicable, insert—and the Guarantors] and the Trustee with the consent of the Holders of a majority in principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company [If applicable, insert—and the Guarantors] with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, regardless of whether notation of such consent or waiver is made upon this Security.

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No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Security at the times, place(s) and rate, and in the coin or currency, herein prescribed.

[If a Global Security, insert—This Global Security or portion hereof may not be exchanged for Definitive Securities of this series except in the limited circumstances provided in the Indenture. The holders of beneficial interests in this Global Security will not be entitled to receive physical delivery of Definitive Securities except as described in the Indenture and will not be considered the Holders thereof for any purpose under the Indenture.]

[If a Definitive Security, insert—As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registerable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in [if applicable, insert—any place where the principal of and any premium and interest on this Security are payable] [if applicable, insert—The City of New York [, or, subject to any laws or regulations applicable thereto and to the right of the Company (limited as provided in the Indenture) to rescind the designation of any such transfer agent, at the [main] offices of                              in                              or at such other offices or agencies as the Company may designate]], duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.]

The Securities of this series are issuable only in registered form without coupons in denominations of U.S. $ . . . . . . . . and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

Prior to due presentment of this Security for registration of transfer, the Company, [If applicable, insert—any Guarantor,] the Trustee and any agent of the Company [If applicable, insert—, a Guarantor] or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, regardless of whether this Security be overdue, and none of the Company, [If applicable, insert—the Guarantors,] the Trustee nor any such agent shall be affected by notice to the contrary.

No recourse under or upon any obligation, covenant or agreement of or contained in the Indenture or of or contained in any Security, [If applicable, insert—, or the Securities Guarantee endorsed thereon,] or for any claim based thereon or otherwise in respect thereof, or in any Security [If applicable, insert—or in the Securities Guarantee], or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, shareholder, member, officer, manager or director, as such, past, present or future, of the Company [If applicable, insert—or any Guarantor] or of any successor Person, either directly or through the Company [If applicable, insert—or any Guarantor] or any successor Person, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment,

19

penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released by the acceptance hereof and as a condition of, and as part of the consideration for, the Securities and the execution of the Indenture.

The Indenture provides that the Company [If applicable, insert—and the Guarantors] (a) will be discharged from any and all obligations in respect of the Securities (except for certain obligations described in the Indenture), or (b) need not comply with certain restrictive covenants of the Indenture, in each case if the Company [If applicable, insert—or a Guarantor] deposits, in trust, with the Trustee money or U.S. Government Obligations (or a combination thereof) which through the payment of interest thereon and principal thereof in accordance with their terms will provide money, in an amount sufficient to pay all the principal of and interest on the Securities, but such money need not be segregated from other funds except to the extent required by law.

Except as otherwise defined herein, all terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture.

[If a Definitive Security, insert as a separate page—

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto

(Please Print or Typewrite Name and Address of Assignee)

the within instrument of FLOTEK INDUSTRIES, INC. and does hereby irrevocably constitute and appoint                                          Attorney to transfer said instrument on the books of the within-named Company, with full power of substitution in the premises.

Please Insert Social Security or Other Identifying Number of Assignee:

Dated:
	(Signature)

NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatever.]

[If a Security to which Article Fourteen has been made applicable, insert the following Form of Notation on such Security relating to the Securities Guarantee—

Each of the Guarantors (which term includes any successor Person in such capacity under the Indenture), has fully, unconditionally and absolutely guaranteed, to the extent set forth in the Indenture and subject to the provisions in the Indenture, the due and punctual payment of the principal of, and premium, if any, and interest on the Securities of this series and all other amounts due and payable under the Indenture and the Securities of this series by the Company.

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The obligations of the Guarantors to the Holders of Securities of this series and to the Trustee pursuant to the Securities Guarantee and the Indenture are expressly set forth in Article Fourteen of the Indenture and reference is hereby made to the Indenture for the precise terms of the Securities Guarantee.

Guarantors:
[NAME OF EACH GUARANTOR]
By:
	]

Section 2.4. Global Securities.

Every Global Security authenticated and delivered hereunder shall bear a legend in substantially the following form:

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE TRANSFERRED TO, OR REGISTERED OR EXCHANGED FOR SECURITIES REGISTERED IN THE NAME OF, ANY PERSON OTHER THAN THE DEPOSITARY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

EVERY SECURITY AUTHENTICATED AND DELIVERED UPON REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR OR IN LIEU OF, THIS SECURITY SHALL BE A GLOBAL SECURITY SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES.

If Securities of a series are issuable in whole or in part in the form of one or more Global Securities, as specified as contemplated by Section 3.1, then, notwithstanding clause (i) of Section 3.1 and the provisions of Section 3.2, any Global Security shall represent such of the Outstanding Securities of such series as shall be specified therein and may provide that it shall represent the aggregate amount of Outstanding Securities from time to time endorsed thereon and that the aggregate amount of Outstanding Securities represented thereby may from time to time be reduced or increased, as the case may be, to reflect exchanges. Any endorsement of a Global Security to reflect the amount, or any reduction or increase in the amount, of Outstanding Securities represented thereby shall be made in such manner and upon instructions given by such Person or Persons as shall be specified therein or in a Company Order. Subject to the provisions of Section 3.3, Section 3.4 and Section 3.5, the Trustee shall deliver and redeliver any Global Security in the manner and upon instructions given by the Person or Persons specified therein or in the applicable Company Order. Any instructions by the Company with respect to endorsement or delivery or redelivery of a Global Security shall be in a Company Order (which need not comply with Section 1.3 and need not be accompanied by an Opinion of Counsel).

The provisions of the last sentence of Section 3.3 shall apply to any Security represented by a Global Security if such Security was never issued and sold by the Company and the Company delivers to the Trustee the Global Security together with a Company Order (which need not comply with Section 1.3 and need not be accompanied by an Opinion of Counsel) with regard to the reduction or increase, as the case may be, in the principal amount of Securities represented thereby, together with the written statement contemplated by the last sentence of Section 3.3.

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Section 2.5. Form of Trustee’s Certificate of Authentication.

The Trustee’s certificate(s) of authentication shall be in substantially the following form:

This is one of the Securities of the series designated [insert title of applicable series] referred to in the within-mentioned Indenture.

		,
as Trustee
By:
	Authorized Officer

ARTICLE THREE

THE SECURITIES

Section 3.1. Amount Unlimited; Issuable in Series.

The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited.

The Securities may be issued in one or more series. There shall be established in or pursuant to a Board Resolution, and set forth, or determined in the manner provided, in an Officer’s Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of any series,

(a) the title of the Securities of the series (which shall distinguish the Securities of the series from all other Securities and which may be part of a series of Securities previously issued);

(b) any limit upon the aggregate principal amount of the Securities of the series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 3.4, Section 3.5, Section 3.6, Section 9.6 or Section 11.7 and except for any Securities which, pursuant to Section 3.3, are deemed never to have been authenticated and delivered hereunder);

(c) the Person to whom any interest on a Security of the series shall be payable, if other than the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest;

(d) the date or dates on which the principal of the Securities of the series is payable or the method of determination thereof;

(e) the rate or rates at which the Securities of the series shall bear interest, if any, or the formula, method or provision pursuant to which such rate or rates are determined, the date or dates from which such interest shall accrue or the method of determination thereof, the Interest Payment Dates on which such interest shall be payable and the Regular Record Date for the interest payable on any Interest Payment Date;

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(f) the place or places where, subject to the provisions of Section 10.2, the principal of and any premium and interest on Securities of the series shall be payable, Securities of the series may be surrendered for registration of transfer, Securities of the series may be surrendered for exchange and notices, and demands to or upon the Company in respect of the Securities of the series and this Indenture may be served;

(g) the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the series may be redeemed, in whole or in part, at the option of the Company;

(h) the obligation, if any, of the Company to redeem or purchase Securities of the series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof and the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the series shall be redeemed or purchased, in whole or in part, pursuant to such obligation;

(i) if other than denominations of $1,000 and any integral multiple thereof, the denominations in which Securities of the series shall be issuable;

(j) whether payment of principal of and premium, if any, and interest, if any, on the Securities of the series shall be without deduction for taxes, assessments or governmental charges paid by Holders of the series;

(k) if other than the principal amount thereof, the portion of the principal amount of Securities of the series which shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 5.2;

(l) if the amount of payments of principal of and any premium or interest on the Securities of the series may be determined with reference to an index, the manner in which such amounts shall be determined;

(m) if and as applicable, that the Securities of the series shall be issuable in whole or in part in the form of one or more Global Securities and, in such case, the Depositary or Depositaries for such Global Security or Global Securities and any circumstances other than those set forth in Section 3.5 in which any such Global Security may be transferred to, and registered and exchanged for Securities registered in the name of, a Person other than the Depositary for such Global Security or a nominee thereof and in which any such transfer may be registered;

(n) any deletions from, modifications of or additions to the Events of Default set forth in Section 5.1 or the covenants of the Company set forth in Article Ten with respect to the Securities of such series;

(o) whether and under what circumstances the Company will pay additional amounts on the Securities of the series held by a Person who is not a U.S. Person in respect of any tax, assessment or governmental charge withheld or deducted and, if so, whether the Company will have the option to redeem the Securities of the series rather than pay such additional amounts;

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(p) if the Securities of the series are to be issuable in definitive form (whether upon original issue or upon exchange of a temporary Security of such series) only upon receipt of certain certificates or other documents or satisfaction of other conditions, the form and terms of such certificates, documents or conditions;

(q) if the Securities of the series are to be convertible into or exchangeable for any other security or property of the Company, including, without limitation, securities of another Person held by the Company or its Affiliates and, if so, the terms thereof;

(r) if other than as provided in Section 13.2 and Section 13.3, the means of Legal Defeasance or Covenant Defeasance as may be specified for the Securities of the series;

(s) if other than the Trustee, the identity of the initial Security Registrar and any initial Paying Agent;

(t) whether the Securities of the series will be guaranteed pursuant to the Securities Guarantee set forth in Article Fourteen, any modifications to the terms of Article Fourteen applicable to the Securities of such series and the applicability of any other guarantees;

(u) if the Securities of the series or, if applicable, the Securities Guarantee thereof are to be secured by any property or assets and, if so, the nature of such property or assets and the priority of such liens; and

(v) any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture).

All Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided in or pursuant to the Board Resolution referred to above and (subject to Section 3.3) set forth, or determined in the manner provided, in the Officer’s Certificate referred to above or in any such indenture supplemental hereto.

All Securities of any one series need not be issued at the same time and, unless otherwise provided, a series may be reopened, without the consent of the Holders, for increases in the aggregate principal amount of such series of Securities and issuances of additional Securities of such series or for the establishment of additional terms with respect to the Securities of such series.

If any of the terms of the series are established by action taken by or pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by an authorized officer or other authorized person on behalf of the Company and, if applicable, the Guarantors and delivered to the Trustee at or prior to the delivery of the Officer’s Certificate setting forth, or providing the manner for determining, the terms of the series.

With respect to Securities of a series subject to a Periodic Offering, such Board Resolution or Officer’s Certificate may provide general terms for Securities of such series and provide either that the specific terms of particular Securities of such series shall be specified in a Company Order or that such terms shall be determined by the Company and, if applicable, the Guarantors or one or more agents thereof designated in an Officer’s Certificate, in accordance with a Company Order.

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Section 3.2. Denominations.

The Securities of each series shall be issuable in registered form without coupons in such denominations as shall be specified as contemplated by Section 3.1. In the absence of any such provisions with respect to the Securities of any series, the Securities of such series shall be issuable in denominations of $1,000 and any integral multiple thereof.

Section 3.3. Execution, Authentication, Delivery and Dating.

The Securities shall be executed on behalf of the Company by its Chairman of the Board, its Chief Executive Officer, its President, its Chief Financial Officer or any of its Vice Presidents and need not be attested. The signature of any of these officers on the Securities may be manual or facsimile. Any Securities Guarantee endorsed on the Securities shall be executed on behalf of the applicable Guarantor by its Chairman of the Board, its Chief Executive Officer, its President, its Chief Financial Officer or any of its Vice Presidents and need not be attested.

Securities and any Securities Guarantee bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company or a Guarantor, as the case may be, shall bind the Company or such Guarantor, as the case may be, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities.

At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company Order shall authenticate and deliver such Securities; provided, however, that in the case of Securities offered in a Periodic Offering, the Trustee shall authenticate and deliver such Securities from time to time in accordance with such other procedures (including, without limitation, the receipt by the Trustee of oral or electronic instructions from the Company or its duly authorized agents, thereafter promptly confirmed in writing) acceptable to the Trustee as may be specified by or pursuant to a Company Order delivered to the Trustee prior to the time of the first authentication of Securities of such series. If the forms or terms of the Securities of the series have been established in or pursuant to one or more Board Resolutions as permitted by Section 2.1 and Section 3.1, in authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive such documents as it may reasonably request. The Trustee shall also be entitled to receive, and (subject to Section 6.1) shall be fully protected in relying upon, an Opinion of Counsel stating,

(a) if the form or forms of such Securities has been established in or pursuant to a Board Resolution as permitted by Section 2.1, that each such form has been established in conformity with the provisions of this Indenture;

(b) if the terms of such Securities have been, or in the case of Securities of a series offered in a Periodic Offering will be, established in or pursuant to a Board Resolution as permitted by Section 3.1, that such terms have been, or in the case of Securities of a series offered in a Periodic Offering will be, established in conformity with the provisions of this Indenture, subject, in the case of Securities of a series offered in a Periodic Offering, to any conditions specified in such Opinion of Counsel; and

(c) that such Securities when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions and assumptions specified in such

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Opinion of Counsel, will constitute valid and legally binding obligations of the Company and, if applicable, the Guarantors, enforceable in accordance with their terms, subject to the following limitations: (i) bankruptcy, insolvency, moratorium, reorganization, liquidation, fraudulent conveyance or transfer and other similar laws of general applicability relating to or affecting the enforcement of creditors’ rights, or to general equity principles, (ii) the availability of equitable remedies being subject to the discretion of the court to which application therefor is made; and (iii) such other usual and customary matters as shall be specified in such Opinion of Counsel.

If such form or forms or terms have been so established, the Trustee shall not be required to authenticate such Securities if the issue of such Securities pursuant to this Indenture will affect the Trustee’s own rights, duties or immunities under the Securities and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee.

Notwithstanding the provisions of Section 3.1 and of the preceding paragraph, if all Securities of a series are not to be originally issued at one time, it shall not be necessary to deliver the Officer’s Certificate otherwise required pursuant to Section 3.1 or the Company Order and Opinion of Counsel otherwise required pursuant to such preceding paragraph at or prior to the time of authentication of each Security of such series if such documents are delivered at or prior to the authentication upon original issuance of the first Security of such series to be issued.

With respect to Securities of a series offered in a Periodic Offering, the Trustee may rely, as to the authorization by the Company of any of such Securities, on the form or forms and terms thereof and the legality, validity, binding effect and enforceability thereof, upon the Opinion of Counsel and the other documents delivered pursuant to Section 2.1 and Section 3.1 and this Section, as applicable, in connection with the first authentication of Securities of such series.

Each Security shall be dated the date of its authentication.

No Security, nor any Securities Guarantee endorsed thereon, shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature of an authorized officer, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in Section 3.9 for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture.

Section 3.4. Temporary Securities.

Pending the preparation of Definitive Securities of any series, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the Definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities.

If temporary Securities of any series are issued, the Company will cause Definitive Securities of that series to be prepared without unreasonable delay. After the preparation of Definitive Securities of such series, the temporary Securities of such series shall be exchangeable for Definitive Securities of such

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series upon surrender of the temporary Securities of such series at the office or agency of the Company in a Place of Payment for that series, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities of any series the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of Definitive Securities of the same series and tenor of authorized denominations. Until so exchanged the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as Definitive Securities of such series.

Section 3.5. Registration, Registration of Transfer and Exchange.

The Company shall cause to be kept at the office or agency of the Company in the Borough of Manhattan, the City of New York or in any other office or agency of the Company in a Place of Payment required by Section 10.2 a register (the register maintained in such office being herein sometimes referred to as the “Security Register”) in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities. The Trustee is hereby appointed as the initial “Security Registrar” for the purpose of registering Securities and transfers of Securities as herein provided, and its corporate trust office in New York City, which, at the date hereof, is located at 100 Wall Street, Suite 1600, New York, New York 10005, is the initial office or agency in the Borough of Manhattan where the Securities Register will be maintained. The Company may at any time replace such Security Registrar, change such office or agency or act as its own Security Registrar. The Company will give prompt written notice to the Trustee of any change of the Security Registrar or of the location of such office or agency.

Upon surrender for registration of transfer of any Security of any series at the office or agency maintained pursuant to Section 10.2 for such purpose, the Company and, if applicable, the Guarantors shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities, with an endorsement of the Securities Guarantee, if applicable, executed by the Guarantors, of the same series and tenor, of any authorized denominations and of a like aggregate principal amount.

At the option of the Holder, Securities of any series (except a Global Security) may be exchanged for other Securities of the same series and tenor, of any authorized denominations and of a like aggregate principal amount, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company and, if applicable, the Guarantors shall execute and the Trustee shall authenticate and deliver, the Securities, with an endorsement of the Securities Guarantee, if applicable, executed by the Guarantors, which the Holder making the exchange is entitled to receive.

All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company and, if applicable, the Guarantors evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange.

Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing.

No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 3.4, Section 9.6 or Section 11.7 not involving any transfer.

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The Company shall not be required (a) to issue, register the transfer of or exchange Securities of any series during a period beginning at, the opening of business 15 days before the day of the mailing of a notice of redemption of Securities of that series selected for redemption under Section 11.3 and ending at the close of business on the day of such mailing, or (b) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part.

Notwithstanding any other provisions of this Indenture and except as otherwise specified with respect to any particular series of Securities as contemplated by Section 3.1, a Global Security representing all or a portion of the Securities of a series may not be transferred, except as a whole by the Depositary for such series to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any such nominee to a successor Depositary for such series or a nominee of such successor Depositary. Every Security authenticated and delivered upon registration of, transfer of, or in exchange for or in lieu of, a Global Security shall be a Global Security except as provided in the three paragraphs immediately following.

If at any time the Depositary for any Securities of a series represented by one or more Global Securities notifies the Company that it is unwilling or unable to continue as Depositary for such Securities or if at any time the Depositary for such Securities shall no longer be eligible to continue as Depositary under Section 3.1 or ceases to be a clearing agency registered under the Exchange Act, the Company shall appoint a successor Depositary with respect to such Securities. If a successor Depositary for such Securities is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such ineligibility, the Company’s election pursuant to Section 3.1 that such Securities be represented by one or more Global Securities shall no longer be effective and the Company and, if applicable, the Guarantors will execute and the Trustee, upon receipt of a Company Order for the authentication and delivery of Definitive Securities of such series, will authenticate and deliver, Securities, with an endorsement of the Securities Guarantee, if applicable, executed by the Guarantors, of such series in definitive registered form without coupons, in any authorized denominations, in an aggregate principal amount equal to the principal amount of the Global Security or Securities representing such Securities in exchange for such Global Security or Securities registered in the names of such Persons as the Depositary shall direct.

The Company may at any time and in its sole discretion determine that the Securities of any series issued in the form of one or more Global Securities shall no longer be represented by a Global Security or Securities. In such event, the Company and, if applicable, the Guarantors will execute and the Trustee, upon receipt of a Company Order for the authentication and delivery of the Definitive Securities of such series, will authenticate and deliver, Securities, with an endorsement of the Securities Guarantee, if applicable, executed by the Guarantors, of such series in definitive registered form without coupons, in any authorized denominations, in an aggregate principal amount equal to the principal amount of the Global Security or Securities representing such Securities in exchange for such Global Security or Securities registered in the names of such Persons as the Depositary shall direct.

If specified by the Company pursuant to Section 3.1 with respect to Securities represented by a Global Security, the Depositary for such Global Security may surrender such Global Security in exchange in whole or in part for Securities of the same series and tenor in definitive registered form on such terms as are acceptable to the Company, the Trustee and such Depositary. Thereupon, the Company and, if applicable, the Guarantors shall execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of Securities in definitive registered form, shall authenticate and deliver, without service charge,

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(a) to the Person specified by such Depositary a new Security or Securities, with an endorsement of the Securities Guarantee, if applicable, executed by the Guarantors, of the same series and tenor, of any authorized denominations as requested by such Person, in an aggregate principal amount equal to and in exchange for such Person’s beneficial interest in the Global Security; and

(b) to such Depositary a new Global Security, with an endorsement of the Securities Guarantee, if applicable, executed by the Guarantors, in a denomination equal to the difference, if any, between the principal amount of the surrendered Global Security and the aggregate principal amount of Securities authenticated and delivered pursuant to clause (a) above.

Every Person who takes or holds any beneficial interest in a Global Security agrees that:

(a) the Company, the Guarantors (if applicable) and the Trustee may deal with the Depositary as sole owner of the Global Security and as the authorized representative of such Person;

(b) such Person’s rights in the Global Security shall be exercised only through the Depositary and shall be limited to those established by law and agreement between such Person and the Depositary and/or direct and indirect participants of the Depositary;

(c) the Depositary and its participants make book-entry transfers of beneficial ownership among, and receive and transmit distributions of principal and interest on the Global Securities to, such Persons in accordance with their own procedures; and

(d) none of the Company, the Guarantors (if applicable), the Trustee, nor any agent of any of them will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.

Section 3.6. Mutilated, Destroyed, Lost and Stolen Securities.

If any mutilated Security is surrendered to the Trustee, together with, in proper cases, such security or indemnity as may be required by the Company, the Guarantors (if applicable) or the Trustee to save each of them and any agent of any of them harmless, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security, with an endorsement of the Securities Guarantee, if applicable, executed by the Guarantors, of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.

If there shall be delivered to the Company, the Guarantors (if applicable) and the Trustee (a) evidence to their satisfaction of the destruction, loss or theft of any Security and (b) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company and, if applicable, the Guarantors shall execute and upon its request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security, with an endorsement of the Securities Guarantee, if applicable, executed by the Guarantors, of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.

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In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security.

Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.

Every new Security of any series issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company and, if applicable, the Guarantors, regardless of whether the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of that series duly issued hereunder.

The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.

Section 3.7. Payment of Interest; Interest Rights Preserved.

Except as otherwise provided as contemplated by Section 3.1 with respect to any series of Securities, interest on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest.

Any interest on any Security of any series which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called “Defaulted Interest”) shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in clause (a) or (b) below:

(a) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security of such series and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon, the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder of Securities of such series at his address as it appears in the Security Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (b).

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(b) The Company may make payment of any Defaulted Interest on the Securities of any series in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee.

Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security.

Section 3.8. Persons Deemed Owners.

Except as otherwise provided as contemplated by Section 3.1 with respect to any series of Securities, prior to due presentment of a Security for registration of transfer, the Company, the Trustee and, if applicable, the Guarantors and any agent thereof may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of and any premium and (subject to Section 3.5 and Section 3.7) any interest on such Security and for all other purposes whatsoever, regardless of whether such Security be overdue, and none of the Company, the Trustee nor, if applicable, the Guarantors nor any agent of any of them shall be affected by notice to the contrary.

No holder of any beneficial interest in any Global Security held on its behalf by a Depositary shall have any rights under this Indenture with respect to such Global Security, and such Depositary may be treated by the Company, the Trustee, and, if applicable, the Guarantors and any agent of thereof as the owner of such Global Security for all purposes whatsoever.

Section 3.9. Cancellation.

All Securities surrendered for payment, redemption, registration of transfer or exchange or for credit against any sinking fund payment shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly canceled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and may deliver to the Trustee (or to any other Person for delivery to the Trustee) for cancellation any Securities previously authenticated hereunder which the Company has not issued and sold, and all Securities so delivered shall be promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section, except as expressly permitted by this Indenture. All canceled Securities held by the Trustee shall be disposed of in accordance with its customary practices, and the Trustee shall thereafter deliver to the Company a certificate with respect to such disposition from time to time upon written request.

Section 3.10. Computation of Interest.

Except as otherwise specified as contemplated by Section 3.1 for Securities of any series, interest on the Securities of each series shall be computed on the basis of a year of twelve 30-day months.

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Section 3.11. CUSIP or CINS Numbers.

The Company in issuing the Securities may use “CUSIP” or “CINS” numbers (if then generally in use, and in addition to the other identification numbers printed on the Securities), and, if so, the Trustee shall use “CUSIP” or “CINS” numbers in notices of redemption as a convenience to Holders; provided, however, that any such notice may state that no representation is made as to the correctness of such “CUSIP” or “CINS” numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such “CUSIP” or “CINS” numbers.

ARTICLE FOUR

SATISFACTION AND DISCHARGE

Section 4.1. Satisfaction and Discharge of Indenture.

This Indenture shall cease to be of further effect and will be discharged with respect to the Securities of any series (except as to any surviving rights of registration of transfer or exchange of Securities and certain rights of the Trustee, in each case, herein expressly provided for), and the Trustee, upon Company Request and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture with respect to such Securities, when:

(a) either

(i) all such Securities theretofore authenticated and delivered (other than (A) such Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 3.6, and (B) such Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 10.3) have been delivered to the Trustee for cancellation; or

(ii) all such Securities not theretofore delivered to the Trustee for cancellation

(A) have become due and payable, or

(B) will become due and payable at their Stated Maturity within one year, or

(C) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company,

and the Company, in the case of (A), (B) or (C) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for such purpose an amount sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal (and premium, if any) and interest to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be, together with instructions from the Company irrevocably directing the Trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be;

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(b) the Company has paid or caused to be paid all other sums payable hereunder by the Company with respect to such Securities; and

(c) the Company has delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, which, taken together, state that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture with respect to such Securities have been complied with.

Notwithstanding the satisfaction and discharge of this Indenture with respect to the Securities of any series, (x) the obligations of the Company to the Trustee under Section 6.7, the obligations of the Trustee to any Authenticating Agent under Section 6.14 and the right of the Trustee to resign under Section 6.10 shall survive, and (y) if money shall have been deposited with the Trustee pursuant to clause (a) of this Section, the obligations of the Company and the Trustee under Section 4.2, Section 6.6 and Section 10.2 and the last paragraph of Section 10.3 shall survive.

Section 4.2. Application of Trust Money.

Subject to the provisions of the last paragraph of Section 10.3, all money deposited with the Trustee pursuant to Section 4.1 shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal and any premium and interest for whose payment such money has been deposited with the Trustee.

ARTICLE FIVE

REMEDIES

Section 5.1. Events of Default.

“Event of Default”, wherever used herein with respect to Securities of any series, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

(a) default in the payment of any interest upon any Security of that series when it becomes due and payable, and continuance of such default for a period of 30 days; or

(b) default in the payment of the principal of (or premium, if any, on) any Security of that series at its Maturity; or

(c) default in the deposit of any sinking fund payment in respect of any Security of that series when due; or

(d) default in the performance, or breach, of the covenant set forth in Section 8.1; or

(e) default in the performance, or breach, of any covenant in this Indenture (other than the covenant in Section 8.1 or any other covenant a default in whose performance or whose breach is elsewhere in this Section specifically dealt with or which has expressly been included in this Indenture solely for the benefit of series of Securities other than that series), and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders

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of at least 25% in principal amount of the Outstanding Securities of that series a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder; or

(f) the Company or any Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law (i) commences a voluntary case or proceeding, (ii) consents to the entry of any order for relief against it in an involuntary case or proceeding, (iii) consents to the appointment of a Custodian of it or for all or substantially all of its property, (iv) makes a general assignment for the benefit of its creditors, (v) consents to or acquiesces in the institution of a bankruptcy or an insolvency proceeding against it, (vi) takes any corporate action to authorize or effect any of the foregoing, or (vii) takes any comparable action under any foreign laws relating to insolvency; or

(g) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (i) is for relief against the Company or any Significant Subsidiary in an involuntary case, (ii) appoints a Custodian of the Company or any Significant Subsidiary for all or substantially all of its property, or (iii) orders the liquidation or winding up of the Company or any Significant Subsidiary; and the order or decree remains unstayed and in effect for 30 consecutive days; or

(h) any other Event of Default provided with respect to Securities of that series in accordance with Section 3.1.

Section 5.2. Acceleration of Maturity; Rescission and Annulment.

If an Event of Default with respect to Securities of any series at the time Outstanding occurs and is continuing, then in every such case the Trustee or the Holders of at least 25% in aggregate principal amount of the Outstanding Securities of that series may declare the principal amount (or, if the Securities of that series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of that series), together with any accrued and unpaid interest thereon, of all of the Securities of that series to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such principal amount (or specified amount), together with any accrued and unpaid interest thereon, shall become immediately due and payable. Notwithstanding the foregoing, if an Event of Default specified in clause (f) or (g) of Section 5.1 occurs, the Securities of any series at the time Outstanding shall be due and payable immediately without further action or notice.

At any time after such a declaration of acceleration with respect to Securities of any series has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article Five provided, the Holders of a majority in principal amount of the Outstanding Securities of that series, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if:

(a) the Company or, if applicable, one or more of the Guarantors has paid or deposited with the Trustee a sum sufficient to pay:

(i) all overdue interest on all Securities of that series,

(ii) the principal of (and premium, if any, on) any Securities of that series which have become due otherwise than by such declaration of acceleration and any interest thereon at the rate or rates prescribed therefor in such Securities,

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(iii) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate or rates prescribed therefor in such Securities, and

(iv) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and

(b) all Events of Default with respect to Securities of that series, other than the non-payment of the principal of Securities of that series which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 5.13.

No such rescission shall affect any subsequent default or impair any right consequent thereon.

Section 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee.

The Company covenants that if:

(a) default is made in the payment of any installment of interest on any Security when such interest becomes due and payable and such default continues for a period of 30 days, or

(b) default is made in the payment of the principal of (or premium, if any, on) any Security at the Maturity thereof,

the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and any premium and interest and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal and any premium and on any overdue interest, at the rate or rates prescribed therefor in such Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.

If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or, if applicable, the Guarantors or any other obligor upon such Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or, if applicable, the Guarantors or any other obligor upon such Securities, wherever situated.

If an Event of Default with respect to Securities of any series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such series by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.

Section 5.4. Trustee May File Proofs of Claim.

In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or, if

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applicable, any Guarantor or any other obligor upon the Securities, their property or their creditors, the Trustee (irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company or, if applicable, the Guarantors for the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise,

(a) to file and prove a claim for the whole amount of principal (and premium, if any) and interest owing and unpaid in respect of the Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding, and

(b) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, if the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 6.7.

No provision of this Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, compromise, arrangement, adjustment or composition affecting the Securities or, if applicable, the Securities Guarantee or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding; provided, however, that the Trustee may, on behalf of the Holders, vote for the election of a trustee in bankruptcy or similar official and be a member of a creditors’ or other similar committee.

Section 5.5. Trustee May Enforce Claims Without Possession of Securities.

All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered.

Section 5.6. Application of Money Collected.

Subject to the terms of any applicable Intercreditor Agreement, any money collected by the Trustee pursuant to this Article Five shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal or any premium or interest, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:

FIRST: To the payment of all amounts due the Trustee under Section 6.7;

SECOND: To the payment of the amounts then due and unpaid for principal of and any premium and interest on the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal and any premium and interest, respectively; and

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THIRD: The balance, if any, to the Company.

Section 5.7. Limitation on Suits.

No Holder of any Security of any series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, the Securities of such series or, if applicable, the Securities Guarantee or any Security Documents, or for the appointment of a receiver or trustee, or for any other remedy hereunder or thereunder, unless:

(a) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of that series;

(b) the Holders of not less than 25% in principal amount of the Outstanding Securities of that series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;

(c) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request;

(d) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and

(e) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Securities of that series;

it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all such Holders.

Section 5.8. Unconditional Right of Holders to Receive Principal, Premium and Interest.

Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of and any premium and (subject to Section 3.5 and Section 3.7) interest on such Security on the Stated Maturity or Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder.

Section 5.9. Restoration of Rights and Remedies.

If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Guarantors, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted.

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Section 5.10. Rights and Remedies Cumulative.

Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 3.6, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or under any other agreement or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

Section 5.11. Delay or Omission Not Waiver.

To fullest extent permitted by applicable law, no delay or omission of the Trustee or of any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article Five or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.

Section 5.12. Control by Holders.

The Holders of not less than a majority in principal amount of the Outstanding Securities of any series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Securities of such series; provided, however, that:

(a) such direction shall not be in conflict with any rule of law or with this Indenture or any applicable Security Document or Intercreditor Agreement;

(b) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction; and

(c) subject to the provisions of Section 6.1, the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith shall determine that the proceeding so directed would involve the Trustee in personal liability.

Section 5.13. Waiver of Past Defaults.

By written notice to the Company and the Trustee, the Holders of not less than a majority in principal amount of the Outstanding Securities of any series may on behalf of the Holders of all the Securities of such series waive any past default hereunder with respect to such series and its consequences, except:

(a) a continuing default in the payment of the principal of or any premium or interest on any Security of such series, or

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(b) a default in respect of a covenant or provision hereof which under Article Nine cannot be modified or amended without the consent of the Holder of each Outstanding Security of such series affected.

Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.

Section 5.14. Undertaking for Costs.

All parties to this Indenture agree, and each Holder of any Security by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant, other than the Trustee, in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 5.14 shall not apply to any suit instituted by the Company, to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Securities of any series, or to any suit instituted by any Holder for the enforcement of the payment of the principal of (or premium, if any) or interest on any Security on or after the Stated Maturity or Maturities expressed in such Security (or, in the case of redemption, on or after the Redemption Date).

Section 5.15. Waiver of Stay or Extension Laws.

Each of the Company and the Guarantors covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and each of the Company and the Guarantors (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

ARTICLE SIX

THE TRUSTEE

Section 6.1. Certain Duties and Responsibilities.

(a) Except during the continuance of an Event of Default,

(i) the Trustee undertakes to perform such duties and only such express duties as are specifically set forth in this Indenture and as are provided by the Trust Indenture Act and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

(ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any

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provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether they conform to the requirements of this Indenture.

(b) In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs.

(c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

(i) this Subsection shall not be construed to limit the effect of Subsection (a) of this Section;

(ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and

(iii) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a majority in principal amount of the Outstanding Securities of any series, given pursuant to Section 5.12.

(d) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

(e) Regardless of whether therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section.

(f) The Trustee will not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

Section 6.2. Notice of Defaults.

Within 90 days after the occurrence of any Default hereunder, with respect to the Securities of any series, that is known to the Trustee, the Trustee shall transmit by mail to all Holders of Securities of such series, as their names and addresses appear in the Security Register, notice of such Default hereunder known to the Trustee, unless such Default shall have been cured or waived; provided, however, that, except in the case of a Default in the payment of the principal of or any premium or interest on any Security of such series or in the payment of any sinking fund installment with respect to Securities of such series, the Trustee may withhold from Holders of Securities notice of any continuing Default or Event of Default if the Trustee in good faith determines that the withholding of such notice is in the interest of the Holders of Securities of such series; and, provided, further, that in the case of any Default of the character specified in Section 5.1(c) with respect to Securities of such series, no such notice to

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Holders shall be given until at least 90 days after the occurrence thereof and that in the case of any Default of the character specified in Section 5.1(e) with respect to Securities of such series, no such notice to Holders shall be given until at least 180 days after the occurrence thereof.

Section 6.3. Certain Rights of Trustee.

Subject to the provisions of Section 6.1:

(a) the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

(b) any request or direction of the Company or a Guarantor mentioned herein shall be sufficiently evidenced by a Company Request or Company Order (other than delivery of any Security to the Trustee for authentication and delivery pursuant to Section 3.3, which shall be sufficiently evidenced as provided therein) and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;

(c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) shall be entitled to receive and may, in the absence of bad faith on its part, rely upon an Officer’s Certificate;

(d) the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;

(e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction;

(f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney;

(g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder and shall not be responsible for the supervision of officers and employees of such agents or attorneys;

(h) the Trustee may request that the Company and, if applicable, the Guarantors deliver an Officer’s Certificate setting forth the names of individuals and/or titles of officers

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authorized at such time to take or refrain from taking specified actions pursuant to this Indenture, which Officer’s Certificate may be signed by any person authorized to sign an Officer’s Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded;

(i) the Trustee shall be entitled to the rights and protections afforded to the Trustee pursuant to this Article Six in acting as a Paying Agent or Security Registrar hereunder; and

(j) the Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Notes and this Indenture.

Section 6.4. Not Responsible for Recitals or Issuance of Securities.

The recitals contained herein and in the Securities, except the Trustee’s certificates of authentication, shall be taken as the statements of the Company or, if applicable, the Guarantors, and the Trustee or any Authenticating Agent assumes no responsibility for their correctness. Neither the Trustee nor any Authenticating Agent makes any representations as to the validity or sufficiency of this Indenture or of the Securities. The Trustee or any Authenticating Agent shall not be accountable for the use or application by the Company of Securities or the proceeds thereof.

Section 6.5. May Hold Securities.

The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other agent of the Company or, if applicable, any Guarantor, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 310(b) and 311 of the Trust Indenture Act and Section 6.8, Section 6.9 and Section 6.13, may otherwise deal with the Company or, if applicable, the Guarantors with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such other agent.

Section 6.6. Money Held in Trust.

Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company or, if applicable, one or more of the Guarantors.

Section 6.7. Compensation and Reimbursement.

The Company agrees:

(a) to promptly pay to the Trustee reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);

(b) except as otherwise expressly provided herein, to promptly reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its bad faith; and

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(c) to promptly indemnify each of the Trustee and its officers, directors, agents and employees for, and to hold it harmless against, any loss, liability or expense incurred without negligence or willful misconduct on its part, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder.

As security for the performance of the obligations of the Company under this Section the Trustee shall have a lien prior to the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the payment of principal of (and premium, if any) or interest on particular Securities.

Without limiting any rights available to the Trustee under applicable law, when the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 5.1(f) or Section 5.1(g), the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services of the Trustee are intended to constitute expenses of administration under any applicable Bankruptcy Law.

The provisions of this Section 6.7 shall survive the satisfaction and discharge of this Indenture and the Legal Defeasance of the Securities.

Section 6.8. Disqualification; Conflicting Interests.

Reference is made to Section 310(b) of the Trust Indenture Act. There shall be excluded from the operation of Section 310(b)(1) of the Trust Indenture Act this Indenture with respect to the Securities of more than one series.

Section 6.9. Corporate Trustee Required; Eligibility.

There shall at all times be a Trustee hereunder which shall be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus required by the Trust Indenture Act, subject to supervision or examination by Federal or State authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Trustee shall not be an obligor upon the Securities or an Affiliate thereof. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article Six.

Section 6.10. Resignation and Removal; Appointment of Successor.

(a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 6.11.

(b) The Trustee may resign at any time with respect to the Securities of one or more series by giving written notice thereof to the Company. If the instrument of acceptance by a successor Trustee required by Section 6.11 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series.

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(c) The Trustee may be removed at any time with respect to the Securities of any series by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series, delivered to the Trustee and to the Company.

(d) If at any time:

(i) the Trustee shall fail to comply with Section 310(b) of the Trust Indenture Act after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months, or

(ii) the Trustee shall cease to be eligible under Section 6.9 and shall fail to resign after written request therefor by the Company or by any such Holder, or

(iii) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (A) the Company by a Board Resolution may remove the Trustee with respect to all Securities, or (B) subject to Section 5.14, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee with respect to all Securities and the appointment of a successor Trustee or Trustees.

(e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, with respect to the Securities of one or more series, the Company, by a Board Resolution, shall promptly appoint a successor Trustee or Trustees with respect to the Securities of that or those series (it being understood that any such successor Trustee may be appointed with respect to the Securities of one or more or all of such series and that at any time there shall be only one Trustee with respect to the Securities of any particular series) and shall comply with the applicable requirements of Section 6.11. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Securities of any series shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 6.11, become the successor Trustee with respect to the Securities of such series and to that extent supersede the successor Trustee appointed by the Company. If no successor Trustee with respect to the Securities of any series shall have been so appointed by the Company or the Holders and accepted appointment in the manner required by Section 6.11, any Holder who has been a bona fide Holder of a Security of such series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series.

(f) The Company shall give notice of each resignation and each removal of the Trustee with respect to the Securities of any series and each appointment of a successor Trustee with respect to the Securities of any series to all Holders of Securities of such series in the manner provided in Section 1.7. Each notice shall include the name of the successor Trustee with respect to the Securities of such series and the address of its Corporate Trust Office.

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Section 6.11. Acceptance of Appointment by Successor.

(a) In case of the appointment hereunder of a successor Trustee with respect to all Securities, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company, the Guarantors (if applicable) and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or, if applicable, any Guarantor or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder.

(b) In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series, the Company, the Guarantors (if applicable), the retiring Trustee and each successor Trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (i) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, (ii) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (iii) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Company, any Guarantor (if applicable) or any successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor Trustee relates.

(c) Upon request of any such successor Trustee, the Company and, if applicable, the Guarantors shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in paragraph (a) or (b) of this Section, as the case may be.

(d) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article and the Trust Indenture Act.

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Section 6.12. Merger, Conversion, Consolidation or Succession to Business.

Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article Six, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities.

Section 6.13. Preferential Collection of Claims Against Company.

Reference is made to Section 311 of the Trust Indenture Act. For purposes of Section 311(b) of the Trust Indenture Act,

(a) the term “cash transaction” means any transaction in which full payment for goods or securities sold is made within seven days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand;

(b) the term “self-liquidating paper” means any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or incurred by the Company or, if applicable, any Guarantor for the purpose of financing the purchase, processing, manufacturing, shipment, storage or sale of goods, wares or merchandise and which is secured by documents evidencing title to, possession of, or a lien upon, the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Trustee simultaneously with the creation of the creditor relationship with the Company or, if applicable, such Guarantor arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation.

Section 6.14. Appointment of Authenticating Agent.

The Trustee may appoint an Authenticating Agent or Agents with respect to one or more series of Securities which shall be authorized to act on behalf of the Trustee to authenticate Securities of such series issued upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 3.6, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee’s certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or State authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section.

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Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to all or substantially all of the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.

An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company and, if applicable, the Guarantors. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company and, if applicable, the Guarantors. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company and, if applicable, the Guarantors and shall mail written notice of such appointment by first-class mail, postage prepaid, to all Holders of Securities of the series with respect to which such Authenticating Agent will serve, as their names and addresses appear in the Security Register. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section.

Except with respect to an Authenticating Agent appointed at the request of the Company or, if applicable, the Guarantors, the Trustee agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section 6.14, and the Trustee shall be entitled to be reimbursed by the Company or, if applicable, the Guarantors for such payments, subject to the provisions of Section 6.7.

If an appointment with respect to one or more series is made pursuant to this Section 6.14, the Securities of such series may have endorsed thereon, in addition to the Trustee’s certificate of authentication, an alternate certificate of authentication in the following form:

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

		,
As Trustee
By:
	As Authenticating Agent
By:
	Authorized Officer

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ARTICLE SEVEN

HOLDERS’ LISTS AND REPORTS BY TRUSTEE AND COMPANY

Section 7.1. Company to Furnish Trustee Names and Addresses of Holders.

The Company will furnish or cause to be furnished to the Trustee:

(a) semi-annually, not more than 15 days after each Regular Record Date for a series of Securities, a list for such series of Securities, in such form as the Trustee may reasonably require, of the names and addresses of the Holders of Securities of such series as of such Regular Record Date, and

(b) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished; provided, however, that if and so long as the Trustee shall be the Security Registrar, no such list need be furnished with respect to such series of Securities.

Section 7.2. Preservation of Information; Communications to Holders.

(a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 7.1 and the names and addresses of Holders received by the Trustee in its capacity as Security Registrar. The Trustee may destroy any list furnished to it as provided in Section 7.1 upon receipt of a new list so furnished.

(b) If three or more Holders (herein referred to as “applicants”) apply in writing to the Trustee, and furnish to the Trustee reasonable proof that each such applicant has owned a Security for a period of at least six months preceding the date of such application, and such application states that the applicants desire to communicate with other Holders with respect to their rights under this Indenture or under the Securities and is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Trustee shall, within five business days after the receipt of such application, at its election, either

(i) afford such applicants access to the information preserved at the time by the Trustee in accordance with Section 7.2(a), or

(ii) inform such applicants as to the approximate number of Holders whose names and addresses appear in the information preserved at the time by the Trustee in accordance with Section 7.2(a), and as to the approximate cost of mailing to such Holders the form of proxy or other communication, if any, specified in such application.

If the Trustee shall elect not to afford such applicants access to such information, the Trustee shall, upon the written request of such applicants, mail to each Holder whose name and address appear in the information preserved at the time by the Trustee in accordance with Section 7.2(a) a copy of the form of proxy or other communication which is specified in such request, with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless within five days after such tender the Trustee shall mail to such applicants and file with the SEC, together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing

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would be contrary to the best interest of the Holders or would be in violation of applicable law. Such written statement shall specify the basis of such opinion. If the SEC, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections or if, after the entry of an order sustaining one or more of such objections, the SEC shall find, after notice and opportunity for hearing, that all the objections so sustained have been met and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Holders with reasonable promptness after the entry of such order and the renewal of such tender; otherwise the Trustee shall be relieved of any obligation or duty to such applicants respecting their application.

(c) Every Holder of Securities, by receiving and holding the same, agrees with the Company, the Guarantors (if applicable) and the Trustee that none of the Company, the Guarantors (if applicable) nor the Trustee nor any agent of any of them shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders in accordance with Section 7.2(b), regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 7.2(b).

Section 7.3. Reports by Trustee.

Any Trustee’s report required pursuant to Section 313(a) of the Trust Indenture Act shall be dated as of May 15, and shall be transmitted within 60 days after May 15 of each year (but in all events at intervals of not more than 12 months), commencing with the year 2010, by mail to all Holders, as their names and addresses appear in the Security Register. A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which any Securities are listed, with the SEC and with the Company. The Company will notify the Trustee when any Securities are listed on any stock exchange.

Section 7.4. Reports by Company.

The Company shall:

(a) file with the Trustee, within 15 days after the Company files the same with the SEC, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may from time to time by rules and regulations prescribe) which the Company may be required to file with the SEC pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company is not required to file information, documents or reports pursuant to either of said Sections, then it shall file with the Trustee and the SEC, in accordance with rules and regulations prescribed from time to time by the SEC, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Exchange Act in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations;

(b) file with the Trustee and the SEC, in accordance with rules and regulations prescribed from time to time by the SEC, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and

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(c) transmit by mail to all Holders, as their names and addresses appear in the Security Register, within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Company pursuant to clauses (a) and (b) of this Section as may be required by rules and regulations prescribed from time to time by the SEC.

ARTICLE EIGHT

CONSOLIDATION, AMALGAMATION, MERGER AND SALE

Section 8.1. Company and Guarantors May Consolidate, Etc., Only on Certain Terms.

Neither the Company nor any Guarantor shall consolidate or merge with or into any other Person or sell, convey, transfer, lease or otherwise dispose of all or substantially all of the properties and assets of the Company and, if applicable, the Guarantors on a consolidated basis to any other Person, and shall not permit any Person to consolidate or merge into the Company or any Guarantor, unless:

(a) either: (i) the Company or such Guarantor is the surviving corporation; or (ii) the Person formed by or surviving any such consolidation, amalgamation or merger or resulting from such conversion (if other than the Company or such Guarantor) or to which such sale, assignment, transfer, conveyance or other disposition has been made is a corporation, limited liability company or limited partnership organized or existing under the laws of the United States, any state of the United States or the District of Columbia;

(b) the Person formed by or surviving any such conversion, consolidation, amalgamation or merger (if other than the Company or such Guarantor) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made assumes all the obligations of the Company or such Guarantor under the Securities, this Indenture, the Securities Guarantee, and any Security Documents and Intercreditor Agreements pursuant to agreements reasonably satisfactory to the Trustee; provided that, unless such Person is a corporation, a corporate co-issuer of the Securities will be added to this Indenture by agreements reasonably satisfactory to the Trustee;

(c) immediately before and after giving pro forma effect to such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing; and

(d) the Company has delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, amalgamation, merger, conveyance, sale, transfer or lease and such supplemental indenture, if any, comply with this Article Eight and that all conditions precedent herein provided for relating to such transaction have been complied with.

Notwithstanding the foregoing, this Article Eight shall not apply to any consolidation or merger of any Guarantor with or into any other Person or to any sale, conveyance, transfer, lease or other disposition of all or substantially all of its assets to any other Person if (i) no Securities Guarantees are then outstanding or (ii) the terms of all outstanding Securities Guarantees otherwise permit such transaction and provide for the release of such Guarantor of its obligations under such Securities Guarantee as a result of such transaction.

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Section 8.2. Successor Substituted.

Upon any consolidation or merger of the Company with or into any other Person or any sale, conveyance, transfer, lease or other disposition of all or substantially all of the properties and assets of the Company and, if applicable, the Guarantors on a consolidated basis in accordance with Section 8.1, the successor or resulting Person formed by or resulting upon such consolidation or merger (if other than the Company) or to which such sale, conveyance, transfer, lease or other disposition is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor Company and each of the Guarantors which remain Subsidiaries of the predecessor Company shall be relieved of all obligations and covenants under this Indenture, the Securities and any Security Documents.

ARTICLE NINE

AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.1. Without Consent of Holders.

The Company, the Guarantors and the Trustee may amend or supplement this Indenture, the Securities Guarantees, the Securities, or any Security Documents or Intercreditor Agreements without the consent of any Holder of a Security:

(a) to cure any ambiguity or to correct or supplement any provision herein or therein that may be inconsistent with any other provision herein or therein in a manner that does not adversely affect the rights of any Holder of Securities in any material respect; or

(b) to evidence the succession of another Person to the Company and the assumption by any such successor of the obligations of the Company hereunder and under the Securities and any Security Documents and Intercreditor Agreements; or

(c) to provide for uncertificated Securities in addition to or in place of certificated Securities; provided that the uncertificated Securities are issued in registered form for purposes of Section 163(f) of the Code, or in the manner such that the uncertificated Securities are described in Section 163(f)(2)(B) of the Code; or

(d) to add a Securities Guarantee and cause any Person to become a Guarantor, and/or to evidence the succession of another Person to a Guarantor and the assumption by any such successor of the Securities Guarantee of such Guarantor herein and, to the extent applicable, endorsed upon any Securities of any series and the obligations of such Guarantor under any Security Documents and Intercreditor Agreements; or

(e) to secure the Securities of any series; or

(f) to add to the covenants of the Company such further covenants, restrictions, conditions or provisions as the Company shall consider to be appropriate for the benefit of the Holders of all or any series of Securities (and if such covenants, restrictions, conditions or provisions are to be for the benefit of less than all series of Securities, stating that such covenants are expressly being included solely for the benefit of such series) or to surrender any right or power herein conferred upon the Company and to make the occurrence, or the occurrence and continuance, of a Default in any such additional covenants, restrictions, conditions or provisions an Event of Default permitting the enforcement of all or any of the several remedies provided in

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this Indenture as herein set forth; provided, that in respect of any such additional covenant, restriction, condition or provision such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such an Event of Default or may limit the remedies available to the Trustee upon such an Event of Default or may limit the right of the Holders of a majority in aggregate principal amount of the Securities of such series to waive such an Event of Default; or

(g) to make any change to any provision of this Indenture that does not adversely affect the rights or interests of any Holder of Securities; or

(h) to provide for the issuance of additional Securities in accordance with the provisions set forth in this Indenture on the date of this Indenture; or

(i) to add any additional Defaults or Events of Default in respect of all or any series of Securities; or

(j) to add to, change or eliminate any of the provisions of this Indenture to such extent as shall be necessary to permit or facilitate the issuance of Securities in bearer form, registrable or not registrable as to principal, and with or without interest coupons; or

(k) to change or eliminate any of the provisions of this Indenture; provided that any such change or elimination shall become effective only when there is no Security Outstanding of any series created prior to the execution of such supplemental indenture that is entitled to the benefit of such provision; or

(l) to establish the form or terms of Securities of any series as permitted by Section 2.1 and Section 3.1, including to reopen any series of any Securities as permitted under Section 3.1; or

(m) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 6.11(b); or

(n) to conform the text of this Indenture (and/or any supplemental indenture) or any debt securities issued thereunder to any provision of a description of such debt securities appearing in a prospectus or prospectus supplement or an offering memorandum or offering circular to the extent that such provision was intended to be a verbatim recreation of a provision of this Indenture (and/or any supplemental indenture) or any debt securities issued thereunder; or

(o) to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to effect the qualification of this Indenture under the Trust Indenture Act or under any similar federal statute subsequently enacted, and to add to this Indenture such other provisions as may be expressly required under the Trust Indenture Act.

After an amendment or supplement under this Section 9.1 becomes effective, the Company shall mail to Holders a notice briefly describing such amendment or supplement. The failure to give such notice to Holders, or any defect therein, shall not impair or affect the validity of an amendment or supplement under this Section 9.1.

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Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental indenture, the Trustee is hereby authorized to join with the Company and any Guarantor in the execution of any such amended or supplemental indenture, to make any further appropriate agreements and stipulations that may be therein contained and to accept the conveyance, transfer, assignment, mortgage, charge or pledge of any property thereunder, but the Trustee shall not be obligated to enter into any such amended or supplemental indenture that affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise.

Section 9.2. With Consent of Holders.

The Company, the Guarantors and the Trustee may amend or supplement this Indenture, the Securities Guarantees, the Securities, and any Security Documents and Intercreditor Agreements with the consent of the Holders of a majority in aggregate principal amount of the Outstanding Securities of each series of Securities affected by such amendment or supplemental indenture, with each such series voting as a separate class (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Securities) and, subject to Section 5.8 and Section 5.13 hereof, any existing Default or Event of Default or compliance with any provision of this Indenture, the Securities Guarantees, the Securities, or any Security Documents or Intercreditor Agreements may be waived with respect to each series of Securities with the consent of the Holders of a majority in principal amount of the Outstanding Securities of such series voting as a separate class (including consents obtained in connection with a purchase of, or tender offer or exchange offer for, Securities).

Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Securities as aforesaid, and upon receipt by the Trustee of the documents described in Section 6.3 hereof, the Trustee will join with the Company and the Guarantors in the execution of such amended or supplemental indenture unless such amended or supplemental indenture directly affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but will not be obligated to, enter into such amended or supplemental Indenture.

It is not be necessary for the consent of the Holders of Securities under this Section 9.2 to approve the particular form of any proposed amendment, supplement or waiver, but it is sufficient if such consent approves the substance of the proposed amendment, supplement or waiver.

After an amendment, supplement or waiver under this Section 9.2 becomes effective, the Company will mail to the Holders of Securities affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, will not, however, in any way impair or affect the validity of any such amended or supplemental indenture or waiver.

Notwithstanding the foregoing, without the consent of each Holder affected, an amendment, supplement or waiver under this Section 9.2 may not (with respect to any Securities held by a non-consenting Holder):

(a) change the Stated Maturity of the principal of, or any installment of principal of or interest on, any Security, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof, or reduce the amount of the principal of an Original Issue Discount Security that would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 5.2, or change any Place of Payment where, or the coin or currency in which, any Security or any premium or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date), or

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(b) reduce the percentage in principal amount of the Outstanding Securities of any series, the consent of whose Holders is required for any such amended or supplemental indenture, or the consent of whose Holders is required for any such waiver, or

(c) modify any of the provisions of this Section 9.2, Section 5.8, Section 5.13 or Section 10.6, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby, provided, however, that this clause (c) shall not be deemed to require the consent of any Holder with respect to changes in the references to “the Trustee” and concomitant changes in this Section, or the deletion of this proviso, in accordance with the requirements of Section 6.11(b) and Section 9.1(m); or

(d) waive a redemption payment with respect to any Security; provided, however, that any purchase or repurchase of Securities shall not be deemed a redemption of the Securities; or

(e) release any Guarantor from any of its obligations under its Securities Guarantee or this Indenture, except in accordance with the terms of this Indenture (as supplemented by any supplemental indenture); or

(f) make any change in the foregoing amendment, supplement and waiver provisions.

An amended or supplemental indenture that changes or eliminates any covenant or other provision of this Indenture that has expressly been included solely for the benefit of one or more particular series of Securities, or that modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series.

It shall not be necessary for any Act of Holders under this Section 9.2 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.

Section 9.3. Execution of Supplemental Indentures.

In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 6.1) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise.

Section 9.4. Effect of Supplemental Indentures.

Upon the execution of any supplemental indenture under this Article Nine, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.

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Section 9.5. Conformity with Trust Indenture Act.

Every supplemental indenture executed pursuant to this Article Nine shall conform to the requirements of the Trust Indenture Act as then in effect.

Section 9.6. Reference in Securities to Supplemental Indentures.

Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to this Article Nine may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities of any series so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities of such series.

ARTICLE TEN

COVENANTS

Section 10.1. Payment of Principal, Premium and Interest.

The Company covenants and agrees for the benefit of each series of Securities that it will duly and punctually pay the principal of and any premium and interest on the Securities of that series in accordance with the terms of the Securities and this Indenture.

Section 10.2. Maintenance of Office or Agency.

The Company will maintain in the Borough of Manhattan, The City of New York, an office or agency (which may be an office of the Trustee or Registrar or agent of the Trustee or Registrar) where Securities of that series may be presented or surrendered for payment, where Securities of that series may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities of that series and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee.

The Company may also from time to time designate one or more other offices or agencies where the Securities of one or more series may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

Except as otherwise specified with respect to a series of Securities as contemplated by Section 3.1, the Company hereby initially designates the office of the Trustee located at 100 Wall Street, Suite 1600, New York, New York 10005, as the Company’s office or agency for each such purpose for each series of Securities.

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Section 10.3. Money for Securities Payments to Be Held in Trust.

If the Company shall at any time act as its own Paying Agent, with respect to any series of Securities, it will, on or before each due date of the principal of and any premium or interest on any of the Securities of that series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal and any premium and interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act.

Whenever the Company shall have one or more Paying Agents for any series of Securities, it will, prior to each due date of the principal of and any premium or interest on any Securities of that series, deposit with a Paying Agent a sum sufficient to pay the principal and any premium or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act. For purposes of this Section 10.3, should a due date for principal of and any premium or interest on, or sinking fund payment with respect to any series of Securities not be on a Business Day, such payment shall be due on the next Business Day without any interest for the period from the due date until such Business Day.

The Company will cause each Paying Agent for any series of Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will:

(a) hold all sums held by it for the payment of the principal of and any premium or interest on Securities of that series in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided;

(b) give the Trustee notice of any Default by the Company (or any other obligor upon the Securities of that series) in the making of any payment of principal and any premium or interest on the Securities of that series; and

(c) at any time during the continuance of any such Default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent.

The Company and, if applicable, the Guarantors may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.

Subject to any applicable escheat or abandoned property laws, any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of and any premium or interest on any Security of any series and remaining unclaimed for one year after such principal and any premium or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily

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published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company.

Section 10.4. Existence.

Subject to Article Eight, the Company and, if any Securities of a series to which Article Fourteen has been made applicable are Outstanding, each Guarantor will do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights (charter and statutory) and franchises; provided, however, that the Company and, if applicable, each Guarantor shall not be required to preserve any such right or franchise if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company or such Guarantor, as the case may be.

Section 10.5. Statement by Officers as to Default.

Annually, within 150 days after the close of each fiscal year beginning with the first fiscal year during which one or more series of Securities are Outstanding, the Company and, if any Securities of a series to which Article Fourteen has been made applicable are Outstanding, each Guarantor will deliver to the Trustee a brief certificate (which need not include the statements set forth in Section 1.3) from the principal executive officer, principal financial officer or principal accounting officer of the Company and, if applicable, such Guarantor as to his or her knowledge of the Company’s or such Guarantor’s, as the case may be, compliance (without regard to any period of grace or requirement of notice provided herein) with all conditions and covenants under the Indenture and, if the Company or such Guarantor, as the case may be, shall be in Default, specifying all such Defaults and the nature and status thereof of which such officer has knowledge.

Section 10.6. Additional Amounts.

If the Securities of a series provide for the payment of additional amounts (as provided in Section 3.1(o)), at least 10 days prior to the first Interest Payment Date with respect to that series of Securities and at least 10 days prior to each date of payment of principal of, premium, if any, or interest on the Securities of that series if there has been a change with respect to the matters set forth in the below-mentioned Officer’s Certificate, the Company shall furnish to the Trustee and the principal Paying Agent, if other than the Trustee, an Officer’s Certificate instructing the Trustee and such Paying Agent whether such payment of principal of, premium, if any, or interest on the Securities of that series shall be made to Holders of the Securities of that series without withholding or deduction for or on account of any tax, assessment or other governmental charge described in the Securities of that series. If any such withholding or deduction shall be required, then such Officer’s Certificate shall specify by country the amount, if any, required to be withheld or deducted on such payments to such Holders and shall certify the fact that additional amounts will be payable and the amounts so payable to each Holder, and the Company shall pay to the Trustee or such Paying Agent the additional amounts required to be paid by this Section. The Company covenants to indemnify the Trustee and any Paying Agent for, and to hold them harmless against, any loss, liability or expense reasonably incurred without negligence or bad faith on their part arising out of or in connection with actions taken or omitted by any of them in reliance on any Officer’s Certificate furnished pursuant to this Section 10.6.

Whenever in this Indenture there is mentioned, in any context, the payment of the principal of or any premium, interest or any other amounts on, or in respect of, any Securities of any series, such mention shall be deemed to include mention of the payment of additional amounts provided by the terms of such

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series established hereby or pursuant hereto to the extent that, in such context, additional amounts are, were or would be payable in respect thereof pursuant to such terms, and express mention of the payment of additional amounts (if applicable) in any provision hereof shall not be construed as excluding the payment of additional amounts in those provisions hereof where such express mention is not made.

ARTICLE ELEVEN

REDEMPTION OF SECURITIES

Section 11.1. Applicability of Article.

Securities of any series which are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and (except as otherwise specified as contemplated by Section 3.1 for Securities of any series) in accordance with this Article Eleven.

Section 11.2. Election to Redeem; Notice to Trustee.

The election of the Company to redeem any Securities shall be evidenced by a Board Resolution. In case of any redemption at the election of the Company of less than all the Securities of any series, the Company shall, at least 15 days prior to the last date for the giving of notice of such redemption (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Securities of such series to be redeemed and, if applicable, of the tenor of the Securities to be redeemed. In the case of any redemption of Securities (a) prior to the expiration of any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture or (b) pursuant to an election of the Company that is subject to a condition specified in the terms of the Securities of the series to be redeemed, the Company shall furnish the Trustee with an Officer’s Certificate evidencing compliance with such restriction or condition.

Section 11.3. Selection by Trustee of Securities to Be Redeemed.

If less than all the Securities of any series are to be redeemed (unless all of the Securities of such series and of a specified tenor are to be redeemed), the particular Securities to be redeemed shall be selected not more than 45 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series not previously called for redemption, by such method as the Trustee shall deem fair and appropriate, including any method required by the Depository with respect to any Global Securities (and in such manner as is not prohibited by applicable legal requirements) and which may provide for the selection for redemption of portions (equal to the minimum authorized denomination for Securities of that series or any integral multiple thereof) of the principal amount of Securities of such series of a denomination larger than the minimum authorized denomination for Securities of that series.

The Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. If the Securities of any series to be redeemed consist of Securities having different dates on which the principal is payable or different rates of interest, or different methods by which interest may be determined or have any other different tenor or terms, then the Company may, by written notice to the Trustee, direct that the Securities of such series to be redeemed shall be selected from among the groups of such Securities having specified tenor or terms and the Trustee shall thereafter select the particular Securities to be redeemed in the manner set forth in the preceding paragraph from among the group of such Securities so specified.

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For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed.

Section 11.4. Notice of Redemption.

Notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Securities to be redeemed, at his address appearing in the Security Register.

All notices of redemption shall state:

(a) the Redemption Date,

(b) the Redemption Price, or if not then ascertainable, the manner of calculation thereof,

(c) if less than all the Outstanding Securities of any series are to be redeemed, the identification (and, in the case of partial redemption, the principal amounts) of the particular Securities to be redeemed,

(d) that on the Redemption Date the Redemption Price will become due and payable upon each such Security to be redeemed and, if applicable, that interest thereon will cease to accrue on and after said date,

(e) the place or places where such Securities are to be surrendered for payment of the Redemption Price, and

(f) that the redemption is for a sinking fund, if such is the case.

Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company’s request, by the Trustee in the name and at the expense of the Company.

Section 11.5. Deposit of Redemption Price.

Prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 10.3) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest on, all the Securities which are to be redeemed on that date.

Section 11.6. Securities Payable on Redemption Date.

Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Securities shall cease to bear interest. Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the Redemption Price, together with accrued interest to the Redemption Date; provided, however, that unless otherwise specified with respect to Securities of any series as contemplated in Section 3.1, installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant record dates according to their terms and the provisions of Section 3.7.

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If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security.

Section 11.7. Securities Redeemed in Part.

Any Security which is to be redeemed only in part shall be surrendered at a Place of Payment therefor (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company and the Guarantors shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities of the same series and tenor, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered.

ARTICLE TWELVE

SINKING FUNDS

Section 12.1. Applicability of Article.

The provisions of this Article Twelve shall be applicable to any sinking fund for the retirement of Securities of a series except as otherwise specified as contemplated by Section 3.1 for Securities of such series.

The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a “mandatory sinking fund payment”, and any payment in excess of such minimum amount provided for by the terms of Securities of any series is herein referred to as an “optional sinking fund payment.” If provided for by the terms of Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 12.2. Each sinking fund payment shall be applied to the redemption of Securities of any series as provided for by the terms of Securities of such series.

Section 12.2. Satisfaction of Sinking Fund Payments with Securities.

The Company (a) may deliver Outstanding Securities of a series (other than any previously called for redemption) and (b) may apply as a credit Securities of a series which have been redeemed either at the election of the Company pursuant to the terms of such Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities, in each case in satisfaction of all or any part of any sinking fund payment with respect to the Securities of such series required to be made pursuant to the terms of such Securities as provided for by the terms of such series; provided that such Securities have not been previously so credited. Such Securities shall be received and credited for such purpose by the Trustee at the Redemption Price specified in such Securities for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly.

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Section 12.3. Redemption of Securities for Sinking Fund.

Not less than 45 days prior to each sinking fund payment date for any series of Securities (unless a shorter period shall be satisfactory to the Trustee), the Company will deliver to the Trustee an Officer’s Certificate specifying the amount of the next ensuing sinking fund payment for that series pursuant to the terms of that series, the portion thereof, if any, which is to be satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting Securities of that series pursuant to Section 12.2 and stating the basis for such credit and that such Securities have not been previously so credited, and will also deliver to the Trustee any Securities to be so delivered. Not less than 30 days before each such sinking fund payment date the Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 11.3 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 11.4. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Section 11.6 and Section 11.7.

ARTICLE THIRTEEN

DEFEASANCE

Section 13.1. Option to Effect Legal Defeasance or Covenant Defeasance.

The Company may, at the option of its Board of Directors evidenced by a resolution set forth in an Officers’ Certificate, and at any time, elect to have either Section 13.2 or Section 13.3 hereof be applied to all outstanding Securities upon compliance with the conditions set forth below in this Article Thirteen.

Section 13.2. Legal Defeasance and Discharge.

Upon the Company’s exercise under Section 13.1 hereof of the option applicable to this Section 13.2, the Company and each of the Guarantors will, subject to the satisfaction of the conditions set forth in Section 13.4 hereof, be deemed to have been discharged from their obligations with respect to all outstanding Securities (including the Securities Guarantees) on the date the conditions set forth below are satisfied (hereinafter, “Legal Defeasance”). For this purpose, Legal Defeasance means that the Company and the Guarantors will be deemed to have paid and discharged the entire Debt represented by the outstanding Securities (including the Securities Guarantees), which will thereafter be deemed to be “outstanding” only for the purposes of Section 13.5 hereof and the other sections of this Indenture referred to in clauses (a) and (b) below, and to have satisfied all their other obligations under such Securities, the Securities Guarantees and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which will survive until otherwise terminated or discharged hereunder:

(a) the rights of Holders of Outstanding Securities to receive payments in respect of the principal of, or interest or premium, if any, on such Securities when such payments are due from the trust referred to in Section 13.4 hereof;

(b) the Company’s obligations with respect to such Securities under Section 3.4, Section 3.5, Section 3.6, Section 10.2 and Section 10.3 hereof;

(c) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Company’s and the Guarantors’ obligations in connection therewith; and

(d) this Article Thirteen.

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In addition, upon the Company’s exercise under Section 13.1 hereof of the option applicable to this Section 13.2, subject to the satisfaction of the conditions set forth in Section 13.4 hereof, all Security Documents, if any, will be deemed to have terminated (and the Trustee, on demand of and at the expense of the Company, shall execute, or instruct any applicable collateral agent to execute, proper instruments evidencing the same).

Subject to compliance with this Article Thirteen, the Company may exercise its option under this Section 13.2 notwithstanding the prior exercise of its option under Section 13.3 hereof.

Section 13.3. Covenant Defeasance.

Upon the Company’s exercise under Section 13.1 hereof of the option applicable to this Section 13.3, the Company and each of the Guarantors will, subject to the satisfaction of the conditions set forth in Section 13.4 hereof, be released from each of their obligations under the covenants contained in Section 7.4, Section 8.1 and Section 10.4 hereof as well as any Additional Defeasible Provisions (such release and termination hereinafter referred to as “Covenant Defeasance”), and the Securities will thereafter be deemed not “outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but will continue to be deemed “outstanding” for all other purposes hereunder (it being understood that such Securities will not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Securities and Securities Guarantees, the Company and the Guarantors may omit to comply with and will have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply will not constitute a Default or an Event of Default under Section 5.1 hereof, but, except as specified above, the remainder of this Indenture and such Securities and Securities Guarantees will be unaffected thereby. In addition, upon the Company’s exercise under Section 13.1 hereof of the option applicable to this Section 13.3, subject to the satisfaction of the conditions set forth in Section 13.4 hereof, (a) Section 5.1(c) and Section 5.1(e) hereof will not constitute Events of Default, and (b) all Security Documents, if any, will be deemed to have terminated (and the Trustee, on demand of and at the expense of the Company, shall execute, or instruct any applicable collateral agent to execute, proper instruments evidencing the same).

Section 13.4. Conditions to Legal or Covenant Defeasance.

In order to exercise either Legal Defeasance or Covenant Defeasance under either Section 13.2 or Section 13.3 hereof:

(a) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the Securities, cash in U.S. dollars, non-callable U.S. Government Obligations, or a combination of cash in U.S. dollars and non-callable U.S. Government Obligations, in such amounts as will be sufficient, in the opinion of a nationally recognized investment bank, appraisal firm, or firm of independent public accountants to pay the principal of, or interest and premium, if any, on the Outstanding Securities on the stated date for payment thereof or on the applicable redemption date, as the case may be, and the Company must specify whether the Securities are being defeased to such stated date for payment or to a particular redemption date;

(b) in the case of an election under Section 13.2 hereof, the Company must deliver to the Trustee an Opinion of Counsel confirming that:

(i) the Company has received from, or there has been published by, the Internal Revenue Service a ruling; or

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(ii) since the Issue Date, there has been a change in the applicable federal income tax law,

in either case to the effect that, and based thereon such Opinion of Counsel will confirm that, the Holders of the Outstanding Securities will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

(c) in the case of an election under Section 13.3 hereof, the Company must deliver to the Trustee an Opinion of Counsel confirming that the Holders of the Outstanding Securities will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

(d) no Default or Event of Default has occurred and is continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit);

(e) the deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Company or any Guarantor is a party or by which the Company or any Guarantor is bound;

(f) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound;

(g) the Company must deliver to the Trustee an Officers’ Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of Securities over the other creditors of the Company with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company or others;

(h) the Company must deliver to the Trustee an Officers’ Certificate, stating that all conditions precedent set forth in clauses (a) through (g) of this Section 13.4 have been complied with; and

(i) the Company must deliver to the Trustee an Opinion of Counsel (which Opinion of Counsel may be subject to customary assumptions, qualifications and exclusions), stating that all conditions precedent set forth in clauses (b), (c) and (e) of this Section 13.4 have been complied with; provided that the Opinion of Counsel with respect to clause (e) of this Section 13.4 may be to the knowledge of such counsel.

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Section 13.5. Deposited Money and U.S. Government Obligations to be Held in Trust, Other Miscellaneous Provisions.

Subject to Section 13.6 hereof, all money and non-callable U.S. Government Obligation (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 13.5, the “Trustee”) pursuant to Section 13.4 hereof in respect of the Outstanding Securities will be held in trust and applied by the Trustee, in accordance with the provisions of such Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Securities of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law.

The Company will pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable U.S. Government Obligations deposited pursuant to Section 13.4 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the Outstanding Securities.

Notwithstanding anything in this Article Thirteen to the contrary, the Trustee will deliver or pay to the Company from time to time upon the request of the Company any money or non-callable U.S. Government Obligations held by it as provided in Section 13.4 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 13.4(a) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.

Section 13.6. Repayment.

Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium, if any, or interest on any Security and remaining unclaimed for two years after such principal, premium, if any, or interest has become due and payable shall be paid to the Company on its request or (if then held by the Company) will be discharged from such trust; and the Holder of such Security will thereafter be permitted to look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, will thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which will not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company.

Section 13.7. Reinstatement.

If the Trustee or Paying Agent is unable to apply any United States dollars or non-callable U.S. Government Obligations in accordance with Section 13.2 or Section 13.3 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company’s and the Guarantors’ obligations under this Indenture and the Securities and the Securities Guarantees will be revived and reinstated as though no deposit had occurred pursuant to Section 13.2 or Section 13.3 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 13.2 or Section 13.3 hereof, as the case may be; provided, however, that, if the Company makes any payment of principal of, premium, if any, or interest on any Securities following the reinstatement of its obligations, the Company will be subrogated to the rights of the Holders of such Securities to receive such payment from the money held by the Trustee or Paying Agent.

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ARTICLE FOURTEEN

GUARANTEE OF SECURITIES

Section 14.1. Securities Guarantee.

(a) Subject to the other provisions of this Article Fourteen, each of the Guarantors hereby jointly and severally guarantees to each Holder of a Security of each series to which this Article Fourteen has been made applicable as provided in Section 3.1(t) (the Securities of such series being referred to herein as the “Guaranteed Securities”) (which Security has been authenticated and delivered by the Trustee), and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Guaranteed Securities, or the obligations of the Company hereunder or thereunder, that:

(i) the principal of, premium, if any, and interest on the Guaranteed Securities will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Guaranteed Securities, if any, if lawful, and all other obligations of the Company to the Holders of Guaranteed Securities or the Trustee hereunder or thereunder, will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and

(ii) in case of any extension of time of payment or renewal of any Guaranteed Securities or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise.

Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors will be jointly and severally obligated to pay the same immediately. Each Guarantor agrees that this is a guarantee of payment and not a guarantee of collection.

(b) To the extent permissible under applicable law, the obligations of the Guarantors under this Securities Guarantee are unconditional, irrespective of the validity, regularity or enforceability of the Guaranteed Securities or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Guaranteed Securities with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. To the extent permitted by applicable law, each Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenants that this Securities Guarantee will not be discharged except by complete performance of the obligations contained in the Guaranteed Securities and this Indenture.

(c) If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Guarantors or any custodian, trustee, liquidator or other similar official acting in relation to either the Company or the Guarantors, any amount paid by either to the Trustee or such Holder, this Securities Guarantee, to the extent theretofore discharged, will be reinstated in full force and effect.

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(d) Each Guarantor agrees that it will not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. Each Guarantor further agrees that, to the extent permitted by applicable law, as between the Guarantors, on the one hand, and the Holders of Guaranteed Securities and the Trustee, on the other hand, (1) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article Five hereof for the purposes of this Securities Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (2) in the event of any declaration of acceleration of such obligations as provided in Article Five hereof, such obligations (regardless of whether due and payable) will forthwith become due and payable by the Guarantors for the purpose of this Securities Guarantee. The Guarantors will have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Securities Guarantee.

Section 14.2. Limitation on Guarantor Liability.

Each Guarantor, and by its acceptance of Guaranteed Securities, each Holder thereof, hereby confirms that it is the intention of all such parties that the Securities Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any Securities Guarantee. To effectuate the foregoing intention, the Trustee, to the extent permitted under applicable law, the Holders and each Guarantor hereby irrevocably agree that the obligations of such Guarantor will be limited to the maximum amount that will, after giving effect to such maximum amount and all other contingent and fixed liabilities of such Guarantor that are relevant under such laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under this Article Fourteen, result in the obligations of such Guarantor under its Securities Guarantee not constituting a fraudulent transfer or conveyance.

Section 14.3. Execution and Delivery of Securities Guarantee Notation.

To evidence its Securities Guarantee set forth in Section 14.1 hereof, each Guarantor hereby agrees that a notation of such Securities Guarantee substantially in the form set forth in Section 2.3 or established pursuant to a Board Resolution or in a supplemental indenture, in accordance with the provisions of Section 2.1, will be endorsed by an officer of such Guarantor on each Guaranteed Security authenticated and delivered by the Trustee and that this Indenture will be executed on behalf of such Guarantor by one of its officers.

Each Guarantor hereby agrees that its Securities Guarantee set forth in Section 14.1 hereof will remain in full force and effect notwithstanding any failure to endorse on each Guaranteed Security a notation of such Securities Guarantee.

If an officer whose signature is on this Indenture or on the Securities Guarantee no longer holds that office at the time the Trustee authenticates the Guaranteed Security on which a Securities Guarantee is endorsed, the Securities Guarantee will be valid nevertheless.

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The delivery of any Guaranteed Security by the Trustee, after the authentication thereof hereunder, will constitute due delivery of the Securities Guarantee of such Guaranteed Security set forth in this Indenture on behalf of the Guarantors.

* * *

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This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

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

FLOTEK INDUSTRIES, INC.
By:	/s/ John Chisholm
Name:	John Chisholm
Title:	President
U.S. BANK NATIONAL ASSOCIATION
By:	/s/ Steven A. Finklea
Name:	Steven A. Finklea
Title:	Vice President

GUARANTORS:
TELEDRIFT COMPANY
FLOTEK PAYMASTER, INC.
MATERIAL TRANSLOGISTICS, INC.
PETROVALVE, INC.
TURBECO, INC.
USA PETROVALVE, INC.
FLOTEK INTERNATIONAL, INC.
PADKO INTERNATIONAL INCORPORATED
FLOTEK ECUADOR MANAGEMENT, LLC
FLOTEK ECUADOR INVESTMENTS, LLC
By:	/s/ John Chisholm
Name:	John Chisholm
Title:	President
SOONER ENERGY SERVICES, LLC
CESI MANUFACTURING, LLC
CESI CHEMICAL, INC.
By:	/s/ John Chisholm
Name:	John Chisholm
Title:	Chief Executive Officer
FLOTEK INDUSTRIES FZE
By:	/s/ John Chisholm
Name:	John Chisholm
Title:	President

EX-4.2

Exhibit 4.2

FIRST SUPPLEMENTAL INDENTURE

by and among

FLOTEK INDUSTRIES, INC.

AS ISSUER,

THE GUARANTORS PARTY HERETO

AND

U.S. BANK NATIONAL ASSOCIATION

AS TRUSTEE

5.25% Convertible Senior Secured Notes due 2028

Dated as of March 31, 2010

Supplemental To Indenture For Senior Secured Debt Securities

Dated as of March 31, 2010

TABLE OF CONTENTS

			PAGE
Article 1 Definitions and Incorporation by Reference			2
	Section 1.01.	Scope of First Supplemental Indenture	2
	Section 1.02.	Definitions	2
	Section 1.03.	Other Definitions	12
	Section 1.04.	Rules of Construction	13
Article 2 The Securities			13
	Section 2.01.	Title; Amount and Issue of Securities; Principal and Interest	13
	Section 2.02.	Form of Securities; Authentication	14
	Section 2.03.	Legends	15
	Section 2.04.	Registrar and Paying Agent	16
	Section 2.05.	General Provisions Relating to Transfer and Exchange	16
	Intentionally Omitted		17
	Section 2.07.	Original Issue Discount	17
Article 3 Covenants			17
	Section 3.01.	Payment of Securities	17
	Section 3.02.	Further Instruments and Acts	17
	Section 3.03.	Statement by Officer as to Default; Trading Price of Securities	17
	Section 3.04.	Additional Interest and Contingent Interest	18
	Section 3.05.	Calculation Of Original Issue Discount	18
	Section 3.06.	Limitation on Liens	18
Article 4 Redemption of Securities			19
	Section 4.01.	Optional Redemption	19
	Section 4.02.	Selection by Trustee of Securities to Be Redeemed	19
	Section 4.03.	Notice of Redemption	19
Article 5 Defaults and Remedies			20
	Section 5.01.	Additional Events of Default	20
	Section 5.02.	Sole Remedy for Failure to Report	21
	Section 5.03.	Limitation on Suits	22
Article 6 Discharge of Indenture			22
	Section 6.01.	Discharge of Liability on Securities	22
	Section 6.02.	Reinstatement	23
	Section 6.03.	Officer’s Certificate; Opinion of Counsel	23
Article 7 Amendments			24
	Section 7.01.	Without Consent of Holders	24
	Section 7.02.	With Consent of Holders	24
Article 8 Purchase at the Option of Holders Upon a Fundamental Change; Purchase at the Option of Holders			25
	Section 8.01.	Purchase at the Option of the Holder Upon a Fundamental Change	25
	Section 8.02.	Purchase of Securities at the Option of the Holder	27

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	Section 8.03.	Further Conditions and Procedures for Purchase at the Option of the Holder Upon a Fundamental Change and Purchase of Securities at the Option of the Holder	28
Article 9 Conversion			31
	Section 9.01.	Conversion of Securities	31
	Section 9.02.	Adjustments to Conversion Rate	37
	Section 9.03.	Adjustment to Common Stock Delivered Upon Certain Fundamental Changes	43
	Section 9.04.	Effect of Recapitalizations, Reclassifications, and Changes of Common Stock	44
	Section 9.05.	Responsibility of Trustee	45
	Section 9.06.	Stockholder Rights Plan	46
	Section 9.07.	No Stockholder Rights	46
	Section 9.08.	Withholding Taxes for Adjustments in Conversation Rate	46
Article 10 Guarantee of Securities			46
	Section 10.01.	Securities Guarantee	46
	Section 10.02.	Release of A Guarantor; Termination Of Securities Guarantee	46
ARTICLE 11 Security Documents			47
	Section 11.01.	Collateral and Security Documents	47
	Section 11.02.	Recording and Opinions	47
	Section 11.03.	Release of Collateral	48
	Section 11.04	Certificates of the Company	49
	Section 11.05.	Permitted Releases Not to Impair Lien; Trust Indenture Act Requirements	50
	Section 11.06.	Certificate of the Trustee	50
	Section 11.07.	Enforcement of Security Documents and Protection of Collateral	51
	Section 11.08.	Authorization of Receipt of Funds by Trustee Under the Security Documents	51
	Section 11.09.	Collateral Agent	51
	Section 11.10.	Designations	52
	Section 11.11.	Termination of Liens	52
	Section 11.12.	Excluded Securities	52
	Section 11.13.	Automatic Waiver of Covenants in Security Documents	52
Article 12 Miscellaneous			53
	Section 12.01.	Compliance with Trust Indenture Act	53
	Section 12.02.	No Defeasance	53
	Section 12.03.	Communication by Holders with other Holders	53
	Section 12.04.	Rules by Trustee, Paying Agent and Registrar	53
	Section 12.05.	Governing Law	53
	Section 12.06.	No Recourse Against Others	53
	Section 12.07.	Successors	53
	Section 12.08.	Multiple Originals	53
	Section 12.09.	Table of Contents; Headings	53
	Section 12.10.	Severability Clause	53
	Section 12.11.	Calculations	54
	Section 12.12.	Ratification and Incorporation of Original Indenture	54
EXHIBIT A Form of the Security

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FIRST SUPPLEMENTAL INDENTURE dated as of March 31, 2010, among Flotek Industries, Inc., a Delaware corporation (the “Company”), the guarantors listed on the signature page hereto (the “Initial Guarantors”) and U.S. Bank National Association, as Trustee (the “Trustee”).

Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders of the Company’s 5.25% Convertible Senior Secured Notes due 2028 (the “Securities”).

W I T N E S S E T H:

WHEREAS, this First Supplemental Indenture is supplemental to the Original Indenture.

WHEREAS, for its lawful corporate purposes, the Company has duly authorized the issue of the Securities, in an aggregate principal amount not to exceed $36,004,000, and in order to provide the terms and conditions upon which the Securities are to be authenticated, issued and delivered, the Company has duly authorized the execution and delivery of this First Supplemental Indenture.

WHEREAS, pursuant to Section 3.1 of the Original Indenture, the Company may establish one or more series of Securities from time to time as authorized by a supplemental indenture of which the Securities shall be one such series.

WHEREAS, the Form of Security, the certificate of authentication to be borne by each Security, the Form of Conversion Notice, the Form of Fundamental Change Purchase Notice, the Form of Purchase Notice and the Assignment Form to be borne by the Securities are to be substantially in the forms hereinafter provided for.

WHEREAS, all acts and things necessary to make the Securities, when executed by the Company and authenticated and delivered by the Trustee or a duly authorized authenticating agent, as in the Indenture provided, the valid, binding and legal obligations of the Company, and to constitute these presents a valid agreement according to its terms, have been done and performed, and the execution of this First Supplemental Indenture and the issue hereunder of the Securities have in all respects been duly authorized.

WHEREAS, the Guarantors party hereto have duly authorized the execution and delivery of this First Supplemental Indenture as guarantors of the Securities. All things necessary to make the Indenture a valid agreement of each Guarantor, in accordance with its terms, have been done, and each Guarantor has done all things necessary to make the Securities Guarantee, when the Securities are executed by the Company and authenticated and delivered by the Trustee and duly issued by the Company, the valid obligations of such Guarantor as hereinafter provided.

NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:

That in order to declare the terms and conditions upon which the Securities are, and are to be, authenticated, issued and delivered, and in consideration of the premises and of the purchase and acceptance of the Securities by the holders thereof, the Company and the Guarantors covenant and agree with the Trustee for the equal and proportionate benefit of the respective holders from time to time of the Securities (except as otherwise provided below), as follows:

ARTICLE 1

DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.01. Scope of First Supplemental Indenture. The changes, modifications and supplements to the Original Indenture affected by this First Supplemental Indenture shall be applicable only with respect to, and shall only govern the terms of, the Securities, which shall be limited to $36,004,000 aggregate principal amount Outstanding and which shall be issued on the Issue Date, and shall not apply to any other Securities that may be issued under the Original Indenture. The provisions of the First Supplemental Indenture shall supersede any corresponding or inconsistent provisions in the Original Indenture.

Section 1.02. Definitions. The terms defined in this Section 1.02 (except as herein otherwise expressly provided or unless the context otherwise requires) for all purposes of this First Supplemental Indenture and for purposes of the Original Indenture as it relates to the Securities shall have the respective meanings specified in this Section 1.02. Except as otherwise provided in this First Supplemental Indenture, all words, terms and phrases defined in the Original Indenture (but not otherwise defined herein) shall have the same meaning herein as in the Original Indenture. All other terms used in this First Supplemental Indenture that are defined in the Trust Indenture Act or that are by reference therein defined in the Securities Act (except as herein otherwise expressly provided or unless the context otherwise requires) shall have the meanings assigned to such terms in said Trust Indenture Act and in said Securities Act as in force at the date of the execution of this First Supplemental Indenture. The words “herein,” “hereof,” “hereunder,” and words of similar import refer to this First Supplemental Indenture as a whole and not to any particular Article, Section or other subdivision.

“Accredited Investors” means an “accredited investor” as described in Rule 501 under the Securities Act.

“Additional Interest” means all amounts, if any, payable pursuant to Section 5.02 hereof.

“Beneficial Owner” shall mean any Person who is considered a beneficial owner of a security in accordance with Rule 13d-3 promulgated by the SEC under the Exchange Act.

“Beneficial Ownership Limitation” shall mean, for purposes of determining the extent to which any Holder’s right to convert its Securities into shares of Common Stock is limited by Section 9.01(h), 9.99% of the sum of (i) the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon such conversion, plus (ii) the number of shares of Common Stock the beneficial ownership of which such Holder (together with such Holder’s Affiliates and any other Persons acting as a group together with such Holder or any of such Holder’s Affiliates) has the right to acquire within 60 days (other than upon such conversion). For purposes of the foregoing sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act and the

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rules and regulations promulgated thereunder. A Holder, upon not less than 61 days’ prior written notice to the Company, may increase or decrease the Beneficial Ownership Limitation as it applies to such Holder, provided that any such increase or decrease will not be effective until the 61st day after such notice is delivered to the Company.

“Bid Solicitation Agent” means, initially, the Trustee. The Company may change the Bid Solicitation Agent, but the Bid Solicitation Agent shall not be the Company’s Affiliate. The Bid Solicitation Agent shall solicit bids from securities dealers in accordance with Section 9.01 that are believed by the Company to be willing to bid for the Securities.

“Capital Stock” of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock, but excluding any debt securities convertible into such equity.

“Collateral” means all the collateral provided for and described in the Security Documents.

“Collateral Agent” means the Trustee in its capacity as collateral agent under the Security Documents, and any successor thereto in such capacity.

“Common Equity” of any Person means Capital Stock of such Person that is generally entitled to (1) vote in the election of directors of such Person or (2) if such Person is not a corporation, vote or otherwise participate in the selection of the governing body, partners, managers or others that will control the management or policies of such Person.

“Common Stock” means the Company’s common stock, par value $0.0001 per share at the date of this First Supplemental Indenture or, subject to Section 9.04, shares of any class or classes resulting from any reclassification or reclassifications thereof and that have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and that are not subject to redemption by the Company; provided that if at any time there shall be more than one such resulting class, the shares of each such class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications.

“Contingent Interest” has the meaning set forth in Exhibit A attached hereto.

“Conversion Agent” means the office or agency appointed by the Company where Securities may be presented for conversion. The Conversion Agent appointed by the Company shall initially be the Trustee.

“Conversion Period” means, with respect to any Securities:

(i) with respect to any Conversion Date that occurs on or after the 25^th Scheduled Trading Day prior to the Maturity Date, the 20 consecutive VWAP Trading Day period beginning on and including the 22^nd Scheduled Trading Day prior to the Maturity Date (whether or not the Maturity Date is a Scheduled Trading Day) (or if such day is not a VWAP Trading Day, the next succeeding VWAP Trading Day);

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(ii) with respect to any Securities called for redemption, the 20 consecutive VWAP Trading Day Period beginning on and including the 22^nd Scheduled Trading Day prior to the Redemption Date (or if such day is not a VWAP Trading Day, the next succeeding VWAP Trading Day); and

(iii) in all other instances, the 20 consecutive VWAP Trading Day period beginning on and including the third VWAP Trading Day after the related Conversion Date in respect of such Securities.

“Conversion Price” at any time means a dollar amount (initially $22.75) equal to $1,000 divided by the Conversion Rate at such time.

“Credit Agreement” means the Amended and Restated Credit Agreement dated as of March 31, 2010 among the Company, as borrower, Whitebox Advisors LLC, as administrative agent, and the lenders named therein, as amended, restated, supplemented, waived, or replaced (whether or not upon termination, and whether with the original lenders or otherwise), refinanced, restructure or otherwise modified from time to time.

“Credit Agreement Indebtedness” means Debt and other obligations Incurred or arising under or in respect of the Credit Agreement, including principal, premium (if any), interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company whether or not a claim for post-filing interest is allowed in such proceedings), fees, charges, expenses, reimbursement obligations, guarantees and all other amounts payable thereunder or in respect thereof.

“Credit Facilities Collateral Agent” means Whitebox Advisors LLC, in its capacity as administrative agent for the lenders party to the Credit Agreement, or any successor thereto in such capacity, or any Person otherwise designated the “Credit Facilities Collateral Agent” pursuant to the Intercreditor Agreement.

“Daily Conversion Value” means, for each of the 20 consecutive VWAP Trading Days during the Conversion Period, one-twentieth (1/20) of the product of (a) the Conversion Rate on such day and (b) the Daily VWAP of the Common Stock (or the Reference Property pursuant to Section 9.04) on such VWAP Trading Day.

“Daily Settlement Amount” means, for each of the 20 VWAP Trading Days during the applicable Conversion Period:

(i) cash equal to the lesser of $50.00 and the Daily Conversion Value relating to such VWAP Trading Day; and

(ii) if such Daily Conversion Value exceeds $50.00, a number of shares of Common Stock equal to (A) the difference between such Daily Conversion Value and $50.00, divided by (B) the Daily VWAP of the Common Stock (or the consideration into which Common Stock has been exchanged in connection with certain corporate transactions) for such VWAP Trading Day, subject to adjustment pursuant to Section 9.02(l).

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“Daily VWAP” means for each of the 20 consecutive VWAP Trading Days during the Conversion Period, the per share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page FTK.UQ <equity> AQR (or any equivalent successor page) in respect of the period from the scheduled open of trading on the principal trading market for the Common Stock to the scheduled close of trading on such market on such VWAP Trading Day (or if such volume-weighted average price is unavailable, the market value of one share of Common Stock on such VWAP Trading Day, using a volume-weighted method if reasonably practical, as determined in good faith by the Company).

“Discharge of Priority Lien Obligations” means payment in full in cash of the principal of and interest and premium, if any, on all Debt constituting Priority Lien Obligations secured by any Collateral, or, with respect to Hedging Obligations constituting Priority Lien Obligations secured by any Collateral, delivery of cash collateral or backstop letters of credit in respect thereof in compliance with the terms of such Priority Lien Obligations, in each case after or concurrently with termination of all commitments to extend credit thereunder, and payment in full of any other obligations in respect of any Priority Lien Obligation secured by any Collateral that are due and payable or otherwise accrued and owing at or prior to the time such principal, interest and premium, if any, are paid.

“Exchanged Securities” means the Company’s 5.25% Convertible Senior Notes due 2028 issued under the Exchanged Securities Indenture, in exchange for which the Company has issued or will issue the Securities.

“Exchanged Securities Issue Date” means February 14, 2008, which is the date the Exchanged Securities were issued under the Exchanged Securities Indenture.

“Exchanged Securities Indenture” means the Indenture dated as of February 14, 2008 among the Company, the guarantors party thereto and the Trustee, as supplemented by the First Supplemental Indenture dated as of February 14, 2008 among the Company, the guarantors party thereto and the Trustee.

“Exchanged Securities Underwriter” means Bear, Stearns & Co. Inc.

“Excluded Securities” means that portion of the Capital Stock or other securities of any Subsidiary pledged as Collateral (but for the provisions of Section 11.12 hereof) the value (defined as the principal amount, par value, book value as carried by the Company or market value, whichever is greatest) of which, when considered in the aggregate with all other Capital Stock or other securities of such Subsidiary subject to a security interest under any of the Security Documents, exceeds 19.99% of the principal amount of the then outstanding Securities; provided, however, in the event that Rule 3-16 of Regulation S-X promulgated by the SEC is amended, modified or interpreted by the SEC to require (or is replaced with another rule or regulation, or any other law, rule or regulation is adopted, which would require) the filing with the SEC (or any other governmental agency) of separate financial statements of any Subsidiary due to the fact that such Subsidiary’s Capital Stock or other securities secure the Securities or the

5

Securities Guarantee, then the Capital Stock or other securities of such Subsidiary shall automatically be deemed to be Excluded Securities but only for so long as and to the extent necessary to not be subject to such requirement; provided further, however, that if any Priority Lien Obligation is secured by a security interest in any securities that are Excluded Securities, such Priority Lien Obligation is registered under the Securities Act, and, in connection with such registration, the Company is required to file with the SEC (or any other governmental agency) separate financial statements of the Subsidiary of the Company that is the issuer of such Capital Stock or other securities, then such Capital Stock or other securities shall not be considered Excluded Securities.

“Ex-Dividend Date” means, in respect of an issuance, a dividend or distribution to holders of Common Stock, the first date on which Common Stock trades on the applicable exchange or in the applicable market, regular way, without the right to receive the issuance, dividend or distribution in question.

“Fair Market Value” means the amount that a willing buyer would pay a willing seller in an arm’s length transaction.

A “Fundamental Change” shall be deemed to have occurred if any of the following occurs:

(1) any “person” or “group” within the meaning of Section 13(d) of the Exchange Act, other than the Company, any Subsidiary of the Company or any employee benefit plan of the Company or any such Subsidiary, files a Schedule TO or any other schedule, form or report under the Exchange Act disclosing that such person or group has become the Beneficial Owner of Common Equity of the Company representing more than 50% of the ordinary voting power of the Company’s Common Equity;

(2) consummation of any share exchange, consolidation or merger of the Company pursuant to which the Common Stock will be converted into cash, securities or other property or any sale, lease or other transfer (in one transaction or a series of transactions) of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, to any Person other than one of the Company’s Subsidiaries; provided, however, that a transaction where the holders of more than 50% of all classes of the Company’s Common Equity immediately prior to such transaction own, directly or indirectly, more than 50% of all classes of Common Equity of the continuing or surviving entity or transferee or parent thereof immediately after such event shall not be a Fundamental Change; or

(3) the Company’s Common Stock (or other Reference Property into which the Securities are then convertible) ceases to be listed on a U.S. national or regional securities exchange or quoted on an established automated over-the-counter trading market in the United States for a period of 30 consecutive Scheduled Trading Days,

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provided, however, that a Fundamental Change described in clause (2) of the definition above shall not be deemed to have occurred if at least 90% of the consideration received or to be received by the holders of the Company’s Common Stock, excluding cash payments for fractional shares and cash payments in respect of statutory dissenters’ rights, in connection with the transaction or transactions constituting the Fundamental Change described in clause (2) consists of shares of common stock (or depositary receipts or shares evidencing common stock) traded on a U.S. national or regional securities exchange, or which shall be so traded when issued or exchanged in connection with such Fundamental Change as described in clause (2) of the definition above (such securities being referred to as “Publicly Traded Securities”) and as a result of such transaction or transactions the Securities become convertible into such consideration.

“Guarantors” means (i) initially, the Initial Guarantors and (ii) each of the Company’s other Subsidiaries that provides a Securities Guarantee of the Securities pursuant to the terms of the Indenture.

“Hedging Obligations” means, with respect to any Person, the obligations of such Person under (i) currency exchange, interest rate or commodity swap agreements, currency exchange, interest rate or commodity cap agreements and currency exchange, interest rate or commodity collar agreements and (ii) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange, interest rates or commodity prices.

“IAI” means an institutional “accredited investor” as described in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.

“Incur” means issue, assume, guarantee, incur or otherwise become liable for; provided, however, that any Priority Lien Obligations of a Person existing at the time such Person becomes a Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Person at the time it becomes a Subsidiary. The term “Incurrence” when used as a noun shall have a correlative meaning. The accretion of principal of a non-interest bearing or other discount security, and the accrual of interest, fees and expenses under any Priority Lien Obligation Governing Documents or Priority Lien Obligation Security Documents evidencing, governing or securing any Priority Lien Obligations, shall not be deemed the Incurrence of Priority Lien Obligations.

“Indenture” means the Original Indenture, as amended and supplemented by this First Supplemental Indenture and, if further amended or supplemented as herein provided, as so amended or supplemented.

“Intercreditor Agreement” means (i) that certain Lien Subordination and Intercreditor Agreement, dated as of the Issue Date, by and among the Company, the Credit Facilities Collateral Agent, the Collateral Agent and the grantors and guarantors named therein, as amended (including any amendment and restatement thereof), supplemented or otherwise modified from time to time, and (ii) after the termination of the Intercreditor Agreement referred to in clause (i) above, any other intercreditor agreement, with terms no less favorable to the Holders than the Intercreditor Agreement referred to in clause (i) above, entered into by and among the Company, one or more representatives for any Priority Lien Obligations, the Collateral Agent and the grantors or guarantors named therein, as amended (including any amendment and restatement thereof), supplemented or otherwise modified from time to time.

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“Interest Payment Date” has the meaning set forth in Exhibit A attached hereto.

“Issue Date” means March 31, 2010.

“Last Reported Sale Price” of the Common Stock (or any other security for which a Last Reported Sale Price must be obtained) means, on any date, the closing sale price per share of Common Stock or such security (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on that date as reported in composite transactions for the principal U.S. national or regional securities exchange on which the Common Stock or such other security is listed for trading. If the Common Stock or such security is not listed for trading on a U.S. national or regional securities exchange on the relevant date, the Last Reported Sale Price will be the mid-point of the last quoted bid and ask prices for the Common Stock or such security in the over-the-counter market on the relevant date as reported by the National Quotation Bureau or similar organization. If the Common Stock or such security is not so quoted, the Last Reported Sale Price will be the average of the mid-point of the last bid and ask prices for the Common Stock or such security on the relevant date from each of at least three nationally recognized independent investment banking firms (which may include the Exchanged Securities Underwriter or its Affiliates) selected by the Company for this purpose. The Last Reported Sale Price shall be determined without reference to extended or after hours trading.

“Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof).

“Market Capitalization” means, as of any Trading Day, the product of (i) the Last Reported Sale Price of the Common Stock on such Trading Day and (ii) the number of issued and outstanding shares of Common Stock as reflected in the Company’s most recent periodic or other report filed with the SEC.

“Market Disruption Event” means, for the purpose of the definition of Trading Day, the occurrence or existence during the one half-hour period ending on the scheduled close of trading on the principal U.S. national or regional securities exchange on which the Common Stock is listed for trading of any material suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the stock exchange or otherwise) in the Common Stock or in any options contracts or future contracts relating to the Common Stock.

“Officer” means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer or any Vice President of such Person.

“Original Indenture” means the indenture for Senior Debt Securities dated as of March 31, 2010 by and among the Company, the guarantors party thereto and the Trustee.

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“Original Issue Discount” means the amount of ordinary interest income on a Security that must be accrued as original issue discount for United States federal income tax purposes pursuant to Treasury Regulation Section 1.1275-4 or any successor provision.

“Other Permitted Collateral Liens” means (i) Liens imposed by law, such as materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s liens, and other similar Liens arising in the ordinary course of business securing obligations which are not overdue for a period of more than 30 days or are being contested in good faith by appropriate procedures or proceedings and for which adequate reserves have been established; (ii) Liens arising in the ordinary course of business out of pledges or deposits under workers compensation laws, unemployment insurance, old age pensions, or other social security or retirement benefits, or similar legislation to secure public or statutory obligations; (iii) Liens for taxes, assessment or other governmental charges which are not yet due and payable or which are being actively contested in good faith by appropriate proceedings; (iv) Liens securing purchase money debt or obligations under any lease of any property or assets which would, in accordance with GAAP, be required to be classified and accounted for as a capital lease, provided that (A) the aggregate principal amount of the obligations secured by such Liens shall not exceed $5,000,000 at any time outstanding, and (B) each such Lien encumbers only the property or assets purchased in connection with the creation of any such purchase money debt or the subject of any such capital lease; (v) Liens arising from precautionary Uniform Commercial Code financing statements regarding operating leases; (vi) encumbrances consisting of minor easements, zoning restrictions or other restrictions on the use of real property that do not (individually or in the aggregate) materially affect the value of the assets encumbered thereby or materially impair the ability of the Company or any Subsidiary to use such assets in its business, and none of which is violated in any material aspect by existing or proposed structures or land use; (vii) Liens arising solely by virtue of any statutory or common law provision relating to banker’s liens, rights of set-off or similar rights and remedies and burdening only deposit accounts or other funds maintained with a depository institution; (viii) Liens on cash or securities pledged to secure performance of tenders, surety and appeal bonds, government contracts, performance and return of money bonds, bids, trade contracts, leases, statutory obligations, regulatory obligations and other obligations of a like nature incurred in the ordinary course of business; (ix) judgment and attachment Liens not giving rise to an Event of Default, provided that no action to enforce any such Lien has been commenced; and (x) Liens existing on the date hereof on equipment and vehicles securing Debt existing on the date hereof.

“Permitted Collateral Liens” means (i) Liens on the Collateral securing Priority Lien Obligations in a principal amount which, when taken together with the principal amount of all other Priority Lien Obligations permitted by this clause (i) then outstanding (other than Hedging Obligations secured by Priority Liens), does not exceed the sum of (A) $50,000,000, plus (B) the aggregate amount of all interest accrued under the Priority Lien Obligation Governing Documents evidencing or governing any such Priority Lien Obligations which, since the Issue Date, has been capitalized and added to the principal of any such Priority Lien Obligations, (ii) Liens on the Collateral securing other Priority Lien Obligations (including without limitation Credit Agreement Indebtedness not otherwise permitted under clause (i) above) in a principal amount which, when taken together with the principal amount of all other Priority Lien Obligations permitted by this clause (ii) then outstanding, does not exceed $10,000,000, so long as Market Capitalization is $100,000,000 or more for at least 20 Trading Days during the period

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of 30 consecutive Trading Days ending immediately prior to the date of Incurrence of such Priority Lien Obligations; (iii) Liens on the Collateral securing the Securities and the Securities Guarantee; and (iv) Liens on the Collateral constituting Other Permitted Collateral Liens. For the avoidance of doubt, any Lien on the Collateral securing Credit Agreement Indebtedness Incurred or arising under or in respect of the Credit Agreement as in effect on the Issue Date shall be deemed to be permitted pursuant to clause (i) of this definition.

“Preferred Stock”, as applied to the Capital Stock of any corporation, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such corporation, over shares of Capital Stock of any other class of such corporation.

“Priority Lien” means any Lien on any Collateral for the benefit of the holders of any Debt or other obligations of the Company or any of its Subsidiaries (including without limitation any Hedging Obligations) that are designated by the Company, as permitted by this First Supplemental Indenture, to rank prior to the Liens on such Collateral for the benefit of the Holders.

“Priority Lien Obligation” means any Debt or other obligations (including without limitation any Hedging Obligations) that are secured by a Priority Lien. The relative priorities of the Liens securing the Priority Lien Obligations are determined by agreement among the holders of the Priority Lien Obligations.

“Priority Lien Obligation Governing Documents” means any instrument or document evidencing or governing any Priority Lien Obligation, as amended, restated, supplemented, waived, or replaced (whether or not upon termination, and whether with the original lenders or otherwise), refinanced, restructure or otherwise modified from time to time.

“Priority Lien Obligations Security Documents” means the security agreements, pledge agreements, mortgages, deeds of trust and collateral assignments defining the terms of the Priority Liens, as amended, restated, supplemented, waived or otherwise modified from time to time.

“QIB” a “qualified institutional buyer” as defined in Rule 144A under the Securities Act.

“Registration Statement” means a Registration Statement of the Company filed under the Securities Act.

“Regular Record Date” for the payment of interest on the Securities (including Contingent Interest and Additional Interest, if any), means the February 1 (whether or not a Business Day) immediately preceding an Interest Payment Date on February 15 and August 1 (whether or not a Business Day) immediately preceding an Interest Payment Date on August 15.

“Regulation S” means Regulation S under the Securities Act.

“Restricted Securities Legend” means the legend set forth in Section 2.03(a) hereof.

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“Rule 144” means Rule 144 under the Securities Act.

“Rule 506” means Rule 506 under the Securities Act.

“Scheduled Trading Day” means a day that is scheduled to be a Trading Day on the primary United States national securities exchange or market on which the Common Stock is listed or admitted to trading.

“Securities” has the meaning ascribed to it in the second introductory paragraph of this First Supplemental Indenture.

“Securities Act” means the Securities Act of 1933 (15 U.S.C. §§77a-77aa), as amended, and the rules and regulations of the SEC promulgated thereunder.

“Security Documents” means the security agreements, pledge agreements, mortgages, deeds of trust and collateral assignments defining the terms of the Liens that secure the Securities and the Securities Guarantee, as amended, restated, supplemented, waived or otherwise modified from time to time.

“Stated Maturity” means February 15, 2028.

“Stock Price” means, in respect of a Fundamental Change, the price per share of Common Stock paid in connection with such Fundamental Change, which shall be equal to (i) if such Fundamental Change is a transaction set forth in clause (2) of the definition thereof, and holders of Common Stock receive only cash in such transaction, the cash amount paid per share of Common Stock and (ii) in all other cases, the average of the Last Reported Sale Prices of the Common Stock over the five Trading Day period ending on the Trading Day preceding the Effective Date of such Fundamental Change.

“Trading Day” means any day during which (i) trading in the Common Stock generally occurs on the primary United States national securities exchange or market on which the Common Stock (or other security in question) is listed or admitted for trading and (ii) there is no Market Disruption Event.

“Trading Price” of the Securities on any date of determination means the average of the secondary market bid quotations per $1,000 principal amount of the Securities obtained by the Bid Solicitation Agent for $5,000,000 principal amount of the Securities at approximately 3:30 p.m., New York City time, on such determination date from two independent nationally recognized securities dealers the Company will select, but if only one such bid can reasonably be obtained by the Bid Solicitation Agent, this one bid shall be used. If the Bid Solicitation Agent cannot reasonably obtain at least one bid for $5,000,000 principal amount of the Securities from a nationally-recognized securities dealer or if, in the Company’s reasonable judgment, the bid quotations are not indicative of the secondary market value of the Securities, then the Trading Price of the Securities will be determined by the Company’s Board of Directors based on a good faith estimate of the fair value of the Securities; provided however that, for purposes of determining the Trading Price pursuant to Section 9.01(a)(ii), if the Bid Solicitation Agent cannot reasonably obtain on any Trading Day at least one bid for $5,000,000 principal amount of the Securities from a nationally recognized securities dealer, then the Trading Price per $1,000

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principal amount of Securities for such Trading Day will be deemed to be less than 95% of the product of the Last Reported Sale Price of the Common Stock and the Conversion Rate on such Trading Day.

“Transfer Restricted Security” means any Securities that bear or are required to bear the Restricted Securities Legend.

“UCC” means the Uniform Commercial Code as in effect in the State of New York.

“VWAP Market Disruption Event” means (i) a failure by the principal United States national or regional securities exchange or market on which the Common Stock is listed or admitted to trading to open for trading during its regular trading session or (ii) the occurrence or existence prior to 1:00 p.m. New York City time on any Scheduled Trading Day for the Common Stock for an aggregate one half-hour period of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the stock exchange or otherwise) in the Common Stock or in any options contracts or futures contracts relating to the Common Stock.

“VWAP Trading Day” means a day during which (i) trading in the Common Stock generally occurs on the principal United States national or regional securities exchange or market on which the Common Stock is listed or admitted for trading and (ii) there is no VWAP Market Disruption Event. If the Common Stock is not so listed or traded, then “VWAP Trading Day” shall mean “Business Day.”

Section 1.03. Other Definitions.

Term	Defined in Section
“Additional Shares”	9.03(a)
“Company Notice”	8.03(a)
“Company Notice Date”	8.03(a)
“Conversion Date”	9.01(c)
“Conversion Obligation”	9.01(d)(i)
“Conversion Rate”	9.01
“Effective Date”	9.03(b)
“Fundamental Change Purchase Date”	8.01
“Fundamental Change Purchase Notice”	8.01(b)
“Fundamental Change Purchase Price”	8.01
“Measurement Period”	9.01(a)(ii)
“Net-Share Settlement”	9.01(d)
“Paying Agent”	2.04
“Purchase Date”	8.02(a)
“Purchase Notice”	8.02(a)
“Purchase Price”	8.02(a)
“Redemption Price”	4.01(b)
“Reference Property”	9.04
“Registrar”	2.04
“Reorganization Event”	9.04

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Term	Defined in Section
“Spin-Off”	9.02(c)

Section 1.04. Rules of Construction. In addition to the rules of construction set forth in Section 1.1 of the Original Indenture, unless the context otherwise requires:

(a) “or” is not exclusive;

(b) the principal amount of any non-interest bearing or other discount security at any date shall be the principal amount thereof that would be shown on a balance sheet of the issuer dated such date prepared in accordance with GAAP;

(c) the principal amount of any Preferred Stock shall be the greater of (i) the maximum liquidation value of such Preferred Stock and (ii) the maximum mandatory redemption or mandatory repurchase price with respect to such Preferred Stock; and

(d) references to the Company and its Subsidiaries on a consolidated basis shall be deemed to include any other Guarantor.

ARTICLE 2

THE SECURITIES

Section 2.01. Title; Amount and Issue of Securities; Principal and Interest.

(a) The Securities shall be known and designated as the “5.25% Convertible Senior Secured Notes due 2028” of the Company. The aggregate principal amount of Securities which may be authenticated and delivered under this First Supplemental Indenture is limited to $36,004,000, except for Securities authenticated and delivered upon registration of, transfer of, or in exchange for, or in lieu of other Securities pursuant to Section 2.03, 2.05, 8.03, 9.01 hereof, or Sections 3.4, 3.5, 3.6, 6.14 or 11.7 of the Original Indenture.

(b) The Securities issued on the Issue Date will be offered and sold by the Company pursuant to an Exchange Agreement only to (i) Accredited Investors in reliance on Rule 506 and (ii) Persons other than U.S. Persons (as defined in Regulation S) in reliance on Regulation S.

(c) The Securities shall mature on February 15, 2028 unless earlier converted, redeemed or repurchased in accordance with the provisions hereof.

(d) Interest on the Securities shall accrue from and including the date specified on the face of such Securities until the principal thereof is paid or made available for payment. Interest shall be payable semiannually in arrears on February 15 and August 15 in each year, commencing August 15, 2010. For purposes of this First Supplemental Indenture, the Securities, and the Security Documents, unless the context clearly requires otherwise, references to “interest” shall include Additional Interest and Contingent Interest.

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(e) A Holder of any Security at 5:00 p.m., New York City time, on a Regular Record Date shall be entitled to receive interest (including Contingent Interest and Additional Interest, if any), on such Security on the corresponding Interest Payment Date, notwithstanding the conversion of such Securities at any time after the close of business on such Regular Record Date. Securities surrendered for conversion during the period from 5:00 p.m., New York City time, on any Regular Record Date to 9:00 a.m., New York City time, on the corresponding Interest Payment Date must be accompanied by payment of an amount equal to the interest (including Contingent Interest and Additional Interest, if any) payable on such Securities on such Interest Payment Date. Notwithstanding the foregoing, no such payment of interest (including Contingent Interest and Additional Interest) need be made by any converting Holder (i) if the Company has specified a Redemption Date that is after a Regular Record Date and on or prior to the corresponding Interest Payment Date, (ii) if the Company has specified a Fundamental Change Purchase Date that is after a Regular Record Date and on or prior to the corresponding Interest Payment Date, or (iii) to the extent of any overdue interest (including Contingent Interest and Additional Interest, if any) existing at the time of conversion of such Security. Except as described above, no interest, Contingent Interest or Additional Interest, if any, on converted Securities will be payable by the Company on any Interest Payment Date subsequent to the date of conversion, and delivery of shares of Common Stock or the combination of cash and shares of Common Stock, if applicable, pursuant to Article 9 hereunder, together with any cash payment for any fractional share, upon conversion will be deemed to satisfy in full the Company’s obligation to pay the principal amount of the Securities and accrued and unpaid interest and Contingent Interest and Additional Interest, if any, to, but not including, the related Conversion Date.

(f) Principal of, and any premium on, Securities shall be payable at the office or agency of the Company maintained for such purpose, which initially shall be the corporate trust office of the Trustee. Interest (including Contingent Interest and Additional Interest, if any) on Securities will be payable (i) to Holders having an aggregate principal amount of $5,000,000 or less, by check mailed to the Holders of these Securities and (ii) to Holders having an aggregate principal amount of more than $5,000,000, either by check mailed to each Holder or, upon application by a Holder to the Registrar not later than the relevant Regular Record Date, by wire transfer in immediately available funds to such Holder’s account within the United States, which application shall remain in effect until the Holder notifies, in writing, the Registrar to the contrary.

Section 2.02. Form of Securities; Authentication.

(a) Except as otherwise provided pursuant to this Section 2.02, the Securities are issuable in fully registered form without coupons in substantially the form of Exhibit A hereto, with such applicable legends as are provided for in Section 2.03. The terms and provisions contained in the form of Security shall constitute, and are hereby expressly made, a part of this First Supplemental Indenture and to the extent applicable, the Company, the Guarantors and the Trustee, by their execution and delivery of this First Supplemental Indenture, expressly agree to such terms and provisions and to be bound thereby.

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(b) The Trustee shall authenticate and make available for delivery, upon a written order of the Company signed by two Officers, Securities for original issue on the Issue Date in an aggregate principal amount of up to $36,004,000.

Section 2.03. Legends.

(a) Except as otherwise provided by this Section 2.03, each certificate evidencing the Securities and any Common Stock issued upon conversion thereof (unless the Security being converted was not required hereunder to bear such legend) shall bear a legend in substantially the following form (each defined term in the legend being defined as such for purposes of the legend only):

“THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE FORM AND SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE ISSUER, THE REGISTRAR AND THE TRANSFER AGENT. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT.”

(b) Upon any sale or transfer of a Transfer Restricted Security pursuant to, and in accordance with, Rule 144, the Registrar shall permit the Holder thereof to exchange such Transfer Restricted Security for a Security that does not bear the Restricted Securities Legend and rescind any restriction on the transfer of such Transfer Restricted Security if the Registrar receives (i) from the Holder, a written certification to the Company and the Registrar that its request for such exchange is made in reliance on Rule 144 (such certification to be included in the Assignment Form as set forth on the back of the Security) and (ii) from the Company, an Opinion of Counsel opining that the Restricted Securities Legend can be removed.

(c) Upon any sale or transfer of any Transfer Restricted Security pursuant to, and in accordance with, an effective Registration Statement with respect to the Securities, the Registrar shall permit the Holder thereof to exchange such Transfer Restricted Security for a Security that does not bear the Restricted Securities Legend and rescind any restriction on the transfer of such Transfer Restricted Security if the Registrar receives (i) from the Holder, a written certification to the Company and the Registrar that its sale or transfer of the Security is made pursuant to such

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effective Registration Statement (such certification to be included in the Assignment Form as set forth on the back of the Security) and (ii) from the Company, an Opinion of Counsel opining that the Restricted Securities Legend can be removed.

(d) Upon the Holder of any Transfer Restricted Security becoming eligible to sell or transfer such Transfer Restricted Security pursuant to Rule 144(b)(1) under the Securities Act, the Registrar shall permit the Holder thereof to exchange such Transfer Restricted Security for a Security that does not bear the Restricted Securities Legend and rescind any restriction on the transfer of such Transfer Restricted Security if the Registrar receives (i) from the Holder, a written certification to the Company and the Registrar that its request for such exchange is made in reliance on Rule 144(b)(1) (such certification to be in the form set forth on the back of the Security) and (ii) from the Company, an Opinion of Counsel opining that the Restricted Securities Legend can be removed.

Section 2.04. Registrar and Paying Agent. The Company shall maintain an office or agency where Securities may be presented for registration of transfer or for exchange (the “Registrar”), which Registrar shall constitute a Security Register (as such term is defined in the Original Indenture), and an office or agency where Securities may be presented for payment (the “Paying Agent”). The Company may have one or more co-registrars and one or more additional paying agents. The term “Paying Agent” includes any additional paying agent and the term “Registrar” includes any co-registrar.

The Company shall enter into an appropriate agency agreement with any Registrar or Paying Agent not a party to this First Supplemental Indenture, which shall incorporate the terms of the Trust Indenture Act. The agreement shall implement the provisions of this First Supplemental Indenture that relate to such agent. The Company shall notify the Trustee of the name and address of each such agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 6.7 of the Original Indenture. The Company or any of its domestically organized, wholly owned Subsidiaries may act as Paying Agent, Registrar or transfer agent.

The Company initially appoints the Trustee as Registrar and Paying Agent for the Securities. The Company may remove any Registrar or Paying Agent upon written notice to such Registrar or Paying Agent and to the Trustee; provided, however, that no such removal shall become effective until (i) acceptance of any appointment by a successor as evidenced by an appropriate agreement entered into by the Company and such successor Registrar or successor Paying Agent, as the case may be, and delivered to the Trustee or (ii) notification to the Trustee that the Trustee shall serve as Registrar or Paying Agent until the appointment of a successor in accordance with clause (i) above. The Registrar or Paying Agent may resign at any time upon written notice to the Company and the Trustee.

Section 2.05. General Provisions Relating to Transfer and Exchange. A Holder may transfer a Security only by written application to the Registrar stating the name of the proposed transferee and otherwise complying with the terms of the Indenture. No such transfer shall be effected until, and such transferee shall succeed to the rights of a Holder only upon, final acceptance and registration of the transfer by the Registrar in the Securities Register.

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In addition to the matters described in the 7^th paragraph of Section 3.5 of the Original Indenture, neither the Company nor the Registrar shall be required to exchange or register a transfer of any Securities surrendered for conversion or, if a portion of any Security is surrendered for conversion, the portion thereof surrendered for conversion.

Section 2.06. Intentionally Omitted.

Section 2.07. Original Issue Discount. The Securities are being issued with original issue discount. A Holder may obtain the issue price, the amount of original issue discount, the issue date and the yield to maturity for the Securities by submitting a written request for such information to Flotek Industries, Inc., 2930 West Sam Houston Parkway North, Suite 300, Houston, TX 77043, Attention: Chief Financial Officer.

ARTICLE 3

COVENANTS

Section 3.01. Payment of Securities. The Company shall promptly pay the principal of, interest (including Contingent Interest and Additional Interest, if any) and premium, if any, on the Securities on the dates and in the manner provided in the Securities and in this First Supplemental Indenture. Principal, interest (including Contingent Interest and Additional Interest, if any) and premium, if any, shall be considered paid on the date due if by 11:00 a.m., New York City time, on such date the Trustee or the Paying Agent holds in accordance with this First Supplemental Indenture immediately available funds sufficient to pay all principal, interest (including Contingent Interest and Additional Interest, if any) and premium, if any, then due.

The Company shall pay interest on overdue principal or premium, if any, at the rate specified therefor in the Securities, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful.

Notwithstanding anything to the contrary contained in this First Supplemental Indenture, the Company may, to the extent it is required to do so by law, deduct or withhold income or other similar taxes imposed by the United States of America from principal, premium or interest (including Contingent Interest and Additional Interest, if any) payments hereunder.

Section 3.02. Further Instruments and Acts. Upon request of the Trustee, the Company will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this First Supplemental Indenture.

Section 3.03. Statement by Officer as to Default; Trading Price of Securities.

(a) The Company shall deliver to the Trustee, within 30 days after the Company becomes aware of the occurrence of any Event of Default or Default, an Officer’s Certificate setting forth the details of such events which would constitute an Event of Default or Default, its status and the action which the Company proposes to take with respect thereto.

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(b) The Bid Solicitation Agent shall have no obligation to determine the Trading Price of the Securities unless requested by the Company in an Officer’s Certificate, delivered at least five (5) Business Days prior to the applicable date of determination, specifying (i) the applicable dates on which the Bid Solicitation Agent shall determine the Trading Price of the Securities; (ii) the names of the two independent nationally recognized securities dealers from which the Bid Solicitation Agent shall request the secondary market bid quotations for the Securities; and (iii) the applicable provisions under the First Supplemental Indenture under which the Trading Price of the Securities is required to be determined.

Section 3.04. Additional Interest and Contingent Interest. If Additional Interest is payable by the Company or the Guarantors pursuant to Section 5.02, or if Contingent Interest is payable by the Company or the Guarantors pursuant to the terms of the Securities, the Company or the Guarantors shall deliver to the Trustee an Officer’s Certificate to that effect stating (i) the amount of such Additional Interest or Contingent Interest that is payable and (ii) the date on which such Additional Interest or Contingent Interest is payable. Unless and until a Responsible Officer of the Trustee receives such a certificate, the Trustee may assume without inquiry that no Additional Interest or Contingent Interest is payable. If the Company or the Guarantors have paid Additional Interest or Contingent Interest directly to the Persons entitled to it, the Company or the Guarantors shall deliver to the Trustee an Officer’s Certificate setting forth the particulars of such payment.

Section 3.05. Calculation Of Original Issue Discount. The Company shall file with the Trustee promptly at the end of each calendar year (i) a written notice specifying the amount of Original Issue Discount (including daily rates and accrual periods) accrued on the Securities as of the end of such year and (ii) such other specific information relating to such Original Issue Discount as may then be reasonably requested by the Trustee and relevant under the Internal Revenue Code of 1986, as amended from time to time, or the Treasury regulations promulgated thereunder.

Section 3.06. Limitation on Liens. The Company shall not, and shall not permit any Subsidiary to, directly or indirectly, incur or permit to exist any Lien of any nature whatsoever on any of its property or assets that constitute Collateral, whether owned at the Issue Date or thereafter acquired, other than Permitted Collateral Liens. Notwithstanding the foregoing, to the extent that any asset that does not already constitute Collateral is pledged after the Issue Date by the Company or any Guarantor to secure any Credit Agreement Indebtedness or other Priority Lien Obligations, such asset shall also be pledged to secure the Securities and the Securities Guarantee on an immediately junior basis in accordance with the Intercreditor Agreement to the Liens on such asset securing the Credit Agreement Indebtedness and other Priority Lien Obligations (subject to other Permitted Collateral Liens) and such asset will thereafter be deemed to be part of the Collateral.

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ARTICLE 4

REDEMPTION OF SECURITIES

Section 4.01. Optional Redemption.

(a) Prior to February 15, 2013, the Securities shall not be redeemable.

(b) On and after February 15, 2013, subject to the terms and conditions of this Article 4, the Company may, at its option, redeem for cash all or a portion of the Securities, at a price (the “Redemption Price”) equal to 100% of the principal amount of Securities to be redeemed, plus accrued and unpaid interest (including Contingent Interest and Additional Interest, if any) to but excluding the Redemption Date.

(c) In the event that the Redemption Date occurs after a Regular Record Date for the payment of interest and on or prior to the related Interest Payment Date, the Redemption Price for any such Securities to be redeemed shall be 100% of the principal amount of such Securities, and accrued and unpaid interest (including Contingent Interest and Additional Interest, if any) shall be paid to the Holder on such Regular Record Date.

(d) The Securities are not subject to redemption through the operation of any sinking fund.

Section 4.02. Selection by Trustee of Securities to Be Redeemed. If any Securities selected for partial redemption are thereafter surrendered for conversion in part before termination of the conversion right with respect to the portion of the Securities so selected, the converted portion of such Securities shall be deemed (so far as may be), solely for purposes of determining the aggregate principal amount of Securities to be redeemed by the Company, to be the portion selected for redemption. Securities which have been converted during a selection of Securities to be redeemed may be treated by the Trustee as outstanding for the purpose of such selection. Nothing in this Section 4.02 or Section 11.3 of the Original Indenture shall affect the right of any Holder to convert any Securities pursuant to Article 9 before the termination of the conversion right with respect thereto.

Section 4.03. Notice of Redemption. The Company shall notify each Holder of Securities to be redeemed in the manner provided in Section 11.4 of the Original Indenture, except that notice of redemption shall be mailed not less than 91 nor more than 121 days prior to the Redemption Date. In addition to those matters set forth in Section 11.4 of the Original Indenture, a notice of redemption sent to the Holder shall state:

(a) the then current Conversion Rate and provide a statement that the Securities called for redemption may be converted at any time before the close of business on the third Scheduled Trading Day prior to the Redemption Date, and that Holders who wish to convert Securities must comply with the relevant procedures;

(b) in case any Security is to be redeemed in part only, the notice which relates to such Security shall state that on and after the Redemption Date, upon surrender of such Security, the Holder will receive, without charge, a new Security or Securities of authorized denominations for the principal amount thereof remaining unredeemed;

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(c) the name and address of the Paying Agent and the Conversion Agent; and

(d) that Securities called for redemption must be surrendered to the Paying Agent to collect the Redemption Price.

ARTICLE 5

DEFAULTS AND REMEDIES

Section 5.01. Additional Events of Default. In addition to those Events of Default set forth in Section 5.1 of the Original Indenture, the following events shall also be Events of Default with respect to the Securities:

(a) failure by the Company to comply with its obligation to convert the Securities in accordance with this First Supplemental Indenture upon exercise of a Holder’s conversion right and such failure continues for a period of 10 days;

(b) failure by the Company to give a Company Notice of the occurrence of a Fundamental Change to Holders pursuant to Section 8.01 or notice of a specified corporate transaction (as described in Section 9.01(a)(iv)) to Holders, in each case when due;

(c) except as permitted by Section 10.02, any Securities Guarantee of any Significant Subsidiary shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect, or any Guarantor which is a Significant Subsidiary, or any person acting on its behalf, shall deny or disaffirm its obligation under the Securities Guarantee;

(d) failure by the Company for a period of 60 days after written notice from the Trustee or Holders of at least 25% in principal amount of Securities then outstanding has been received to comply with any obligation, covenant or agreement in the Indenture or under the Securities or the Security Documents (or 180 days after such notice with respect to any failure to comply with Section 12.01 hereof) (other than those referred to in clauses (a), (b), (c), (e), (f) and (g) of this Section 5.01);

(e) default by the Company or any Subsidiary in the payment of the principal or interest on any mortgage, agreement or other instrument under which there may be outstanding, or by which there may be secured or evidenced, any indebtedness for money borrowed in excess of $15,000,000 in the aggregate of the Company and/or any such Subsidiary, whether such indebtedness now exists or shall hereafter be created, resulting in such indebtedness becoming or being declared due and payable, and such acceleration shall not have been rescinded or annulled within 30 days after written notice of such acceleration has been received by the Company or such Subsidiary from the Trustee (or by the Company and the Trustee from Holders of at least 25% in principal amount of outstanding Securities);

(f) a final judgment or decree for the payment of $15,000,000 or more rendered against the Company or any Subsidiary, which judgment is not fully covered by insurance or not discharged or stayed within 60 days after (i) the date on which the right to appeal thereof has expired if no such appeal has commenced or (ii) the date on which all rights to appeal have been extinguished; and

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(g) (i) the Company or any Guarantor repudiates or disaffirms its obligations under any of the Security Documents or a determination is made in a judicial proceeding that any of the Security Documents is unenforceable or invalid against the Company or any Guarantor for any reason with respect to any material portion of the Collateral, or (ii) any Security Document shall cease to be in full force and effect in all material respects (other than in accordance with the terms of the applicable Security Document, the Intercreditor Agreement or this First Supplemented Indenture), or cease to be effective to grant the Collateral Agent a perfected Lien on any material portion of the Collateral (but only to the extent the applicable Security Documents contemplated perfection and except as a result of the Collateral Agent’s failure to file any necessary continuation statements or the Collateral Agent’s or the Credit Facilities Collateral Agent’s failure to maintain possession of any stock certificates, notes or other instruments or possessory collateral delivered to it) with the priority purported to be created hereby (other than in accordance with the terms of the applicable Security Document, the Intercreditor Agreement or this First Supplemental Indenture).

The foregoing will constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body.

Notwithstanding the foregoing, a Default under clauses (d) or (e) of this Section 5.01 will not constitute an Event of Default until the Trustee notifies the Company (or the Holders of 25% or more in principal amount of the outstanding Securities notify the Company and the Trustee) of the Default in writing and the Company does not cure such Default within the time specified in clauses (d) or (e) of this Section 5.01 after receipt of such notice.

Section 5.02. Sole Remedy for Failure to Report. Notwithstanding any other provision of the Indenture, the sole remedy for an Event of Default relating to the failure to comply with the reporting obligations under Section 12.01 of this First Supplemental Indenture, and for any failure to comply with the requirements of Section 314(a)(1) of the Trust Indenture Act, will for the 365 days after the occurrence of such an Event of Default consist exclusively of the right to receive Additional Interest on the principal amount of the Securities at a rate equal to 0.25% per annum. This Additional Interest will be payable in the same manner and subject to the same terms as other interest payable under this First Supplemental Indenture. The Additional Interest will accrue on all outstanding Securities from and including the date on which an Event of Default relating to a failure to comply with Section 12.01 or Section 314(a)(1) of the Trust Indenture Act first occurs to but not excluding the 365^th day thereafter (or such earlier date on which the Event of Default relating to the reporting obligations under Section 12.01 or Section 314(a)(1) of the Trust Indenture Act shall have been cured or waived). On such 365^th day, such Additional Interest will cease to accrue and the Securities will be subject to acceleration and other remedies as provided in this Article 5 if the Event of Default is continuing. For the avoidance of doubt, the provisions of this Section 5.02 will not affect the rights of Holders of Securities in the event of the occurrence of any other Event of Default.

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Section 5.03. Limitation on Suits. Subject to Section 5.8 of the Original Indenture, a Holder may not pursue any remedy with respect to this First Supplemental Indenture or the Securities unless:

(a) such Holder has previously given to the Trustee written notice stating that an Event of Default is continuing;

(b) Holders of at least 25% in principal amount of the outstanding Securities have requested that the Trustee pursue the remedy;

(c) such Holders have offered to the Trustee security or indemnity reasonably satisfactory to it against any loss, liability or expense to be incurred in compliance with such request;

(d) the Trustee has not complied with such request within 60 days after receipt of the request and the offer of security or indemnity; and

(e) the Holders of a majority in principal amount of the outstanding Securities have not given the Trustee a direction that, in the opinion of the Trustee, is inconsistent with such request within such 60-day period.

A Holder may not use this First Supplemental Indenture to prejudice the rights of another Holder or to obtain a preference or priority over another Holder.

ARTICLE 6

DISCHARGE OF INDENTURE

Section 6.01. Discharge of Liability on Securities. Article 4 of the Original Indenture shall not apply to the Securities. When (1) the Company shall deliver to the Registrar for cancellation all Securities theretofore authenticated (other than any Securities which have been mutilated, destroyed, lost or wrongfully taken and in lieu of or in substitution for which other Securities shall have been authenticated and delivered) and not theretofore canceled, or (2) all the Securities not theretofore canceled or delivered to the Registrar for cancellation shall have (a) been deposited for conversion (after all related Conversion Periods have elapsed) and the Company or the Guarantors shall deliver to the Holders shares of Common Stock or a combination of cash and shares of Common Stock, as applicable, sufficient to satisfy the Company’s obligation to convert all Securities (other than any Securities which shall have been mutilated, destroyed, lost or wrongfully taken and in lieu of or in substitution for which other Securities shall have been authenticated and delivered) not theretofore canceled or delivered to the Registrar for cancellation or (b) become due and payable on the Stated Maturity, Purchase Date, Fundamental Change Purchase Date or Redemption Date, as applicable, and the Company or the Guarantors shall deposit with the Trustee cash and shares of Common Stock, if any, as applicable, sufficient to pay all amounts owing in respect of all Securities (other than any Securities which shall have been mutilated, destroyed, lost or wrongfully taken and in lieu of or in substitution for which other Securities shall have been authenticated and delivered) not theretofore canceled or delivered to the Registrar for cancellation, including the principal

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amount, premium, if any, and interest (including Contingent Interest and Additional Interest, if any) accrued and unpaid to such Stated Maturity, Purchase Date, Fundamental Change Purchase Date or Redemption Date, as the case may be, and if in either case (1) or (2) the Company or the Guarantors shall also pay or cause to be paid all other sums payable hereunder or under the Security Documents by the Company or any Guarantor, then the Indenture with respect to the Securities shall cease to be of further effect (except as to (i) remaining rights of registration of transfer, substitution and exchange and conversion of Securities; (ii) rights hereunder of Holders to receive from the Trustee payments of the amounts then due, including interest (including Contingent Interest and Additional Interest, if any) or premium, if any, with respect to the Securities and the other rights, duties and obligations of Holders, as beneficiaries hereof solely with respect to the amounts, if any, so deposited with the Trustee; and (iii) the rights, obligations and immunities of the Trustee, Authenticating Agent, Paying Agent, Conversion Agent, Collateral Agent and Registrar under the Indenture with respect to the Securities), and the Trustee, on demand of the Company accompanied by an Officer’s Certificate and an Opinion of Counsel as required by Section 6.03 and at the cost and expense of the Company, shall execute proper instruments acknowledging satisfaction of and discharging the Indenture with respect to the Securities; however, the Company hereby agrees to reimburse the Trustee, Authenticating Agent, Paying Agent, Conversion Agent, Collateral Agent and Registrar for any costs or expenses thereafter reasonably and properly incurred by the Trustee, Authenticating Agent, Paying Agent, Conversion Agent, Collateral Agent and Registrar and to compensate the Trustee, Authenticating Agent, Paying Agent, Conversion Agent, Collateral Agent and Registrar for any services thereafter reasonably and properly rendered by the Trustee, Authenticating Agent, Paying Agent, Conversion Agent, Collateral Agent and Registrar in connection with the Indenture with respect to the Securities.

Section 6.02. Reinstatement. If the Trustee or the Paying Agent is unable to apply any money to the Holders entitled thereto by reason of any order or judgment of any court of governmental authority enjoining, restraining or otherwise prohibiting such application, the Company’s and each Guarantor’s obligations under the Indenture with respect to the Securities shall be revived and reinstated as though no deposit had occurred pursuant to Section 6.01 until such time as the Trustee or the Paying Agent is permitted to apply all such money in accordance with the Indenture and the Securities to the Holders entitled thereto; provided, however, that if the Company or the Guarantors make any payment of principal amount of, interest (including Contingent Interest and Additional Interest, if any) or premium, if any, on any Security following the reinstatement of its obligations, the Company and the Guarantors shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money held by the Trustee or Paying Agent.

Section 6.03. Officer’s Certificate; Opinion of Counsel. Upon any application or demand by the Company to the Trustee to take any action under Section 6.01, the Company shall furnish to the Trustee an Officer’s Certificate or Opinion of Counsel stating that all conditions precedent, if any, provided for in this First Supplemental Indenture relating to the proposed action have been complied with.

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ARTICLE 7

AMENDMENTS

Section 7.01. Without Consent of Holders. In addition to the matters described in Section 9.1 of the Original Indenture, the Company, the Guarantors and the Trustee may amend or supplement this First Supplemental Indenture, any Security Documents or the Intercreditor Agreement, without the consent of any Holder, for one or more of the following purposes:

(a) to provide for the addition of Collateral; or

(b) to provide for the release of Collateral in accordance with the terms of Section 11.03 or 11.11 hereof.

Section 7.02. With Consent of Holders. In addition to the matters described in Section 9.2 of the Original Indenture, the Company, the Guarantors and the Trustee may not, without the consent of each Holder of Securities affected, amend or waive any portion of this First Supplemental Indenture, the Securities, any Security Documents or the Intercreditor Agreement for one or more of the following purposes:

(a) to extend the stated time for payment of interest, including Contingent Interest and Additional Interest, if any, or premium, on any Security;

(b) to otherwise impair the right of any Holder to receive payment of principal of, or interest (including Contingent Interest and Additional Interest, if any) or premium, if any, on, such Holder’s Securities on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder’s Securities;

(c) to make any change that impairs or adversely affects the conversion rights of any Securities;

(d) to reduce the Redemption Price, the Fundamental Change Purchase Price or the Purchase Price payable upon the redemption or repurchase or conversion of any Security or amend or modify in any manner adverse to Holders of the Securities the Company’s obligation to make such payments;

(e) except as provided in Section 7.01(b) or 11.11 hereof, to release any substantial part of the Collateral; or

(f) to make any changes to the amendment provisions or to the waiver provisions which require each Holder’s consent.

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ARTICLE 8

PURCHASE AT THE OPTION OF HOLDERS UPON A FUNDAMENTAL

CHANGE; PURCHASE AT THE OPTION OF HOLDERS

Section 8.01. Purchase at the Option of the Holder Upon a Fundamental Change.

If a Fundamental Change shall occur at any time, each Holder shall have the right, at such Holder’s option, to require the Company to purchase any or all of such Holder’s Securities on a date specified by the Company that is no earlier than the 10^th calendar day and no later than the 35^th calendar day after the date of the Company Notice of the occurrence of such Fundamental Change (subject to extension to comply with applicable law, as provided in Section 8.03(d)) (the “Fundamental Change Purchase Date”). The Company shall purchase such Securities at a price (the “Fundamental Change Purchase Price”), which shall be paid in cash, equal to 100% of the principal amount of the Securities to be purchased plus accrued and unpaid interest, including any Contingent Interest and Additional Interest, to but excluding the Fundamental Change Purchase Date, unless the Fundamental Change Purchase Date is between a Regular Record Date and the Interest Payment Date to which it relates, in which case the Fundamental Change Purchase Price shall equal 100% of the principal amount of Securities to be purchased, and accrued and unpaid interest, including Contingent Interest and Additional Interest, if any, shall be paid to the Holder of record on the Regular Record Date.

(a) Notice of Fundamental Change. The Company shall mail to all Holders and the Trustee a Company Notice of the occurrence of a Fundamental Change and of the purchase right arising as a result thereof, including the information required by Section 8.03(a) hereof, on or before the 20^th calendar day after the occurrence of such Fundamental Change. The Company shall promptly furnish to the Paying Agent a copy of such Company Notice.

(b) Exercise of Option. For a Security to be so purchased at the option of the Holder, such Holder must deliver to the Paying Agent such Security duly endorsed for transfer, together with a written notice of purchase (a “Fundamental Change Purchase Notice”) in the form entitled “Form of Fundamental Change Purchase Notice” attached to the Security duly completed, on or before the Business Day immediately preceding the Fundamental Change Purchase Date, subject to extension to comply with applicable law. The Fundamental Change Purchase Notice shall state:

(i) the certificate numbers of the Securities which the Holder shall deliver to be purchased;

(ii) the portion of the principal amount of the Securities which the Holder shall deliver to be purchased, which portion must be $1,000 in principal amount or a multiple thereof; and

(iii) that such Securities shall be purchased as of the Fundamental Change Purchase Date pursuant to the terms and conditions specified in paragraph 6(b) of the Securities and in this First Supplemental Indenture.

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(c) Procedures. The Company shall purchase from a Holder, pursuant to this Section 8.01, Securities if the principal amount of such Securities is $1,000 or a multiple of $1,000 if so requested by such Holder.

Any purchase by the Company contemplated pursuant to the provisions of this Section 8.01 shall be consummated by the delivery of the Fundamental Change Purchase Price to be received by the Holder promptly following the later of the Fundamental Change Purchase Date or the time of delivery of the Securities.

Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the Fundamental Change Purchase Notice contemplated by this Section 8.01 shall have the right at any time prior to the close of business on the Business Day prior to the Fundamental Change Purchase Date to withdraw such Fundamental Change Purchase Notice (in whole or in part) by delivery of a written notice of withdrawal to the Paying Agent in accordance with Section 8.03(b).

The Paying Agent shall promptly notify the Company of the receipt by it of any Fundamental Change Purchase Notice or written notice of withdrawal thereof.

At or before 11:00 a.m. (New York City time) on the Fundamental Change Purchase Date, the Company shall deposit with the Paying Agent (or if the Company or an Affiliate of the Company is acting as the Paying Agent, shall segregate and hold in trust as provided in Section 10.3 of the Original Indenture) cash sufficient to pay the aggregate Fundamental Change Purchase Price of the Securities to be purchased pursuant to this Section 8.01. Payment by the Paying Agent of the Fundamental Change Purchase Price for such Securities shall be made promptly following the later of the Fundamental Change Purchase Date or the time of delivery of such Securities. If the Paying Agent holds, in accordance with the terms of this First Supplemental Indenture, cash sufficient to pay the Fundamental Change Purchase Price of such Securities on the Business Day following the Fundamental Change Purchase Date, then, on and after such date, such Securities shall cease to be outstanding and interest (including Contingent Interest and Additional Interest, if any) on such Securities shall cease to accrue, whether or not such Securities are delivered to the Paying Agent, and all other rights of the Holder shall terminate (other than the right to receive the Fundamental Change Purchase Price and previously accrued and unpaid interest (including Contingent Interest and Additional Interest, if any), upon delivery of the Securities). Nothing herein shall preclude any withholding of tax required by law.

The Company shall require each Paying Agent (other than the Trustee) to agree in writing that the Paying Agent shall hold in trust for the benefit of Holders or the Trustee all cash held by the Paying Agent for the payment of the Fundamental Change Purchase Price and shall notify the Trustee of any default by the Company in making any such payment. If the Company or an Affiliate of the Company acts as Paying Agent, it shall segregate the cash held by it as Paying Agent and hold it as a separate trust fund. The Company at any time may require a Paying Agent to deliver all cash held by it to the Trustee and to account for any funds disbursed by the Paying Agent. Upon doing so, the Paying Agent shall have no further liability for the cash delivered to the Trustee.

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Section 8.02. Purchase of Securities at the Option of the Holder.

(a) A Holder shall have the option to require the Company to purchase any outstanding Securities of such Holder on each of February 15, 2013, February 15, 2018 and February 15, 2023 (each, a “Purchase Date”), at a price (the “Purchase Price”) which shall be paid in cash, equal to 100% of the principal amount of the Securities to be repurchased plus any accrued and unpaid interest, including any Contingent Interest and Additional Interest, if any, to but excluding the Purchase Date, upon:

(i) delivery to the Paying Agent by the Holder of a written notice of purchase (a “Purchase Notice”) at any time from the opening of business on the date that is 20 Business Days prior to the relevant Purchase Date until the close of business on the second Business Day prior to such Purchase Date, stating:

(A) the certificate numbers of the Securities which the Holder will deliver to be purchased;

(B) the portion of the principal amount of the Securities which the Holder will deliver to be purchased, which portion must be $1,000 in principal amount or a multiple thereof;

(C) that such Securities shall be purchased by the Company as of the Purchase Date pursuant to the terms and conditions specified in paragraph 6(a) of the Securities and in this First Supplemental Indenture; and

(ii) delivery of such Securities to the Paying Agent (together with all necessary endorsements) at the offices of the Paying Agent, such delivery being a condition to receipt by the Holder of the Purchase Price therefor; provided, however, that such Purchase Price shall be so paid pursuant to this Section 8.02 only if the Securities so delivered to the Paying Agent shall conform in all respects to the description thereof in the related Purchase Notice.

(b) The Company shall purchase from a Holder, pursuant to this Section 8.02, Securities if the principal amount of such Securities is $1,000 or a multiple of $1,000 if so requested by such Holder.

(c) Any purchase by the Company contemplated pursuant to the provisions of this Section 8.02 shall be consummated by the delivery of the Purchase Price to be received by the Holder promptly following the later of the Purchase Date or the time of delivery of the Securities.

(d) Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the Purchase Notice contemplated by this Section 8.02 shall have the right at any time prior to the close of business on the Business Day prior to the Purchase Date to withdraw such Purchase Notice (in whole or in part) by delivery of a written notice of withdrawal to the Paying Agent in accordance with Section 8.03(b).

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(e) The Paying Agent shall promptly notify the Company of the receipt by it of any Purchase Notice or written notice of withdrawal thereof.

(f) At or before 11:00 a.m. (New York City time) on the Purchase Date, the Company shall deposit with the Paying Agent (or if the Company or an Affiliate of the Company is acting as the Paying Agent, shall segregate and hold in trust) cash sufficient to pay the aggregate Purchase Price of the Securities to be purchased pursuant to this Section 8.02. Payment by the Paying Agent of the Purchase Price for such Securities shall be made promptly following the later of the Purchase Date or the time of delivery of such Securities. If the Paying Agent holds, in accordance with the terms of this First Supplemental Indenture, cash sufficient to pay the Purchase Price of such Securities on the Business Day following the Purchase Date, then, on and after such date, such Securities shall cease to be outstanding and interest (including Contingent Interest and Additional Interest, if any) on such Securities shall cease to accrue, whether or not such Securities are delivered to the Paying Agent, and all other rights of the Holder shall terminate (other than the right to receive the Purchase Price and previously accrued interest (including Contingent Interest and Additional Interest, if any) upon delivery of the Securities). Nothing herein shall preclude any withholding of tax required by law.

(g) The Company shall require each Paying Agent (other than the Trustee) to agree in writing that the Paying Agent shall hold in trust for the benefit of Holders or the Trustee all cash held by the Paying Agent for the payment of the Purchase Price and shall notify the Trustee of any default by the Company in making any such payment. If the Company or an Affiliate of the Company acts as Paying Agent, it shall segregate the cash held by it as Paying Agent and hold it as a separate trust fund. The Company at any time may require a Paying Agent to deliver all cash held by it to the Trustee and to account for any funds disbursed by the Paying Agent. Upon doing so, the Paying Agent shall have no further liability for the cash delivered to the Trustee.

Section 8.03. Further Conditions and Procedures for Purchase at the Option of the Holder Upon a Fundamental Change and Purchase of Securities at the Option of the Holder.

(a) Notice of Purchase Date or Fundamental Change. The Company shall send notices (each, a “Company Notice”) to the Holders, beneficial owners of the Securities as required by applicable law, the Trustee and the Paying Agent, not less than 20 Business Days prior to each Purchase Date, or on or before the 20^th calendar day after the occurrence of the Fundamental Change, as the case may be (each such date of delivery, a “Company Notice Date”). Each Company Notice shall include a form of Purchase Notice or Fundamental Change Purchase Notice, as the case may be, to be completed by a Holder and shall state:

(i) the applicable Purchase Price or Fundamental Change Purchase Price, as the case may be;

(ii) if conversion is permitted under Section 9.01(a)(iv), the Conversion Rate at the time of such notice and any expected adjustments to the Conversion Rate;

(iii) the applicable Purchase Date or Fundamental Change Purchase Date, as the case may be, and the last date on which a Holder may exercise its repurchase rights under Section 8.01 or Section 8.02, as applicable;

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(iv) the name and address of the Paying Agent and the Conversion Agent;

(v) that Securities must be surrendered to the Paying Agent to collect payment of the Purchase Price or the Fundamental Change Purchase Price, as the case may be;

(vi) that Securities as to which a Purchase Notice or a Fundamental Change Purchase Notice has been delivered may be surrendered for conversion only if the applicable Purchase Notice or Fundamental Change Purchase Notice, as the case may be, has been withdrawn in accordance with the terms of this First Supplemental Indenture;

(vii) that the Purchase Price or the Fundamental Change Purchase Price for any Securities as to which a Purchase Notice or a Fundamental Change Purchase Notice, as applicable, has been given and not withdrawn shall be paid by the Paying Agent promptly following the later of the Purchase Date or the Fundamental Change Purchase Date, as applicable, or the time of delivery of such Securities;

(viii) the procedures the Holder must follow under Sections 8.01 or 8.02, as applicable, and Section 8.03;

(ix) that, unless the Company defaults in making payment of such Purchase Price or Fundamental Change Purchase Price on Securities covered by any Purchase Notice or Fundamental Change Purchase Notice, as applicable, interest (including Contingent Interest and Additional Interest, if any) will cease to accrue on and after the Purchase Date or Fundamental Change Purchase Date, as applicable;

(x) the procedures for withdrawing a Purchase Notice or a Fundamental Change Purchase Notice, as the case may be; and

(xi) in the case of a Company Notice pursuant to Section 8.01, the events causing a Fundamental Change and the effective date of the Fundamental Change.

Simultaneously with providing such Company Notice, the Company will publish a notice containing the information in such Company Notice in a newspaper of general circulation in The City of New York or publish such information on its then existing website or through such other public medium as it may use at the time.

At the Company’s request, made at least five Business Days prior to the date upon which such notice is to be mailed, and at the Company’s expense, the Trustee shall give the Company Notice in the Company’s name; provided, however, that, in all cases, the text of the Company Notice shall be prepared by the Company.

(b) Adequacy and Effect of Purchase Notice or Fundamental Change Purchase Notice; Withdrawal; Effect of Event of Default. The Company shall reasonably determine whether the Purchase Notice, Fundamental Change Purchase Notice or written notice of withdrawal delivered by the relevant Holders satisfies the conditions set out in Section 8.01(b), Section 8.02(a) and Section 8.03 for such notices. The Company’s determination under this Section 8.03(b) will be binding and conclusive, absent manifest error.

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Upon receipt by the Company of the Purchase Notice or Fundamental Change Purchase Notice specified in Section 8.02(a) or Section 8.01(b), as applicable, the Holder of the Securities in respect of which such Purchase Notice or Fundamental Change Purchase Notice, as the case may be, was given shall (unless such Purchase Notice or Fundamental Change Purchase Notice is withdrawn as specified in the following two paragraphs) thereafter be entitled to receive solely the Purchase Price or Fundamental Change Purchase Price with respect to such Securities. Such Purchase Price or Fundamental Change Purchase Price shall be paid by the Paying Agent to such Holder promptly following the later of (x) the Purchase Date or the Fundamental Change Purchase Date, as the case may be, with respect to such Securities (provided the conditions in this Article 8 have been satisfied) and (y) the time of delivery of such Securities to the Paying Agent by the Holder thereof in the manner required by Section 8.02 or Section 8.01, as applicable. Securities in respect of which a Purchase Notice or Fundamental Change Purchase Notice, as the case may be, has been given by the Holder thereof may not be converted on or after the date of the delivery of such Purchase Notice or Fundamental Change Purchase Notice, as the case may be, unless such Purchase Notice or Fundamental Change Purchase Notice, as the case may be, has first been validly withdrawn as specified in the following two paragraphs.

A Purchase Notice or Fundamental Change Purchase Notice, as the case may be, may be withdrawn by means of a written notice of withdrawal delivered to the office of the Paying Agent at any time prior to 5:00 p.m., New York City time, on the Business Day prior to the Purchase Date or the Fundamental Change Purchase Date, as the case may be, to which it relates, specifying:

(i) the principal amount of the Securities with respect to which such notice of withdrawal is being submitted;

(ii) the certificate number of the Securities in respect of which such notice of withdrawal is being submitted; and

(iii) the principal amount, if any, of such Securities which remains subject to the original Purchase Notice or Fundamental Change Purchase Notice, as the case may be, and which has been or shall be delivered for purchase by the Company.

There shall be no purchase of any Securities pursuant to Section 8.01 or Section 8.02 if an Event of Default has occurred and is continuing (other than a default that is cured by the payment of the Purchase Price or Fundamental Change Purchase Price, as the case may be). The Paying Agent shall promptly return to the respective Holders thereof any Securities (x) with respect to which a Purchase Notice or Fundamental Change Purchase Notice, as the case may be, has been withdrawn in compliance with this First Supplemental Indenture, or (y) held by it during the continuance of an Event of Default (other than a default that is cured by the payment of the Purchase Price or Fundamental Change Purchase Price, as the case may be) in which case, upon such return, the Purchase Notice or Fundamental Change Purchase Notice with respect thereto shall be deemed to have been withdrawn.

(c) Securities Purchased in Part. Any Securities that are to be purchased only in part shall be surrendered at the office of the Paying Agent (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the

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Company and the Trustee duly executed by, the Holder thereof or such Holder’s attorney duly authorized in writing) and the Company shall execute, the Guarantors shall endorse and the Trustee or the Authenticating Agent shall authenticate and deliver to the Holder of such Securities, without service charge, a new Security or Securities, of any authorized denomination as requested by such Holder in aggregate principal amount equal to, and in exchange for, the portion of the principal amount of the Securities so surrendered which is not purchased.

(d) Covenant to Comply with Securities Laws Upon Purchase of Securities. In connection with any offer to purchase Securities under Section 8.02 or Section 8.01, the Company shall, to the extent applicable, (a) comply with Rules 13e-4 and 14e-1 (and any successor provisions thereto) under the Exchange Act, if applicable; (b) file the related Schedule TO (or any successor schedule, form or report) under the Exchange Act, if applicable; and (c) otherwise comply with all applicable federal and state securities laws so as to permit the rights and obligations under Section 8.02 or Section 8.01 to be exercised in the time and in the manner specified in Section 8.02 or Section 8.01. To the extent any other provision of this First Supplemental Indenture conflicts with any of the foregoing, the foregoing shall govern.

(e) Officer’s Certificate. At least five Business Days before the Company Notice Date, the Company shall deliver an Officer’s Certificate to the Trustee specifying whether the Company desires the Trustee to give the Company Notice (in the form prepared by the Company) required by Section 8.03(a) herein.

ARTICLE 9

CONVERSION

Section 9.01. Conversion of Securities.

(a) Right to Convert. Subject to the procedures for conversion set forth in this Article 9, a Holder may convert its Securities, in whole or in part (provided that the total principal amount of Securities converted are in integral multiples of $1,000), prior to January 15, 2028 at a rate (the “Conversion Rate”) of 43.9560 shares of Common Stock (subject to adjustment by the Company as set forth herein) per $1,000 principal amount of Securities when one or more of the conditions specified below are met and during the related specified period, subject to the limitations in clause (iii) of Section 9.01(a) and in Section 9.01(h). On and after January 15, 2028, as set forth under clause (b) below, a Holder may convert its Securities until the close of business on the second Business Day immediately preceding Stated Maturity regardless of the conditions specified below, subject to the limitations in Section 9.01(h).

(i) Conversion Upon Satisfaction of Sale Price Condition. A Holder may surrender all or a portion of its Securities for conversion during any fiscal quarter (and only during such fiscal quarter) if the Last Reported Sale Price for the Common Stock for at least 20 Trading Days during the period of 30 consecutive Trading Days ending on the last Trading Day of the immediately preceding fiscal quarter is greater than or equal to 120% of the Conversion Price in effect on such last Trading Day.

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(ii) Conversion Upon Satisfaction of Trading Price Condition. A Holder may surrender its Securities for conversion during the five Business Day period after any 10 consecutive Trading Day period (the “Measurement Period”) in which the Trading Price per $1,000 principal amount of Securities, as determined following a request by a Holder in accordance with the procedures set forth in this Section 9.01(a)(ii), for each Trading Day of the Measurement Period was less than 95% of the product of the Last Reported Sale Price of the Common Stock and the Conversion Rate for such Trading Day. In connection with any conversion in accordance with this Section 9.01(a)(ii), the Bid Solicitation Agent shall have no obligation to determine the Trading Price of the Securities unless requested by the Company; and the Company shall have no obligation to make such request unless a Holder provides the Company with reasonable evidence that the Trading Price per $1,000 principal amount of Securities would be less than 95% of the product of the Last Reported Sale Price of the Common Stock and the Conversion Rate. Promptly after receiving such evidence, the Company shall instruct the Bid Solicitation Agent to determine the Trading Price of the Securities beginning on the next Trading Day and on each successive Trading Day until the Trading Price per $1,000 principal amount of Securities for any Trading Day is greater than or equal to 95% of the product of the Last Reported Sale Price of the Common Stock and the Conversion Rate.

(iii) Conversion Upon Notice of Redemption. If the Company calls any or all of the Securities for redemption, a Holder may surrender for conversion the Securities called for redemption at any time prior to the close of business on the third Scheduled Trading Day prior to the related Redemption Date, even if the Securities are not otherwise convertible at such time, after which time a Holder’s right to convert will expire unless the Company defaults in the payment of the Redemption Price.

(iv) Conversion Upon Specified Corporate Transactions.

(A) If the Company elects to (1) distribute to all holders of Common Stock any rights or warrants entitling them to purchase, for a period expiring within 45 days after the Ex-Dividend Date of the distribution, shares of Common Stock at a price per share less than the average of the Last Reported Sale Price of Common Stock for the 10 consecutive Trading Day period ending on the Trading Day immediately preceding the declaration date for such distribution, or (2) distribute to all holders of Common Stock assets, debt securities or rights to purchase securities of the Company, which distribution has a per share Fair Market Value, as determined by the Company’s Board of Directors, exceeding 15% of the Last Reported Sale Price on the Trading Day immediately preceding the declaration date for such distribution, then, in each case, the Company must notify the Holders of such distribution and of their rights under this clause (A), in the manner provided in Section 1.7 of the Original Indenture, at least 61 days prior to the 25th Scheduled Trading Day before the Ex-Dividend Date for such distribution. Once the Company has given such notice, Holders may surrender Securities for conversion at any time until the earlier of 5:00 p.m., New York City time, on the Business Day immediately prior to such Ex-Dividend Date or the Company’s announcement that such distribution will not take place even if the Securities are not otherwise convertible at such time.

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(B) If the Company is party to a transaction described in clause (2) of the definition of Fundamental Change (without giving effect to the proviso set forth in the definition thereof relating to Publicly Traded Securities), the Company must notify Holders of such an event and of their rights under this clause (B), in the manner provided in Section 1.7 of the Original Indenture, at least 61 days prior to the 25th Scheduled Trading Day before the anticipated effective date for such transaction. Once the Company has given such notice, Holders may surrender Securities for conversion at any time until seven Scheduled Trading Days after the actual effective date of such transaction or, if later, the related Fundamental Change Purchase Date.

(C) A Holder may surrender all or a portion of such Holder’s Securities for conversion, if a Fundamental Change of the type described in clause (1) or (3) in the definition thereof occurs. In such event, Holders may surrender Securities for conversion at any time beginning on the actual Effective Date of such Fundamental Change until and including the date which is 61 days after the seventh Scheduled Trading Day following the actual effective date of such transaction or, if later, until the related Fundamental Change Purchase Date.

A Holder may convert a portion of the principal amount of Securities if the portion is $1,000 or a multiple of $1,000. The number of shares of Common Stock issuable or the combination of cash payable and the number of shares of Common Stock issuable, if any, upon conversion of a Security shall be determined as set forth in Section 9.01(d).

(b) Conversion During Specified Period Immediately Prior to Stated Maturity. Subject to the limitations in Section 9.01(h), but notwithstanding anything else herein to the contrary, a Holder may surrender its Securities for conversion beginning on January 15, 2028, until the close of business on the second Business Day immediately preceding the Stated Maturity.

(c) Conversion Procedures. To effect the conversion of Securities a Holder must (i) complete and manually sign the conversion notice on the back of the Security, or a facsimile of such conversion notice; (ii) deliver such conversion notice, which is irrevocable, and the Security to the Conversion Agent; (iii) to the extent any shares of Common Stock issuable upon conversion are to be issued in a name other than the Holder’s, furnish appropriate endorsements and transfer documents as may be required by the Conversion Agent; (iv) if required pursuant to Section 9.01(f) below, pay all transfer or similar taxes; and (v) if required pursuant to Section 2.01(d) above, pay funds equal to interest payable on the next Interest Payment Date to which such Holder is not entitled.

The date a Holder satisfies the foregoing requirements is the “Conversion Date” hereunder.

If a Holder converts more than one Security at the same time, the number of shares of Common Stock issuable or the combination of the cash payable and number of shares of Common Stock issuable upon the conversion, if any, shall be based on the total principal amount of the Securities converted.

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Upon surrender of a Security that is converted in part, the Company shall execute, the Guarantors shall endorse and the Trustee or the Authenticating Agent shall authenticate and deliver to the Holder, a new Security in an authorized denomination equal in principal amount to the unconverted portion of the Security surrendered.

Delivery of shares of Common Stock will be accomplished by delivery to the Conversion Agent of certificates for the relevant number of shares of Common Stock.

(d) Settlement Upon Conversion. In the event that the Company receives a Holder’s notice of conversion upon satisfaction of one or more of the conditions to conversion described in this Section 9.01, the Company will notify the relevant Holders within two Scheduled Trading Days following the Conversion Date whether the Company will satisfy its obligation to convert the Securities through delivery of (x) shares of Common Stock pursuant to clause (ii) below (plus cash in lieu of fractional shares) or (y) a combination of cash and shares of Common Stock, if any (such method of settlement, a “Net-Share Settlement”) pursuant to clause (i) below; provided that the Company may not elect to satisfy such obligation pursuant to clause (ii) below if the Company has made the election to waive such right to do so as set forth in the immediately succeeding sentence or if the Conversion Period for the applicable Securities would not commence on or after the Scheduled Trading Day after the Company’s notice of settlement. At any time on or before the third Scheduled Trading Day prior to the applicable Conversion Period for a Net-Share Settlement, the Company may irrevocably waive, in its sole discretion without the consent of the Holders, by notice to the Trustee and to the Holders, its right to satisfy its Conversion Obligation in shares of its Common Stock pursuant to clause (ii) below (plus cash in lieu of any fractional shares). Notwithstanding the foregoing, if the Company elects to redeem the Securities, it will, in its notice of redemption, elect whether it will settle any conversions of Securities called for redemption pursuant to clause (i) or (ii) below (unless it has irrevocably elected to waive its right to satisfy its Conversion Obligation pursuant to clause (ii) below), which election shall apply to all Securities converted following the Company’s notice of redemption.

(i) If the Company chooses or has to satisfy its obligation to convert the Securities (the “Conversion Obligation”) by Net-Share Settlement (or if the Company has irrevocably elected to waive its right to satisfy its Conversion Obligation pursuant to clause (ii) below), upon conversion the Company will deliver to converting Holders cash and Common Stock, if any, in respect of each $1,000 principal amount of Securities being converted, equal to the aggregate Daily Settlement Amounts for each of the 20 VWAP Trading Days during the related Conversion Period; provided that the Company shall deliver cash in lieu of any fractional shares as described below in Section 9.01(e). The Daily Settlement Amounts shall be determined by the Company promptly following the last VWAP Trading Day of the Conversion Period.

The amount of cash and Common Stock, if any, delivered in respect of any Security converted pursuant to this clause (i) will be delivered to converting Holders as soon as practicable following the last VWAP Trading Day of the applicable Conversion Period.

(ii) If the Company elects to satisfy all of its Conversion Obligation with respect to Securities to be converted in shares of Common Stock, the Company will

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deliver to any converting Holder, for each $1,000 principal amount of the Securities, a number of shares of Common Stock equal to the Conversion Rate for such Securities, plus cash in lieu of any fractional shares determined as described below in Section 9.01(e).

The shares of Common Stock in respect of any Security converted (and cash in lieu of any fractional shares) pursuant to this clause (ii) will be delivered through the Conversion Agent as soon as practicable following the applicable Conversion Date for such Security.

(iii) With respect to a conversion of a Security pursuant to clause (ii) above, at and after the close of business on the Conversion Date, the Person in whose name any certificate representing any shares of Common Stock issuable upon such conversion is registered shall be treated as a stockholder of record of the Company to the extent permitted by law. With respect to a conversion of a Security pursuant to clause (i) above by Net Share Settlement, on each VWAP Trading Day during the related Conversion Period, the Person in whose name any certificate representing any shares of Common Stock constituting the Daily Settlement Amount for such VWAP Trading Day is registered shall be treated as a stockholder of record of the Company of such number of shares to the extent permitted by law on and after the close of business on such VWAP Trading Day. On and after the Conversion Date with respect to a conversion of a Security pursuant hereto, all rights of the Holder of such Security shall terminate, other than the right to receive the consideration deliverable upon conversion of such Security as provided herein. A Holder of a Security is not entitled, as such, to any rights of a holder of Common Stock until, if such Holder converts such Security and is entitled pursuant hereto to receive shares of Common Stock in respect of such conversion, the close of business on the Conversion Date or respective VWAP Trading Days, as the case may be, with respect to such conversion.

(e) Cash Payments in Lieu of Fractional Shares. The Company shall not issue a fractional share of Common Stock upon conversion of Securities. Instead the Company shall deliver cash for the current market value of the fractional share. The current market value of a fractional share shall be determined to the nearest 1/10,000th of a share by multiplying the Last Reported Sale Price of the Common Stock on the Conversion Date (or, in the case of Net-Share Settlement, the Daily VWAP of the Common Stock on the last VWAP Trading Day of the relevant Conversion Period) by the fractional amount and rounding the product to the nearest whole cent.

(f) Taxes on Conversion. If a Holder converts Securities, the Company shall pay any documentary, stamp or similar issue or transfer tax due on the issue of shares of Common Stock upon the conversion. However, the Holder shall pay any such tax which is due because the Holder requests the shares to be issued in a name other than the Holder’s name. The Conversion Agent may refuse to deliver the certificates representing the Common Stock being issued in a name other than the Holder’s name until the Conversion Agent receives a sum sufficient to pay any tax which shall be due because the shares are to be issued in a name other than the Holder’s name, but the Conversion Agent shall have no duty to determine if any such tax is due. Nothing herein shall preclude any withholding of tax required by law.

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(g) Certain Covenants of the Company.

(i) The Company shall, prior to issuance of any Securities hereunder, and from time to time as may be necessary, reserve out of its authorized but unissued Common Stock or shares of Common Stock held in treasury, a sufficient number of shares of Common Stock, free of preemptive rights, to permit the conversion of the Securities.

(ii) All shares of Common Stock delivered upon conversion of the Securities shall be newly issued shares or treasury shares, shall be duly and validly issued and fully paid and nonassessable and shall be free from preemptive rights and free of any lien or adverse claim.

(iii) The Company shall endeavor promptly to comply with all federal and state securities laws regulating the issuance and delivery of shares of Common Stock upon the conversion of Securities, if any, and shall cause to have listed or quoted all such shares of Common Stock on each U.S. national securities exchange or over-the-counter or other domestic market on which the Common Stock is then listed or quoted.

(iv) Before taking any action which would cause an adjustment increasing the Conversion Rate to an amount that would cause the Conversion Price to be reduced below the then par value per share of the Common Stock, if any, of the shares of Common Stock issuable upon conversion of the Securities, the Company will take all corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue shares of such Common Stock at such adjusted Conversion Rate.

(h) Holder’s Conversion Limitations. Notwithstanding anything herein to the contrary, a Holder shall have no right to convert its Securities into shares of Common Stock, pursuant to Section 9.01(a) hereof or otherwise, to the extent that, after giving effect to the issuance of Common Stock upon such conversion, such Holder (together with such Holder’s Affiliates and any other Persons acting as a group together with such Holder or any of such Holder’s Affiliates) would beneficially own Common Stock in excess of the Beneficial Ownership Limitation. For purposes of the foregoing sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section 9.01(h) applies, the determination of whether the Securities of any Holder are convertible (in relation to other securities owned by such Holder or any of such Holder’s Affiliates) and of which portion of the Securities of any Holder are convertible shall be in the sole discretion of such Holder, and the submission of a notice of conversion in accordance with Section 9.01(c) shall be deemed to be such Holder’s determination of whether its Securities are convertible (in relation to other securities owned by such Holder or any of such Holder’s Affiliates) and of which portion of its Securities are convertible, in each case subject to the Beneficial Ownership Limitation, and neither the Company nor the Conversion Agent shall have any obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 9.01(h), in

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determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (i) the Company’s most recent periodic or annual report filed with the SEC, (ii) a more recent public announcement by the Company or (iii) a more recent written notice by the Company or the transfer agent of the Common Stock setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Business Days confirm orally and in writing to such Holder the number of shares of Common Stock then outstanding.

Section 9.02. Adjustments to Conversion Rate. The Conversion Rate shall be adjusted by the Company as follows:

(a) If the Company issues shares of Common Stock as a dividend or distribution on shares of the Common Stock, or effects a share split or share combination, the Conversion Rate will be adjusted based on the following formula:

where,
CR0	=	the Conversion Rate in effect immediately prior to the Ex-Dividend Date for such dividend or distribution, or the effective date of such share split or share combination, as the case may be;
CR'	=	the new Conversion Rate in effect immediately after the Ex-Dividend Date for such dividend or distribution, or the effective date of such share split or share combination, as the case may be;
OS0	=	the number of shares of Common Stock outstanding immediately prior to the Ex-Dividend Date for such dividend or distribution, or the effective date of such share split or share combination, as the case may be; and
OS'	=	the number of shares of Common Stock outstanding immediately after, and solely as a result of, such event.

Such adjustment shall become effective immediately after (i) the Ex-Dividend Date for such dividend or distribution or (ii) the date on which such split or combination becomes effective, as applicable. If any dividend or distribution of the type described in this clause Section 9.02(a) is declared but not so paid or made, the new Conversion Rate shall again be adjusted to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

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(b) If the Company distributes to all holders of its Common Stock any rights or warrants entitling them to purchase, for a period of not more than 45 days after the Ex-Dividend Date for the distribution, shares of Common Stock at a price per share less than the average of the Last Reported Sale Prices of the Common Stock for the 10 consecutive Trading Day period ending on the Trading Day immediately preceding the declaration date for such distribution, the Conversion Rate will be adjusted based on the following formula:

where,
CR0	=	the Conversion Rate in effect immediately prior to the Ex-Dividend Date for such distribution;
CR'	=	the new Conversion Rate in effect immediately after the Ex-Dividend Date for such distribution;
OS0	=	the number of shares of Common Stock outstanding immediately prior to the Ex-Dividend Date for such distribution;
X	=	the total number of shares of Common Stock issuable pursuant to such rights or warrants; and
Y	=	the number of shares of Common Stock equal to the aggregate price payable to exercise such rights or warrants divided by the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending on the Trading Day immediately preceding the Ex-Dividend Date for such distribution.

For purposes of this clause Section 9.02(b), in determining whether any rights or warrants entitle the Holders to subscribe for or purchase shares of Common Stock at less than the average of the applicable Last Reported Sale Prices, and in determining the aggregate exercise or conversion price payable for such shares of Common Stock, there shall be taken into account any consideration received by the Company for such rights or warrants and any amount payable on exercise or conversion thereof, with the value of such consideration, if other than cash, to be determined by the Board of Directors. If any right or warrant described in this clause Section 9.02(b) is not exercised or converted prior to the expiration of the exercisability or convertibility thereof, the new Conversion Rate shall be readjusted to the Conversion Rate that would then be in effect if such right or warrant had not been so issued. Any adjustment made pursuant to this clause Section 9.02(b) shall become effective immediately after the Ex-Dividend Date for the applicable distribution.

(c) If the Company distributes shares of Capital Stock, evidences of its indebtedness or other assets or property of the Company to all holders of the Common Stock, excluding:

(i) dividends or distributions as to which an adjustment applies under clause (a) or (b) above;

(ii) dividends or distributions paid exclusively in cash; and

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(iii) Spin-Offs to which the provisions set forth below in this clause (c) shall apply;

then the Conversion Rate will be adjusted based on the following formula:

where,
CR0	=	the Conversion Rate in effect immediately prior to the Ex-Dividend Date for such distribution;
CR'	=	the new Conversion Rate in effect immediately after the Ex-Dividend Date for such distribution;
SP0	=	the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending on the Trading Day immediately preceding the Ex-Dividend Date for such distribution; and
FMV	=	the Fair Market Value (as determined by the Board of Directors) of the shares of Capital Stock, evidences of indebtedness, assets or property distributed with respect to each outstanding share of Common Stock on the Ex-Dividend Date for such distribution.

Such adjustment shall become effective immediately after the Ex-Dividend Date for the applicable distribution.

With respect to an adjustment pursuant to this clause (c) where there has been a payment of a dividend or other distribution on the Common Stock of shares of Capital Stock of any class or series, or similar equity interest, of or relating to a Subsidiary or other business unit (a “Spin-Off”), the Conversion Rate in effect immediately before 5:00 p.m., New York City time, on the tenth Trading Day immediately following, and including, the effective date of the Spin-Off will be increased based on the following formula:

where,
CR0	=	the Conversion Rate in effect immediately prior to the tenth Trading Day immediately following, and including, the effective date of the Spin-Off;
CR'	=	the new Conversion Rate in effect immediately after the tenth Trading Day immediately following, and including, the effective date of the Spin-Off;

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FMV0	=	the average of the Last Reported Sale Prices of the Capital Stock or similar equity interest distributed to holders of Common Stock applicable to one share of Common Stock over the first 10 consecutive Trading Day period immediately following, and including, the effective date of the Spin-Off; and
MP0	=	the average of the Last Reported Sale Prices of Common Stock over the first 10 consecutive Trading Day period immediately following, and including, the effective date of the Spin-Off.

Such adjustment shall occur immediately after the tenth Trading Day immediately following, and including, the effective date of the Spin-Off; provided that in respect of any conversion during the ten Trading Days following the effective date of any Spin-Off, references within the portion of this clause (c) related to “Spin-Offs” to 10 Trading Days shall be deemed replaced with such lesser number of Trading Days as have elapsed between the effective date of such Spin-Off and the relevant Conversion Date.

If any such dividend or distribution described in this clause (c) is declared but not paid or made, the new Conversion Rate shall be readjusted to be the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

(d) If any cash dividend or distribution is made to all holders of Common Stock, the Conversion Rate will be adjusted based on the following formula:

where,
CR0	=	the Conversion Rate in effect immediately prior to the Ex-Dividend Date for such distribution;
CR'	=	the new Conversion Rate in effect immediately after the Ex-Dividend Date for such distribution;
SP0	=	the Last Reported Sale Price of the Common Stock on the Trading Day immediately preceding the Ex-Dividend Date for such distribution; and
C	=	the amount in cash per share of Common Stock of the Company distributes to holders of Common Stock.

An adjustment to the Conversion Rate made pursuant to this clause (d) shall become effective immediately after the Ex-Dividend Date for the applicable dividend or distribution. If any dividend or distribution described in this clause (d) is declared but not so paid or made, the new Conversion Rate shall be readjusted to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

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(e) If the Company or any of its Subsidiaries makes a payment in respect of a tender or exchange offer for Common Stock, to the extent that the cash and value of any other consideration included in the payment per share of Common Stock exceeds the Last Reported Sale Price of the Common Stock on the Trading Day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer, the Conversion Rate will be increased based on the following formula:

where,
CR0	=	the Conversion Rate in effect at the close of business on the last Trading Day of the 10 consecutive Trading Day period commencing on the Trading Day next succeeding the date such tender or exchange offer expires;
CR'	=	the new Conversion Rate in effect immediately following the last Trading Day of the 10 consecutive Trading Day period commencing on the Trading Day next succeeding the date such tender or exchange offer expires;
AC	=	the aggregate value of all cash and any other consideration (as determined by the Board of Directors) paid or payable for shares purchased in such tender or exchange offer;
OS0	=	the number of shares of Common Stock outstanding immediately prior to the expiration of such tender or exchange offer;
OS'	=	the number of shares of Common Stock outstanding immediately after the expiration of such tender or exchange offer (after giving effect to the purchase or exchange of shares pursuant to such tender or exchange offer); and
SP'	=	the average of the Last Reported Sale Prices of Common Stock over the 10 consecutive Trading Day period commencing on the Trading Day next succeeding the date such tender or exchange offer expires.

The adjustment to the Conversion Rate under this clause (e) shall become effective immediately following the tenth Trading Day next succeeding the date such tender or exchange offer expires; provided that, in respect of any conversion during the ten Trading Days following the date that any tender or exchange offer expires, references within this clause (e) to 10 Trading Days shall be deemed replaced with such lesser number of Trading Days as have elapsed between the date such tender or exchange offer expires and the relevant Conversion Date. If the Company or one of its Subsidiaries is obligated to purchase Common Stock pursuant to any such tender or exchange offer but are permanently prevented by applicable law from effecting any such purchase or all such purchases are rescinded, the new Conversion Rate shall be readjusted to be the Conversion Rate that would be in effect if such tender or exchange offer had not been made.

(f) Notwithstanding the foregoing provisions of this Section 9.02, no adjustment will be made thereunder, nor shall an adjustment be made to the ability of a Holder to convert, for

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any distribution described therein if the Holder will otherwise participate in the distribution on the same terms as holders of Common Stock as if such Holder held a number of shares of Common Stock equal to the applicable Conversion Rate, multiplied by the principal amount (expressed in thousands) of the Securities held by such holder, without having to convert its Securities. Further, if the application of the foregoing formulas in this Section 9.02 would result in a decrease in the Conversion Rate, no adjustment to the Conversion Rate will be made (except on account of share combinations).

(g) No adjustment to the Conversion Rate will be made unless as specifically set forth in this Section 9.02 and Section 9.03.

(h) Without limiting the foregoing, no adjustment to the Conversion Rate need be made:

(i) upon the issuance of any shares of Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on securities of the Company and the investment of additional optional amounts in shares of Common Stock under any plan;

(ii) upon the issuance of any shares of Common Stock or options or rights to purchase shares of Common Stock pursuant to any present or future employee, director or consultant benefit plan or program or employee stock purchase plan of or assumed by the Company or any of its Subsidiaries;

(iii) upon the issuance of any shares of Common Stock pursuant to any option, warrant, right, or exercisable, exchangeable or convertible security not described in clause (ii) above and outstanding as of the Exchanged Securities Issue Date;

(iv) for a change in the par value of the Common Stock; or

(v) for accrued and unpaid Interest (including Contingent Interest and Additional Interest, if any) on the Securities.

(i) No adjustment to the Conversion Rate will be required unless the adjustment would require an increase or decrease of at least 1% of the Conversion Rate. If the adjustment is not made because the adjustment does not change the Conversion Rate by at least 1%, then the adjustment that is not made will be carried forward and taken into account in any future adjustment. All required calculations will be made to the nearest cent or 1/1000th of a share, as the case may be. Notwithstanding the foregoing, if the Securities are called for redemption or upon a Fundamental Change, all adjustments not previously made will be made for all the Securities to be converted after the Company’s notice of redemption to the applicable Redemption Date or after the Company’s notice of a Fundamental Change, as applicable.

(j) Whenever the Conversion Rate is adjusted as herein provided, the Company shall promptly file with the Trustee and any Conversion Agent other than the Trustee an Officer’s Certificate setting forth the Conversion Rate after such adjustment and setting forth a brief statement of the facts requiring such adjustment. Unless and until a Responsible Officer of the Trustee shall have received such Officer’s Certificate, the Trustee shall not be deemed to have

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knowledge of any adjustment of the Conversion Rate and may assume that the last Conversion Rate of which it has knowledge is still in effect. Promptly after delivery of such certificate, the Company shall prepare a notice of such adjustment of the Conversion Rate setting forth the adjusted Conversion Rate and the date on which each adjustment becomes effective and shall mail such notice of such adjustment of the Conversion Rate to the Holder of each Security at such Holder’s last address appearing on the Securities Register provided for in Section 2.04 of this First Supplemental Indenture within 20 days after execution thereof. Failure to deliver such notice shall not affect the legality or validity of any such adjustment.

(k) For purposes of this Section 9.02, the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock. If the Company pays any dividend or makes any distribution on, or issues any rights, options or warrants in respect of, shares of Common Stock held in treasury by the Company, the Company shall not issue, transfer or convey such shares of Common Stock in a manner that would have the effect of circumventing the provisions of this Section 9.02.

(l) If Net-Share Settlement applies and any provision of this Article 9 requires a calculation of an average of the Daily VWAP over a span of multiple days, the Company will make appropriate adjustments to the Daily Settlement Amount (determined in good faith by the Board of Directors) to account for any adjustment to the Conversion Rate that becomes effective, or any event requiring an adjustment to the Conversion Rate where the Ex-Dividend Date of the event occurs, at any time during the period from which such calculation is to be calculated; provided that such adjustments shall only be made to the Daily Settlement Amounts relating to days prior to the date that the adjustment to the Conversion Rate becomes effective.

Section 9.03. Adjustment to Common Stock Delivered Upon Certain Fundamental Changes.

(a) If a Holder elects to convert Securities pursuant to Section 9.01(a)(iv) above in connection with a Fundamental Change on or following the effective date of the transaction and the transaction has an effective date occurring on or prior to February 15, 2013, subject to Section 9.04 below, the Conversion Rate for such converted Securities shall be increased by an additional number of shares of Common Stock (the “Additional Shares”) as described below. Any conversion will be deemed to have occurred in connection with such Fundamental Change if such Securities are surrendered for conversion on or following the effective date of a Fundamental Change and prior to the expiration of the time during which Securities may be converted in respect of such Fundamental Change as specified in Section 9.01(a)(iv) and notwithstanding the fact that a Security may then be convertible because another condition to conversion also has been satisfied.

(b) The number of Additional Shares will be determined by reference to the table attached as Schedule A hereto, based on the actual effective date on which the Fundamental Change occurs or becomes effective (the “Effective Date”) and the Stock Price paid per share of Common Stock with respect to such Fundamental Change; provided that if the Stock Price is between two Stock Price amounts set forth in such table or the Effective Date is between two Effective Dates in the table, the number of Additional Shares will be determined by a straight-line

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interpolation between the number of Additional Shares set forth for the higher and lower Stock Price amounts and the two dates, as applicable, based on a 365-day year; provided further that if the Stock Price is greater than $100.00 per share (subject to adjustment as set forth in clause (c) below) or less than $17.50 per share (subject to adjustment as set forth in clause (c) below), then no Additional Shares will be added to the Conversion Rate. Notwithstanding the foregoing, the Conversion Rate shall not exceed 57.1429 per $1,000 principal amount of Securities on account of adjustments pursuant to this Section 9.03, subject to adjustments set out in Section 9.02(a) through (e).

(c) The Stock Prices set forth in the first row of the table in Schedule A hereto will be adjusted as of any date on which the Conversion Rate of the Securities is otherwise adjusted pursuant to Section 9.02. The adjusted Stock Prices will equal the Stock Prices applicable immediately prior to such adjustment, multiplied by a fraction, the numerator of which is the Conversion Rate immediately prior to such adjustment and the denominator of which is the Conversion Rate as so adjusted. The number of Additional Shares set forth in such table will be adjusted in the same manner as the Conversion Rate as set forth in Section 9.02.

Section 9.04. Effect of Recapitalizations, Reclassifications, and Changes of Common Stock.

(a) If any of the following events occur: (i) any recapitalization, reclassification or change of the outstanding shares of Common Stock (other than a subdivision or combination to which Section 9.02(a) applies), (ii) any consolidation, merger or combination of the Company with another Person, (iii) any sale or conveyance to another Person of all or substantially all of the property and assets of the Company and its Subsidiaries, or (iv) any statutory share exchange, in each case as a result of which Common Stock would be converted into, or exchanged for, stock, other securities, other property or assets (including cash or any combination thereof) (any such event or transaction, a “Reorganization Event”), then, following the effective time of the Reorganization Event, the right to receive shares of Common Stock upon conversion of Securities, if any, will be changed into a right to receive the kind and amount of shares of stock, other securities or other property or assets (including cash or any combination thereof) (the “Reference Property”) that a Holder would have been entitled to receive upon such Reorganization Event in respect of Common Stock, as provided below. If the Reorganization Event causes Common Stock to be converted into the right to receive more than a single type of consideration (determined based in part upon any form of stockholder election), the Reference Property will be deemed to be the weighted average of the types and amounts of consideration received by the holders of Common Stock that affirmatively make such an election. The Company will notify Holders of the weighted average as soon as practicable after such determination is made. Upon such Reorganization Event, the Company or any Successor Company will enter into a supplemental indenture consistent with the foregoing. Such supplemental indenture shall provide for provisions and adjustments which shall be as nearly equivalent as may be practicable to the provisions and adjustments provided for in this Article 9, Article 7 and Article 8 of this First Supplemental Indenture, Article 9 of the Original Indenture and the definition of Fundamental Change, as appropriate, as determined in good faith by the Company (which determination shall be conclusive and binding), to make such provisions apply to such other Person if different from the original issuer of the Securities.

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(b) Following the effective time of any such Reorganization Event, settlement of Securities converted shall be in units of Reference Property or cash and units of Reference Property, if applicable, determined in accordance with Section 9.01(d)(i) and Section 9.01(d)(ii) above. The Conversion Rate will relate to units of Reference Property (a “unit” of Reference Property being the kind and amount of reference property that a holder of one share of Common Stock would have received in such transaction); and the Daily VWAP will be determined based on the Daily VWAP of one unit of Reference Property.

(c) The Company shall cause notice of the execution of any supplemental indenture required by this Section 9.04 to be mailed to each Holder, at its address appearing on the Securities Register provided for in Section 2.04 of this First Supplemental Indenture, within 20 calendar days after execution thereof. Failure to deliver such notice shall not affect the legality or validity of such supplemental indenture.

(d) The above provisions of this Section 9.04 shall similarly apply to successive Reorganization Events.

(e) If this Section 9.04 applies to any event or occurrence, Section 9.02 shall not apply in respect of such event or occurrence.

(f) The Company shall not become a party to any Reorganization Event unless its terms are consistent with the foregoing. None of the foregoing provisions shall affect the right of a Holder of Securities to convert the Securities as set forth in and subject to Section 9.01 prior to the effective time of such Reorganization Event.

Section 9.05. Responsibility of Trustee. The Trustee and any other Conversion Agent shall not at any time be under any duty or responsibility to the Company or any Holder of Securities to determine when the Securities become convertible, the Conversion Rate, or whether any facts exist which may require any adjustment of the Conversion Rate, or with respect to the nature or extent or calculation of any such adjustment when made, or with respect to the method employed in making the same. The Trustee and any other Conversion Agent shall not be accountable with respect to the validity or value (or the kind or amount) of any shares of Common Stock, or of any securities or property, which may at any time be issued or delivered upon the conversion of any Security; and the Trustee and any other Conversion Agent make no representations with respect thereto. Neither the Trustee nor any Conversion Agent shall be responsible for any failure of the Company to issue, transfer or deliver any cash or shares of Common Stock or stock certificates or other securities or property upon the surrender of any Security for the purpose of conversion or to comply with any of the duties, responsibilities or covenants of the Company contained in this Article 9. Without limiting the generality of the foregoing, neither the Trustee nor any Conversion Agent shall be under any responsibility to determine the correctness of any provisions contained in any supplemental indenture entered into pursuant to Section 9.04 relating either to the kind or amount of shares of stock or securities or property (including cash) receivable by Holders upon the conversion of their Securities after any Reorganization Event or to any adjustment to be made with respect thereto, but, subject to the provisions of Section 6.1 of the Original Indenture, may accept as conclusive evidence of the correctness of any such provisions, and shall be protected in relying upon, an Officer’s Certificate with respect thereto.

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Section 9.06. Stockholder Rights Plan. To the extent that the Company has a rights plan in effect upon conversion of the Securities into Common Stock, the Holder will receive upon conversion of the Securities in respect of which the Company has elected to deliver Common Stock, if applicable, the rights under the rights plan, unless prior to any conversion, the rights have separated from the Common Stock, in which case, and only in such case, the Conversion Rate will be adjusted at the time of separation as if the Company distributed to all holders of Common Stock shares of the Company’s Capital Stock, evidences of indebtedness or assets as described in Section 9.02(c) above, subject to readjustment in the event of the expiration, termination or redemption of such rights. In lieu of any such adjustment, the Company may amend such applicable stockholder rights agreement to provide that upon conversion of the Securities the Holders will receive, in addition to the Common Stock issuable upon such conversion, the rights which would have attached to such Common Stock if the rights had not become separated from the Common Stock under such applicable stockholder rights agreement.

Section 9.07. No Stockholder Rights. For the avoidance of doubt, Holders of Securities will not have any rights as holders of Common Stock (including voting rights and rights to receive any dividends or other distributions on the Common Stock) if and until the Securities are converted into shares of Common Stock.

Section 9.08. Withholding Taxes for Adjustments in Conversation Rate. If the Company pays withholding taxes on behalf of a Holder as a result of an adjustment to the Conversion Rate, the Company may, at its option, set off such payments against payments of cash and shares of Common Stock on the Securities of such Holder.

ARTICLE 10

GUARANTEE OF SECURITIES

Section 10.01. Securities Guarantee. The Securities shall be fully and unconditionally guaranteed by the Guarantors and the provisions of Article Fourteen of the Original Indenture shall apply to the Securities.

Section 10.02. Release of A Guarantor; Termination Of Securities Guarantee. All Subsidiaries that from time to time guarantee any of the Company’s indebtedness shall be Guarantors hereunder. A Guarantor shall be deemed released and relieved from all its obligations under its Securities Guarantee upon:

(a) a sale or other disposition (including by way of consolidation or merger) of such Guarantor or the sale or disposition of all or substantially all the assets of such Guarantor; or

(b) discharge of the Indenture with respect to the Securities as provided in Article 6 of this First Supplemental Indenture.

The Trustee shall deliver an appropriate instrument evidencing any such release upon receipt of a request by the Company accompanied by an Officer’s Certificate and Opinion of Counsel certifying as to the compliance with this Section 10.02.

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Any Guarantor not released in accordance with this Section 10.02 remains liable for the full amount of principal of and interest on the Securities as provided in the Securities and Article 14 of the Original Indenture.

ARTICLE 11

SECURITY DOCUMENTS

Section 11.01. Collateral and Security Documents. The Securities and the Securities Guarantee are secured as provided in the Security Documents, subject to the terms of the Intercreditor Agreement. Each Holder (i) hereby consents to the subordination of the Liens securing the Securities and the Securities Guarantee on the terms set forth in the Intercreditor Agreement, (ii) hereby agrees that it will be bound by and will take no actions contrary to the provisions of the Intercreditor Agreement and (iii) hereby authorizes and instructs the Collateral Agent to enter into the Intercreditor Agreement and to subject the Securities and the Securities Guarantee and the Liens securing the Securities and the Securities Guarantee to the provisions thereof. The foregoing provisions are intended as an inducement to the Senior Obligations Secured Parties (as defined the Intercreditor Agreement) to extend credit to the Company, and such Senior Obligations Secured Parties are intended third party beneficiaries of such provisions and the provisions of the Intercreditor Agreement. The Company shall deliver to the Trustee (if it is not itself then the Collateral Agent) copies of all documents delivered to the Collateral Agent pursuant to the Security Documents, and will do or cause to be done all such acts and things as may be required by the next sentence of this Section 11.01 to assure and confirm to the Collateral Agent the security interest in the Collateral contemplated hereby or by the Security Documents or any part thereof, as from time to time constituted, so as to render the same available for the security and benefit of the Securities and the Securities Guarantee according to the intent and purposes herein expressed. The Company shall take, and shall cause the Guarantors to take, any and all actions reasonably required to cause the Security Documents to create and maintain, as security for the Securities and the Securities Guarantee, valid and enforceable Liens on all material portions of the Collateral (subject to the terms of this First Supplemental Indenture, the applicable Security Documents and the Intercreditor Agreement), in favor of the Collateral Agent for the benefit of the Holders, perfected to the extent contemplated by the applicable Security Documents and immediately junior in priority in accordance with the Intercreditor Agreement (subject to other Permitted Collateral Liens) to any and all Liens at any time granted in the Collateral to secure the Priority Lien Obligations.

Section 11.02. Recording and Opinions.

(a) The Company will furnish to the Collateral Agent and the Trustee promptly (but in no event later than 20 Business Days) after the execution and delivery of this First Supplemental Indenture an Opinion of Counsel either:

(1) stating that, in the opinion of such counsel, all action has been taken with respect to the recording, registering and filing of the Indenture, financing statements or other instruments necessary to make effective the Liens intended to be created by the Security Documents, and reciting, with respect to the security interests in the Collateral, the details of such action; or

47

(2) stating that, in the opinion of such counsel, no such action is necessary to make such Liens effective.

(b) The Company will furnish to the Collateral Agent and the Trustee (if it is not itself then the Collateral Agent) on or within one month of April 15 in each year beginning with April 15, 2010, an Opinion of Counsel either:

(1)(A) stating that, in the opinion of such counsel, such action has been taken with respect to the recording, registering, filing, re-recording, re-registering and re-filing of all supplemental indentures, financing statements, continuation statements or other instruments of further assurance as is necessary to maintain the Liens of the Security Documents and reciting with respect to the security interests in the Collateral the details of such action or referring to prior Opinions of Counsel in which such details are given, and (B) stating that, in the opinion of such counsel, based on relevant laws as in effect on the date of such Opinion of Counsel, all financing statements and continuation statements have been executed and filed that are necessary as of such date and during the succeeding 12 months fully to preserve and protect, to the extent such protection and preservation are possible by filing, the rights of the Holders and the Collateral Agent and the Trustee (if it is not itself then the Collateral Agent) hereunder and under the Security Documents with respect to the security interests in the Collateral; or

(2) stating that, in the opinion of such counsel, no such action is necessary to maintain such Liens.

(c) The Company will otherwise comply with the provisions of Section §314(b) of the Trust Indenture Act.

Section 11.03. Release of Collateral.

(a) Subject to subsections (b) and (c) of this Section 11.03, whether prior to or after the Discharge of Priority Lien Obligations, Collateral shall be released from the Liens created by the Security Documents at any time or from time to time in accordance with the provisions hereof or of the Security Documents or the Intercreditor Agreement. Upon the request of the Company pursuant to an Officer’s Certificate or an Opinion of Counsel (or both to the extent requested by the Collateral Agent) to the effect that all conditions precedent hereunder have been met, the Company and the Guarantors shall be entitled to a release of any assets included in the Collateral (but, in the case of releases pursuant to clause (2) below, not on the proceeds of such assets, except to the extent such proceeds are applied to repay Priority Lien Obligations) from the Liens created by the Security Documents, and the Collateral Agent shall release such assets (but, in the case of releases pursuant to clause (2) below, not on the proceeds of such assets, except to the extent such proceeds are applied to repay Priority Lien Obligations) from such Liens at the Company’s sole cost and expense, under any one or more of the following circumstances:

(1) if all other Liens (other than Permitted Collateral Liens described in clause (iii) of the definition thereof) on that asset securing Priority Lien Obligations then secured by that asset (including all commitments thereunder) are released; provided, however, that after giving effect to the release, at least $5,000,000 of obligations secured

48

by Priority Liens on the remaining Collateral remain outstanding or committed and no Default or Event of Default with respect to the Securities shall have occurred and be continuing under the Indenture as of the time of such proposed release;

(2) to enable the Company or any Guarantor to consummate sales, transfers, leases or other dispositions of that asset (to a Person who is not the Company or Subsidiary), including any such transactions by the Credit Facilities Collateral Agent in connection with an exercise of remedies against the Collateral on behalf of holders of any Priority Lien Obligations secured by such asset;

(3) if the Company or any Guarantor provides substitute collateral with at least an equivalent fair value, as determined in good faith by the Board of Directors of the Company;

(4) if any Subsidiary that is a Guarantor is released from its Securities Guarantee, that Subsidiary’s assets shall also be released; or

(5) pursuant to an amendment, supplement or waiver in accordance with Article Nine of the Original Indenture and Article 7 hereof.

Subject to the provisions of Section 11.03(b) below, upon receipt of any necessary or proper instrument of termination, satisfaction or release prepared by the Company, the Collateral Agent shall, at the Company’s expense, execute, deliver or acknowledge such instruments to evidence the release of any Collateral required or permitted to be released pursuant to this First Supplemental Indenture, the Security Documents or the Intercreditor Agreement.

(b) Except as otherwise provided in the Intercreditor Agreement, no Collateral may be released from the Liens created by the Security Documents unless the Officer’s Certificate or Opinion of Counsel (or both to the extent requested by the Collateral Agent) required by this Section 11.03, dated not more than 30 days prior to the date of the application for such release, has been delivered to the Collateral Agent and the Trustee (if it is not itself then the Collateral Agent).

(c) At any time when an Event of Default with respect to the Securities has occurred and is continuing and the maturity of the Securities has been accelerated (whether by declaration or otherwise) and the Trustee (if it is not itself then the Collateral Agent) has delivered a notice of acceleration to the Collateral Agent, no release of Collateral pursuant to the provisions of this First Supplemental Indenture or the Security Documents will be effective as against the Holders, except as otherwise provided in the Intercreditor Agreement.

Section 11.04 Certificates of the Company.

(a) The Company will furnish to the Collateral Agent and the Trustee (if it is not itself then the Collateral Agent), prior to each proposed release of Collateral from the Liens created by the Security Documents:

(1) all documents required by Section §314(d) of the Trust Indenture Act; and

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(2) an Opinion of Counsel to the effect that such accompanying documents constitute all documents required by Section §314(d) of the Trust Indenture Act.

The Trustee may, to the extent permitted by Sections 6.1 and 6.3 of the Original Indenture, accept as conclusive evidence of compliance with the foregoing provisions the appropriate statements contained in such documents and such Opinion of Counsel.

Section 11.05. Permitted Releases Not to Impair Lien; Trust Indenture Act Requirements. The release of any Collateral from the Security Documents or the release of, in whole or in part, the Liens created by the Security Documents, will not be deemed to impair any Lien on the Collateral in contravention of the provisions of the Indenture if and to the extent the Collateral or Liens are released pursuant to the applicable Security Documents or the Intercreditor Agreement or pursuant to the terms of this Article 11. The Trustee and each of the Holders acknowledge that a release of Collateral or a Lien strictly in accordance with the terms of the Security Documents or the Intercreditor Agreement or of this Article 11 will not be deemed for any purpose to be an impairment of the Lien on the Collateral in contravention of the terms of the Indenture. To the extent applicable, the Company will cause Section 314(d) of the Trust Indenture Act, relating to the release of property or securities or relating to the substitution therefor of any property or securities to be subjected to the Lien of the Security Documents, to be complied with. Any certificate or opinion required by Section 314(d) of the Trust Indenture Act may be made by an Officer of the Company except in cases where Section 314(d) of the Trust Indenture Act requires that such certificate or opinion be made by an independent Person, which Person shall be an independent engineer, appraiser or other expert selected by or reasonably satisfactory to the Collateral Agent. Fees, charges and expenses incurred by the Trustee or the Collateral Agent in connection herewith, including the fees and expenses of any such engineer, appraiser or other expert, shall be reimbursed by the Company to the Trustee or the Collateral Agent (as applicable).

Notwithstanding anything to the contrary in Section 11.04 or in this Section 11.05, the Company will not be required to comply with all or any portion of Section 314(d) of the Trust Indenture Act if it determines, in good faith based on advice of counsel, and upon such determination furnishes to the Trustee an Officer’s Certificate or Opinion of Counsel certifying such determination, that the terms of Section 314(d) of the Trust Indenture Act or any interpretation or guidance as to the meaning thereof of the SEC and its staff, including “no action” letters or exemptive orders, whether or not issued to the Company by the SEC, or any portion of Section 314(d) of the Trust Indenture Act is inapplicable to one or a series of released Collateral.

Section 11.06. Certificate of the Trustee. In the event that the Company elects to release Collateral in accordance with this First Supplemental Indenture or the Security Documents at a time when the Trustee is not itself also the Collateral Agent and the Company has delivered the certificates and documents required by the Security Documents and Sections 11.03 and 11.04 hereof, the Trustee shall determine whether it has received all documentation required by Section 314(d) in connection with such release and, based on such determination, shall deliver a certificate to the Collateral Agent setting forth such determination.

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Section 11.07. Enforcement of Security Documents and Protection of Collateral. Subject to the provisions of Articles Five and Six of the Original Indenture and of the Security Documents and Intercreditor Agreement, the Trustee in its sole discretion and without the consent of any Holder, on behalf of the Holders, may or may direct the Collateral Agent to take all actions it deems necessary or appropriate in order to:

(1) enforce any of the terms of the Security Documents; and

(2) collect and receive any and all amounts payable in respect of the Securities or the Securities Guarantee thereunder.

Subject to the provisions of Articles Five and Six of the Original Indenture and of the Security Documents and the Intercreditor Agreement, the Trustee shall have power to institute and to maintain such suits and proceedings as it may deem expedient to prevent any impairment of the Collateral by any acts which may be unlawful or in violation of any of the Security Documents or this First Supplemental Indenture, and such suits and proceedings as the Trustee, in its sole discretion, may deem expedient to preserve or protect its interests and the interests of the Holders in the Collateral (including power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such enactment, rule or order would impair the Lien on the Collateral of the Security Documents or be prejudicial to the interests of the Holders, the Collateral Agent or the Trustee under the Security Documents or this First Supplemental Indenture).

Section 11.08. Authorization of Receipt of Funds by Trustee Under the Security Documents. Subject to the provisions of the Intercreditor Agreement, the Trustee is authorized to receive any funds for the benefit of the Holders distributed under the Security Documents, and to make further distributions of such funds to such Holders according to the provisions of the Indenture.

Section 11.09. Collateral Agent.

(a) The Trustee shall initially act as Collateral Agent and shall be authorized to appoint co-Collateral Agents as necessary in its sole discretion. Except as otherwise explicitly provided in the Indenture, the Security Documents or the Intercreditor Agreement, neither the Collateral Agent nor any of its respective officers, directors, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof. The Collateral Agent shall be accountable only for amounts that it actually receives as a result of the exercise of such powers, and neither the Collateral Agent nor any of its officers, directors, employees or agents shall be responsible for any act or failure to act under the Indenture or the Security Documents, except for its own willful misconduct, negligence or bad faith.

(b) The Trustee, as Collateral Agent, is authorized and directed to (i) enter into the Security Documents, (ii) enter into the Intercreditor Agreement, (iii) bind the Holders on the terms as set forth in the Security Documents and the Intercreditor Agreement and (iv) perform and observe its obligations under the Security Documents and the Intercreditor Agreement.

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(c) If the Company or any Subsidiary (i) incurs Priority Lien Obligations at any time when no Intercreditor Agreement is in effect or at any time when Priority Lien Obligations entitled to the benefit of an existing Intercreditor Agreement are concurrently retired, and (ii) delivers to the Collateral Agent an Officers’ Certificate so stating and requesting the Collateral Agent to enter into an Intercreditor Agreement in favor of a designated agent or representative for the holders of the Priority Lien Obligations so incurred, the Collateral Agent shall (and is hereby authorized and directed to) enter into such Intercreditor Agreement, bind the Holders on the terms set forth therein, and perform and observe its obligations thereunder.

Section 11.10. Designations. Except as provided in the next sentence, for purposes of the provisions hereof permitting or requiring the Company to designate any Lien on any Collateral as a “Priority Lien” hereunder, any such designation shall be sufficient if the relevant designation is set forth in writing, signed on behalf of the Company by an Officer thereof and delivered to the Trustee and the Collateral Agent. For all purposes hereof, the Company hereby designates the Liens on the Collateral securing the Credit Agreement Indebtedness incurred or arising under or in respect of the Credit Agreement as in effect on the Issue Date as “Priority Liens” hereunder.

Section 11.11. Termination of Liens. The Trustee will, at the written request of the Company, instruct the Collateral Agent to release the Liens granted by the Security Documents upon satisfaction and discharge of the Indenture with respect to the Securities as described in Article 6. Upon receipt of such instruction and any necessary or proper instruments of termination, satisfaction or release prepared by the Company, the Collateral Agent shall execute, deliver or acknowledge any such instruments or releases to evidence the release of such Liens.

Section 11.12. Excluded Securities. Notwithstanding anything to the contrary provided in this First Supplemental Indenture (including without limitation Sections 3.06 and 11.01 hereof) or any of the Security Documents, (i) the Collateral shall at no time include any Capital Stock or other securities of any Subsidiary of the Company that constitute Excluded Securities, and (ii) any portion of the Excluded Securities may continue to secure any Priority Lien Obligations. The Security Documents may be amended or modified, without the consent of any Holder, from time to time to the extent necessary to release the Liens on any Excluded Securities.

Section 11.13. Automatic Waiver of Covenants in Security Documents. In the event that the requisite holders of the Priority Lien Obligations (or any representatives thereof) waive or amend any covenant in a Priority Lien Obligation Security Document, the corresponding covenant in any Security Document will automatically be deemed waived or amended to the same extent; provided, however, that after giving effect to the waiver or amendment, at least $5,000,000 of Priority Lien Obligations remain outstanding or committed.

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ARTICLE 12

MISCELLANEOUS

Section 12.01. Compliance with Trust Indenture Act. In addition to the Company’s reporting obligations set forth in Section 7.4 of the Original Indenture, the Company shall also comply with the provisions of Section 314(a) of the Trust Indenture Act.

Section 12.02. No Defeasance. The provisions of Article Thirteen of the Original Indenture shall not apply to any Securities issued under this First Supplemental Indenture.

Section 12.03. Communication by Holders with other Holders. Holders may communicate pursuant to Section 312(b) of the Trust Indenture Act with other Holders with respect to their rights under this First Supplemental Indenture or the Securities. The Company, the Trustee, the Registrar and anyone else shall have the protection of Section 312(c) of the Trust Indenture Act.

Section 12.04. Rules by Trustee, Paying Agent and Registrar. The Trustee may make reasonable rules for action by, or a meeting of, Holders. The Registrar and the Paying Agent may make reasonable rules for their functions.

Section 12.05. Governing Law. THIS FIRST SUPPLEMENTAL INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

Section 12.06. No Recourse Against Others. An incorporator, director, officer, employee, partner or stockholder of the Company or any Guarantor, solely by reason of this status, shall not have any liability for any obligations of the Company or such Guarantor under the Securities, the Indenture or the Security Documents or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Holder shall waive and release all such liability. The waiver and release shall be part of the consideration for the issue of the Securities.

Section 12.07. Successors. All agreements of the Company in this First Supplemental Indenture and the Securities shall bind its successors. All agreements of the Trustee in this First Supplemental Indenture shall bind its successors.

Section 12.08. Multiple Originals. The parties may sign any number of copies of this First Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this First Supplemental Indenture.

Section 12.09. Table of Contents; Headings. The table of contents, cross-reference sheet and headings of the Articles and Sections of this First Supplemental Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.

Section 12.10. Severability Clause. In case any provision in this First Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability.

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Section 12.11. Calculations. Except as otherwise provided herein, the Company will be responsible for making all calculations called for under the Indenture and the Securities. The Company will make all such calculations in good faith and, absent manifest error, its calculations will be final and binding on Holders. The Company will provide a schedule of its calculations to each of the Trustee and the Conversion Agent, and each of the Trustee and Conversion Agent is entitled to rely conclusively upon the accuracy of the Company’s calculations without independent verification. The Trustee will deliver a copy of such schedule to any Holder upon the request of such Holder.

Section 12.12. Ratification and Incorporation of Original Indenture. As supplemented hereby, the Original Indenture is in all respects ratified and confirmed, and the Original Indenture and this First Supplemental Indenture shall be read, taken and construed as one and the same instrument.

[Remainder of the page intentionally left blank]

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IN WITNESS WHEREOF, the parties have caused this First Supplemental Indenture to be duly executed as of the date first written above.

FLOTEK INDUSTRIES, INC.
By:	/s/ John Chisholm
	Name: John Chisholm
	Title: President
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By:	/s/ Steven A. Finklea
	Name: Steven A. Finklea
	Title: Vice President

GUARANTORS: TELEDRIFT COMPANY FLOTEK PAYMASTER, INC. MATERIAL TRANSLOGISTICS, INC. PETROVALVE, INC. TURBECO, INC. USA PETROVALVE, INC. FLOTEK INTERNATIONAL, INC. PADKO INTERNATIONAL INCORPORATED FLOTEK ECUADOR MANAGEMENT, LLC FLOTEK ECUADOR INVESTMENTS, LLC
By:	/s/ John Chisholm
	Name: John Chisholm
	Title: President

SOONER ENERGY SERVICES, LLC CESI MANUFACTURING, LLC CESI CHEMICAL, INC.
By:	/s/ John Chisholm
	Name: John Chisholm
	Title: Chief Executive Officer

FLOTEK INDUSTRIES FZE
By:	/s/ John Chisholm
	Name: John Chisholm
	Title: President

EXHIBIT A

[FORM OF FACE OF SECURITY]

FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, THIS SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT AND THE ISSUE DATE OF THIS SECURITY IS MARCH 31, 2010. A HOLDER MAY OBTAIN THE ISSUE PRICE, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT, THE ISSUE DATE AND THE YIELD TO MATURITY FOR THE SECURITIES BY SUBMITTING A WRITTEN REQUEST FOR SUCH INFORMATION TO FLOTEK INDUSTRIES, INC., 2930 WEST SAM HOUSTON PARKWAY NORTH, SUITE 300, HOUSTON, TX 77043, ATTENTION: CHIEF FINANCIAL OFFICER.

[IF THE SECURITIES ARE SUBJECT TO TRANSFER RESTRICTIONS: THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE FORM AND SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE ISSUER, THE REGISTRAR AND THE TRANSFER AGENT. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT.]

A-1

No. [    ] Principal Amount $[            ].

5.25% Convertible Senior Secured Notes due 2028

Flotek Industries, Inc., a Delaware corporation, promises to pay to [            ], or registered assigns, the principal sum of [            ] Dollars on February 15, 2028.

Interest Payment Dates:	February 15 and August 15
Regular Record Dates:	February 1 and August 1

Additional provisions of this Security are set forth on the attached “Terms of Securities.”

Dated: [            ]

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed.

FLOTEK INDUSTRIES, INC.
By:
	Name:
	Title:

A-2

Each of the Guarantors (which term includes any successor Person in such capacity under the Indenture), has fully, unconditionally and absolutely guaranteed, to the extent set forth in the Indenture and subject to the provisions in the Indenture, the due and punctual payment of the principal of, and premium, if any, and interest on the Securities and all other amounts due and payable under the Indenture and the Securities by the Company.

The obligations of the Guarantors to the Holders of Securities and to the Trustee pursuant to the Securities Guarantee and the Indenture are expressly set forth in Article 10 of the First Supplemental Indenture and Article Fourteen of the Original Indenture and reference is hereby made to the Indenture for the precise terms of the Securities Guarantee.

TELEDRIFT COMPANY FLOTEK PAYMASTER, INC. MATERIAL TRANSLOGISTICS, INC. PETROVALVE, INC. TURBECO, INC. USA PETROVALVE, INC. FLOTEK INTERNATIONAL, INC. PADKO INTERNATIONAL INCORPORATED FLOTEK ECUADOR MANAGEMENT, LLC FLOTEK ECUADOR INVESTMENTS, LLC
By:
	Name: John Chisholm
	Title: President

SOONER ENERGY SERVICES, LLC CESI MANUFACTURING, LLC CESI CHEMICAL, INC.
By:
	Name: John Chisholm
	Title: Chief Executive Officer

FLOTEK INDUSTRIES FZE
By:
	Name: John Chisholm
	Title: President

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TRUSTEE’S CERTIFICATE OF AUTHENTICATION

U.S. BANK NATIONAL ASSOCIATION

as Trustee, certifies that this is one of the Securities referred to in the Indenture.

By:
	Authorized Signatory

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TERMS OF SECURITIES

5.25% Convertible Senior Secured Notes due 2028

The Company issued this Security under an Indenture dated as of March 31, 2010 (the “Original Indenture”), among the Company, the guarantors party thereto and the Trustee, as supplemented by the First Supplemental Indenture dated as of March 31, 2010 (the “First Supplemental Indenture”), among the Company, the guarantors party thereto and the Trustee (the Original Indenture, as supplemented by the First Supplemental Indenture, the “Indenture”), to which reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the Holders.

1. Interest

Flotek Industries, Inc., a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “Company”), promises to pay interest on the principal amount of this Security at the rate of 5.25% per annum until the principal hereof is paid or made available for payment.

The Company will pay interest semiannually in arrears on February 15 and August 15 of each year (each, an “Interest Payment Date”), commencing August 15, 2010, to Holders of record on the immediately preceding February 1 and August 1. Interest on the Securities will accrue from the most recent date to which interest has been paid on the Securities or, if no interest has been paid, from March 31, 2010. Interest will be computed on the basis of a 360-day year of twelve 30-day months.

2. Contingent Interest

Subject to the accrual and record date provisions described above, the Company will pay Contingent Interest to the Holders of the Securities during any six-month period from an Interest Payment Date to, but excluding, the following Interest Payment Date, commencing with the six-month period beginning on February 15, 2013, if the Trading Price of the Securities for each of the five Trading Days ending on the third Trading Day immediately preceding the first day of the relevant six-month period equals 120% or more of the principal amount of the Securities.

The amount of Contingent Interest payable per each $1,000 principal amount of Securities with respect to any six-month period will equal 0.50% per annum of the average Trading Price of the Securities for the five Trading Days referred to above.

Upon determination that Holders of the Securities will be entitled to receive Contingent Interest that will become payable during a relevant six-month period, on or prior to the start of such six-month period, the Company will provide an Officer’s Certificate to the Trustee setting forth the amount of contingent interest per $1,000 principal amount of the Securities and disseminate a press release through a public medium that is customary for such press releases.

The Company may cause to be withheld from any payment hereunder any tax withholding required by law or regulations, including, in the case of any withholding obligation arising from income that does not give rise to any cash or property from which any applicable withholding tax could be satisfied, set off against any subsequent payment of cash or property hereunder.

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The Company may unilaterally increase the amount of Contingent Interest it may pay or interest or other amounts it is obligated to pay, but the Company will have no obligation to do so.

3. Method of Payment

By no later than 11:00 a.m. (New York City time) on the date on which any principal of, interest (including Contingent Interest and Additional Interest, if any) or premium, if any, on any Security is due and payable, the Company shall deposit with the Paying Agent money sufficient to pay such amount. The Company will pay principal, premium and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. The Company will pay principal of Securities at the office or agency designated by the Company for such purpose. Interest (including Contingent Interest and Additional Interest, if any) on Securities will be payable (i) to Holders having an aggregate principal amount of $5,000,000 or less, by check mailed to the Holders of these Securities and (ii) to Holders having an aggregate principal amount of more than $5,000,000, either by check mailed to each Holder or, upon application by a Holder to the Registrar not later than the relevant record date, by wire transfer in immediately available funds to that Holder’s account within the United States, which application shall remain in effect until the Holder notifies, in writing, the Registrar to the contrary.

4. Redemption

Subject to certain conditions specified in the Indenture, the Securities will be redeemable, at the option of the Company, in whole at any time or in part from time to time, at any time on or after February 15, 2013 and at a price equal to 100% of the principal amount of Securities to be redeemed, plus accrued and unpaid interest (including Contingent Interest and Additional Interest, if any) to but excluding the Redemption Date (unless the Redemption Date is between a Regular Record Date and the Interest Payment Date to which it relates, in which case the Company will pay accrued and unpaid interest to the Holder of record on such Regular Record Date).

5. Sinking Fund

The Securities are not subject to any sinking fund.

6. Purchase by the Company at the Option of the Holder; Purchase at the Option of the Holder Upon a Fundamental Change

(a) Subject to the terms and conditions of the Indenture, a Holder shall have the option to require the Company to purchase all or a portion of its Securities held by such Holder on each of February 15, 2013, February 15, 2018 and February 15, 2023 at a Purchase Price specified in the Indenture.

(b) If a Fundamental Change shall occur at any time, each Holder shall have the right, at such Holder’s option and subject to the terms and conditions of the Indenture, to require the Company to purchase all or a portion of its Securities at a Fundamental Change Purchase Price specified in the Indenture.

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7. Conversion

Subject to the limitations in Section 9.01(h) of the Indenture, a Holder may convert its Securities prior to January 15, 2028 in accordance with the procedures for conversion set forth in the Indenture only when one or more of the conditions specified in the Indenture are met and during the related specified period. Subject to the limitations in Section 9.01(h) of the Indenture, on or after January 15, 2028, a Holder may convert its Securities in accordance with the procedures for conversion set forth in the Indenture until the close of business on the second Business Day immediately preceding Stated Maturity regardless of such conditions specified in the Indenture.

The initial Conversion Rate is 43.9560 shares of Common Stock per $1,000 principal amount of Securities, subject to adjustment in certain events described in the Indenture. Upon conversion, the Company will either (i) deliver shares of Common Stock based on the Conversion Rate or (ii) pay cash and shares of Common Stock, if any, as set forth in the Indenture. The Company shall deliver cash in lieu of any fractional share of Common Stock.

A Holder may convert a portion of the Securities only if the principal amount of such portion is $1,000 or a multiple of $1,000. No payment or adjustment shall be made for dividends on the Common Stock except as provided in the Indenture.

8. Denominations; Transfer; Exchange

The Securities are in registered form without coupons in denominations of principal amount of $1,000 and multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange of Securities (i) selected for redemption or, if a portion of any Security is selected for redemption, the portion thereof selected for redemption; (ii) surrendered for conversion or, if a portion of any Security is surrendered for conversion, the portion thereof surrendered for conversion; or (iii) in certificated form for a period of 15 days prior to mailing a notice of redemption under Article 4 of the First Supplemental Indenture and Article Eleven of the Original Indenture.

9. Persons Deemed Owners

The registered Holder of this Security may be treated as the owner of it for all purposes.

10. Unclaimed Money

If money for the payment of principal, premium, if any, or interest (including Contingent Interest and Additional Interest, if any) remains unclaimed for one year, the Trustee or Paying Agent shall pay the money back to the Company, subject to applicable abandoned property laws. After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment.

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11. Amendment, Waiver

Subject to certain exceptions, the Indenture contains provisions permitting an amendment of the Indenture, the Securities, the Securities Guarantee, the Security Documents and the Intercreditor Agreement with the written consent of the Holders of at least a majority in principal amount of the then outstanding Securities and the waiver of any Event of Default (other than with respect to nonpayment or in respect of a provision that cannot be amended without the written consent of each Holder affected) or noncompliance with any provision with the written consent of the Holders of a majority in principal amount of the then outstanding Securities.

In addition, the Indenture permits an amendment of the Indenture, the Securities, the Securities Guarantee, the Security Documents and the Intercreditor Agreement without the consent of any Holder under certain circumstances specified in the Indenture.

12. Defaults and Remedies

Subject to the following paragraph, if an Event of Default specified in the Indenture occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Securities may declare all the Securities by notice to the Company to be due and payable immediately. In addition, certain specified Events of Default will cause the Securities to become immediately due and payable without further action by the Holders.

The sole remedy for an Event of Default relating to the Company’s failure to comply with the reporting obligations under Section 12.01 of the First Supplemental Indenture, and for any failure to comply with the requirements of Section 314(a)(1) of the Trust Indenture Act, will for the 365 days after the occurrence of such an Event of Default consist exclusively of the right to receive Additional Interest on the principal amount of the Securities at a rate equal to 0.25% per annum.

Holders may not enforce the Indenture, the Securities, the Securities Guarantee or the Security Documents except as provided in the Indenture. The Trustee may refuse to enforce the Indenture, the Securities, the Securities Guarantee and the Security Documents unless it receives reasonable indemnity or security. Subject to certain limitations, Holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing Default or Event of Default (except a Default or Event of Default in payment of principal, interest (including Contingent Interest and Additional Interest, if any) or premium, if any) if it determines that withholding notice is in their interest.

13. Security Documents.

The Securities and the Securities Guarantee are secured on a second-priority basis (subject to Permitted Collateral Liens) by the Liens created by the Security Documents, subject to the terms of the Indenture, the Security Documents and the Intercreditor Agreement.

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14. Trustee Dealings with the Company

Subject to certain limitations set forth in the Indenture, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.

15. No Recourse Against Others

An incorporator, director, officer, employee, partner, sponsor or stockholder of the Company or any Guarantor, solely by reason of this status, shall not have any liability for any obligations of the Company or such Guarantor under the Securities, the Indenture or the Security Documents or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Holder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities.

16. Authentication

This Security shall not be valid until an authorized signatory of the Trustee manually authenticates this Security.

17. Abbreviations

Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entirety), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to Minors Act).

18. Governing Law

This Security and the Indenture shall be governed by, and construed in accordance with, the laws of the State of New York.

The Company will furnish to any Holder upon written request and without charge to the Holder a copy of the Indenture which has in it the text of this Security. Requests may be made to:

Flotek Industries, Inc.

2930 West Sam Houston Parkway North, Suite 300

Houston, TX 77043

Attention: Chief Financial Officer

Facsimile: (713) 466-8386

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ASSIGNMENT FORM

To assign this Security, fill in the form below:

I or we assign and transfer this Security to

(Print or type assignee’s name, address and zip code)

(Insert assignee’s soc. sec. or tax I.D. No.)

and irrevocably appoint              agent to transfer this Security on the books of the Company. The agent may substitute another to act for him.

[FOR INCLUSION ONLY IF THE SECURITY BEARS A RESTRICTED SECURITIES LEGEND: In connection with the transfer of this Security, the undersigned confirms that this Security is being transferred:

CHECK ONE BOX BELOW:

(1) [    ] to the Company;

(2) [    ] pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended (the “Act”);

(3) [    ] pursuant to and in compliance with Regulation S under the Act;

(4) [    ] pursuant to and in compliance with Rule 144 under the Act;

(5) [    ] pursuant to and in compliance with another available exemption from, or in a transaction not subject to, the registration requirements of the Act; or

(6) [    ] pursuant to and in compliance with a currently effective Registration Statement under the Act.

Unless one of the boxes is checked the Registrar will refuse to register this Security in the name of any person other than the registered holder hereof. In addition the Company or the Registrar may require, prior to registering any such transfer of this Security, such certifications, other information and legal opinions as are reasonably necessary or desirable to confirm that such transfer is being made in accordance with the registration requirements of the Act, or a valid exemption therefrom.

Date: Your Signature:

Signature Guarantee:
	(Signature must be guaranteed)

Sign exactly as your name appears on the other side of this Security.

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program, pursuant to S.E.C. Rule 17Ad-15.

	Signature:
Signature Guarantee:
(Signature must be guaranteed)	Signature:

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program, pursuant to S.E.C. Rule 17Ad-15.

FORM OF RULE 144(b)(1) NOTICE

To: Registrar of Flotek Industries, Inc. 5.25% Convertible Senior Secured Notes due 2028

The undersigned registered Holder of this Security hereby notifies the Registrar that such Holder is eligible to sell or transfer this Security pursuant to Rule 144(b)(1) under the Securities Act of 1933, as amended (the “Act”), and hereby requests the Registrar issue and register in the name of the Holder a replacement Security that does not bear a legend restricting the transfer of the Securities under the Act.

Dated:
	Signature(s)
	The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program, pursuant to S.E.C. Rule 17Ad-15.
	Signature Guarantee

FORM OF CONVERSION NOTICE

To: Flotek Industries, Inc.

The undersigned registered Holder of this Security hereby exercises the option to convert this Security, or portion hereof (which is $1,000 principal amount or a multiple thereof) designated below in accordance with the terms of the Indenture referred to in this Security, and directs that cash, and the shares of Common Stock of Flotek Industries, Inc., if any, issuable and deliverable upon such conversion, and any Securities representing any unconverted principal amount hereof, be issued and delivered to the registered Holder hereof unless a different name has been indicated below. If cash, shares or any portion of this Security not converted are to be issued in the name of a Person other than the undersigned, the undersigned shall pay all transfer taxes payable with respect thereto.

This notice shall be deemed to be an irrevocable exercise of the option to convert this Security.

Dated:
	Signature(s)
	The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program, pursuant to S.E.C. Rule 17Ad-15.
	Signature Guarantee
Fill in if cash or shares are to be issued, or Securities are to be issued, other than to and in the name of registered holder:
(Name)	Principal amount to be converted (if less than all): $            ,000
(Street Address)
(City state and zip code)	Social Security or Other Taxpayer Number
Please print name and address

FORM OF FUNDAMENTAL CHANGE PURCHASE NOTICE

To: Flotek Industries, Inc.

The undersigned registered Holder of this Security hereby acknowledges receipt of a notice from Flotek Industries, Inc. (the “Company”) as to the occurrence of a Fundamental Change with respect to the Company and requests and instructs the Company to repurchase this Security, or the portion hereof (which is $1,000 principal amount or a multiple thereof) designated below, in accordance with the terms of the Indenture referred to in this Security and directs that the check in payment for this Security or the portion thereof and any Securities representing any unrepurchased principal amount hereof, be issued and delivered to the registered Holder hereof unless a different name has been indicated below. If any portion of this Security not repurchased is to be issued in the name of a Person other than the undersigned, the undersigned shall pay all transfer taxes payable with respect thereto.

Dated:
	Signature(s)
	The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program, pursuant to S.E.C. Rule 17Ad-15.
Fill in if a check is to be issued, or Securities are to be issued, other than to and in the name of registered Holder:	Signature Guarantee
(Name)	Principal amount to be purchased (if less than all): $            ,000
(Street Address)
(City state and zip code)	Social Security or Other Taxpayer Number
Please print name and address

FORM OF PURCHASE NOTICE

To: Flotek Industries, Inc.

The undersigned registered Holder of this Security hereby acknowledges receipt of a notice from Flotek Industries, Inc. (the “Company”) as to the Holder’s option to require the Company to repurchase this Security and requests and instructs the Company to repurchase this Security, or the portion hereof (which is $1,000 principal amount or a multiple thereof) designated below, in accordance with the terms of the Indenture referred to in this Security and directs that the check in payment for this Security or the portion thereof and any Securities representing any unrepurchased principal amount hereof, be issued and delivered to the registered Holder hereof unless a different name has been indicated below. If any portion of this Security not repurchased is to be issued in the name of a Person other than the undersigned, the undersigned shall pay all transfer taxes payable with respect thereto.

Dated:
	Signature(s)
	The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program, pursuant to S.E.C. Rule 17Ad-15.
Fill in if a check is to be issued, or Securities are to be issued, other than to and in the name of registered Holder:	Signature Guarantee
(Name)	Principal amount to be purchased (if less than all): $            ,000
(Street Address)
(City state and zip code)	Social Security or Other Taxpayer Number
Please print name and address

EX-10.1

Exhibit 10.1

FLOTEK INDUSTRIES, INC.

EXCHANGE AGREEMENT

This Exchange Agreement (this “Agreement”) is made as of March 31, 2010 by and among Flotek Industries, Inc., a Delaware corporation with its principal office at 2930 W. Sam Houston Parkway North, Suite 300, Houston, Texas 77043 (the “Company”), the guarantors listed on the signature pages hereto (each a “Guarantor” and together the “Guarantors”) and the investors listed on the attached Exhibit A (each an “Investor”, and collectively, the “Investors”).

RECITALS

A. The Company has authorized and outstanding $115 million principal amount of senior unsecured convertible notes (the “2008 Notes”) issued pursuant to an indenture dated February 14, 2008, as supplemented by the first supplemental indenture dated February 14, 2008 (the “2008 Supplement”).

B. The Investors hold 2008 Notes in the amounts listed on Exhibit A, among others.

C. In connection that certain Amended and Restated Credit Agreement, dated as of the date hereof (the “Amended Credit Agreement”), the Company and the Investors wish for the Investors to exchange, in accordance with this Agreement, their 2008 Notes for shares of common stock, par value $0.0001 per share, of the Company (the “Common Stock”), senior secured convertible notes (the “2010 Notes”) to be issued pursuant to an indenture in the form of Exhibit B and a first supplemental indenture in the form of Exhibit C (the “2010 Supplement” and together with the indenture, the “Indenture”), to which the Guarantors are parties and cash for accrued and unpaid interest on the exchanged 2008 Notes.

D. The issuance by the Company of the Common Stock and the 2010 Notes in exchange for the 2008 Notes is intended to be exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”).

E. Contemporaneously with entry into this Agreement, the Company and the Investors are entering into a Registration Rights Agreement (the “Registration Rights Agreement”) with respect to the 2010 Notes, the Exchange Shares (as hereinafter defined) and the Conversion Shares (as hereinafter defined).

TERMS AND CONDITIONS

Now, therefore, in consideration of the foregoing recitals and the mutual covenants and agreements contained herein, the parties hereto, intending to be legally bound, do hereby agree as follows:

1. Exchange of the Securities.

1.1 Agreement to Exchange At the Closing (as hereinafter defined), each Investor will deliver to the Company the 2008 Notes in the principal amounts set forth opposite such Investor’s name on Exhibit A, and the Company will (a) pay to each Investor cash in the amount of accrued and upaid interest up to (but not including) the Closing Date on the 2008 Notes being exchanged by such Investor; and (b) issue and deliver to each Inventor, for each $1,000 principal amount of 2008 Notes being exchanged by such Investor, (i) Common Stock (the “Exchange Shares” and together with the 2010 Notes issuable upon exchange of the 2008 Notes and the Security Guarantees (as defined in the Indenture), the “Securities”) in an amount equal to $50.00 divided by the greater of (x) the 95% of the Volume Weighted Average Price of the Common Stock, as determined using Bloomberg function VWAP for the 10 consecutive trading days ending two days before the Closing Date (as hereinafter defined), beginning at 9:30 a.m. (New York time) on the first day of the period and ending at 4:30 p.m. (New York time) on the last day of the period, or (y) 95% of the closing price of the Common Stock on the day before the Closing Date, rounded up to the nearest whole share, and (ii) 2010 Notes in a principal amount of $900.00, rounded up to the nearest $1,000.00 principal amount.

1.2 Closing; Closing Date. The completion of the exchange of the 2008 Notes (the “Closing”) shall be held at 9:00 a.m. (Central Time) as soon as practicable following the satisfaction of the conditions set forth in Section 4 (the “Closing Date”), at the offices of Doherty & Doherty LLP, 1717 St. James Place, Suite 520, Houston, Texas 77056 or at such other time and place as the Company and Investors may agree.

1.3 Delivery of the 2008 Notes. At the Closing, subject to the terms and conditions hereof, each Investor will deliver to the Company the 2008 Notes being exchanged by such Investor by

(i) in respect of a Definitive Security (as defined in the 2008 Supplement), an Investor must complete and manually sign the Assignment Form on the back of the Definitive Security, obtain the signature guarantee required thereby and deliver Definitive Security, together with the Assignment Form, to the Company;

(ii) in respect of a beneficial interest in a Global Security (as defined in the 2008 Supplement), an Investor who is a Beneficial Owner (as defined in the 2008 Supplement) must comply with DTC’s procedures for assigning a beneficial interest in a Global Security.

1.4 Delivery of the 2010 Notes and the Shares. At the Closing, subject to the terms and conditions hereof, the Company, and the Guarantors with respect to the 2010 Notes, will (i) deliver to each Investor the principal amount of 2010 Notes determined in accordance with Section 1.1 in the form set forth in the 2010 Supplement and subject to the legend set forth in Section 3.3, (ii) cause a book entry to be made in the records of the Company’s transfer agent in the name of each Investor evidencing (a “Book Entry”) the number of Exchange Shares determined in accordance with Section 1.1 and subject to the notation or legend set forth in Section 3.3, and (iii) pay to each Investor an amount in cash equal to the accrued and unpaid interest on the exchanged 2008 Notes surrendered by such Investor up to (but not including) the Closing Date.

2. Representations and Warranties of the Company and the Guarantors. The Company and the Guarantors hereby jointly and severally represents and warrants to each Investor:

2.1 Authorization.

(a) All corporate action on the part of the Company and each Guarantor, its officers, directors and shareholders necessary for the authorization, execution and delivery of this Agreement has been taken. The Company and each Guarantor has the requisite corporate power to enter into this Agreement and carry out and perform its obligations under the terms of this Agreement. At the Closing, the Company will have the requisite corporate power to issue and deliver the 2010 Notes, the Exchange Shares and the Common Stock issuable upon conversion of the 2010 Notes (the “Conversion Shares”). At the Closing, each Guarantor will have the requisite corporate power to provide its guarantee to the 2010 Notes. This Agreement has been duly authorized, executed and delivered by the Company and each Guarantor and, upon due execution and delivery by the Investors, this Agreement will be a valid and binding agreement of the Company and each Guarantor, enforceable against the Company and each Guarantor in accordance with its terms (except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally or by equitable principles).

(b) The Indenture has been duly authorized by the Company and each Guarantor and, assuming due authorization, execution and delivery thereof by the Trustee named therein, when executed and delivered by the Company and each Guarantor, will constitute a valid and binding instrument enforceable against the Company and each Guarantor in accordance with its terms (except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally or by equitable principles).

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(c) The 2010 Notes have been duly authorized by the Company and each Guarantor, and, when executed and authenticated in accordance with the provisions of the Indenture and delivered to the Investors in exchange for the 2008 Notes, will have been duly executed and delivered by the Company and each Guarantor and will constitute the valid and binding obligations of the Company and each Guarantor (subject, as to the enforcement of remedies, to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally or by equitable principles) entitled to the benefits of the Indenture and will be convertible into the Conversion Shares in accordance with their terms. The Security Guarantees (as defined in the Indenture) have been duly authorized by each Guarantor and, when executed and delivered by each Guarantor, will constitute a valid and binding instrument enforceable against each Guarantor in accordance with their terms (except as rights to indemnification thereunder may be limited by applicable law and except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally or by equitable principles).

(d) Each Security Document (as defined in the 2010 Supplement, together with this Agreement, Indenture and the Registration Rights Agreement, the “Transaction Documents”) has been duly authorized by the Company and each Guarantor that is a party thereto and, assuming due authorization, execution and delivery thereof by the other parties thereto, when executed and delivered by the Company and the applicable Guarantors, will constitute a valid and binding instrument enforceable against the Company and the applicable Guarantors in accordance with their terms (except as rights to indemnification thereunder may be limited by applicable law and except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally or by equitable principles).

(e) The Registration Rights Agreement has been duly authorized and, when executed and delivered by the Company, assuming due authorization, execution and delivery thereof by the Investors, will constitute a valid and binding instrument enforceable against the Company in accordance with its terms (except as rights to indemnification thereunder may be limited by applicable law and except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally or by equitable principles).

2.2 No Conflict with Other Instruments. The execution, delivery and performance of the Transaction Documents, the issuance and delivery of the Securities, the issuance of the Conversion Shares upon the conversion of the 2010 Notes and the consummation of the actions contemplated by the Transaction Documents (which for all purposes herein shall include conversion of the 2010 Notes) will not (A) result in any violation of, be in conflict with, or constitute a default under, with or without the passage of time or the giving of notice: (i) any provision of the Company’s, or any of its subsidiary’s or any Guarantor’s Certificate or Articles of Incorporation or Bylaws as in effect on the date hereof or at the Closing; (ii) any provision of any judgment, arbitration ruling, decree or order to which the Company, any subsidiary or any Guarantor is a party or by which any of them is bound; (iii) any bond, debenture, note or other evidence of indebtedness, or any lease, contract, mortgage, indenture, deed of trust, loan agreement, joint venture or other agreement, instrument or commitment to which the Company, any subsidiary or any Guarantor is a party or by which they or their respective properties are bound; or (iv) any statute, rule, law or governmental regulation applicable to the Company, any subsidiary or any Guarantor; or (B) result in the creation or imposition of any lien, encumbrance, claim, security interest or restriction whatsoever upon any of the properties or assets of the Company, any subsidiary or any Guarantor or any acceleration of indebtedness pursuant to any obligation, agreement or condition contained in any bond, debenture, note or any other evidence of indebtedness or any indenture, mortgage, deed of trust or any other agreement or instrument to which the Company, any subsidiary or any Guarantor is a party or by which any of them is bound or to which any of the property or assets of the Company, any subsidiary or any Guarantor is

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subject. No consent, approval, authorization or other order of, or registration, qualification or filing with, any regulatory body, administrative agency, or other governmental body is required for the execution and delivery of the Transaction Documents by the Company or any Guarantor and the valid issuance of the Securities by the Company and the Guarantors pursuant to this Agreement and the Indenture, other than such as have been made or obtained and that remain in full force and effect, and except for the filing of a Form D under the Securities Act or any notice filings required to be made under state securities laws.

2.3 Certificate of Incorporation; Bylaws. The Amended and Restated Certificate of Incorporation of the Company filed with the SEC (as hereinafter defined) as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the period ending September 30, 2009 is a true, correct and complete copy of the Company’s Amended and Restated Certificate of Incorporation as in effect on the date hereof. The Bylaws of the Company attached as Appendix F to the Company’s Definitive Proxy Statement filed with the SEC on September 27, 2001 is a true, correct and complete copy of the Company’s Bylaws as in effect on the date hereof.

2.4 Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as now conducted. The Company, each of its subsidiaries, and each Guarantor has the full power and authority to own, operate and occupy its properties and to conduct its business as presently conducted and is duly qualified to transact business and is in good standing in each jurisdiction in which the failure so to qualify would have a material adverse effect on its or its subsidiaries’ business, financial condition, properties, operations, prospects or assets or its ability to perform its obligations under this Agreement (a “Material Adverse Effect”).

2.5 SEC Filings. The consolidated financial statements contained in each report, registration statement and definitive proxy statement filed by the Company with the Securities and Exchange Commission (the “SEC,” and the documents, the “Company SEC Documents”): (i) complied as to form in all material respects with the published rules and regulations of the SEC applicable thereto and were timely filed; (ii) the information contained therein as of the respective dates thereof did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein in light of the circumstances under which they were made not misleading; (iii) were prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods covered, except as may be indicated in the notes to such financial statements and (in the case of unaudited statements) as permitted by Form 10-Q of the SEC, and except that unaudited financial statements may not contain footnotes and are subject to year-end audit adjustments; and (iv) fairly present the consolidated financial position of the Company and its subsidiaries as of the respective dates thereof and the consolidated results of operations cash flows and the changes in shareholders’ equity of the Company and its subsidiaries for the periods covered thereby.

2.6 Capitalization. The authorized capital stock of the Company consists of (i) 80,000,000 shares of Common Stock, of which (A) 25,056,627 shares were issued and outstanding as of the date of this Agreement, and (B) 12,397,137 shares were reserved for issuance upon the exercise or conversion, as the case may be, of outstanding options, warrants or other convertible securities as of the date of this Agreement; and (ii) 100,000 shares of preferred stock, of which 16,000 shares have been designated as Series A Cumulative Convertible Preferred Stock (the “Series A Preferred Stock”), of which 13,220 shares of Series A Preferred Stock were issued and outstanding as of the date of this Agreement, and no shares were reserved for issuance upon the exercise or conversion, as the case may be, of outstanding options, warrants or other convertible securities. All issued and outstanding shares of Common Stock and Series A Preferred Stock have been duly authorized and validly issued, are fully paid and nonassessable, have been issued and sold in compliance with the registration requirements (including any exceptions therefrom) of federal and state securities laws or the applicable statutes of limitation have expired, and were not issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. Except as set forth herein or the Company SEC Documents, there are no (i) outstanding rights

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(including, without limitation, preemptive rights), warrants or options to acquire, or instruments convertible into or exchangeable for, any unissued shares of capital stock or other equity interest in the Company, or any contract, commitment, agreement, understanding or arrangement of any kind to which the Company or any subsidiary is a party and relating to the issuance or sale of any capital stock or convertible or exchangeable security of the Company or any subsidiary, other than 1,594,379 options granted to directors and employees of the Company pursuant to its 2003 Long Term Incentive Plan, 2005 Long Term Incentive Plan or 2007 Long Term Incentive Plan; or (ii) obligations of the Company to purchase redeem or otherwise acquire any of its outstanding capital stock or any interest therein or to pay any dividend or make any other distribution in respect thereof. Except as disclosed in the Company SEC Documents, there are no anti-dilution or price adjustment provisions, co-sale rights, registration rights, rights of first refusal or other similar rights contained in the terms governing any outstanding security of the Company that will be triggered by the issuance of the Securities or the Conversion Shares.

2.7 2008 Notes. The Conversion Rate (as defined in the 2008 Supplement) for the 2008 Notes is 43.9560 shares of Common Stock per $1,000 principal amount of 2008 Notes. Since the initial issuance of the 2008 Notes, there has been (i) no transaction that would cause an adjustment to the Conversion Rate pursuant to Section 9.02 of the 2008 Supplement, and (ii) no Reorganization Event (as defined in the 2008 Supplement).

2.8 Subsidiaries. Except as set forth in the Company SEC Documents or such additional entities that are guarantors of the 2010 Notes, the Company does not presently own or control, directly or indirectly, and has no stock or other interest as owner or principal in, any other corporation or partnership, joint venture, association or other business venture or entity (each a “subsidiary”). Each subsidiary is duly incorporated or organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization and has all requisite power and authority to carry on its business as now conducted. All of the outstanding capital stock or other securities of each subsidiary is owned by the Company, directly or indirectly, free and clear of any liens, claims, or encumbrances other than pledges of such shares as security under or in connection with the Amended Credit Agreement and the 2010 Notes.

2.9 Valid Issuance of Securities. The Securities and the Conversion Shares are duly authorized and, when issued and delivered in accordance with the terms hereof or of the 2010 Notes, as the case may be, will be duly and validly authorized and issued, fully paid and nonassessable, free from all taxes, liens, claims, encumbrances and charges with respect to the issue thereof; provided, however, that the Securities and the Conversion Shares may be subject to restrictions on transfer under state and/or federal securities laws or as otherwise set forth herein. The issuance and delivery of the Securities and the Conversion Shares in accordance with the terms hereof or the 2010 Notes will not be subject to preemptive rights of stockholders of the Company. The Conversion Shares have been duly reserved for issuance upon conversion of the 2010 Notes.

2.10 Offering. Assuming the accuracy of the representations of the Investors in Section 3.3 of this Agreement on the date hereof, on the Closing Date and solely as this Section 2.10 relates to the issue of the Conversion Shares on the date(s) of conversion of the 2010 Notes, the offer and issuance of the Securities to Investors hereunder and issuance of the Conversion Shares upon the conversion of the 2010 Notes in accordance with the terms thereof (assuming no change in applicable law prior to the date the Conversion Shares are issued), are and will be exempt from the registration and prospectus delivery requirements of the Securities Act and have been or will be registered or qualified (or are or will be exempt from registration and qualification) under the registration, permit or qualification requirements of all applicable state securities laws. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales of any security or solicited any offers to buy any security under circumstances that would require registration under the Securities Act of the issuance of the Securities to the Investors or the issuance of the Conversion Shares upon conversion of the 2010 Notes. Other than the Company SEC Documents, the Company has not distributed and will not distribute prior to the Closing Date any offering material in connection with the issuance of the Securities

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or Conversion Shares. The Company has not taken any action to sell, offer for sale or solicit offers to buy any securities of the Company that would bring the exchange of the 2008 Notes or the issuance of the Securities or the issuance of the Conversion Shares upon conversion of the 2010 Notes, within the provisions of Section 5 of the Securities Act, unless such offer, issuance or sale was or shall be within the exemptions of Section 4 of the Securities Act.

2.11 Litigation. Except as set forth in the Company SEC Documents, there is no action, suit, proceeding nor investigation pending or, to the Company’s knowledge, currently threatened against the Company or any of its subsidiaries that (a) would reasonably be expected to adversely effect the business, condition, prospects, capitalization, assets, liabilities, operations or financial performance of the Company or its subsidiaries or (b) would be required to be disclosed in the Company’s Annual Report on Form 10-K under the requirements of Item 103 of Regulation S-K. The foregoing includes, without limitation, any action, suit, proceeding or investigation, pending or threatened, that questions the validity of the Transaction Documents or the right of the Company to enter into the Transaction Documents and perform its obligations hereunder and thereunder. Neither the Company nor any subsidiary nor any Guarantor is subject to any injunction, judgment, decree or order of any court, regulatory body, arbitral panel, administrative agency or other government body that could reasonably be expected to have a Material Adverse Effect.

2.12 Governmental Consents. No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state, local or provincial governmental authority on the part of the Company or any Guarantor is required in connection with the consummation of the transactions contemplated by the Transaction Documents, except for notices required or permitted to be filed with certain state and federal securities commissions, which notices will be filed on a timely basis.

2.13 No Brokers. Except for any fees payable by the Company to Fig Partners, LLC, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by the Transaction Documents based on arrangements made by the Company or any Guarantor.

2.14 Compliance. The Company is not in violation of its Amended and Restated Certificate of Incorporation or Bylaws. Neither the Company nor any subsidiary nor any Guarantor has been advised or has reason to believe, that it is not conducting its business in compliance with all applicable laws, rules and regulations of the jurisdictions in which it is conducting business, including, without limitation, all applicable local, state and federal environmental laws and regulations; except where failure to be so in compliance would not have a Material Adverse Effect. Each of the Company, the subsidiaries and the Guarantors has all necessary franchises, licenses, certificates and other authorizations from any foreign, federal, state or local government or governmental agency, department or body that are currently necessary for the operation of the business of the Company, the subsidiaries and the Guarantors as currently conducted, except where the failure to currently possess such franchises, licenses, certificates and other authorizations would not reasonably be expected to have a Material Adverse Effect.

2.15 Exchange Act Compliance. The Common Stock is registered pursuant to Section 12(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and is listed on the New York Stock Exchange (the “Principal Market”), and, except as disclosed in the Company SEC Documents, the Company has taken no action designed to, or likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act or delisting the Common Stock (including the Exchange Shares and the Conversion Shares) from the Principal Market. Except as disclosed in the Company SEC Documents, the Company is in compliance with all of the presently applicable requirements for continued listing of the Common Stock on the Principal Market. The issuance of the Securities and the Conversion Shares does not require stockholder approval including, without limitation, pursuant to the rules and regulations of the Principal Market.

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2.16 Form S-3 Eligibility; Registration Rights Agreements. The Company is eligible to register the Securities and the Conversion Shares for resale under the Securities Act by the Investors using a Registration Statement on Form S-3. Other than as set forth in the Company SEC Documents or as provided under the Registration Rights Agreement and the Registration Right Agreement related to the Amended Credit Agreement, the Borrower has not agreed to register any of its authorized or outstanding securities under the Securities Act.

2.17 Transfer Taxes. On the Closing Date, all stock transfer or other taxes (other than income taxes) that are required to be paid in connection with the issuance of the Securities hereunder will be, or will have been, fully paid or provided for by the Company and the Company will have complied with all laws imposing such taxes.

2.18 No General Solicitation. Neither the Company, nor any of its affiliates, nor any Guarantor, nor any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D promulgated under the Securities Act) in connection with the issuance of the Securities.

2.19 Application of Takeover Protections; Rights Agreement. The Company and its board of directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Certificate of Incorporation or the laws of the jurisdiction of its formation which is or could become applicable to any Investor as a result of the transactions contemplated by the Transaction Documents, including, without limitation, the Company’s issuance of the Securities and the Conversion Shares and any Investor’s ownership of the Securities and the Conversion Shares. The Company has not adopted a shareholder rights plan or similar arrangement relating to accumulations of beneficial ownership of Common Stock or a change in control of the Company.

2.20 Security Documents Complete. The Security Documents represent all of the collateral and guarantee agreements, security agreements, mortgages and other similar agreements necessary to grant to Investors a valid security interest in the Collateral (as defined in the 2010 Supplement), which security interest will rank immediately junior in priority (subject to Permitted Collateral Liens (as defined in the 2010 Supplement)) to the security interests in the Collateral securing the Priority Lien Obligations (as defined in the 2010 Supplement).

2.21 Security Interests.

(a) Upon execution and delivery of the Security Documents and the filing of Uniform Commercial Code financing statements and any other applicable registrations in the appropriate filing offices, the Investors will obtain a valid and perfected lien upon and security interest in all right, title and interest of the Company and the Guarantors in the Collateral (to the extent a lien upon or security interest in such Collateral may be perfected by possession, by filings under the Uniform Commercial Code as in effect in any applicable jurisdiction or by any filings required with the United States Patent and Trademark Office or United States Copyright Office) as security for the 2010 Notes and the Securities Guarantee (as defined in the Indenture), which security interest will rank immediately junior in priority (subject to Permitted Collateral Liens) to the security interests in the Collateral securing the Priority Lien Obligations.

(b) Upon the execution and delivery of the mortgages to be delivered at Closing (the “Mortgages”) related to the Mortgaged Property (as used in the Amended Credit Agreement), such Mortgages will be effective to grant a legal and valid mortgage lien on all of the mortgagor’s right, title and interest in each of the Mortgaged Properties thereunder. When the Mortgages are duly recorded in the proper recorders’ offices or appropriate public records and the mortgage recording fees and taxes in respect thereof are paid and compliance is otherwise had with the formal requirements of state or local

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law applicable to the recording of real estate mortgages generally, each such Mortgage shall constitute a validly perfected and enforceable second-priority security interest in the related Mortgaged Property, for the ratable benefit of the holders of the 2010 Notes, subject only to Permitted Collateral Liens and other encumbrances and exceptions to title expressly set forth therein and except to the extent that such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally or by equitable principles.

3. Representations and Warranties of the Investors. Each Investor, severally and not jointly, hereby represents and warrants to the Company as follows:

3.1 Legal Power. The Investor has the requisite authority to enter into this Agreement and to carry out and perform its obligations under the terms of this Agreement. All action on the Investor’s part required for the lawful execution and delivery of this Agreement have been or will be effectively taken prior to the Closing.

3.2 Due Execution. This Agreement has been duly authorized, executed and delivered by the Investor, and, upon due execution and delivery by the Company, this Agreement will be a valid and binding agreement of the Investor, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally or by equitable principles.

3.3 Investment Representations. In connection with the issuance of the Securities and Conversion Shares, the Investor, for itself and no other Investor, makes the following representations:

(a) Investment for Own Account. The Investor is acquiring the Securities and any Conversion Shares for its own account, not as nominee or agent, and not with a view to, or for resale in connection with, any distribution or public offering thereof within the meaning of the Securities Act; provided, however, that by making the representations herein, the Investor does not agree to hold any of the Securities or the Conversion Shares for any minimum or specific term and reserves the right to dispose of the securities at any time in accordance with, or pursuant to, a registration statement or an exemption from the registration requirements of the Securities Act.

(b) Transfer Restrictions; Legends. The Investor understands that (i) the Securities and Conversion Shares have not been registered under the Securities Act; (ii) the Securities and Conversion Shares are being issued pursuant to an exemption from registration, based in part upon the Company’s reliance upon the statements and representations made by the Investors in this Agreement, and that the Securities and Conversion Shares must be held by the Investor indefinitely, and that the Investor must, therefore, bear the economic risk of such investment indefinitely, unless a subsequent disposition thereof is registered under the Securities Act or is exempt from such registration; (iii) each note representing the 2010 Notes and each certificate representing Exchange Shares or Conversion Shares will be endorsed with the following legend, and each Book Entry evidencing Exchange Shares or Conversion Shares shall contain the following notation, until the earlier of (1) the time at which the Securities or the Conversion Shares, as applicable, have been sold under a Registration Statement, or (2) the date on which the Securities or the Conversion Shares, as applicable, may be immediately sold without registration and without restriction (including without limitation as to sales volume by each holder thereof) as to the number of Securities or Conversion Shares, as applicable, to be sold, pursuant to Rule 144 under the Securities Act or otherwise:

THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION

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NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE FORM AND SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE ISSUER, THE REGISTRAR AND THE TRANSFER AGENT. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT.

(iv) the Company will instruct any transfer agent not to register any transfer of the Securities or the Conversion Shares (or any portion thereof) until the applicable time set forth in clause (iii) above unless the conditions specified in the foregoing legends are satisfied or, if the opinion of counsel referred to above is to the further effect that such legend is not required in order to establish compliance with any provisions of the Securities Act or this Agreement, or other satisfactory assurances of such nature are given to the Company.

The Company acknowledges and agrees that an Investor may from time to time pledge, and/or grant a security interest in some or all of the Securities or the Conversion Shares pursuant to a bona fide margin agreement in connection with a bona fide margin account with a financial institution that is an “accredited investor,” as defined in Rule 501(a) under the Securities Act, and, if required under the terms of such agreement or account, the Investor may transfer pledged or secured Securities or Conversion Shares to the pledgees or secured parties. Such a pledge or transfer shall not be subject to approval or consent of the Company and no legal opinion of legal counsel to the pledgee, secured party or pledgor shall be required in connection with the pledge, but such legal opinion may be required in connection with a subsequent transfer following default by the Investor transferee of the pledge. No notice shall be required of such pledge. At the applicable Investor’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Securities or Conversion Shares may reasonably request in connection with a pledge or transfer of the Securities or Conversion Shares including the preparation and filing of any required prospectus supplement under Rule 424(b)(3) of the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of Selling Stockholders thereunder.

Book Entries evidencing, and certificates representing, Exchange Shares or Conversion Shares shall not contain any notation or legend, as applicable, (including the notation and legend set forth in this Section): (i) following a sale of such Exchange Shares or Conversion Shares pursuant to an effective registration statement; (ii) following a sale of such Exchange Shares or Conversion Shares pursuant to Rule 144, or (iii) while such Exchange Shares or Conversion Shares are eligible for sale under Rule 144 without volume or manner of sale limitations, or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the SEC). Following such time as restrictive notations are not required to be made relative to any Book Entry evidencing, or legends are not required to be placed on certificates representing, Exchange Shares or Conversion Shares, the Company will (A) promptly upon a request by an Investor, instruct the transfer agent for the Company to remove the restrictive notation from Book Entries evidencing such Exchange Shares or Conversion Shares; and (B) no later than three Trading Days following the delivery by an Investor to the Company or the Company’s transfer agent of a certificate representing Exchange Shares or Conversion Shares containing a restrictive legend, deliver or cause to be delivered to such Investor a certificate representing such Exchange Shares or Conversion Shares that is free from all restrictive and other legends.

The Company shall cause its counsel to issue a legal opinion to the Company’s transfer agent promptly after the effective date of a registration statement covering the Exchange Shares or Conversion

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Shares if required by the Company’s transfer agent to effect the removal of any notation on the Book Entries evidencing, or legend on the certificates representing, such Exchange Shares or Conversion Shares. The Company may not make any notation on its records or give instructions to any transfer agent of the Company that enlarge the restrictions on transfer set forth in this Section. Certificates for Exchange Shares or Conversion Shares subject to legend removal hereunder shall be transmitted by the transfer agent of the Company to the Investors by crediting the account of the Investor’s prime broker with the Depository Trust Company system.

Each Investor, severally and not jointly with the other Investors, agrees that the removal of the restrictive notation on the Book Entries evidencing, or legend from certificates representing, Exchange Shares or Conversion Shares, as set forth in this Section 3.2(b), is predicated upon the Company’s reliance that the Investor will sell any Exchange Shares or Conversion Shares pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom.

(c) Financial Sophistication. The Investor has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in connection with the transactions contemplated in this Agreement.

(d) Accredited Investor Status. The Investor is an “accredited investor” as such term is defined in Rule 501(a) under the Securities Act.

(e) Residency. The Investor is organized under the laws of the state set forth beneath such Investor’s name on the signature page attached hereto, and its principal place of operations is in the state set forth beneath such Investor’s name on the signature page attached hereto.

3.4 No Investment, Tax or Legal Advice. Each Investor understands that nothing in the Company SEC Documents, this Agreement, or any other materials presented to the Investor in connection with the issuance of the Securities constitutes legal, tax or investment advice. Each Investor has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of Securities.

3.5 Additional Acknowledgement. Each Investor acknowledges that it has independently evaluated the merits of the transactions contemplated by this Agreement, that it has independently determined to enter into the transactions contemplated hereby, that it is not relying on any advice from or evaluation by any other person. Each Investor acknowledges that it has not taken any actions that would deem the Investors to be members of a “group” for purposes of Section 13(d) of the Exchange Act.

4. Conditions to Closing.

4.1 Conditions to Obligations of Investors at Closing. Each Investor’s obligation to exchange 2008 Notes for the Securities at the Closing is subject to the fulfillment to that Investor’s reasonable satisfaction, on or prior to the Closing, of all of the following conditions, any of which may be waived by such Investor:

(a) Representations and Warranties True; Performance of Obligations. The representations and warranties made by the Company in Section 2 shall be true and correct in all material respects on the Closing Date with the same force and effect as if they had been made on and as of the Closing Date and the Company shall have performed and complied with all obligations and conditions herein required to be performed or complied with by it on or prior to the Closing in all material respects and a certificate duly executed by an officer of the Company, to the effect of the foregoing, shall be delivered to the Investors.

(b) Proceedings and Documents. All corporate and other proceedings in connection with the transactions contemplated at the Closing and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form to counsel to the Investor, and

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counsel to the Investor shall have received all such counterpart originals or certified or other copies of such documents as they may reasonably request. The Company shall have delivered (or caused to have been delivered) to each Investor, the certificates required by this Agreement. The Conversion Shares shall have been duly authorized and reserved for issuance upon conversion of the 2010 Notes.

(c) Qualifications, Legal Investment. All authorizations, approvals, or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful exchange of the 2008 Notes and issuance of the Securities and Conversion Shares shall have been duly obtained and shall be effective on and as of the Closing. No stop order or other order enjoining the exchange of the 2008 Notes or the issuance of the Securities or Conversion Shares shall have been issued and no proceedings for such purpose shall be pending or, to the knowledge of the Company, threatened by the SEC, or any commissioner of corporations or similar officer of any state having jurisdiction over this transaction. At the time of the Closing, the exchange of the 2008 Notes and the issuance of the Securities and Conversion Shares shall be legally permitted by all laws and regulations to which Investors and the Company are subject. No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby that prohibits the consummation of any of the transactions contemplated by the Transaction Documents.

(d) Execution of Agreements. The Company shall have executed this Agreement and the Registration Rights Agreement and have delivered such agreements to the Investors.

(e) Secretary’s Certificate. The Company shall have delivered to the Investors a certificate of the Secretary of the Company certifying as to the truth and accuracy of the resolutions of the board of directors relating to the transaction contemplated hereby (a copy of which shall be included with such certificate).

(f) Trading and Listing. Trading and listing of the Company’s common stock on the Principal Market shall not have been suspended by the SEC or the Principal Market.

(g) Market Listing. The Company will comply with all of the requirements of the Financial Industry Regulatory Authority, Inc. and the Principal Market with respect to the issuance of the Securities and the Conversion Shares and shall have, or will, list the Exchange Shares and the Conversion Shares on the Principal Market prior to, or on, the date of issuance thereof.

(h) Blue Sky. The Company shall have obtained all necessary “blue sky” law permits and qualifications, or have the availability of exemptions therefrom, required by any state for the exchange of the 2008 Notes and the issuance of the Securities and issuance of the Conversion Shares upon the conversion of the 2010 Notes.

(i) Material Adverse Change. Since the date of this Agreement, there shall not have occurred any event which results in a Material Adverse Effect.

(j) Change in Conversion Rate. Since the date of this Agreement, there shall not have occurred any event that would cause an adjustment to the Conversions Rate (as defined in the 2008 Supplement) pursuant to Section 9.02 of the 2008 Supplement, and (ii) no Reorganization Event (as defined in the 2008 Supplement).

(k) Opinion. The Company shall have delivered to Investors the opinion of Andrews Kurth, LLP, counsel to the Company, dated as of the Closing Date in substantially the form attached hereto as Exhibit D.

4.2 Conditions to Obligations of the Company. The Company’s obligation to exchange the 2008 Notes and issue the Securities at the Closing is subject to the fulfillment to the Company’s reasonable satisfaction, on or prior to the Closing of the following conditions, any of which may be waived by the Company:

(a) Representations and Warranties True. The representations and warranties made by the Investors in Section 3 shall be true and correct in all material respects on the Closing Date with the same force and effect as if they had been made on and as of said date.

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(b) Performance of Obligations. The Investors shall have performed and complied with all agreements and conditions herein required to be performed or complied with by them on or before the Closing in all material respects.

(c) Qualifications, Legal Investment. All authorizations, approvals, or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful exchange of the 2008 Notes and issuance of the Securities and Conversion Shares shall have been duly obtained and shall be effective on and as of the Closing. No stop order or other order enjoining the conversion of the Notes or the issuance of the Securities or Conversion Shares shall have been issued and no proceedings for such purpose shall be pending or, to the knowledge of the Company, threatened by the SEC, or any commissioner of corporations or similar officer of any state having jurisdiction over this transaction. At the time of the Closing, conversion of the Notes and issuance of the Securities and the Conversion Shares shall be legally permitted by all laws and regulations to which the Investors and the Company are subject. No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by the Transaction Documents.

(d) Execution of Agreements. The Investors shall have executed this Agreement and the Registration Rights Agreement and delivered this Agreement and the Registration Rights Agreement to the Company.

5. Additional Covenants.

5.1 Reporting Status. With a view to making available to the Investors the benefits of certain rules and regulations of the SEC which may permit the sale of the Securities and Conversion Shares to the public without registration, the Company agrees to use its best efforts to file with the SEC, in a timely manner all reports and other documents required of the Company under the Exchange Act. The Company will otherwise take such further action as an Investor may reasonably request, all to the extent required from time to time to enable such Investor to sell the Securities and Conversion Shares without registration under the Securities Act or any successor rule or regulation adopted by the SEC.

5.2 Listing. So long as an Investor owns any of the Securities or Conversion Shares, the Company will use its reasonable best efforts to maintain the automated quotation of its Common Stock, including the Exchange Shares and Conversion Shares, on the Principal Market or an alternative listing on the NASDAQ Stock Market or, if such quotation on the Principal Market or the NASDAQ Stock Market is not possible, qualification for trading on the OTCBB, and will comply in all material respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Financial Industry Regulatory Authority, Inc. and such exchange or listing, if applicable.

5.3 Non-Public Information. The Company covenants and agrees that neither it nor any other person acting on its behalf will provide any Investor or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto such Investor shall have executed a written agreement regarding the confidentiality and use of such information. The Company understands and confirms that each Investor shall be relying on the foregoing representations in effecting transactions in securities of the Company.

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6. Additional Securities Law Matters.

6.1 Limits on Additional Issuances. The Company will not, for a period of six months following the Closing Date, offer for sale or sell any securities unless, in the opinion of the Company’s counsel, such offer or sale does not jeopardize the availability of exemptions from the registration and qualification requirements under applicable securities laws with respect to the securities being offered hereby. Except for the issuance of common stock under the Amended Credit Agreement, stock options under the Company’s stock option plans, the issuance of common stock upon exercise of outstanding options, warrants and convertible securities, the issuance of common stock purchase warrants, and the offering contemplated hereby, the Company has not engaged in any offering of equity securities during the six months prior to the date of this Agreement. The foregoing provisions shall not prevent the Company from filing a “shelf” registration statement pursuant to Rule 415 under the Securities Act, but the foregoing provisions shall apply to any sale of securities thereunder.

6.2 Form D and State Securities Filings. If applicable, the Company will file with the SEC a Notice of Sale of Securities on Form D with respect to the Securities, as required under Regulation D under the Securities Act, no later than 15 days after the Closing Date. The Company will promptly and timely file all documents and pay all filing fees required by any states’ securities laws in connection with the issuance of Securities.

6.3 Supplying Information. For so long as the Securities remain outstanding and are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, the Company will furnish to holders of the Securities and prospective purchasers of the Securities designated by such holders, upon the request of such holders or such prospective purchasers, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act, unless the Company is then subject to and in compliance with Section 13 or 15(d) of the Exchange Act.

7. Miscellaneous.

7.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to the choice of law provisions thereof, and the federal laws of the United States.

7.2 Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors, and administrators of the parties hereto.

7.3 Entire Agreement. The Transaction Documents and the exhibits thereto, and the other documents delivered pursuant thereto, constitute the full and entire understanding and agreement among the parties with regard to the subjects hereof and no party shall be liable or bound to any other party in any manner by any representations, warranties, covenants, or agreements except as specifically set forth therein. Nothing in this Agreement, express or implied, is intended to confer upon any party, other than the parties thereto and their respective successors and assigns, any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided therein.

7.4 Severability. In the event any provision of this Agreement shall be invalid, illegal, or unenforceable, it shall to the extent practicable, be modified so as to make it valid, legal and enforceable and to retain as nearly as practicable the intent of the parties, and the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

7.5 Amendment and Waiver. Except as otherwise provided herein, any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance, either retroactively or prospectively, and either for a specified period of time or indefinitely), with the written consent of the Company and Investors representing a majority of the Securities (determined as if the 2010 Notes had been converted to Common Stock) and the

Page 13

Conversion Shares. Any amendment or waiver effected in accordance with this Section 7.5 shall be binding upon any holder of any Securities purchased under this Agreement (including securities into which such Securities have been converted), each future holder of all such securities, and the Company.

7.6 Fees and Expenses. The Company agrees to pay on demand (i) all reasonable out-of-pocket costs and expenses of each Investor (including outside counsel fees and expenses of each Investor) in connection with the preparation, execution and delivery and of this Agreement and the related documents, and (ii) all costs and expenses, if any, of each Investor (including outside counsel fees and expenses of each Investor) in connection with the enforcement (whether through negotiations, legal proceedings, or otherwise) of this Agreement and the related documents.

7.7 Notices. All notices, requests, consents and other communications hereunder shall be in writing, shall be delivered (A) if within the United States, by first-class registered or certified airmail, or nationally recognized overnight express courier, postage prepaid, or by facsimile, or (B) if from outside the United States, by International Federal Express (or comparable service) or facsimile, and shall be deemed given (i) if delivered by first-class registered or certified mail domestic, upon the business day received, (ii) if delivered by nationally recognized overnight carrier, one business day after timely delivery to such carrier, (iii) if delivered by International Federal Express (or comparable service), two business days after so mailed, (iv) if delivered by facsimile, upon electric confirmation of receipt and shall be addressed as follows, or to such other address or addresses as may have been furnished in writing by a party to another party pursuant to this paragraph:

if to the Company, to:

Flotek Industries, Inc.

Attn: Executive Vice President - Finance

2930 W. Sam Houston Parkway North, Suite 300

Houston, Texas 77043

Facsimile: (713) 726-5363

with a copy to:

Andrews Kurth, LLP

Attn: W. Mark Young

600 Travis, Suite 4200

Houston, Texas 77002

Facsimile: (713) 238-7111

if to a Guarantor, at its address on the signature page to this Agreement, and if to an Investor, at its address on the signature page to this Agreement.

7.8 Survival of Representations, Warranties and Agreements. Notwithstanding any investigation made by any party to this Agreement, all covenants, agreements, representations and warranties made by the Company and the Investors herein shall survive the execution of this Agreement, the delivery to the Investor of the Securities, and a party’s reliance on such representations and warranties shall not be affected by any investigation made by such party or any information developed thereby.

7.9 Counterparts. This Agreement may be executed by facsimile signature and in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.

7.10 Independent Nature of Investors’ Obligations and Rights. The obligations of each Investor under this Agreement are several and not joint with the obligations of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor under this Agreement. Nothing contained herein, and no action taken by any Investor pursuant hereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other

Page 14

kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this Agreement. Each Investor confirms that it has independently participated in the negotiation of the transaction contemplated hereby with the advice of its own counsel and advisors. Each Investor shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement, and it shall not be necessary for any other Investor to be joined as an additional party in any proceeding for such purpose.

[The remainder of this page is intentionally left blank.]

Page 15

In witness whereof, the foregoing Exchange Agreement is hereby executed as of the date first above written.

FLOTEK INDUSTRIES, INC.
By	/s/ John Chisholm
	John Chisholm
	President

In witness whereof, the foregoing Exchange Agreement is hereby executed as of the date first above written.

TELEDRIFT COMPANY FLOTEK PAYMASTER, INC. MATERIAL TRANSLOGISTICS, INC. PETROVALVE, INC. TURBECO, INC. USA PETROVALVE, INC. FLOTEK INTERNATIONAL, INC. PADKO INTERNATIONAL INCORPORATED FLOTEK ECUADOR MANAGEMENT, LLC FLOTEK ECUADOR INVESTMENTS, LLC
By	/s/ John Chisholm
	John Chisholm
	President

Address for Notice: 2930 W. Sam Houston Parkway North, Suite 300 Houston, Texas 77043
Attn:	Jempy Neyman
Telephone:	(713) 726-5370
Facsimile:	(713) 726-5363

SOONER ENERGY SERVICES, LLC CESI MANUFACTURING, LLC CESI CHEMICAL, INC.
By	/s/ John Chisholm
	John Chisholm
	Chief Executive Officer

Address for Notice: 2930 W. Sam Houston Parkway North, Suite 300 Houston, Texas 77043
Attn:	Jempy Neyman
Telephone:	(713) 726-5370
Facsimile:	(713) 726-5363

In witness whereof, the foregoing Exchange Agreement is hereby executed as of the date first above written.

FLOTEK INDUSTRIES FZE
By	/s/ John Chisholm
	John Chisholm
	President

Address for Notice: 2930 W. Sam Houston Parkway North, Suite 300 Houston, Texas 77043
Attn:	Jempy Neyman
Telephone:	(713) 726-5370
Facsimile:	(713) 726-5363

In witness whereof, the foregoing Exchange Agreement is hereby executed as of the date first above written.

WHITEBOX HEDGED HIGH YIELD PARTNERS, LP
By:	Whitebox Hedged High Yield Advisors, LLC
Its:	General Partner
By:	Whitebox Advisors LLC
Its:	Managing Member
By:	/s/ Mark Strefling
Name:	Mark Strefling
Title:	Chief Legal Officer

Tax Identification No.:                                              

State of Organization: British Virgin Islands

State of Principal Place of Operations: Minnesota

Address for Notice:

c/o Whitebox Advisors LLC

3033 Excelsior Blvd., Suite 300

Minneapolis, MN 55416

Attention: Jake Mercer

Telephone: 612-253-6049

Facsimile: 612-253-6100

Delivery Instructions (if different from above):

Attention:

Telephone:

Facsimile:

In witness whereof, the foregoing Exchange Agreement is hereby executed as of the date first above written.

IAM MINI-FUND 14 LIMITED
By:	Whitebox Advisors LLC
Its:	Investment Manager
By:	/s/ Mark Strefling
Name:	Mark Strefling
Title:	Chief Legal Officer

Tax Identification No.:                                              

State of Organization: Cayman Islands

State of Principal Place of Operations:                     

Address for Notice:

c/o Whitebox Advisors LLC

3033 Excelsior Blvd., Suite 300

Minneapolis, MN 55416

Attention: Jake Mercer

Telephone: 612-253-6049

Facsimile: 612-253-6100

Delivery Instructions (if different from above):

Attention:

Telephone:

Facsimile:

In witness whereof, the foregoing Exchange Agreement is hereby executed as of the date first above written.

PANDORA SELECT PARTNERS, LP
By:	Pandora Select Advisors, LLC
Its:	General Partner
By:	Whitebox Advisors LLC
Its:	Managing Member
By:	/s/ Mark Strefling
Name:	Mark Strefling
Title:	Chief Legal Officer

Tax Identification No.:                                              

State of Organization: British Virgin Islands

State of Principal Place of Operations: Minnesota

Address for Notice:

c/o Whitebox Advisors LLC

3033 Excelsior Blvd., Suite 300

Minneapolis, MN 55416

Attention: Jake Mercer

Telephone: 612-253-6049

Facsimile: 612-253-6100

Delivery Instructions (if different from above):

Attention:

Telephone:

Facsimile:

In witness whereof, the foregoing Exchange Agreement is hereby executed as of the date first above written.

WHITEBOX SPECIAL OPPORTUNITIES FUND, LP – SERIES B
By:	Whitebox Special Opportunities Advisors, LLC
Its:	General Partner
By:	Whitebox Advisors LLC
Its:	Managing Member
By:	/s/ Mark Strefling
Name:	Mark Strefling
Title:	Chief Legal Officer

Tax Identification No.:                                              

State of Organization: British Virgin Islands

State of Principal Place of Operations: Minnesota

Address for Notice:

c/o Whitebox Advisors LLC

3033 Excelsior Blvd., Suite 300

Minneapolis, MN 55416

Attention: Jake Mercer

Telephone: 612-253-6049

Facsimile: 612-253-6100

Delivery Instructions (if different from above):

Attention:

Telephone:

Facsimile:

In witness whereof, the foregoing Exchange Agreement is hereby executed as of the date first above written.

WHITEBOX COMBINED PARTNERS, LP
By:	Whitebox Combined Advisors, LLC
Its:	General Partner
By:	Whitebox Advisors LLC
Its:	Managing Member
By:	/s/ Mark Strefling
Name:	Mark Strefling
Title:	Chief Legal Officer

Tax Identification No.:                                              

State of Organization: British Virgin Islands

State of Principal Place of Operations: Minnesota

Address for Notice:

c/o Whitebox Advisors LLC

3033 Excelsior Blvd., Suite 300

Minneapolis, MN 55416

Attention: Jake Mercer

Telephone: 612-253-6049

Facsimile: 612-253-6100

Delivery Instructions (if different from above):

Attention:

Telephone:

Facsimile:

In witness whereof, the foregoing Exchange Agreement is hereby executed as of the date first above written.

WHITEBOX CONVERTIBLE ARBITRAGE PARTNERS, LP
By:	Whitebox Convertible Arbitrage Advisors, LLC
Its:	General Partner
By:	Whitebox Advisors LLC
Its:	Managing Member
By:	/s/ Mark Strefling
Name:	Mark Strefling
Title:	Chief Legal Officer

Tax Identification No.:                                              

State of Organization: British Virgin Islands

State of Principal Place of Operations: Minnesota

Address for Notice:

c/o Whitebox Advisors LLC

3033 Excelsior Blvd., Suite 300

Minneapolis, MN 55416

Attention: Jake Mercer

Telephone: 612-253-6049

Facsimile: 612-253-6100

Delivery Instructions (if different from above):

Attention:

Telephone:

Facsimile:

In witness whereof, the foregoing Exchange Agreement is hereby executed as of the date first above written.

WHITEBOX INTERMARKET PARTNERS LP
By:	Whitebox Intermarket Advisors LLC
Its:	General Partner
By:	Whitebox Advisors LLC
Its:	Managing Member
By:	/s/ Mark Strefling
Name:	Mark Strefling
Title:	Chief Legal Officer

Tax Identification No.:                                              

State of Organization: British Virgin Islands

State of Principal Place of Operations: Minnesota

Address for Notice:

c/o Whitebox Advisors LLC

3033 Excelsior Blvd., Suite 300

Minneapolis, MN 55416

Attention: Jake Mercer

Telephone: 612-253-6049

Facsimile: 612-253-6100

Delivery Instructions (if different from above):

Attention:

Telephone:

Facsimile:

ECF VALUE FUND, L.P.
By:	Gates Capital Partners, L.P.
Its:	General Partner
By:	Gates Capital Management, Inc.
Its:	General Partner
By:	/s/ Jeffrey L. Gates
Name:	Jeffrey L. Gates
Title:	President
ECF VALUE FUND II, L.P.
By:	Gates Capital Partners, L.P.
Its:	General Partner
By:	Gates Capital Management, Inc.
Its:	General Partner
By:	/s/ Jeffrey L. Gates
Name:	Jeffrey L. Gates
Title:	President
ECF VALUE FUND INTERNATIONAL LTD.
By:	Gates Capital Management, Inc.
Its:	Investment Advisor
By:	/s/ Jeffrey L. Gates
Name:	Jeffrey L. Gates
Title:	President

EXHIBIT A

SCHEDULE OF INVESTORS

Investor	2008 Notes Held		2010 Notes to be Received
Whitebox Hedged High Yield Partners, LP	$	3,724,000	$	3,352,000
IAM Mini-Fund 14 Limited	$	955,000	$	860,000
Pandora Select Partners, LP	$	1,711,000	$	1,540,000
Whitebox Special Opportunities Fund, LP – Series B	$	503,000	$	453,000
Whitebox Combined Partners, LP	$	11,244,000	$	10,120,000
Whitebox Convertible Arbitrage Partners, LP	$	4,196,000	$	3,777,000
Whitebox Intermarket Partners LP	$	167,000	$	151,000
ECF Value Fund, L.P.	$	8,892,000	$	8,003,00
ECF Value Fund II, L.P.	$	5,612,000	$	5,051,000
ECF Value Fund International Ltd.	$	2,696,400	$	2,697,000

EX-10.2

Exhibit 10.2

LIEN SUBORDINATION AND INTERCREDITOR AGREEMENT

dated as of

March 31, 2010,

among

WHITEBOX ADVISORS LLC,

as Credit Facilities Collateral Agent,

U.S. BANK NATIONAL ASSOCIATION

as Note Collateral Agent

and

FLOTEK INDUSTRIES, INC.

and the other Grantors named herein

LIEN SUBORDINATION AND INTERCREDITOR AGREEMENT dated as of March 31, 2010, between WHITEBOX ADVISORS LLC, as collateral agent for the Credit Facility Secured Parties referred to herein; U.S. BANK NATIONAL ASSOCIATION, as collateral agent for the Note Secured Parties referred to herein; FLOTEK INDUSTRIES, INC.; and the other Grantors named herein.

Reference is made to (a) the Credit Agreement (such term, and each other capitalized term used and not otherwise defined herein, having the meaning assigned to it in Article I), under which the Lenders referred to therein have extended and agreed to extend credit to the Company, and (b) the Note Indenture, under which the Company proposes to issue the Notes. The issuance of the Notes and the creation of the Liens provided for in the Note Security Documents require the execution and delivery of this Agreement. In consideration of the amendment of the Credit Agreements to permit the issuance of the Notes, the purchase of the Notes by the purchasers thereof, the mutual agreements herein contained and other good and valuable consideration, the receipt of which is hereby acknowledged, the Credit Facilities Collateral Agent (for itself and on behalf of the Credit Facilities Secured Parties), the Note Collateral Agent (for itself and on behalf of the Note Secured Parties), the Company and the subsidiaries of the Company named herein agree as follows:

ARTICLE I

Definitions

SECTION 1.01. Construction; Certain Defined Terms. (a) 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, (i) 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, (ii) any reference herein to any person shall be construed to include such person’s successors and assigns, but shall not be deemed to include the subsidiaries of such person unless express reference is made to such subsidiaries, (iii) 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, (iv) all references herein to Articles and Sections shall be construed to refer to Articles and Sections of this Agreement and (v) 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.

1

(b) As used in this Agreement, the following terms have the meanings specified below:

“Accession Agreement” means an accession agreement in substantially the form of Annex I hereto under which a collateral agent or similar Representative of Designated Senior Obligations shall become a party hereto and the Designated Senior Obligations Collateral Agent for such Designated Senior Obligations hereunder.

“Bankruptcy Code” means Title 11 of the U.S. Code.

“Collateral” means the Credit Facilities Collateral, the Designated Senior Obligations Collateral and the Note Collateral.

“Collateral Agent” means any of the Credit Facilities Collateral Agent, any Designated Senior Obligations Collateral Agent and the Note Collateral Agent.

“Company” means Flotek Industries, Inc., a Delaware corporation.

“Credit Agreement” means the Amended and Restated Credit Agreement dated as of March 31, 2010, as amended, extended, renewed, restated, supplemented or otherwise modified from time to time, among the Company, the Lenders party thereto, and Whitebox Advisors LLC, as Administrative Agent.

“Credit Facilities Collateral” means all “Collateral”, as defined in the Pledge and Security Agreement, securing any Credit Facilities Obligations, and any other assets or properties of the Company or any subsidiaries of the Company now or at any time hereafter subject to Liens securing any Credit Facilities Obligations.

“Credit Facilities Collateral Agent” means Whitebox Advisors LLC, in its capacity as Administrative Agent under the Credit Agreement and the Credit Facilities Security Documents, and its successors and assigns in such capacity.

“Credit Facilities Obligations” means all “Obligations” as such term is defined in the Credit Agreement.

2

“Credit Facilities Secured Parties” means, at any time, each person that is a “Secured Party” under and as defined in the Credit Agreement.

“Credit Facilities Security Documents” means the Pledge and Security Agreement, the other “Security Documents”, as defined in the Credit Agreement, and any other documents now existing or entered into after the date hereof that create Liens on any assets or properties of the Company or any subsidiaries of the Company to secure any Credit Facilities Obligations.

“Designated Senior Obligations” means all obligations of the Company or any subsidiaries of the Company that shall have been designated as such in accordance with Article III.

“Designated Senior Obligations Collateral” means any assets or properties of the Company or any subsidiaries of the Company now or at any time hereafter subject to Liens securing any Designated Senior Obligations.

“Designated Senior Obligations Collateral Agent” means, with respect to any Designated Senior Obligations, any collateral agent or similar Representative appointed to act on behalf of the applicable Designated Senior Obligations Secured Parties with respect to the Designated Senior Obligations Collateral securing such Designated Senior Obligations; provided, that if no such collateral agent or other Representative shall have been so appointed by the applicable Designated Senior Obligations Secured Parties, then the Designated Senior Obligations Collateral Agent with respect to such Designated Senior Obligations will be deemed to be such Designated Senior Obligations Secured Parties.

“Designated Senior Obligations Governing Documents” means, as to any Designated Senior Obligations, the credit agreement, note agreement, indenture or other instrument or document under which such Designated Senior Obligations shall have been issued or incurred.

“Designated Senior Obligations Secured Parties” means, at any time, each holder of, or obligee in respect of, any Designated Senior Obligations outstanding at such time.

“Designated Senior Obligations Security Documents” means any documents entered into after the date hereof that create Liens on any assets or properties of the Company or any subsidiaries of the Company to secure any Designated Senior Obligations.

3

“Discharge of Senior Obligations” means payment in full in cash of the principal of and interest and premium, if any, on all Debt (as defined in the Credit Agreement) (or any corresponding definition in any Designated Senior Obligations Governing Documents) constituting Senior Obligations secured by any Collateral, or, with respect to all obligations under each Hedging Arrangement (as defined in the Credit Agreement) (or any corresponding definition in any Designated Senior Obligations Governing Documents) constituting Senior Obligations secured by any Collateral, delivery of cash collateral or backstop letters of credit in respect thereof in compliance with the terms of such Senior Obligation, in each case after or concurrently with termination of all commitments to extend credit thereunder, and payment in full of any other obligations in respect of any Senior Obligation secured by any Collateral that are due and payable or otherwise accrued and owing at or prior to the time such principal, interest and premium, if any, are paid.

“Grantor” means the Company and each subsidiary of the Company that shall have created any Senior Lien or Junior Lien on its assets or properties to secure any Senior Obligations or Note Obligations.

“Junior Collateral Agent” means the Note Collateral Agent.

“Junior Liens” means Liens created under Junior Obligations Security Documents securing Junior Obligations.

“Junior Lien Pledge and Security Agreement” means the Junior Lien Pledge and Security Agreement dated as of March 31, 2010, among the Company, certain subsidiaries of the Company and the Note Collateral Agent, as amended, extended, renewed, restated, supplemented or otherwise modified from time to time.

“Junior Obligations” means the Note Obligations.

“Junior Obligations Collateral” means the Note Collateral.

“Junior Obligations Secured Parties” means the Note Secured Parties.

“Junior Obligations Security Documents” means the Note Security Documents.

“Lien” means any pledge, security interest, mortgage or other lien or encumbrance created to secure any indebtedness or other obligation.

4

“Note Collateral” means the “Collateral”, as defined in the Note Indenture, and any other assets or properties of the Company or any subsidiaries of the Company now or at any time hereafter subject to Liens securing any Note Obligations.

“Note Collateral Agent” means U.S. Bank National Association, in its capacity as Collateral Agent under the Note Indenture and the Note Security Documents, and its successors and assigns in such capacity.

“Note Indenture” means the Indenture dated as of March 31, 2010, among the Company, as Issuer, the Guarantors (as defined therein) party thereto and U.S. Bank National Association, as Trustee, as amended and supplemented by the First Supplemental Indenture dated as of March 31, 2010 among the Company, as Issuer, the Guarantors (as defined therein) party thereto and U.S. Bank National Association, as Trustee (the “First Supplemental Note Indenture”) and as further amended, extended, renewed, restated, supplemented or otherwise modified from time to time.

“Note Obligations” means (a) the due and punctual payment of (i) the principal of and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Notes, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) all other monetary obligations of the Company or any subsidiaries of the Company to any of the Note Secured Parties under the Note Indenture or any Note Security Document, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) and (iii) all amounts due under any guarantee of any of the foregoing, including any guarantee contained in the Note Indenture, and (b) the due and punctual performance of all other obligations of the Company or any subsidiaries of the Company to any of the Note Secured Parties under the Note Indenture or any Note Security Document.

“Note Secured Parties” means, at any time, the Trustee, the Note Collateral Agent and each other holder of, or obligee in respect of, any Note Obligations outstanding at such time.

“Note Security Documents” means the Junior Lien Pledge and Security Agreement, the other “Security Documents”, as defined in the First Supplemental Note Indenture, and any other documents now existing or entered into after the date hereof that create Liens on any assets or properties of the Company or any subsidiaries of the Company to secure any Note Obligations.

5

“Notes” means up to $36,004,000 aggregate principal amount of the Company’s 5.25% Convertible Senior Secured Notes due 2028, issued on or about the date of this Agreement pursuant to the Note Indenture, and any other notes issued from time to time under the Note Indenture.

“Pledge and Security Agreement” means the Amended and Restated Pledge and Security Agreement dated as of March 31, 2010, among the Company, certain subsidiaries of the Company and the Credit Facilities Collateral Agent, as amended, extended, renewed, restated, supplemented or otherwise modified from time to time.

“Representative” means (a) in the case of any Credit Facility Obligations, the Administrative Agent under the Credit Agreement or the Credit Facilities Collateral Agent, (b) in the case of the Note Obligations, the Trustee or the Note Collateral Agent, and (c) in the case of any Designated Senior Obligations, any administrative agent, trustee or similar representative designated pursuant to Article III or the applicable Designated Senior Obligations Collateral Agent.

“Secured Parties” means the Credit Facilities Secured Parties, the Designated Senior Obligations Secured Parties and the Note Secured Parties.

“Senior Collateral Agent” means the Credit Facilities Collateral Agent and each Designated Senior Obligations Collateral Agent.

“Senior Obligations” means the Credit Facilities Obligations and the Designated Senior Obligations.

“Senior Obligations Collateral” means the Credit Facilities Collateral and the Designated Senior Obligations Collateral.

“Senior Obligations Secured Parties” means the Credit Facilities Secured Parties and the Designated Senior Obligations Secured Parties.

“Senior Obligations Security Documents” means the Credit Facilities Security Documents and the Designated Senior Obligations Security Documents.

“Senior Liens” means Liens created under Senior Obligations Security Documents securing Senior Obligations.

6

“subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which are consolidated with those of the parent in the parent’s consolidated financial statements in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held by, or (b) that is, as of such date, otherwise subject to the control by (through possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such person, whether through the ability to exercise voting power, by contract or otherwise), the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.

ARTICLE II

Subordination of Junior Liens

SECTION 2.01. Subordination of Junior Liens. (a) All Junior Liens in respect of any Collateral are expressly subordinated and made junior in right, priority, operation and effect to any and all Senior Liens in respect of such Collateral, notwithstanding anything contained in this Agreement, the Note Indenture, any Junior Obligations Security Document or any other agreement or instrument to the contrary, and irrespective of the time, order or method of creation, attachment or perfection of such Junior Liens and Senior Liens or any defect or deficiency or alleged defect or deficiency in any of the foregoing.

(b) It is acknowledged that (i) the aggregate amount of the Senior Obligations may be increased as provided in Article III or through increases in the amounts of the facilities established by the Credit Agreement or the Designated Senior Obligations Governing Documents (subject to the limitations set forth in the Note Indenture), (ii) a portion of the Senior Obligations consists or may consist of Indebtedness that is revolving in nature, and the amount thereof that may be outstanding at any time or from time to time may be increased or reduced and subsequently reborrowed and (iii) the Senior Obligations may be extended, renewed or otherwise amended or modified, or secured with additional Collateral, from time to time, all without affecting the subordination of the Junior Liens hereunder or the provisions of this Agreement defining the relative rights of the Senior Obligations Secured Parties and the Junior Obligations Secured Parties. The lien priorities provided for herein shall not be altered or otherwise affected by any amendment, modification, supplement, extension, increase, replacement, renewal, restatement or refinancing of either the Junior

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Obligations or the Senior Obligations, by the securing of any Senior Obligations with any additional Collateral or guarantees, by the release of any Collateral or Guarantees securing any Senior Obligations, by the failure of any person to comply with any provision of this Agreement or any agreement evidencing, governing or securing any Senior Obligation or Junior Obligation or by any action that any Collateral Agent or Secured Party may take or fail to take in respect of any Collateral.

(c) It is further acknowledged that the holders of Senior Obligations of one or more classes may from time to time hereafter enter into agreements establishing the relative priorities of such classes of Senior Obligations or of the Senior Liens securing the same. It is agreed that the relative priorities of classes of Senior Obligations shall be governed by the foregoing agreements or, to the extent not determined by such agreements, by applicable law, and that nothing in this Agreement shall affect such relative priorities of classes of Senior Obligations or the related Senior Liens. It is further agreed that no agreements establishing the relative priorities of Senior Obligations of one or more classes or of the Senior Liens securing such Senior Obligations shall in any way limit or affect the subordination of the Junior Liens provided for in this Agreement or the provisions of this Agreement defining the relative rights of the Senior Obligations Secured Parties and the Junior Obligations Secured Parties.

(d) It is further acknowledged that (subject to the limitations set forth in the Note Indenture) the Senior Obligations are or may in the future be secured by Liens on collateral other than the Collateral subject to the Junior Liens. It is agreed that no Senior Collateral Agent will have any obligation to proceed against any such other collateral securing the Senior Obligations or to exercise any other remedies available to them as a condition to obtaining the benefits of this Article II.

(e) The Note Collateral Agent confirms that the Note Indenture and the Note Security Documents contain provisions substantially to the effect set forth in Annex II hereto under which the Note Secured Parties agree to, and subject their rights to the provisions of, this Agreement.

SECTION 2.02. No Action With Respect to Junior Obligations Collateral Subject to Senior Liens. No Junior Collateral Agent or other Junior Obligations Secured Party shall commence or instruct the Junior Collateral Agent to commence any judicial or nonjudicial foreclosure proceedings with respect to, seek to have a trustee, receiver, liquidator or similar official appointed for or over, attempt any action to take possession of, exercise any right, remedy or power with respect to, or otherwise take any action to enforce its interest in or realize upon, or take any other action available to it in respect of, any Junior

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Obligations Collateral under any Junior Obligations Security Document, applicable law or otherwise, at any time when such Junior Obligations Collateral shall be subject to any Senior Lien and prior to the Discharge of Senior Obligations, it being agreed that only the applicable Senior Collateral Agent, acting in accordance with the applicable Senior Obligations Security Documents, shall be entitled to take any such actions or exercise any such remedies. Notwithstanding the foregoing or anything to the contrary provided in Section 2.06, the Junior Collateral Agent may, subject to Section 2.05, (i) take all such actions as it shall deem necessary to continue the perfection of the Junior Liens on any Junior Obligations Collateral, (ii) file a claim or statement of interest with respect to the Junior Obligations in any bankruptcy, insolvency or similar proceeding or (iii) take any other action not adverse to the Senior Liens in order to preserve or protect its rights in the Junior Liens on the Collateral for the benefit of the Junior Obligations Secured Parties.

SECTION 2.03. No Duties of Senior Collateral Agents. Each Junior Obligations Secured Party acknowledges and agrees that no Senior Collateral Agent or other Senior Obligations Secured Party shall have any duties or other obligations to such Junior Obligations Secured Party with respect to any Senior Obligations Collateral, other than to transfer to the Junior Collateral Agent any proceeds of any such Collateral that constitutes Junior Obligations Collateral remaining in its possession following any sale, transfer or other disposition of such Collateral and the Discharge of Senior Obligations, or, if any Senior Collateral Agent shall be in possession of all or any part of such Collateral after the Discharge of Senior Obligations, such Collateral or any part thereof remaining, in each case without representation or warranty on the part of such Senior Collateral Agent or any Senior Obligations Secured Party (it being understood that nothing herein shall prohibit any Senior Collateral Agent from transferring Collateral or proceeds of Collateral to the holders of other Senior Obligations secured by such Collateral or to another Senior Collateral Agent acting on their behalf to the extent it is required to do so under the terms of any agreement). In furtherance of the foregoing, each Junior Obligations Secured Party acknowledges and agrees that until the Discharge of Senior Obligations, the applicable Senior Collateral Agents shall be entitled, for the benefit of the holders of such Senior Obligations, to sell, transfer or otherwise dispose of or deal with such Collateral as provided herein and in the Credit Facilities Security Documents or the Designated Senior Obligations Security Documents, as the case may be, without regard to any Junior Lien or any rights to which the holders of the Junior Obligations would otherwise be entitled as a result of such Junior Lien. Without limiting the foregoing, each Junior Obligations Secured Party agrees that no Senior Collateral Agent or other Senior Obligations Secured Party shall have any duty or obligation first to marshall or realize upon any type of Collateral (or any other collateral securing the Senior Obligations), or to sell, dispose of or otherwise liquidate all or any portion of the Collateral (or any other collateral securing the Senior Obligations), in any manner that would

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maximize the return to the Junior Obligations Secured Parties, notwithstanding that the order and timing of any such realization, sale, disposition or liquidation may affect the amount of proceeds actually received by the Junior Obligations Secured Parties from such realization, sale, disposition or liquidation. Each of the Junior Obligations Secured Parties waives any claim such Junior Obligations Secured Party may now or hereafter have against any Senior Collateral Agent or other Senior Obligations Secured Party (or their representatives) arising out of (i) any actions which any Senior Collateral Agent or the Senior Obligations Secured Parties take or omit to take (including, without limitation, actions with respect to the creation, perfection or continuation of Liens on any Collateral, actions with respect to the foreclosure upon, sale, release or depreciation of, or failure to realize upon, any of the Collateral and actions with respect to the collection of any claim for all or any part of the Senior Obligations from any account debtor, guarantor or any other party) in accordance with the respective Senior Obligations Security Documents or any other agreement related thereto or to the collection of the Senior Obligations or the valuation, use, protection or release of any security for the Senior Obligations, (ii) any election by any Senior Collateral Agent or Senior Obligations Secured Parties, in any proceeding instituted under the Bankruptcy Code, of the application of Section 1111(b) of the Bankruptcy Code and/or (iii) any borrowing of any Grantor as debtor-in-possession, or any related grant of a security interest or administrative expense priority under Section 364 of the Bankruptcy Code.

SECTION 2.04. No Interference; Payment Over; Reinstatement. (a) Each Junior Obligations Secured Party agrees that (i) it will not take or cause to be taken any action the purpose or effect of which is, or could be, to make any Junior Lien pari passu with, or to give such Junior Obligations Secured Party any preference or priority relative to, any Senior Lien with respect to the Collateral subject to such Junior Lien or any part thereof, (ii) it will not challenge or question in any proceeding the validity or enforceability of any Senior Obligations or Senior Obligations Security Document, or the validity, attachment, perfection or priority of any Senior Lien, or the validity or enforceability of the priorities, rights or duties established by or other provisions of this Agreement, (iii) it will not interfere, hinder or delay, in any manner, whether by judicial proceedings or otherwise, any sale, transfer or other disposition of the Collateral subject to such Junior Lien by any holders of Senior Obligations secured by such Collateral or any Senior Collateral Agent acting on their behalf, (iv) it shall have no right to (A) direct any Senior Collateral Agent or any holder of Senior Obligations to exercise any right, remedy or power with respect to the Collateral subject to any Junior Lien or (B) consent to the exercise by any Senior Collateral Agent or any holder of Senior Obligations of any right, remedy or power with respect to the Collateral subject to any Junior Lien, (v) it will not institute any suit or assert in any suit, bankruptcy, insolvency or other proceeding any claim against any Senior Collateral Agent or any holder of Senior Obligations seeking damages from or other relief by way of specific performance,

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instructions or otherwise with respect to, and neither any Senior Collateral Agent nor any holder of Senior Obligations shall be liable for, any action taken or omitted to be taken by such Senior Collateral Agent or any such holder of Senior Obligations with respect to any Collateral securing such Senior Obligations that is subject to any Junior Lien, (vi) it will not seek, and hereby waives any right, to have any Senior Obligations Collateral subject to any Junior Lien or any part thereof marshaled upon any foreclosure or other disposition of such Collateral and (vii) it will not attempt, directly or indirectly, whether by judicial proceedings or otherwise, to challenge the enforceability of any provision of this Agreement.

(b) The Junior Collateral Agent and each other Junior Obligations Secured Party hereby agrees that if it shall obtain possession of any Senior Obligations Collateral, or shall realize any proceeds or payment in respect of any such Collateral, whether pursuant to any Junior Obligations Security Document or by the exercise of any rights available to it under applicable law or in any bankruptcy, insolvency or similar proceeding or otherwise, at any time prior to the Discharge of Senior Obligations, then it shall hold such Collateral, proceeds or payment in trust for the applicable Senior Obligations Secured Parties and transfer such Collateral, proceeds or payment, as the case may be, to the applicable Senior Collateral Agent. Each Junior Obligations Secured Party agrees that if, at any time, all or part of any payment with respect to any Senior Obligations previously made shall be rescinded for any reason whatsoever, such Junior Obligations Secured Party shall promptly pay over to the applicable Senior Collateral Agent any payment received by it in respect of any Collateral subject to any Senior Lien securing such Senior Obligations and shall promptly turn any Collateral subject to any such Senior Lien then held by it over to the applicable Senior Collateral Agent, and the provisions set forth in this Agreement shall be reinstated as if such payment had not been made, until the Discharge of Senior Obligations.

SECTION 2.05. Automatic Release of Junior Liens. The Junior Collateral Agent and each other Junior Obligations Secured Party agrees that, in the event of a sale, transfer or other disposition of Senior Obligations Collateral subject to any Junior Lien to a person or entity that is not the Company or a subsidiary of the Company, such Junior Lien on such Collateral (but not on the proceeds thereof, except to the extent such proceeds are applied to repay any Senior Obligations) shall terminate and be released automatically and without further action if the applicable Senior Liens on such Collateral are released. Each Junior Collateral Agent agrees to execute and deliver all such releases and other instruments as shall reasonably be requested by any applicable Senior Collateral Agent to evidence and confirm any release of Junior Obligations Collateral provided for in this Section.

SECTION 2.06. Certain Agreements With Respect to Bankruptcy or Insolvency Proceedings. In the event a proceeding under the Bankruptcy Code or any other Federal,

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state or foreign bankruptcy, insolvency, receivership or similar law shall be commenced by or against any Grantor, each Junior Collateral Agent and the other Junior Obligations Secured Parties shall not, prior to the Discharge of Senior Obligations, (a) seek in respect of any part of the Collateral or proceeds thereof or any Lien which may exist thereon any relief from or modification of the automatic stay as provided in Section 362 of the Bankruptcy Code or seek or accept any form of adequate protection under either or both Sections 362 and 363 of the Bankruptcy Code with respect thereto except replacement liens junior to the Senior Liens and the accrual (but not the current payment) of interest and the current payment of out-of-pocket expenses, including fees and disbursements of counsel and other professional advisors, incurred by the Junior Collateral Agents (which the Junior Obligations Secured Parties agree will constitute adequate protection of their claims and interests), (b) oppose or object to any adequate protection sought by or granted to any Senior Obligations Secured Party in connection with the use of cash collateral or post-petition financing under Section 362, 363 or 364 of the Bankruptcy Code, (c) oppose or object to the use of cash collateral by a Grantor, (d) oppose or object to any post-petition financing (including any debtor-in-possession financing) provided by any of the Senior Obligations Secured Parties or provided by a third party pursuant to Section 364 of the Bankruptcy Code (including on a priming basis), (e) oppose or object to or withhold consent from the disposition of assets by any Grantor under Section 363(b) or (f) of the Bankruptcy Code, (f) oppose, object to, or vote against any plan of reorganization or disclosure statement the terms of which are consistent with the rights of the Senior Obligations Secured Parties under the Senior Obligations Security Documents and the rights of the Senior Obligations Secured Parties and the Junior Obligations Secured Parties under this Agreement, (g) make an election pursuant to Section 1111(b) of the Bankruptcy Code or oppose any election pursuant to Section 1111(b) by any Senior Obligations Secured Parties, (h) oppose or object to the determination of the extent of any Liens held by any of the Senior Obligations Secured Parties or the value of any claims of Senior Obligations Secured Parties under Section 506(a) of the Bankruptcy Code, or (i) oppose or object to the payment of interest and expenses as provided under Sections 506(b) and (c) of the Bankruptcy Code to any Senior Obligations Secured Parties. In any proceeding described in this Section, until the Discharge of Senior Obligations, each Junior Obligations Secured Party hereby authorizes and empowers (without imposing an obligation on) the holders of such Senior Obligations or any Senior Collateral Agent or other Representative acting on their behalf to vote such Junior Obligations Secured Party’s share of the Junior Obligations secured by such Junior Lien, insofar as any such voting right arises from or relates to such Junior Lien or to the Collateral subject thereto, in connection with any resolution, arrangement, plan of reorganization, compromise or settlement relating to such Collateral, so long as the proposal is consistent with the rights of the Senior Obligations Secured Parties under the Senior Obligations Security Documents and the rights of the Senior Obligations Secured Parties and the Junior Obligations Secured Parties under this Agreement. Notwithstanding the foregoing, any Junior Collateral Agent may take the actions contemplated by the last sentence of Section 2.02 hereof.

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SECTION 2.07. Reinstatement. In the event that any of the Senior Obligations shall be paid in full and such payment or any part thereof shall subsequently, for whatever reason (including, but not limited to, an order or judgment for disgorgement of a preference under Title 11 of the United Stated Code, or any similar law, or the settlement of any claim in respect thereof), be required to be returned or repaid, the terms and conditions of this Article II shall be fully applicable thereto until all such Senior Obligations shall again have been paid in full in cash.

ARTICLE III

Designated Senior Obligations

SECTION 3.01. Designation. The Company may from time to time, subject to any limitations contained in the Credit Agreement, any then existing Designated Senior Obligations Governing Documents and the Note Indenture, designate additional obligations that are, or are to be, secured by Liens on any assets or properties of the Company or any subsidiaries of the Company as Designated Senior Obligations by delivering to each Collateral Agent a notice:

(i) describing the obligations being designated as Designated Senior Obligations, and including a statement of the maximum aggregate outstanding principal amount of such obligations;

(ii) listing the Designated Senior Obligations Governing Documents under which such Designated Senior Obligations are issued or incurred and the Designated Senior Obligations Security Documents securing such Designated Senior Obligations, and attaching copies of such Designated Senior Obligations Governing Documents and Designated Senior Obligations Security Documents;

(iii) identifying the Designated Senior Obligations Collateral Agent with respect to such Designated Senior Obligations, and any other Representative of the holders of such Designated Senior Obligations;

(iv) certifying that the incurrence of such Designated Senior Obligations, the creation of the Liens securing such Designated Senior Obligations and the designation of such Designated Senior Obligations as Designated Senior Obligations hereunder do not violate or result in a default under any provision of any Credit Agreement, any then existing Designated Senior Obligations Governing Document or the Note Indenture;

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(v) certifying that the Designated Senior Obligations Governing Document governing such Designated Senior Obligations contains provisions under which the related Designated Senior Obligations Secured Parties agree, or are deemed to agree, to be bound by the provisions of this Agreement; and

(vi) attaching a fully executed Accession Agreement under which the Designated Senior Obligations Collateral Agent with respect to such Designated Senior Obligations shall become a party to and a Collateral Agent under this Agreement (unless such Designated Senior Obligations Collateral Agent shall already be a party hereto).

Upon the delivery of such notice and the related attachments as provided above, the obligations designated in such notice shall become Designated Senior Obligations for all purposes of this Agreement. Notwithstanding any other provision contained in this Section or elsewhere in this Agreement, no obligation shall constitute a Designated Senior Obligation if the incurrence of such obligation, the creation of the Liens securing such obligation or the designation of such obligation as a Designated Senior Obligation hereunder would violate or result in a default under any provision of any Credit Agreement, any existing Designated Senior Obligations Governing Document or the Note Indenture.

Each Senior Collateral Agent agrees that if it shall at any time hold a Senior Lien on any Junior Obligations Collateral that can be perfected by the possession or control of such Collateral or of any account in which such Collateral is held, and if such Collateral or any such account is in fact in the possession or under the control of such Senior Collateral Agent, such Senior Collateral Agent will serve as sub-agent for each Junior Collateral Agent for the sole purpose of perfecting the Junior Lien of such Junior Collateral Agent in such Collateral. It is agreed that the obligations of the applicable Senior Collateral Agent and the rights of the Junior Collateral Agents and the other Junior Secured Parties in connection with any such sub-agency arrangement will be in all respects subject to the provisions of Article II. The Senior Collateral Agent will be deemed to make no representation as to the adequacy of the steps taken by it to perfect the Junior Lien on any such Collateral and shall have no responsibility to any Junior Collateral Agent or other Junior Secured Party for such perfection, it being understood that the sole purpose of this Article is to enable the Junior Secured Parties to obtain a perfected Junior Lien in such Collateral to the extent, if any, that such perfection results from the possession or control of such Collateral or any such account by the Senior Collateral Agent. Upon the Discharge of Senior Obligations with respect to Senior Obligations secured by the Senior Lien of any Senior Collateral Agent, such Senior

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Collateral Agent shall take all such actions in its power as shall reasonably be requested by the Junior Collateral Agent to transfer possession or control of such Collateral or any such account to the Junior Collateral Agent; provided, that if any such Collateral or any such account shall be subject to any other Senior Lien, then such Senior Collateral Agent shall instead transfer such possession or control of such Collateral or such account to the Senior Collateral Agent holding such Senior Lien. The Junior Collateral Agent agrees that if it shall obtain possession or control of any Collateral or any account pursuant to the foregoing provisions and such Collateral or account shall thereafter become subject to any Senior Lien, it will take all such actions in its power as shall reasonably be requested by the Senior Collateral Agent holding such Senior Lien to transfer possession or control of such Collateral or such account to such Senior Collateral Agent.

ARTICLE V

Existence and Amounts of Liens and Obligations

Whenever any Collateral Agent shall be required, in connection with the exercise of its rights or the performance of its obligations hereunder, to determine the existence or amount of any Senior Obligations or Junior Obligations, or the existence of any Lien securing any such obligations, or the Collateral subject to any such Lien, it may request that such information be furnished to it in writing by the Representative of such Senior Obligations or Junior Obligations and shall be entitled to make such determination on the basis of the information so furnished; provided, however, that if, notwithstanding the request of such Collateral Agent, such Representative shall fail or refuse reasonably promptly to provide the requested information, such Collateral Agent shall be entitled to determine such existence or amount by such method as it may, in the exercise of its good faith judgment, determine, including by reliance upon a certificate of the Company. Each Collateral Agent may rely conclusively, and shall be fully protected in so relying, on any determination made by it in accordance with the provisions of the preceding sentence (or as otherwise directed by a court of competent jurisdiction) and shall have no liability to the Company or any of its subsidiaries, any Secured Party or any other person as a result of such determination.

ARTICLE VI

Consent of Grantors

Each Grantor hereby consents to the provisions of this Agreement and the intercreditor arrangements provided for herein and agrees (a) that no Collateral Agent or other Secured Party shall have any liability to any Grantor as a result of the performance of

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its obligations hereunder and (b) that the obligations of the Grantors under the Senior Obligations Security Documents will in no way be diminished or otherwise affected by the provisions or arrangements provided for herein. Each Grantor also hereby confirms its respective guarantees, pledges and grants of security interests, as applicable, under each of the Credit Facilities Security Documents to which it is a party, and agrees that, notwithstanding the effectiveness of the Note Security Documents, such guarantees, pledges and grants of security interests shall continue to be in full force and effect and shall accrue to the benefit of the Credit Facilities Secured Parties.

ARTICLE VII

Representations and Warranties

SECTION 7.01. Representations and Warranties of Each Party. Each party hereto represents and warrants to the other parties hereto as follows:

(a) Such party is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has all requisite power and authority to enter into and perform its obligations under this Agreement.

(b) This Agreement has been duly executed and delivered by such party and constitutes a legal, valid and binding obligation of such party, enforceable in accordance with its terms.

(c) The execution, delivery and performance by such party of this Agreement (i) do not require any consent or approval of, registration or filing with or any other action by any governmental authority and (ii) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of such party or any order of any governmental authority or any indenture, agreement or other instrument binding upon such party.

SECTION 7.02. Representations and Warranties of Each Collateral Agent. Each Collateral Agent represents and warrants to the other parties hereto that it has been authorized by the Secured Parties for which it serves as collateral agent (or, in the case of the Credit Facilities Collateral Agent, by the Required Lenders under and as defined in each Credit Agreement) to enter into this Agreement.

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ARTICLE VIII

Miscellaneous

SECTION 8.01. Notices. All notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:

(a) if to the Credit Facilities Collateral Agent, to Whitebox Advisors LLC, 3033 Excelsior Blvd., Ste 300, Minneapolis, Minnesota 55416, Attention of Jake Mercer (Telecopy No. (612) 253-6149);

(b) if to the Note Collateral Agent, to U.S. Bank National Association, 5555 San Felipe Street, Suite 1150, Houston, TX 77056, Attention: Corporate Trust Services (Telecopy No. (713) 235-9213);

(c) if to any Designated Senior Obligations Collateral Agent, to it at the address or telecopy number specified in the applicable Accession Agreement; and

(d) if to the Company, to it at Flotek Industries, Inc., 2930 W. Sam Houston Parkway North, Suite 300, Houston, Texas 77043, Attention of Jempy Neyman (Telecopy No. (713) 726-5363).

Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto (and for this purpose a notice to the Company shall be deemed to be a notice to each Grantor). All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt.

SECTION 8.02. Waivers; Amendment. (a) No failure or delay on the part of any party hereto in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the parties hereto are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by any party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on any party hereto in any case shall entitle such party to any other or further notice or demand in similar or other circumstances.

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(b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by each Collateral Agent and the Company.

SECTION 8.03. Parties in Interest. This Agreement shall be binding upon and inure to the benefit of the parties hereto (including any Designated Senior Obligations Collateral Agents becoming parties hereto as provided in Section 8.04) and their respective successors and assigns, as well as the other Credit Facilities Secured Parties, Note Secured Parties and Designated Senior Obligations Secured Parties, all of whom are intended to be bound by, and to be third party beneficiaries of, this Agreement.

SECTION 8.04. Accession of Designated Senior Obligations Collateral Agents. Upon the execution and delivery by the collateral agent or similar Representative of any Designated Senior Obligations of an Accession Agreement as provided in Article III, such collateral agent or Representative shall become a party to this Agreement as the Designated Senior Obligations Collateral Agent for such Designated Senior Obligations and shall thenceforth have all the rights and obligations applicable to it in such capacity hereunder.

SECTION 8.05. Survival of Agreement. All covenants, agreements, representations and warranties made by any party in this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement.

SECTION 8.06. Counterparts. This Agreement may be executed in counterparts, each of which shall constitute an original but all of which when taken together shall constitute a single contract. Delivery of an executed signature page to this Agreement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Agreement.

SECTION 8.07. Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

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SECTION 8.08. Governing Law; Jurisdiction; Consent to Service of Process. (a) This Agreement shall be construed in accordance with and governed by the law of the State of New York.

(b) Each party hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York state or federal court sitting in New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York state or, to the extent permitted by law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that any party hereto may otherwise have to bring any action or proceeding relating to this Agreement in the courts of any jurisdiction.

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

(d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 8.01. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

SECTION 8.09. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE

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FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

SECTION 8.10. Specific Performance. Each party hereto (a) agrees that any other party hereto may demand specific performance of this Agreement and (b) irrevocably waives any defense based on the adequacy of a remedy at law, and any other defense, that might be asserted in opposition to the awarding of specific performance in any action that may be brought by any other party hereto.

SECTION 8.11. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

[Signature Pages Follow]

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

WHITEBOX ADVISORS LLC, as Credit
Facilities Collateral Agent
By:	/s/ Mark Strefling
Name:	Mark Strefling
Title:	Chief Legal Officer

[Signature Page to Lien Subordination and Intercreditor Agreement]

U.S. BANK NATIONAL ASSOCIATION,
as Note Collateral Agent
By:	/s/ Steven A. Finklea
Name:	Steven A. Finklea
Title:	Vice President

[Signature Page to Lien Subordination and Intercreditor Agreement]

FLOTEK INDUSTRIES, INC., as Grantor
By:	/s/ John Chisholm
Name:	John Chisholm
Title:	President

[Signature Page to Lien Subordination and Intercreditor Agreement]

TELEDRIFT COMPANY
FLOTEK PAYMASTER, INC.
MATERIAL TRANSLOGISTICS, INC.
PETROVALVE, INC.
TURBECO, INC.
USA PETROVALVE, INC.
FLOTEK INTERNATIONAL, INC.
PADKO INTERNATIONAL INCORPORATED
FLOTEK ECUADOR MANAGEMENT, LLC
FLOTEK ECUADOR INVESTMENTS, LLC,     as Grantors
By	/s/ John Chisholm
	John Chisholm
	President
SOONER ENERGY SERVICES, LLC
CESI MANUFACTURING, LLC
CESI CHEMICAL, INC.,     as Grantors
By	/s/ John Chisholm
	John Chisholm
	Chief Executive Officer
FLOTEK INDUSTRIES FZE     as Grantor
By	/s/ John Chisholm
	John Chisholm
	Chief Executive Officer

[Signature Page to Lien Subordination and Intercreditor Agreement]

ANNEX I

ACCESSION AGREEMENT dated as of [    ], between [Representative] (the “Representative”) and FLOTEK INDUSTRIES, INC. (the “Company”).

A. Reference is made to the Lien Subordination and Intercreditor Agreement dated as of March 31, 2010 (as amended, restated, supplemented or otherwise modified from time to time, the “Intercreditor Agreement”), among Whitebox Advisors LLC, as Credit Facilities Collateral Agent, U.S. Bank National Association, as Note Collateral Agent, Flotek Industries, Inc., the other Grantors named therein and the other Designated Senior Obligations Collateral Agents from time to time party thereto.

B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Intercreditor Agreement.

C. The Representative desires to become a Designated Senior Obligations Collateral Agent under the Intercreditor Agreement.

Accordingly, the Company and the Representative agree as follows:

SECTION 1. Accession to Intercreditor Agreement. Upon the execution of this Accession Agreement by the Representative and the Company and as of the date of the delivery of this Accession Agreement to each Collateral Agent under the Intercreditor Agreement as part of the notice required pursuant to Section 3.01 of the Intercreditor Agreement, the Representative hereby accedes to the Intercreditor Agreement and shall thereafter be a party to and be bound by the provisions of the Intercreditor Agreement and have all the rights and obligations of a Designated Senior Obligations Collateral Agent with respect to the Designated Senior Obligations described in the notice required pursuant to Section 3.01 of the Intercreditor Agreement (of which this Accession Agreement forms a part).

SECTION 2. Notices. All notices and other communications provided for in the Intercreditor Agreement shall be given to the Representative as follows:

[Address]

[Telecopy Number]

SECTION 3. Counterparts. This Accession Agreement may be executed in multiple counterparts, each of which shall constitute an original but all of which when taken together shall constitute a single agreement. Delivery of an executed signature page to this Accession Agreement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Accession Agreement.

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SECTION 4. Governing Law. This Agreement shall be construed in accordance with and governed by the law of the State of New York.

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

[Name of Representative],

By

Name:

Title:

FLOTEK INDUSTRIES, INC.

By

Name:

Title:

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ANNEX II

Provision for Junior Obligations Governing Document

Reference is made to the Lien Subordination and Intercreditor Agreement dated as of March 31, 2010, among Whitebox Advisors LLC, as collateral agent for the Credit Facility Secured Parties referred to therein; U.S. Bank National Association, as collateral agent for the Note Secured Parties referred to therein; Flotek Industries, Inc.; the other Grantors named therein; and the Designated Senior Obligations Collateral Agents becoming parties thereto from time to time (the “Intercreditor Agreement”). Each [holder of Junior Obligations] (a) [hereby consents] [will be deemed to have consented] to the subordination of the [Liens securing the Junior Obligations] on the terms set forth in the Intercreditor Agreement, (b) [hereby agrees] [will be deemed to have agreed] that it will be bound by and will take no actions contrary to the provisions of the Intercreditor Agreement and (c) [hereby authorizes and instructs] [will be deemed to have authorized and instructed] the [Junior Obligations Collateral Agent] to enter into the Intercreditor Agreement and to subject the [Junior Obligations] and the [Liens securing the Junior Obligations] to the provisions thereof. The foregoing provisions are intended as an inducement to the Senior Obligations Secured Parties (as defined in the Intercreditor Agreement) to extend credit to Flotek Industries, Inc., and such Senior Obligations Secured Parties are intended third party beneficiaries of such provisions and the provisions of the Intercreditor Agreement.

Provision for Junior Obligations Security Document

Reference is made to the Lien Subordination and Intercreditor Agreement dated as of March 31, 2010, among Whitebox Advisors LLC, as collateral agent for the Credit Facility Secured Parties referred to therein; U.S. Bank National Association, as collateral agent for the Note Secured Parties referred to therein; Flotek Industries, Inc.; the other Grantors named therein; and the Designated Senior Obligations Collateral Agents becoming parties thereto from time to time (the “Intercreditor Agreement”). Notwithstanding any other provision contained herein, this Agreement, the Liens created hereby and the rights, remedies, duties and obligations provided for herein are subject in all respects to the provisions of the Intercreditor Agreement and, to the extent provided therein, the Senior Obligations Security Documents (as defined in the Intercreditor Agreement). In the event of any conflict or inconsistency between the provisions of this Agreement and the Intercreditor Agreement, the provisions of the Intercreditor Agreement shall control.

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EX-10.3

Exhibit 10.3

JUNIOR LIEN PLEDGE AND SECURITY AGREEMENT

This JUNIOR LIEN PLEDGE AND SECURITY AGREEMENT (this “Security Agreement”) dated as of March 31, 2010, is made by Flotek Industries, Inc., a Delaware corporation (the “Company”), and each subsidiary of the Company signatory hereto (together with the Company, the “Grantors” and individually, a “Grantor”), in favor of U.S. Bank National Association, as Collateral Agent (in such capacity, together with its successors and assigns, the “Collateral Agent”) for the benefit of each of the Secured Parties (as defined below).

WITNESSETH:

A. Pursuant to the terms and conditions of the Exchange Agreement dated as of March 31, 2010 (as amended, restated, supplemented or otherwise modified from time to time, the “Exchange Agreement”) among the Company, the other Grantors and Whitebox Hedged High Yield Partners, LP (“WHHY”), IAM Mini-Fund 14 Limited (“IAM”), Pandora Select Partners, LP (“Pandora”), Whitebox Special Opportunities Fund, LP – Series B (“WSOB”), Whitebox Combined Partners, LP (“WCP”), Whitebox Convertible Arbitrage Partners, LP (“WCAP”), Whitebox Intermarket Partners LP (“WIP”), ECF Value Fund, L.P. (“ECF”), ECF Value Fund II, L.P. (“ECF II”) and ECF Value Fund International Ltd. (“ECF International”, together with WHHY, IAM, Pandora, WSOB, WCP, WCAP, WIP, ECF and ECF II, collectively, the “Exchanging Noteholders”), the Company is issuing to the Exchanging Noteholders up to $36,004,000 in aggregate principal amount of the Company’s 5.25% Convertible Senior Secured Notes due 2028 (together with any notes issued in substitution or exchange therefor, and as the same may be amended, restated, supplemented or otherwise modified from time to time, collectively, the “Notes”).

B. The Notes will be governed by the terms of that certain Indenture dated as of March 31, 2010 among the Company, as Issuer, each of the subsidiaries of the Company party thereto, as Guarantors (the “Guarantors”), and U.S. Bank National Association, as Trustee (in such capacity, together with its successors and assigns, the “Trustee”), as amended and supplemented by the First Supplemental Indenture dated March 31, 2010 among the Company, as Issuer, the Guarantors, and the Trustee (as so amended and supplemented, and as further amended, restated, supplemented or otherwise modified from time to time, the “Indenture”), and will be unconditionally guaranteed by such Guarantors pursuant to the terms of the Indenture.

C. Pursuant to the terms of an Amended and Restated Pledge and Security Agreement dated as of March 31, 2010 (as amended, restated, supplemented or otherwise modified from time to time, the “Senior Security Agreement”) among the Company, each of the other Grantors and the Credit Facilities Collateral Agent (as defined below), the Grantors have granted to the Credit Facilities Collateral Agent a first-priority lien and security interest in the Collateral (as defined below) to secure the obligations of the Grantors incurred under or in connection with the Amended and Restated Credit Agreement dated as of March 31, 2010 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) among the Company, the lenders party thereto from time to time and Whitebox Advisors LLC, as administrative agent.

D. The Collateral Agent, the Credit Facilities Collateral Agent, the Company and the other Grantors are parties to a Lien Subordination and Intercreditor Agreement dated as of March 31, 2010 (as amended, restated, supplemented or otherwise modified from time to time, the “Intercreditor Agreement”), pursuant which the lien upon and security interest in the Collateral granted by this Security Agreement are and shall be subordinated in all respects to the lien upon and security interest in the Collateral granted pursuant to the Senior Obligations Security Documents (as defined below).

E. Pursuant to the terms of the Exchange Agreement, the Grantors are executing and delivering this Security Agreement to induce the Trustee to enter into the Indenture and the Exchanging Noteholders to acquire the Notes. Inasmuch as each Grantor will derive substantial direct and indirect benefits from the transactions contemplated by the Exchange Agreement, each Grantor is willing to execute and deliver and perform its obligations under this Security Agreement to secure its obligations under the Indenture Documents (as defined below).

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Grantor agrees, for the benefit of the Secured Parties, as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1. Certain Terms. The following terms (whether or not underscored) when used in this Security Agreement, including its preamble and recitals, shall have the following meanings (such definitions to be equally applicable to the singular and plural forms thereof):

“Certificated Equipment” means any Equipment the ownership of which is evidenced by a certificate of title or for which applicable Legal Requirement requires the issuance of a certificate of title.

“Collateral” is defined in Section 2.1.

“Collateral Account” is defined in Section 4.3(b).

“Collateral Agent” is defined in the preamble.

“Computer Hardware and Software Collateral” means (a) all computer and other electronic data processing hardware, integrated computer systems, central processing units, memory units, display terminals, printers, features, computer elements, card readers, tape drives, hard and soft disk drives, cables, electrical supply hardware, generators, power equalizers, accessories and all peripheral devices and other related computer hardware, including all operating system software, utilities and application programs in whatsoever form, (b) software programs (including both source code, object code and all related applications and data files), designed for use on the computers and electronic data processing hardware described in clause (a) above, (c) all firmware associated therewith, (d) all documentation (including flow charts, logic diagrams, manuals, guides, specifications, training materials, charts and pseudo codes) with respect to such hardware, software and firmware described in the preceding clauses (a) through (c), and (e) all rights with respect to all of the foregoing, including copyrights, licenses, options,

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warranties, service contracts, program services, test rights, maintenance rights, support rights, improvement rights, renewal rights and indemnifications and any substitutions, replacements, improvements, error corrections, updates, additions or model conversions of any of the foregoing.

“Company” is defined in the preamble.

“Control Agreement” means an authenticated record in form and substance reasonably satisfactory to a Senior Collateral Agent or the Collateral Agent, as the case may be, that provides for, respectively, such Senior Collateral Agent or the Collateral Agent (for the ratable benefit of the Secured Parties) to have “control” (as defined in the UCC) over certain Collateral.

“Copyright Collateral” means all copyrights of any Grantor, registered or unregistered and whether published or unpublished, now or hereafter in force throughout the world including all of such Grantor’s rights, titles and interests in and to all copyrights registered in the United States Copyright Office or anywhere else in the world, including without limitation those copyrights referred to in Item C of Schedule III hereto, and registrations and recordings thereof and all applications for registration thereof, whether pending or in preparation, all copyright licenses, the right to sue for past, present and future infringements of any of the foregoing, all rights corresponding thereto, all extensions and renewals of any thereof and all Proceeds of the foregoing, including licenses, royalties, income, payments, claims, damages and Proceeds of suit, which are owned or licensed by such Grantor.

“Credit Agreement” is defined in the recitals.

“Credit Facilities Collateral Agent” means Whitebox Advisors LLC, in its capacity as administrative agent under the Credit Agreement and the Credit Facilities Security Documents, and its successors in such capacity.

“Credit Facilities Security Documents” has the meaning assigned to such term in the Intercreditor Agreement.

“Discharge of Senior Obligations” has the meaning assigned to such term in the Intercreditor Agreement.

“Distributions” means all cash, cash dividends, stock dividends, other distributions, liquidating dividends, shares of stock resulting from (or in connection with the exercise of) stock splits, reclassifications, warrants, options, non-cash dividends, and all other distributions or payments (whether similar or dissimilar to the foregoing) on or with respect to, or on account of, any Pledged Share or Pledged Interest or other rights or interests constituting Collateral.

“Equipment” is defined in Section 2.1(a).

“Equity Interest” means with respect to any Person, any shares, interests, participation, or other equivalents (however designated) of corporate stock, membership interests or partnership interests (or any other ownership interests) of such Person.

“Exchange Agreement” is defined in the recitals.

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“Exchanging Noteholders” is defined in the recitals.

“Excluded Stock” means (i) 34% of the Equity Interests in each direct Foreign Subsidiary of the Grantors, and (ii) any Equity Interests or other securities of any Subsidiary of the Company that constitute Excluded Securities, as defined in the Indenture.

“Foreign Subsidiary” means any Subsidiary of the Company that is a “controlled foreign corporation” as defined in Section 957 of the Internal Revenue Code of 1986, as amended, and the regulations and published interpretations thereof.

“General Intangibles” means all “general intangibles” and all “payment intangibles”, each as defined in the UCC, and shall include all interest rate or currency protection or hedging arrangements, all tax refunds, all licenses, permits, concessions and authorizations and all Intellectual Property Collateral (in each case, regardless of whether characterized as general intangibles under the UCC).

“Governmental Approval” is defined in Section 2.1(f).

“Governmental Authority” means, with respect to any Person, any foreign governmental authority, the United States of America, any state of the United States of America, the District of Columbia, and any subdivision of any of the foregoing, and any agency, department, commission, board, authority or instrumentality, bureau or court having jurisdiction over such Person.

“Grantor” is defined in the preamble.

“Indemnified Parties” is defined in Section 6.4(a).

“Indenture” is defined in the recitals.

“Indenture Documents” means the Exchange Agreement, the Indenture, the Notes, this Security Agreement and the other Note Security Documents, as such agreements may be amended, restated, supplemented or otherwise modified from time to time.

“Intellectual Property Collateral” means, collectively, the Computer Hardware and Software Collateral, the Copyright Collateral, the Patent Collateral, the Trademark Collateral and the Trade Secrets Collateral.

“Intercreditor Agreement” is defined in the recitals.

“Inventory” is defined in Section 2.1(b).

“Legal Requirement” means any law, statute, ordinance, decree, requirement, order, judgment, rule, regulation (or official interpretation of any of the foregoing) of, and the terms of any license or permit issued by, any Governmental Authority, including, but not limited to, Regulations T, U and X.

“Lien” means any pledge, security interest, mortgage or other lien or encumbrance created to secure any indebtedness or other obligation.

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“Material Adverse Change” means a material adverse change (a) in the business, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries, taken as a whole; (b) in the validity or enforceability of this Security Agreement or any of the other Indenture Document; or (c) on the Company’s, any Guarantor’s or any other Grantor’s ability to perform its obligations under this Security Agreement, any Note or any other Indenture Document.

“Noteholders” means each Person in whose name a Note is registered in the Securities Register.

“Note Obligations” means (a) the due and punctual payment of (i) the principal of and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Notes, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) all other monetary obligations of the Company or any Subsidiaries of the Company to any of the Secured Parties under the Indenture or any other Indenture Document, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) and (iii) all amounts due under any guarantee of any of the foregoing, including any guarantee contained in the Indenture, and (b) the due and punctual performance of all other obligations of the Company or any Subsidiaries of the Company to any of the Secured Parties under the Indenture or any other Indenture Document.

“Note Security Documents” means the this Security Agreement, the other “Security Documents”, as defined in the Indenture, securing the Notes and any other documents now existing or entered into after the date hereof that create Liens on any assets or properties of the Company or any Subsidiaries of the Company to secure any Note Obligations.

“Notes” is defined in the recitals.

“Obligor” means the Company or any Guarantor.

“Patent Collateral” means (a) all inventions and discoveries, whether patentable or not, all letters patent and applications for letters patent throughout the world, including without limitation those patents referred to in Item A of Schedule III hereto, and any patent applications in preparation for filing, (b) all reissues, divisions, continuations, continuations-in-part, extensions, renewals and reexaminations of any of the items described in clause (a), (c) all patent licenses, and other agreements providing any Grantor with the right to use any items of the type referred to in clauses (a) and (b) above, and (d) all Proceeds of, and rights associated with, the foregoing (including licenses, royalties income, payments, claims, damages and Proceeds of infringement suits), the right to sue third parties for past, present or future infringements of any patent or patent application, and for breach or enforcement of any patent license.

“Permitted Liens” means all Permitted Collateral Liens, as such term is defined in the Indenture.

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“Pledged Interests” means all Equity Interests or other ownership interests of any Pledged Interests Issuer described in Item A of Schedule I hereto; all registrations, certificates, articles, by-laws, regulations, limited liability company agreements or constitutive agreements governing or representing any such interests; all options and other rights, contractual or otherwise, at any time existing with respect to such interests, as such interests are amended, modified, or supplemented from time to time, and together with any interests in any Pledge Interests Issuer taken in extension or renewal thereof or substitution therefor.

“Pledged Interests Issuer” means each Person identified in Item A of Schedule I hereto as the issuer of the Pledged Shares or the Pledged Interests identified opposite the name of such Person.

“Pledged Note Issuer” means each Person identified in Item B of Schedule I hereto as the issuer of the Pledged Notes identified opposite the name of such Person.

“Pledged Notes” means all promissory notes of any Pledged Note Issuer evidencing Debt owed by any Obligor to any other Obligor delivered by any Grantor to a Senior Collateral Agent or to the Collateral Agent as Pledged Property hereunder, as such promissory notes, in accordance with Section 7.3, are amended, modified or supplemented from time to time and together with any promissory note of any Pledged Note Issuer taken in extension or renewal thereof or substitution therefor.

“Pledged Property” means all Pledged Notes, Pledged Interests, Pledged Shares, all assignments of any amounts due or to become due with respect to the Pledged Interests or the Pledged Shares, all other instruments which are now being delivered by any Grantor to a Senior Collateral Agent or the Collateral Agent or may from time to time hereafter be delivered by any Grantor to a Senior Collateral Agent or the Collateral Agent for the purpose of pledge under this Security Agreement or any other Indenture Document, and all proceeds of any of the foregoing.

“Pledged Shares” means all Equity Interests of any Pledged Interests Issuer identified under Item A of Schedule I which are delivered by any Grantor to a Senior Collateral Agent or the Collateral Agent as Pledged Property hereunder.

“Receivables” is defined in Section 2.1(c).

“Related Contracts” is defined in Section 2.1(c).

“Secured Obligations” is defined in Section 2.2.

“Secured Parties” means the Trustee, the Collateral Agent, the Noteholders and each other holder of, or obligee in respect of, any Note Obligations.

“Securities Act” is defined in Section 6.2(a).

“Security Agreement” is defined in the preamble.

“Senior Collateral Agent” has the meaning assigned to such term in the Intercreditor Agreement.

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“Senior Obligations” has the meaning assigned to such term in the Intercreditor Agreement.

“Senior Obligations Security Documents” has the meaning assigned to such term in the Intercreditor Agreement.

“Senior Obligations Governing Documents” means the Credit Agreement and any Designated Senior Obligations Governing Documents, as defined in the Intercreditor Agreement.

“Senior Security Agreement” is defined in the recitals.

“Subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity, a majority of whose outstanding voting securities shall at any time be owned by the parent or one more Subsidiaries of the parent. Unless expressly provided otherwise, all references herein to any “Subsidiary” or “Subsidiaries” means a Subsidiary or Subsidiaries of the Company.

“Termination Date” means the date of satisfaction and discharge of the Indenture with respect to the Notes as described in the Indenture.

“TIA” means the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date hereof.

“Trademark Collateral” means (a) (i) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, certification marks, collective marks, logos and other source or business identifiers, and all goodwill of the business associated therewith, now existing or hereafter adopted or acquired, including without limitation those trademarks referred to in Item B of Schedule III hereto, whether currently in use or not, all registrations and recordings thereof and all applications in connection therewith, whether pending or in preparation for filing, including registrations, recordings and applications in the United States Patent and Trademark Office or in any office or agency of the United States of America, or any State thereof or any other country or political subdivision thereof or otherwise, and all common-law rights relating to the foregoing, and (ii) the right to obtain all reissues, extensions or renewals of the foregoing (collectively referred to as the “Trademark”), (b) all trademark licenses for the grant by or to any Grantor of any right to use any trademark, (c) all of the goodwill of the business connected with the use of, and symbolized by the items described in, clause (a), and to the extent applicable clause (b), (d) the right to sue third parties for past, present and future infringements of any Trademark Collateral described in clause (a) and, to the extent applicable, clause (b), and (e) all Proceeds of, and rights associated with, the foregoing, including any claim by any Grantor against third parties for past, present or future infringement or dilution of any Trademark, Trademark registration or Trademark license, or for any injury to the goodwill associated with the use of any such Trademark or for breach or enforcement of any Trademark license and all rights corresponding thereto throughout the world.

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“Trade Secrets Collateral” means all common law and statutory trade secrets and all other confidential, proprietary or useful information and all know-how obtained by or used in or contemplated at any time for use in the business of any Grantor, (all of the foregoing being collectively called a “Trade Secret”), including all Documents and things embodying, incorporating or referring in any way to such Trade Secret, all Trade Secret licenses, and including the right to sue for and to enjoin and to collect damages for the actual or threatened misappropriation of any Trade Secret and for the breach or enforcement of any such Trade Secret license.

“UCC” means the Uniform Commercial Code as in effect in the State of New York, as the same may be amended from time to time.

SECTION 1.2. Indenture Definitions. Unless otherwise defined herein or the context otherwise requires, terms used in this Security Agreement, including its preamble and recitals, have the meanings provided in the Indenture.

SECTION 1.3. UCC Definitions. Unless otherwise defined herein or the context otherwise requires, terms for which meanings are provided in the UCC are used in this Security Agreement, including its preamble and recitals, with such meanings.

SECTION 1.4. Interest. For purposes of this Security Agreement, unless the context clearly requires otherwise, references to “interest” shall include Additional Interest and Contingent Interest, as each such term is defined in the Indenture.

ARTICLE II

SECURITY INTEREST

SECTION 2.1. Grant of Security Interest. Each Grantor hereby pledges, hypothecates, assigns, charges, mortgages, delivers, and transfers to the Collateral Agent, for its benefit and the ratable benefit of each of the other Secured Parties, and hereby grants to the Collateral Agent, for its benefit and the ratable benefit of each of the other Secured Parties, a continuing security interest in all of such Grantor’s following property, whether now or hereafter existing, owned or acquired by such Grantor, and wherever located, (collectively, the “Collateral”):

(a) all equipment in all of its forms (including but not limited to drilling platforms and rigs and remotely operated vehicles, trenchers, and other equipment used by any Grantor, vehicles, motor vehicles, rolling stock, vessels, aircraft), of such Grantor, wherever located, and all machinery, apparatus, installation facilities and other tangible personal property, and all parts thereof and all accessions, additions, attachments, improvements, substitutions, replacements and proceeds thereto and therefore (any and all of the foregoing being the “Equipment”);

(b) all inventory in all of its forms of such Grantor, wherever located, including (i) all oil, gas, or other hydrocarbons and all products and substances derived therefrom, all raw materials and work in process therefore, finished goods thereof, and materials used or consumed in the manufacture or production thereof, (ii) all goods in which such Grantor has an interest in mass or a joint or other interest or right of any kind (including goods in which such Grantor has an interest or right as consignee), and (iii) all

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goods which are returned to or repossessed by such Grantor, and all accessions thereto, products thereof and documents therefore (any and all such inventory, materials, goods, accessions, products and documents being the “Inventory”);

(c) all accounts, money, payment intangibles, deposit accounts (including the Collateral Accounts and all amounts on deposit therein and all cash equivalent investments carried therein and all proceeds thereof), contracts, contract rights, all rights constituting a right to the payment of money, chattel paper, documents, documents of title, instruments, letters of credit, letter-of-credit rights and General Intangibles of such Grantor, whether or not earned by performance or arising out of or in connection with the sale or lease of goods or the rendering of services, including all moneys due or to become due in repayment of any loans or advances, and all rights of such Grantor now or hereafter existing in and to all security agreements, guaranties, leases, agreements and other contracts securing or otherwise relating to any such accounts, money, payment intangibles, deposit accounts, contracts, contract rights, rights to the payment of money, chattel paper, documents, documents of title, instruments, letters of credit, letter-of-credit rights and General Intangibles (any and all such accounts, money, payment intangibles, deposit accounts, contracts, contract rights, rights to the payment of money, chattel paper, documents, documents of title, instruments, letters of credit, letter-of-credit rights and General Intangibles being the “Receivables”, and any and all such security agreements, guaranties, leases, agreements and other contracts being the “Related Contracts”);

(d) all Intellectual Property Collateral of such Grantor;

(e) all books, correspondence, credit files, records, invoices, tapes, cards, computer runs, writings, data bases, information in all forms, paper and documents and other property relating to, used or useful in connection with, evidencing, embodying, incorporating or referring to, any of the foregoing in this Section 2.1;

(f) all governmental approvals, permits, licenses, authorizations, consents, rulings, tariffs, rates, certifications, waivers, exemptions, filings, claims, orders, judgments and decrees (each a “Governmental Approval”), to the extent a security interest may be granted therein; provided that any Governmental Approval that by its terms or by operation of law would be void, voidable, terminable or revocable if mortgaged, pledged or assigned hereunder is expressly excepted and excluded from the Liens and terms of this Security Agreement, including the grant of security interest in this Section 2.1;

(g) all interest rate swap agreements, interest rate cap agreements and interest rate collar agreements, and all other agreements or arrangements designed to protect such Grantor against fluctuations in interest rates or currency exchange rates and all commodity hedge, commodity swap, exchange, forward, future, floor, collar or cap agreements, fixed price agreements and all other agreements or arrangements designed to protect such Grantor against fluctuations in commodity prices;

(h) to the extent not included in the foregoing, all bank accounts, investment property, fixtures and supporting obligations;

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(i) all Pledged Interests, Pledged Notes, Pledged Shares and any other Pledged Property whether now or hereafter delivered to a Senior Collateral Agent or the Collateral Agent in connection with this Security Agreement and all Distributions, interest, and other payments and rights with respect to such Pledged Property;

(j) all accessions, substitutions, replacements, products, offspring, rents, issues, profits, returns, income and proceeds of and from any and all of the foregoing Collateral (including proceeds which constitute property of the types described in clauses (a), (b), (c), (d), (e), (f), (g), (h), and (i) and proceeds deposited from time to time in any lock boxes of such Grantor, and, to the extent not otherwise included, all payments and proceeds under insurance (whether or not the Collateral Agent is the loss payee thereof), or any condemnation award, indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the Collateral); and

(k) all of such Grantor’s other property and rights of every kind and description and interests therein, including without limitation, all other “Accounts”, “Certificated Securities”, “Chattel Paper”, “Commercial Tort Claims”, “Commodity Accounts”, “Commodity Contracts”, “Deposit Accounts”, “Documents”, “Equipment”, “Fixtures”, “General Intangibles”, “Goods”, “Instruments”, “Inventory”, “Investment Property”, “Letter of Credit Rights”, “Letters of Credit”, “Money”, “Proceeds”, “Promissory Notes”, “Securities”, “Securities Account”, “Security Entitlements”, “Supporting Obligations” and “Uncertificated Securities” as such terms are defined in the UCC.

Notwithstanding anything to the contrary contained herein, Excluded Stock shall be excluded from the Lien and security interest granted hereunder (and shall, as applicable, not be included as “Collateral”, “General Intangibles”, “Investment Property”, or “Pledged Property” for the purposes hereof).

SECTION 2.2. Security for Obligations. This Security Agreement, and the Collateral in which the Collateral Agent (for the benefit of the Secured Parties) is granted a security interest hereunder by each Grantor, secures the prompt and indefeasible payment in full and performance of all Note Obligations of each Grantor and each other Obligor now or hereafter existing, whether for principal, interest, costs, fees, expenses or otherwise, howsoever created, arising or evidenced, whether direct or indirect, primary or secondary, fixed or absolute or contingent, joint or several (all such Note Obligations, collectively, the “Secured Obligations”).

SECTION 2.3. Continuing Security Interest; Transfer of Loans; Reinstatement. This Security Agreement shall create continuing security interests in the Collateral and shall (a) remain in full force and effect until the Termination Date, (b) be binding upon each Grantor and its successors, transferees and assigns, and (c) inure, together with the rights and remedies of the Collateral Agent hereunder, to the benefit of the Collateral Agent and each other Secured Party and its respective successors, transferees and assigns, subject to the limitations set forth, and except as otherwise provided, in the Indenture or the Intercreditor Agreement. Without limiting the generality of the foregoing clause (c), any Noteholder may assign or otherwise transfer (in whole or in part) any Note held by it as provided in the Indenture, and any successor or assignee thereof shall thereupon become vested with all the rights and benefits in respect thereof granted

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to such Secured Party under any Indenture Document (including this Security Agreement), or otherwise, subject, however, to any contrary provisions in such assignment or transfer. If at any time all or any part of any payment theretofore applied by the Collateral Agent or any Secured Party to any of the Secured Obligations is or must be rescinded or returned by the Collateral Agent or any such Secured Party for any reason whatsoever (including, without limitation, the insolvency, bankruptcy, reorganization or other similar proceeding of any Grantor or any other Person), such Secured Obligations shall, for purposes of this Security Agreement, to the extent that such payment is or must be rescinded or returned, be deemed to have continued to be in existence, notwithstanding any application by the Collateral Agent or such Secured Party or any termination agreement or release provided to any Grantor, and this Security Agreement shall continue to be effective or reinstated, as the case may be, as to such Secured Obligations, all as though such application by the Collateral Agent or such Secured Party had not been made.

SECTION 2.4. Grantors Remain Liable. Anything herein to the contrary notwithstanding, (a) each Grantor shall remain liable under the contracts and agreements included in the Collateral to the extent set forth therein, and will perform all of its duties and obligations under such contracts and agreements to the same extent as if this Security Agreement had not been executed, (b) the exercise by the Collateral Agent of any of its rights hereunder shall not release any Grantor from any of its duties or obligations under any such contracts or agreements included in the Collateral, and (c) neither the Collateral Agent nor any other Secured Party shall have any obligation or liability under any contracts or agreements included in the Collateral by reason of this Security Agreement, nor shall the Collateral Agent nor any Secured Party be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

SECTION 2.5. Delivery of Pledged Property.

(a) All certificates or instruments representing or evidencing any Collateral, including all Pledged Shares and Pledged Notes, shall be delivered to and held by or on behalf of (or in the case of the Pledged Notes, endorsed to the order of) a Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent) pursuant hereto, shall be in suitable form for transfer by delivery, and shall be accompanied by all necessary indorsements or instruments of transfer or assignment, duly executed in blank.

(b) To the extent any of the Collateral constitutes an “uncertificated security” (as defined in Section 8-102(a)(18) of the UCC) or a “security entitlement” (as defined in Section 8-102(a)(17) of the UCC), the applicable Grantor shall take and cause the appropriate Person (including any issuer, entitlement holder or securities intermediary thereof) to take all actions necessary to grant “control” (as defined in Section 8-106 of the UCC) to a Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent), for the ratable benefit of the Secured Parties, over such Collateral.

SECTION 2.6. Distributions on Pledged Shares. In the event that any Distribution with respect to any Pledged Shares or Pledged Interests pledged hereunder is permitted to be paid (in accordance with the Indenture), such Distribution or payment may be paid directly to the

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applicable Grantor. If any Distribution is made in contravention of the Indenture, the applicable Grantor shall, subject to the rights and interests of the holders of any Senior Obligations, hold the same segregated and in trust for the Collateral Agent until paid to the Collateral Agent in accordance with Section 4.1(e).

SECTION 2.7. Security Interest Absolute, etc. This Security Agreement shall in all respects be a continuing, absolute, unconditional and irrevocable grant of security interest, and shall remain in full force and effect until the Termination Date, except as otherwise provided in the Indenture or the Intercreditor Agreement. All rights of the Secured Parties and the security interests granted to the Collateral Agent (for its benefit and the ratable benefit of each other Secured Party) hereunder, and all obligations of each Grantor hereunder, shall, in each case, be absolute, unconditional and irrevocable irrespective of (a) any lack of validity, legality or enforceability of any Indenture Document, (b) the failure of any Secured Party (i) to assert any claim or demand or to enforce any right or remedy against any Grantor or any other Person under the provisions of any Indenture Document or otherwise, or (ii) to exercise any right or remedy against any other guarantor of, or collateral securing, any Secured Obligations, (c) any change in the time, manner or place of payment of, or in any other term of, all or any part of the Secured Obligations, or any other extension, compromise or renewal of any Secured Obligations, (d) any reduction, limitation, impairment or termination of any Secured Obligations (except in the case of the occurrence of the Termination Date) for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and each Grantor hereby waives any right to or claim of) any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality, nongenuineness, irregularity, compromise, unenforceability of, or any other event or occurrence affecting, any Secured Obligations or otherwise, (e) any amendment to, rescission, waiver, or other modification of, or any consent to or departure from, any of the terms of any Indenture Document, (f) any addition, exchange or release of any Collateral, or any surrender or non-perfection of any collateral, or any amendment to or waiver or release or addition to, or consent to or departure from, any other guaranty held by any Secured Party securing any of the Secured Obligations, or (g) any other circumstance which might otherwise constitute a defense available to, or a legal or equitable discharge of, any Grantor or any other Obligor, any surety or any guarantor.

SECTION 2.8. Waiver of Subrogation. Until one year and one day after the Termination Date, each Grantor hereby irrevocably waives any claim or other rights which it may now or hereafter acquire against any Obligor that arise from the existence, payment, performance or enforcement of such Grantor’s obligations under this Security Agreement or any other Indenture Document, including any right of subrogation, reimbursement, exoneration or indemnification, any right to participate in any claim or remedy of any Secured Party against any Obligor or any collateral which any Secured Party now has or hereafter acquires, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law, including the right to take or receive from any Obligor, directly or indirectly, in cash or other property or by set-off or in any manner, payment or security on account of such claim or other rights. If any amount shall be paid to any Grantor in violation of the preceding sentence and the Secured Obligations shall not have been indefeasibly paid in full in cash, then, subject to the rights and interests of the holders of any Senior Obligations, such amount shall be deemed to have been paid to such Grantor for the benefit of, and held in trust for, the Collateral Agent (on behalf of the Secured Parties), and shall forthwith be paid to the Collateral Agent to be credited and applied upon the

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Secured Obligations, whether matured or unmatured. Each Grantor acknowledges that it will receive direct and indirect benefits from the issuance of the Notes as contemplated by the Exchange Agreement and that the waiver set forth in this Section 2.8 is knowingly made in contemplation of such benefits.

SECTION 2.9. Election of Remedies. Except as otherwise provided in the Indenture, if any Secured Party may, under applicable law, proceed to realize its benefits under any of this Security Agreement or the other Indenture Documents giving any Secured Party a Lien upon any Collateral, either by judicial foreclosure or by non-judicial sale or enforcement, such Secured Party may, at its sole option, determine which of its remedies or rights it may pursue without affecting any of its rights and remedies under this Security Agreement. If, in the exercise of any of its rights and remedies, any Secured Party shall forfeit any of its rights or remedies, including its right to enter a deficiency judgment against any Obligor or any other Person, whether because of any applicable laws pertaining to “election of remedies” or the like, each Grantor hereby consents to such action by such Secured Party and waives any claim based upon such action, even if such action by such Secured Party shall result in a full or partial loss of any rights of subrogation that such Grantor might otherwise have had but for such action by such Secured Party.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

In order to induce the Exchanging Noteholders to enter into the Exchange Agreement and to acquire the Notes, each Grantor represents and warrants unto each Secured Party, as at date hereof and at the date of each pledge and delivery hereunder by such Grantor to a Senior Collateral Agent or the Collateral Agent of any Collateral (including each pledge and delivery of any Pledged Shares or Pledged Notes), as set forth in this Article.

SECTION 3.1. Validity, etc. This Security Agreement and the other Indenture Documents to which such Grantor is a party constitutes the legal, valid and binding obligations of such Grantor, enforceable against such Grantor in accordance with their respective terms (except, in any case, as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally and by principles of equity).

SECTION 3.2. Ownership, No Liens, etc. Such Grantor is the legal and beneficial owner of, and has good and defensible title to (and has full right and authority to pledge, grant and assign) the Collateral, free and clear of all Liens, except for any Lien (a) granted pursuant to this Security Agreement in favor of the Collateral Agent, or (b) that is a Permitted Lien. No effective UCC financing statement or other filing similar in effect covering all or any part of the Collateral is on file in any recording office, except those filed in favor of the Collateral Agent relating to this Security Agreement, those filed to perfect the Permitted Liens or those as to which a duly authorized termination statement relating to such UCC financing statement or other instrument has been delivered to a Senior Collateral Agent or the Collateral Agent on or before the date hereof. This Security Agreement creates a valid security interest in the Collateral, securing the payment of the Secured Obligations, and, except for the proper filing of the applicable filing statements with the Secretary of State of the States of Delaware, Texas and Oklahoma, all filings and other actions necessary to perfect and protect such security interest have been duly taken and such security interest shall be a first priority security interest (subject to Permitted Liens).

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SECTION 3.3. As to Equity Interests of the Subsidiaries, Investment Property.

(a) With respect to the Pledged Shares, all such Pledged Shares are duly authorized and validly issued, fully paid and non-assessable, and represented by a certificate.

(b) With respect to the Pledged Interests, no such Pledged Interests (i) are dealt in or traded on securities exchanges or in securities markets, (ii) expressly provide that such Pledged Interests are securities governed by Article 8 of the UCC, or (iii) are held in a Securities Account, except, with respect to this clause (b), Pledged Interests (A) for which a Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent) is the registered owner or (B) with respect to which the Pledged Interests Issuer has agreed in an authenticated record with such Grantor and a Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent) to comply with any instructions of such Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent) without the consent of such Grantor.

(c) Such Grantor has delivered all Certificated Securities constituting Collateral held by such Grantor to a Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent), together with duly executed undated blank stock powers, or other equivalent instruments of transfer reasonably acceptable to such Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent).

(d) With respect to Uncertificated Securities constituting Collateral owned by such Grantor, such Grantor has caused the Pledged Interests Issuer or other issuer thereof either (i) to register a Senior Collateral Agent (or, after Discharge of Senior Obligations, the Collateral Agent) as the registered owner of such security, or (ii) to agree in an authenticated record with such Grantor and a Senior Collateral Agent (or, after Discharge of Senior Obligations, the Collateral Agent) that such Pledged Interests Issuer or other issuer will comply with instructions with respect to such security originated by such Senior Collateral Agent (or, after Discharge of Senior Obligations, the Collateral Agent) without further consent of such Grantor.

(e) The percentage of the issued and outstanding Pledged Shares and Pledged Interests of each Issuer pledged by such Grantor hereunder is as set forth on Schedule I. All of the Pledged Shares and Pledged Interests constitute one hundred percent (100%) of such Grantor’s interest in the applicable Pledged Interests Issuer and the percentage of the total membership, partnership and/or other equity interests in the Pledged Interests Issuer indicated on Schedule I.

(f) Such Grantor has no outstanding rights, rights to subscribe, options, warrants or convertible securities outstanding or any other rights outstanding whereby any Person would be entitled to acquire shares, member interests or units of any Pledged Interest Issuer.

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(g) In the case of each Pledged Note, all of such Pledged Notes have been duly authorized, executed, endorsed, issued and delivered, and are the legal, valid and binding obligation of the issuers thereof, and are not in default.

SECTION 3.4. Grantor’s Name, Location, etc.

(a) (i) The jurisdiction in which such Grantor is located for purposes of Sections 9-301 and 9-307 of the UCC is set forth in Item A-1 of Schedule II hereto, (ii) the place of business of such Grantor or, if such Grantor has more than one place of business, the chief executive office of such Grantor and the office where such Grantor keeps its records concerning the Receivables, and all originals of all chattel paper which evidence Receivables, is set forth in Item A-2 of Schedule II hereto, and (iii) such Grantor’s federal taxpayer identification number is set forth in Item A-3 of Schedule II hereto.

(b) Such Grantor has not been known by any legal name different from the one set forth on the signature page hereto, nor has such Grantor been the subject of any merger or other corporate reorganization, except as set forth in Item B of Schedule II hereto.

(c) Such Grantor is not a party to any federal, state or local government contract except contracts with Mineral Management Services or other Federal leases.

(d) Such Grantor does not maintain any Deposit Accounts, Securities Accounts or Commodity Accounts with any Person, in each case, except as set forth on Item C of Schedule II.

(e) None of the Receivables is evidenced by a promissory note or other instrument other than a promissory note or instrument that has been delivered to a Senior Collateral Agent (or, after Discharge of Senior Obligations, the Collateral Agent) (with appropriate endorsements).

(f) Such Grantor is not the beneficiary of any Letters of Credit, except as set forth on Item D of Schedule II (as such schedule may be amended or supplemented from time to time) hereto and such Grantor has obtained the consent of each issuer of any Letter of Credit with a stated amount in excess of $250,000 to the assignment of the proceeds of the letter of credit to a Senior Collateral Agent (or, after Discharge of Senior Obligations, the Collateral Agent).

(g) Such Grantor does not have Commercial Tort Claims (i) in which a suit has been filed by such Grantor, and (ii) where the amount of damages reasonably expected to be claimed exceeds $250,000, except as set forth on Item E of Schedule II.

(h) The name set forth on the signature page attached hereto is the true and correct legal name (as defined in the UCC) of such Grantor.

(i) Such Grantor has obtained a legal, valid and enforceable consent of each issuer of any Letter of Credit with a stated amount in excess of $250,000 to the

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assignment of the Proceeds of such Letter of Credit to a Senior Collateral Agent (or, after Discharge of Senior Obligations, the Collateral Agent) and has not consented to, and is otherwise aware of, any Person (other than a Senior Collateral Agent (or, after Discharge of Senior Obligations, the Collateral Agent)) having control (within the meaning of Section 9-107 of the UCC) over, or any other interest in any of such Grantor’s rights in respect thereof.

SECTION 3.5. Possession of Inventory, Control; etc. Such Grantor (a) has exclusive possession and control, subject to Permitted Liens, of the Equipment and Inventory, and (b) is the sole entitlement holder of its Accounts and no other Person (other than a Senior Collateral Agent (or, after Discharge of Senior Obligations, the Collateral Agent) or any other Person with respect to Permitted Liens) has “control” or “possession” of, or any other interest in, any of its Accounts or any other securities or property credited thereto except as permitted pursuant to this Security Agreement.

SECTION 3.6. Negotiable Documents, Instruments and Chattel Paper. Such Grantor has delivered to a Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent) possession of all originals of all Documents, Instruments, Promissory Notes, Pledged Notes and tangible Chattel Paper owned or held by such Grantor (duly endorsed, in blank, if requested by such Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent)).

SECTION 3.7. Intellectual Property Collateral. Such Grantor represents that except for any Patent Collateral, Trademark Collateral, and Copyright Collateral specified in Item A, Item B and Item C, respectively, of Schedule III hereto, and any Trade Secrets Collateral, such Grantor neither owns and nor has any other interest in any Intellectual Property Collateral as of the date hereof, other than the Computer Hardware and Software Collateral. Such Grantor further represents and warrants that, with respect to all Intellectual Property Collateral (a) such Intellectual Property Collateral is valid, subsisting, unexpired and enforceable and has not been abandoned or adjudged invalid or unenforceable, in whole or in part except as could not reasonably be expected to result in a Material Adverse Change, (b) such Grantor is the sole and exclusive owner of the entire and unencumbered right, title and interest in and to such Intellectual Property Collateral, subject to Permitted Liens, and no claim has been made that the use of such Intellectual Property Collateral does or may, conflict with, infringe, misappropriate, dilute, misuse or otherwise violate any of the rights of any third party in any material respects, (c) such Grantor has made all necessary filings and recordations to protect its interest in such material Intellectual Property Collateral, including recordations of any of its interests in the Patent Collateral and Trademark Collateral in the United States Patent and Trademark Office and in corresponding offices throughout the world, and its claims to the Copyright Collateral in the United States Copyright Office and in corresponding offices throughout the world, and, to the extent necessary, has used proper statutory notice in connection with its use of any material patent, trademark and copyright in any of the Intellectual Property Collateral, (d) such Grantor has taken all reasonable steps to safeguard its Trade Secrets and to its knowledge none of the Trade Secrets of such Grantor has been used, divulged, disclosed or appropriated for the benefit of any other Person other than such Grantor, (e) to such Grantor’s knowledge, no third party is infringing upon any material Intellectual Property owned or used by such Grantor in any material respect, or any of its respective licensees, (f) no settlement or consents, covenants not to sue,

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nonassertion assurances, or releases have been entered into by such Grantor or to which such Grantor is bound that adversely affects its rights to own or use any Intellectual Property except as would not reasonably result in a Material Adverse Change, (g) other than to the Credit Facilities Collateral Agent, such Grantor has not made a previous assignment, sale, transfer or agreement constituting a present or future assignment, sale or transfer of any Intellectual Property for purposes of granting a security interest or as Collateral that has not been terminated or released, (h) such Grantor uses adequate standards of quality in the manufacture, distribution, and sale of all products sold and in the provision of all services rendered under or in connection with any trademarks and has taken all commercially reasonable action necessary to insure that any licensees of any trademarks owned by such Grantor use such adequate standards of quality, (i) the consummation of the transactions contemplated by the Exchange Agreement and this Security Agreement will not result in the termination or material impairment of any material portion of the Intellectual Property Collateral, and (j) such Grantor owns directly or is entitled to use by license or otherwise, any patents, trademarks, tradenames, Trade Secrets, copyrights, mask works, licenses, technology, know-how, processes and rights with respect to any of the foregoing used in, and necessary for the conduct of such Grantor’s business in any material respect.

SECTION 3.8. Authorization, Approval, etc. Except as have been obtained or made and are in full force and effect, no Governmental Approval, authorization, approval or other action by, and no notice to or filing with, any Governmental Authority or any other third party is required either (a) for the grant by such Grantor of the security interest granted hereby or for the execution, delivery and performance of this Security Agreement by such Grantor, (b) for the perfection or maintenance of the security interests hereunder including the first priority (subject to Permitted Liens) nature of such security interest (except with respect to the filing statements or, with respect to Intellectual Property Collateral, the recordation of any agreements with the U.S. Patent and Trademark Office or the U.S. Copyright Office) or the exercise by the Collateral Agent of its rights and remedies hereunder, or (c) for the exercise by the Collateral Agent of the voting or other rights provided for in this Security Agreement, except (i) with respect to any Pledged Shares or Pledged Interests, as may be required in connection with a disposition of such Pledged Shares or Pledged Interests by laws affecting the offering and sale of securities generally and (ii) any “change of control” or similar filings required by state licensing agencies.

SECTION 3.9. Best Interests. It is in the best interests of each Grantor (other than the Company) to execute this Security Agreement in as much as such Grantor will, as a result of being an Affiliate or Subsidiary of the Company, derive substantial direct and indirect benefits from the transactions contemplated by the Exchange Agreement, and each Grantor agrees that the Exchanging Noteholders are relying on this representation in agreeing to acquire the Notes.

SECTION 3.10. Certificated Equipment. Such Grantor has delivered, or will deliver as set forth in Section 4.5, to a Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent) possession of the originals of all certificates of title (with any necessary endorsements) with respect to Certificated Equipment owned or held by such Grantor.

SECTION 3.11. Reaffirmation of Representations and Warranties. All of the representations and warranties made by the Company or any other Obligor regarding any Grantor in the Exchange Agreement or in any other Indenture Document are true and correct in all respects as if such representations and warranties were incorporated herein in their entirety and made by such Grantor.

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ARTICLE IV

COVENANTS

Each Grantor covenants and agrees that, until the Termination Date, it will perform, comply with and be bound by the obligations set forth below.

SECTION 4.1. As to Investment Property, etc.

(a) Equity Interests of Subsidiaries. No Grantor shall allow or permit any of its Subsidiaries (i) that is a corporation, business trust, joint stock company or similar Person, to issue Uncertificated Securities, unless such Person promptly takes the actions set forth in Section 4.1(b)(ii) with respect to any such Uncertificated Securities, (ii) that is a partnership or limited liability company, to (A) issue Equity Interests that are to be dealt in or traded on securities exchanges or in securities markets, (B) expressly provide in its organizational documents that its Equity Interests are securities governed by Article 8 of the UCC, or (C) place such Subsidiary’s Equity Interests in a Securities Account, unless such Person promptly takes the actions set forth in Section 4.1(b)(ii) with respect to any such Equity Interests, and (iii) to issue Equity Interests in addition to or in substitution for the Pledged Property or any other Equity Interests pledged hereunder, except for additional Equity Interests issued to such Grantor; provided that (A) such Equity Interests are immediately pledged and delivered to a Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent), and (B) such Grantor delivers a supplement to Schedule I to the Collateral Agent identifying such new Equity Interests as Pledged Property, in each case pursuant to the terms of this Security Agreement. No Grantor shall permit any of its Subsidiaries to issue any warrants, options, contracts or other commitments or other securities that are convertible to any of the foregoing or that entitle any Person to purchase any of the foregoing, and except for this Security Agreement or any other Indenture Documents or any Senior Obligations Governing Documents, shall not, and shall not permit any of its Subsidiaries to, enter into any agreement creating any restriction or condition upon the transfer, voting or control of any Pledged Property.

(b) Investment Property (other than Certificated Securities). With respect to any Deposit Accounts, Securities Accounts, Commodity Accounts, Commodity Contracts or Security Entitlements constituting Investment Property owned or held by any Grantor, such Grantor will, unless otherwise permitted under the Indenture or any Senior Obligations Governing Documents, upon a Senior Collateral Agent’s (or, after the Discharge of Senior Obligations, the Collateral Agent’s) request either (i) cause the intermediary maintaining such Investment Property to execute a Control Agreement relating to such Investment Property pursuant to which such intermediary agrees to comply with such Senior Collateral Agent’s (or, after the Discharge of Senior Obligations, the Collateral Agent’s) instructions with respect to such Investment Property without further consent by such Grantor, or (ii) transfer such Investment Property to intermediary’s that have or will agree to execute such Control Agreements. With respect

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to any Uncertificated Securities (other than Uncertificated Securities credited to a Securities Account) constituting Investment Property owned or held by any Grantor, such Grantor will cause the Pledged Interests Issuer or other issuer of such securities to either (i) register a Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent) as the registered owner thereof on the books and records of the issuer, or (ii) execute a Control Agreement relating to such Investment Property pursuant to which the Pledged Interests Issuer or other issuer agrees to comply with a Senior Collateral Agent’s (or, after the Discharge of Senior Obligations, the Collateral Agent’s) instructions with respect to such Uncertificated Securities without further consent by such Grantor.

(c) Certificated Securities (Stock Powers). Each Grantor agrees that all Pledged Shares (and all other certificated shares of Equity Interests constituting Collateral) delivered by such Grantor pursuant to this Security Agreement will be accompanied by duly endorsed undated blank stock powers, or other equivalent instruments of transfer acceptable to a Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent). Each Grantor will, from time to time upon the request of a Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent), promptly deliver to such Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent) such stock powers, instruments and similar documents, satisfactory in form and substance to such Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent), with respect to the Collateral as such Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent) may reasonably request and will, from time to time upon the request of a Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent) during the continuance of any Default, promptly transfer any Pledged Shares, Pledged Interests or other shares of Equity Interests constituting Collateral into the name of any nominee designated by such Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent).

(d) Continuous Pledge. Each Grantor will (subject to the terms of the Indenture) deliver to a Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent) and at all times keep pledged to the Collateral Agent pursuant hereto, on a first-priority (subject to Permitted Liens), perfected basis all Pledged Property, Investment Property, all Dividends and Distributions with respect thereto, all Payment Intangibles to the extent they are evidenced by a Document, Instrument, Promissory Note or Chattel Paper, and all interest and principal with respect to such Payment Intangibles, and all Proceeds and rights from time to time received by or distributable to such Grantor in respect of any of the foregoing Collateral. Each Grantor agrees that it will, promptly (but in any event no later than ten (10) Business Days) following receipt thereof, deliver to a Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent) possession of all originals of Pledged Interests, Pledged Shares, Pledged Notes and any other Pledged Property, negotiable Documents, Instruments, Promissory Notes and Chattel Paper that it acquires following the date of this Security Agreement and shall deliver to the Collateral Agent a supplement to Schedule I identifying any such new Pledged Interests, Pledged Shares, Pledged Notes or other Pledged Property.

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(e) Voting Rights; Dividends, etc. Each Grantor agrees:

(i) that promptly upon receipt of notice of the occurrence and continuance of an Event of Default from the Collateral Agent and without any request therefor by the Collateral Agent, so long as such Event of Default shall continue, subject to the rights and interests of the holders of any Senior Obligations, to deliver (properly endorsed where required hereby or requested by the Collateral Agent) to the Collateral Agent all Distributions with respect to Investment Property, all interest, principal and other cash payments on Payment Intangibles, the Pledged Property and all Proceeds of the Pledged Property or any other Collateral, in case thereafter received by such Grantor, all of which shall be held by the Collateral Agent as additional Collateral; and

(ii) if an Event of Default shall have occurred and be continuing and the Collateral Agent has notified such Grantor of the Collateral Agent’s intention to exercise its voting power under this Section 4.1(e)(ii),

(A) the Collateral Agent may exercise (to the exclusion of such Grantor) the voting power and all other incidental rights of ownership with respect to any Pledged Shares, Investment Property or other Equity Interests constituting Collateral. EACH GRANTOR HEREBY GRANTS THE COLLATERAL AGENT AN IRREVOCABLE PROXY (WHICH IRREVOCABLE PROXY SHALL CONTINUE IN EFFECT UNTIL SUCH DEFAULT SHALL HAVE BEEN CURED OR WAIVED) EXERCISABLE UNDER SUCH CIRCUMSTANCES, TO VOTE THE PLEDGED SHARES, PLEDGED INTERESTS, INVESTMENT PROPERTY AND SUCH OTHER COLLATERAL; AND

(B) the Grantor shall promptly deliver to the Collateral Agent such additional proxies and other documents as may be necessary to allow the Collateral Agent to exercise such voting power.

All Distributions, interest, principal, cash payments, Payment Intangibles and Proceeds that may at any time and from time to time be held by any Grantor but which such Grantor is then obligated to deliver to the Collateral Agent, shall, until delivery to the Collateral Agent, be held by such Grantor separate and apart from its other property in trust for the Collateral Agent, subject to the rights and interests of the holders of any Senior Obligations. The Collateral Agent agrees that unless a Default shall have occurred and be continuing and the Collateral Agent shall have given the notice referred to in Section 4.1(e), each Grantor shall be entitled to receive and retain all Distributions and shall have the exclusive voting power, and is granted a proxy, with respect to any Equity Interests (including any of the Pledged Shares) constituting Collateral. The Collateral Agent shall, upon the written request of any Grantor, promptly deliver such proxies and other documents, if any, as shall be reasonably requested by such Grantor which are necessary to allow such Grantor to exercise that voting power with respect to any such Equity Interests (including any of the Pledged Shares) constituting Collateral; provided, however, that no vote shall be cast, or consent, waiver, or ratification given, or action taken by such Grantor that would violate any provision of the Indenture or any other Indenture Document (including this Security Agreement).

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SECTION 4.2. Organizational Documents; Change of Name, etc. No Grantor will change its state of incorporation, formation or organization or its name, identity, organizational identification number or corporate structure unless such Grantor shall have (a) given the Collateral Agent at least thirty (30) days’ prior notice of such change, (b) obtained the consent of the requisite Secured Parties, if such consent is so required by the Indenture or the Indenture Documents, and (c) taken all actions necessary or as requested by the Collateral Agent to ensure that the Liens on the Collateral granted in favor of the Collateral Agent for the benefit of the Secured Parties remain perfected, first-priority Liens (subject to Permitted Liens).

SECTION 4.3. As to Accounts.

(a) Each Grantor shall have the right to collect all Accounts so long as no Event of Default shall have occurred and be continuing.

(b) Upon (i) the occurrence and continuance of an Event of Default and (ii) the delivery of notice by the Collateral Agent to each Grantor, subject to the rights and interests of the holders of any Senior Obligations, all Proceeds of Collateral received by any Grantor shall be delivered in kind to the Collateral Agent for deposit in a Deposit Account of such Grantor (A) maintained with the Collateral Agent or (B) maintained at a depositary bank other than the Collateral Agent to which such Grantor, the Collateral Agent and the depositary bank have entered into a Control Agreement in form and substance acceptable to the Collateral Agent in its sole discretion providing that the depositary bank will comply with the instructions originated by the Collateral Agent directing disposition of the funds in the account without further consent by such Grantor (any such Deposit Accounts, together with any other Deposit Accounts pursuant to which any portion of the Collateral is deposited with the Collateral Agent, a “Collateral Account,” and collectively, the “Collateral Accounts”), and such Grantor shall not commingle any such Proceeds, and shall hold separate and apart from all other property, all such Proceeds in express trust for the benefit of the Collateral Agent until delivery thereof is made to the Collateral Agent.

(c) Following the delivery of notice pursuant to clause (b)(ii), the Collateral Agent shall have the right to apply any amount in the Collateral Account to the payment of any Secured Obligations which are due and payable or in accordance with the Indenture and the Indenture Documents.

(d) With respect to each of the Collateral Accounts, it is hereby confirmed and agreed that (i) deposits in such Collateral Account are subject to a security interest as contemplated hereby, (ii) such Collateral Account shall be under the control of the Collateral Agent and (iii) the Collateral Agent shall have the sole right of withdrawal over such Collateral Account; provided that withdrawals shall only be made during the existence of a Default.

(e) No Grantor shall adjust, settle, or compromise the amount or payment of any Receivable, nor release wholly or partly any account debtor or obligor thereof, nor

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allow any credit or discount thereon; provided that, a Grantor may make such adjustments, settlements or compromises and release wholly or partly any account debtor or obligor thereof and allow any credit or discounts thereon so long as (i) no Event of Default has occurred and is continuing, (ii) such action is taken in the ordinary course of business and consistent with past practices, (iii) such action is, in such Grantor’s good faith business judgment, commercially reasonable, and (iv) the aggregate amount of such adjustments, settlements and compromises which are effected each fiscal year shall not exceed $200,000.

SECTION 4.4. As to Grantor’s Use of Collateral.

(a) Subject to clause (b), each Grantor (i) may in the ordinary course of its business, at its own expense, sell, lease or furnish under the contracts of service any of the Inventory normally held by such Grantor for such purpose, and use and consume, in the ordinary course of its business, any raw materials, work in process or materials normally held by such Grantor for such purpose, (ii) shall, at its own expense, endeavor to collect, as and when due, all amounts due with respect to any of the Collateral, including the taking of such action with respect to such collection as the Collateral Agent may request following the occurrence and during the continuance of a Default or, in the absence of such request, as such Grantor may deem advisable, and (iii) may grant, in the ordinary course of business, to any party obligated on any of the Collateral, any rebate, refund or allowance to which such party may be lawfully entitled, and may accept, in connection therewith, the return of Goods, the sale or lease of which shall have given rise to such Collateral.

(b) At any time following the occurrence and during the continuance of a Default, whether before or after the maturity of any of the Secured Obligations, the Collateral Agent may (i) revoke any or all of the rights of any Grantor set forth in clause (a), (ii) notify any parties obligated on any of the Collateral to make payment to the Collateral Agent of any amounts due or to become due thereunder, and (iii) enforce collection of any of the Collateral by suit or otherwise and surrender, release, or exchange all or any part thereof, or compromise or extend or renew for any period (whether or not longer than the original period) any indebtedness thereunder or evidenced thereby.

(c) Upon request of the Collateral Agent following the occurrence and during the continuance of a Default, each Grantor will, at its own expense, subject to the rights and interests of the holders of any Senior Obligations, notify any parties obligated on any of the Collateral to make payment to the Collateral Agent of any amounts due or to become due thereunder.

(d) At any time following the occurrence and during the continuation of a Default, the Collateral Agent may endorse, in the name of the applicable Grantor, any item, howsoever received by the Collateral Agent, representing any payment on or other Proceeds of any of the Collateral.

SECTION 4.5. As to Equipment and Inventory and Goods. Not later than 30 days following the date of this Security Agreement, each Grantor shall deliver the original certificates of title (with any necessary endorsements) with respect to all Certificated Equipment now owned

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by such Grantor to a Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent). Each Grantor hereby agrees that it shall (a) keep all of the Equipment and Inventory (other than Inventory sold in the ordinary course of business) and Goods located in a jurisdiction within the United States of America or its offshore waters where all representations and warranties set forth in Article III shall be true and correct, and all action required pursuant to the second sentence of Section 4.12 shall have been taken with respect to the Equipment and Inventory and Goods, and (b) pay promptly when due all property and other taxes, assessments and governmental charges or levies imposed upon, and all claims (including claims for labor, materials and supplies) against, the Equipment and Inventory and Goods, except to the extent the validity thereof is being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP have been set aside. Notwithstanding the foregoing, the Grantors may keep Equipment, Inventory and Goods located in a jurisdiction outside of the United States of America or its offshore waters so long as the aggregate book value of the Equipment, Inventory and Goods located in such foreign jurisdictions does not exceed $2,500,000 at any time. With respect to Certificated Equipment now or hereafter owned by a Grantor, such Grantor shall be required to deliver such title to a Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent) and, if such title is required to have been delivered to the Collateral Agent, take any other action necessary to enable the Collateral Agent to perfect its Lien in such Equipment, including endorsing certificates of title or executing applications for transfer of title, as is reasonably required by the Collateral Agent to enable it to properly perfect and protect its Lien on such Certificated Equipment and to transfer the same.

SECTION 4.6. As to Intellectual Property Collateral. Each Grantor covenants and agrees to comply with the following provisions as such provisions relate to any Intellectual Property Collateral material to the operations or business of such Grantor:

(a) such Grantor will not (i) do or fail to perform any act whereby any material Patent Collateral may lapse or become abandoned or dedicated to the public or unenforceable, (ii) permit any of its licensees to (A) fail to continue to use any of the Trademark Collateral in order to maintain all of the Trademark Collateral in full force free from any claim of abandonment for non-use, (B) fail to maintain as in the past the quality of products and services offered under all of the Trademark Collateral, (C) fail to employ all of the Trademark Collateral registered with any federal or state or foreign authority with an appropriate notice of such registration, (D) adopt or use any other Trademark which is confusingly similar or a colorable imitation of any of the Trademark Collateral, (E) use any of the Trademark Collateral registered with any federal, state or foreign authority except for the uses for which registration or application for registration of all of the Trademark Collateral has been made, or (F) do or permit any act or knowingly omit to do any act whereby any of the Trademark Collateral may lapse or become invalid or unenforceable, or (iii) do or permit any act or knowingly omit to do any act whereby any of the Copyright Collateral or any of the Trade Secrets Collateral may lapse or become invalid or unenforceable or placed in the public domain except upon expiration of the end of an unrenewable term of a registration thereof, unless, in the case of any of the foregoing requirements in clauses (i), (ii) and (iii), such Grantor shall either (x) reasonably and in good faith determine that any of such Intellectual Property Collateral is of negligible economic value to such Grantor, or (y) the loss of the Intellectual Property Collateral would not be reasonably likely to result in a Material Adverse Change;

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(b) such Grantor shall promptly notify the Collateral Agent if it knows that any application or registration relating to any material item of the Intellectual Property Collateral may become abandoned or dedicated to the public or placed in the public domain or invalid or unenforceable, or of any adverse determination or development (including the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, the United States Copyright Office or any foreign counterpart thereof or any court) regarding such Grantor’s ownership of any of the Intellectual Property Collateral, its right to register the same or to keep and maintain and enforce the same;

(c) in no event will such Grantor or any of its agents, employees, designees or licensees file an application for the registration of any material Intellectual Property Collateral with the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency in any other country or any political subdivision thereof, unless it promptly informs the Collateral Agent, and upon request of the Collateral Agent (subject to the terms of the Indenture), executes and delivers all agreements, instruments and documents as the Collateral Agent may reasonably request to evidence the Collateral Agent’s security interest in such Intellectual Property Collateral;

(d) such Grantor will take all necessary steps, including in any proceeding before the United States Patent and Trademark Office, the United States Copyright Office or (subject to the terms of the Indenture) any similar office or agency in any other country or any political subdivision thereof, to maintain and pursue any application (and to obtain the relevant registration) filed with respect to, and to maintain any registration of, each material Intellectual Property Collateral, including the filing of applications for renewal, affidavits of use, affidavits of incontestability and opposition, interference and cancellation proceedings and the payment of fees and taxes (except to the extent that dedication, abandonment or invalidation is permitted under the foregoing clause (a) or (b));

(e) following the obtaining of an interest in any material Intellectual Property by such Grantor, such Grantor shall deliver a supplement to Schedule II identifying such new Intellectual Property; and

(f) following the obtaining of an interest in any material Intellectual Property by such Grantor or, following the occurrence and during the continuance of an Event of Default, upon the request of the Collateral Agent, such Grantor shall deliver all agreements, instruments and documents the Collateral Agent may reasonably request to evidence the Collateral Agent’s security interest in such Intellectual Property Collateral and as may otherwise be required to acknowledge or register or perfect the Collateral Agent’s interest in any part of such item of Intellectual Property Collateral unless such Grantor shall determine in good faith (with the consent of the Collateral Agent) that any Intellectual Property Collateral is of negligible economic value to such Grantor.

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SECTION 4.7. As to Letter-of-Credit Rights.

(a) Each Grantor, by granting a security interest in its Letter-of-Credit Rights to the Collateral Agent, intends to (and hereby does) collaterally assign to the Collateral Agent its rights (including its contingent rights ) to the Proceeds of all Letter-of-Credit Rights of which it is or hereafter becomes a beneficiary or assignee. Promptly following the date on which any Grantor obtains any Letter of Credit Rights after the date hereof, such Grantor shall (i) deliver a supplement to Schedule II identifying such new Letter-of-Credit Right and (ii) with respect to Letter of Credit Rights in excess of $250,000 cause the issuer of each Letter of Credit and each nominated person (if any) with respect thereto to consent to the assignment of the Proceeds thereof to a Senior Collateral Agent (and, after the Discharge of Senior Obligations, the Collateral Agent) in a consent agreement in form and substance reasonably satisfactory to such Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent) and deliver written evidence of such consent to the Collateral Agent.

(b) During the existence of an Event of Default, each Grantor will, promptly upon request by a Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent), (i) notify (and each Grantor hereby authorizes such Senior Collateral Agent (or , after the Discharge of Senior Obligations, the Collateral Agent) to notify) the issuer and each nominated person with respect to each of the Letters of Credit that the Proceeds thereof have been assigned to such Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent) and any payments due or to become due in respect thereof are to be made directly to such Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent) and (ii) arrange for such Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent) to become the transferee beneficiary Letter of Credit.

SECTION 4.8. As to Commercial Tort Claims. Each Grantor covenants and agrees that, until the Termination Date, with respect to any Commercial Tort Claim in excess of $250,000 individually or in the aggregate hereafter arising, it shall deliver to the Collateral Agent a supplement to Schedule II in form and substance reasonably satisfactory to the Collateral Agent, identifying such new Commercial Tort Claims.

SECTION 4.9. Electronic Chattel Paper and Transferable Records. If any Grantor at any time holds or acquires an interest in any electronic chattel paper or any “transferable record,” as that term is defined in Section 201 of the U.S. Federal Electronic Signatures in Global and National Commerce Act, or in Section 16 of the U.S. Uniform Electronic Transactions Act as in effect in any relevant jurisdiction, with a value in excess of $250,000, such Grantor shall promptly notify the Collateral Agent thereof and, at the request of a Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent), shall take such action as such Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent) may request to vest in such Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent) control (for the ratable benefit of Secured Parties) under Section 9-105 of the UCC of such electronic chattel paper or control under Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or, as the case may be, Section 16 of the Uniform Electronic Transactions Act, as so in effect in such jurisdiction, of such transferable

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record. The Collateral Agent agrees with each Grantor that, if such control has been vested in it, the Collateral Agent will arrange, pursuant to procedures reasonably satisfactory to the Collateral Agent and so long as such procedures will not result in the Collateral Agent’s loss of control, for such Grantor to make alterations to the electronic chattel paper or transferable record permitted under Section 9-105 of the UCC or, as the case may be, Section 201 of the U.S. Federal Electronic Signatures in Global and National Commerce Act or Section 16 of the U.S. Uniform Electronic Transactions Act for a party in control to allow without loss of control, unless an Event of Default has occurred and is continuing or would occur after taking into account any action by such Grantor with respect to such electronic chattel paper or transferable record.

SECTION 4.10. Transfers and Other Liens. No Grantor shall: (a) sell, assign (by operation of law or otherwise) or otherwise dispose of any of the Collateral, except Inventory in the ordinary course of business or as specifically permitted by the Indenture or any Senior Obligations Governing Documents, or (b) create or suffer to exist any Lien or other charge or encumbrance upon or with respect to any of the Collateral to secure Debt of any Person or entity, except for the security interest created by this Security Agreement and except for Permitted Liens.

SECTION 4.11. Taxes. Each Grantor agrees to comply in all material respects with all applicable law, including the appropriate payment (before the same become delinquent), by, or on behalf of, such Grantor of all taxes imposed upon such Grantor or any of its direct or indirect Subsidiaries or upon their property except to the extent being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP have been set aside on the books of such Grantor or such Subsidiaries, as applicable.

SECTION 4.12. Further Assurances, etc. Each Grantor shall warrant and defend the right, title and interest herein granted unto the Collateral Agent in and to the Collateral (and all right, title and interest represented by the Collateral) against the claims and demands of all Persons whomsoever. Each Grantor agrees that, from time to time at its own expense, it will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or that the Collateral Agent may reasonably request, in order to perfect, preserve and protect the security interest granted or purported to be granted hereby in all material portions of the Collateral (subject to the terms hereof and of the Indenture and the Intercreditor Agreement) or to enable the Collateral Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Each Grantor agrees that, upon the acquisition after the date hereof by such Grantor of any Collateral, with respect to which the security interest granted hereunder is not perfected automatically upon such acquisition, to take such actions with respect to such Collateral or any part thereof as required by the Indenture Documents. Without limiting the generality of the foregoing, each Grantor will:

(a) from time to time upon the request of a Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent), promptly deliver to such Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent) such stock powers, instruments and similar documents, reasonably satisfactory in form and substance to such Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent), with respect to such Collateral as such Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent) may

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reasonably request and will from time to time upon the request of a Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent), after the occurrence and during the continuance of any Event of Default, promptly transfer any securities constituting Collateral into the name of any nominee designated by such Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent); if any Collateral shall be evidenced by an Instrument, negotiable Document, Promissory Note or tangible Chattel Paper, deliver and pledge to a Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent) such Instrument, negotiable Document, Promissory Note, Pledged Note or tangible Chattel Paper duly endorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance reasonably satisfactory to such Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent);

(b) file (and hereby authorizes the Collateral Agent to file after delivery of a copy thereof to such Grantor) such filing statements or continuation statements, or amendments thereto, and such other instruments or notices (including any assignment of claim form under or pursuant to the federal assignment of claims statute, 31 U.S.C. § 3726, any successor or amended version thereof or any regulation promulgated under or pursuant to any version thereof), as may be necessary or that the Collateral Agent may request in order to perfect and preserve the security interests and other rights granted or purported to be granted to the Collateral Agent hereby. The authorization contained in this Section 4.12 shall be irrevocable and continuing until the Termination Date;

(c) deliver to a Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent) and at all times keep pledged to the Collateral Agent pursuant hereto, on a first-priority, perfected basis (except for Permitted Liens), at the request of such Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent), all Investment Property constituting Collateral, all Distributions with respect thereto (which shall only be delivered to a Senior Collateral Agent or the Collateral Agent during the continuance of a Default), and all interest and principal with respect to Promissory Notes, and all Proceeds and rights from time to time received by or distributable to such Grantor in respect of any of the foregoing Collateral;

(d) not take or omit to take any action the taking or the omission of which would result in any impairment or alteration of any obligation of the maker of any Payment Intangible or other Instrument constituting Collateral, except as provided in Section 4.4;

(e) not create any tangible Chattel Paper without placing a legend on such tangible Chattel Paper reasonably acceptable to the Collateral Agent indicating that the Collateral Agent has a security interest in such Chattel Paper;

(f) furnish to the Collateral Agent, from time to time at the Collateral Agent’s request, statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Collateral Agent may reasonably request, all in reasonable detail; and

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(g) do all things reasonably requested by a Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent) in accordance with this Security Agreement in order to enable such Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent) to have and maintain control over the Collateral consisting of Investment Property, Deposit Accounts, Letter-of-Credit-Rights and Electronic Chattel Paper.

Each Grantor agrees that a carbon, photographic or other reproduction of this Security Agreement or any UCC financing statement covering the Collateral or any part thereof shall be sufficient as a UCC financing statement where permitted by law. Each Grantor hereby authorizes the Collateral Agent to file financing statements describing as the collateral covered thereby “all of the debtor’s personal property or assets”, “all assets” or words to that effect, notwithstanding that such wording may be broader in scope than the Collateral described in this Security Agreement.

SECTION 4.13. Insurance. Each Grantor will maintain with financially sound and reputable insurance companies such insurance in such amounts and against such risks as may be customary in the case of reputable Persons of similar size engaged in the same or similar lines of business, including without limitation property insurance with respect to all tangible Collateral and comprehensive general public liability insurance, or will self-insure to the extent customary for reputable Persons of similar size engaged in the same or similar lines of business. Each such policy of insurance shall contain the insurer’s promise not to cancel the policy or allow the policy to lapse without renewal without 30 days’ prior written notice to the Collateral Agent and shall name the Collateral Agent as an additional insured or (subject to the rights and interest of the holders of any Senior Obligations) lender loss payee, as appropriate, as its interests may appear. Each Grantor will promptly notify the Collateral Agent of any loss or material damage to any material part of the Collateral.

SECTION 4.14. Compliance with the TIA. To the extent applicable, the Company will comply with TIA Section 314(b), relating to opinions of counsel regarding the Liens and security interest created pursuant to this Security Agreement and the other Indenture Documents.

ARTICLE V

THE COLLATERAL AGENT

SECTION 5.1. Collateral Agent Appointed Attorney-in-Fact. Each Grantor hereby irrevocably appoints the Collateral Agent its attorney-in-fact, with full authority in the place and stead of such Grantor and in the name of such Grantor or otherwise, from time to time in the Collateral Agent’s discretion, following the occurrence and during the continuance of an Event of Default, to take any action and to execute any instrument which the Collateral Agent may deem necessary or advisable to accomplish the purposes of this Security Agreement, including (a) to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral, (b) to receive, endorse, and collect any drafts or other Instruments, Documents and Chattel Paper, in connection with clause (a) above, (c) to file any claims or take any action or institute any proceedings which the Collateral Agent may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Collateral Agent with respect to any of the Collateral,

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and (d) to perform the affirmative obligations of such Grantor hereunder. EACH GRANTOR HEREBY ACKNOWLEDGES, CONSENTS AND AGREES THAT THE POWER OF ATTORNEY GRANTED PURSUANT TO THIS SECTION 5.1 IS IRREVOCABLE AND COUPLED WITH AN INTEREST AND SHALL BE EFFECTIVE UNTIL THE TERMINATION DATE.

SECTION 5.2. Collateral Agent May Perform. If any Grantor fails to perform any agreement contained herein, the Collateral Agent may itself perform, or cause performance of, such agreement, and the expenses of the Collateral Agent incurred in connection therewith shall be payable by such Grantor pursuant to Section 6.4 hereof and the Collateral Agent may from time to time take any other action which the Collateral Agent reasonably deems necessary for the maintenance, preservation or protection of any of the Collateral or of its security interest therein.

SECTION 5.3. Collateral Agent Has No Duty. The powers conferred on the Collateral Agent hereunder are solely to protect its interest (on behalf of the Secured Parties) in the Collateral and shall not impose any duty on it to exercise any such powers. Except for reasonable care of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Collateral Agent shall have no duty as to any Collateral or responsibility for (a) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Investment Property and any other Pledged Property, whether or not the Collateral Agent has or is deemed to have knowledge of such matters, or (b) taking any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral.

SECTION 5.4. Reasonable Care. The Collateral Agent is required to exercise reasonable care in the custody and preservation of any of the Collateral in its possession; provided, that the Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of any of the Collateral (a) if such Collateral is accorded treatment substantially equal to that which the Collateral Agent accords its own personal property, or (b) if the Collateral Agent takes such action for that purpose as any Grantor reasonably requests in writing at times other than upon the occurrence and during the continuance of an Event of Default; provided, further, that failure of the Collateral Agent to comply with any such request at any time shall not in itself be deemed a failure to exercise reasonable care.

ARTICLE VI

REMEDIES

SECTION 6.1. Certain Remedies. If any Event of Default shall have occurred and be continuing:

(a) The Collateral Agent may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party on default under the UCC (whether or not the UCC applies to the affected Collateral) and also may (i) take possession of any Collateral not already in its possession without demand and without legal process, (ii) require any Grantor to, and each Grantor hereby agrees that it will, at its expense and upon request of the Collateral Agent forthwith, assemble all or part of the Collateral as directed by the Collateral Agent and make it available to the Collateral Agent at a place to be designated

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by the Collateral Agent that is reasonably convenient to both parties, (iii) subject to applicable law or agreements with landlords, enter onto the property where any Collateral is located and take possession thereof without demand and without legal process, (iv) without notice except as specified below, lease, license, sell or otherwise dispose of the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Collateral Agent’s offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Collateral Agent may deem commercially reasonable. Each Grantor agrees that, to the extent notice of sale shall be required by law, at least ten (10) days’ prior notice to the applicable Grantor of the time and place of any public sale or the time of any private sale is to be made shall constitute reasonable notification; provided, however, that with respect to Collateral that is (x) perishable or threatens to decline speedily in value, or (y) is of a type customarily sold on a recognized market (including but not limited to, Investment Property), no notice of sale or disposition need be given. For purposes of this Article VI, notice of any intended sale or disposition of any Collateral may be given by first-class mail, hand-delivery (through a delivery service or otherwise), facsimile or email, and shall be deemed to have been “sent” upon deposit in the U.S. Mails with adequate postage properly affixed, upon delivery to an express delivery service or upon electronic submission through telephonic or internet services, as applicable. The Collateral Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Collateral Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.

(b) Each Grantor agrees and acknowledges that a commercially reasonable disposition of Inventory, Equipment, Goods, Computer Hardware and Software Collateral, or Intellectual Property may be by lease or license of, in addition to the sale of, such Collateral. Each Grantor further agrees and acknowledges that each of the following shall be deemed a reasonable commercial disposition: (i) a disposition made in the usual manner on any recognized market, (ii) a disposition at the price current in any recognized market at the time of disposition, and (iii) a disposition in conformity with reasonable commercial practices among dealers in the type of property subject to the disposition.

(c) All cash Proceeds received by the Collateral Agent in respect of any sale of, collection from, or other realization upon, all or any part of the Collateral shall be, subject to the rights and interests of the holders of any Senior Obligations, applied by the Collateral Agent against all or any part of the Secured Obligations as set forth in the Indenture. The Collateral Agent shall not be obligated to apply or pay over for application noncash proceeds of collection or enforcement unless (i) the failure to do so would be commercially unreasonable, and (ii) the affected party has provided the Collateral Agent with a written demand to apply or pay over such noncash proceeds on such basis.

(d) The Collateral Agent may do any or all of the following: (i) transfer all or any part of the Collateral into the name of the Collateral Agent or its nominee, with or without disclosing that such Collateral is subject to the Lien hereunder, (ii) notify the

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parties obligated on any of the Collateral to make payment to the Collateral Agent of any amount due or to become due thereunder, (iii) withdraw, or cause or direct the withdrawal, of all funds with respect to any Collateral Account or any other Deposit Account subject to an Account Control Agreement, (iv) enforce collection of any of the Collateral by suit or otherwise, and surrender, release or exchange all or any part thereof, or compromise or extend or renew for any period (whether or not longer than the original period) any obligations of any nature of any party with respect thereto, (v) endorse any checks, drafts, or other writings in the applicable Grantor’s name to allow collection of the Collateral, (vi) take control of any Proceeds of the Collateral, or (vii) execute (in the name, place and stead of the applicable Grantor) endorsements, assignments, stock powers and other instruments of conveyance or transfer with respect to all or any of the Collateral.

SECTION 6.2. Securities Laws. If the Collateral Agent shall determine to exercise its right to sell all or any of the Collateral that are Equity Interests pursuant to Section 6.1, each Grantor agrees that, upon request of the Collateral Agent, such Grantor will, at its own expense:

(a) execute and deliver, and cause (or, with respect to any issuer which is not a Subsidiary of such Grantor, use its reasonable efforts to cause) each Pledged Interests Issuer or other issuer of the Collateral contemplated to be sold and the directors and officers thereof to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts and things, as may be necessary or, in the reasonable opinion of the Collateral Agent, advisable to register such Collateral under the provisions of the Securities Act of 1933, as from time to time amended (the “Securities Act”), and cause the registration statement relating thereto to become effective and to remain effective for such period as prospectuses are required by law to be furnished, and to make all amendments and supplements thereto and to the related prospectus which, in the reasonable opinion of the Collateral Agent, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the SEC applicable thereto;

(b) use its reasonable efforts to exempt the Collateral under the state securities or “Blue Sky” laws and to obtain all necessary Governmental Approvals for the sale of the Collateral, as requested by the Collateral Agent;

(c) cause (or, with respect to any issuer that is not a Subsidiary of such Grantor, use its reasonable efforts to cause) each such Pledged Interests Issuer or other issuer to make available to its security holders, as soon as practicable, an earnings statement that will satisfy the provisions of Section 11(a) of the Securities Act; and

(d) do or cause to be done all such other acts and things as may be reasonably necessary to make such sale of the Collateral or any part thereof valid and binding and in compliance with applicable law.

Each Grantor acknowledges the impossibility of ascertaining the amount of damages that would be suffered by the Collateral Agent or the Secured Parties by reason of the failure by such Grantor to perform any of the covenants contained in this Section and consequently agrees that, if such Grantor shall fail to perform any of such covenants, it shall pay, as liquidated damages

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and not as a penalty, an amount equal to the value (as reasonably determined by the Collateral Agent in good faith) of such Collateral on the date the Collateral Agent shall demand compliance with this Section 6.2.

SECTION 6.3. Compliance with Restrictions. Each Grantor agrees that in any sale of any of the Collateral whenever an Event of Default shall have occurred and be continuing, the Collateral Agent is hereby authorized to comply with any limitation or restriction in connection with such sale as it may be advised by counsel is necessary in order to avoid any violation of applicable law (including compliance with such procedures as may restrict the number of prospective bidders and purchasers, require that such prospective bidders and purchasers have certain qualifications, and restrict such prospective bidders and purchasers to Persons who will represent and agree that they are purchasing for their own account for investment and not with a view to the distribution or resale of such Collateral), or in order to obtain any required approval of the sale or of the purchaser by any Governmental Authority or official, and each Grantor further agrees that such compliance shall not result in such sale being considered or deemed not to have been made in a commercially reasonable manner, nor shall the Collateral Agent be liable nor accountable to such Grantor for any discount allowed by the reason of the fact that such Collateral is sold in compliance with any such limitation or restriction.

SECTION 6.4. Indemnity and Expenses.

(a) Each Grantor hereby indemnifies and holds harmless the Collateral Agent, each Secured Party and each of their respective officers, directors, employees and agents (the “Indemnified Parties”) from and against any and all claims, losses and liabilities arising out of or resulting from this Security Agreement or any other Indenture Document (including, without limitation, enforcement of this Security Agreement), except claims, losses or liabilities resulting from such Indemnified Party’s gross negligence, willful misconduct or unlawful acts; PROVIDED, HOWEVER, THAT IT IS THE INTENTION OF THE PARTIES HERETO THAT EACH INDEMNIFIED PARTY BE INDEMNIFIED IN THE CASE OF ITS OWN NEGLIGENCE (OTHER THAN GROSS NEGLIGENCE), REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE OR CONTRIBUTORY, ACTIVE OR PASSIVE, IMPUTED, JOINT OR TECHNICAL. If and to the extent that the foregoing undertaking may be unenforceable for any reason, each Grantor hereby agrees to make the maximum contribution to the payment and satisfaction of each of the foregoing which is permissible under applicable law.

(b) Other than as set forth in clause (c) below, each Grantor will upon demand pay to the Collateral Agent and any counsel the amount of any and all expenses, including the reasonable fees and disbursements of its counsel and of any experts and agents, which the Collateral Agent and any counsel may incur in connection herewith, including without limitation in connection with the administration of this Security Agreement and the custody, preservation, use or operation of, any of the Collateral.

(c) Each Grantor will upon demand pay to the Collateral Agent and any counsel the amount of any and all expenses, including the fees and disbursements of its counsel and of any experts and agents, which the Collateral Agent and any counsel may incur in connection with (i) the sale of, collection from, or other realization upon, any of

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the Collateral, (ii) the exercise or enforcement of any of the rights of the Collateral Agent or any of the Secured Parties hereunder, or (iii) the failure by any Grantor to perform or observe any of the provisions hereof.

SECTION 6.5. Warranties. The Collateral Agent may sell the Collateral without giving any warranties or representations as to the Collateral. The Collateral Agent may disclaim any warranties of title or the like. Each Grantor agrees that this procedure will not be considered to adversely affect the commercial reasonableness of any sale of the Collateral.

ARTICLE VII

OTHER AGREEMENTS

SECTION 7.1. Intercreditor Agreement. Notwithstanding any other provision contained herein, this Security Agreement, the Liens created hereby and the rights, remedies, duties and obligations provided for herein are subject in all respects to the provisions of the Intercreditor Agreement and, to the extent provided therein, the Senior Obligations Security Documents. In the event of any conflict or inconsistency between the provisions of this Security Agreement and the Intercreditor Agreement, the provisions of the Intercreditor Agreement shall control.

SECTION 7.2. Indenture. To the fullest extent possible, the terms and provisions of the Indenture shall be read together with the terms and provisions of this Security Agreement so that the terms and provisions of this Security Agreement do not conflict with the terms and provisions of the Indenture; provided, however, notwithstanding the foregoing, in the event that any of the terms or provisions of this Security Agreement conflict with any terms or provisions of the Indenture, the terms or provisions of the Indenture shall govern and control for all purposes; provided that the inclusion in this Security Agreement of terms and provisions, supplemental rights or remedies in favor of the Collateral Agent not addressed in the Indenture shall not be deemed to be a conflict with the Indenture and all such additional terms, provisions, supplemental rights or remedies contained herein shall be given full force and effect.

ARTICLE VIII

MISCELLANEOUS PROVISIONS

SECTION 8.1. Security Document. This Security Agreement is a Security Document (as defined in the Indenture) executed pursuant to the Indenture and shall (unless otherwise expressly indicated herein) be construed, administered and applied in accordance with the terms and provisions thereof.

SECTION 8.2. Binding on Successors, Transferees and Assigns; Assignment. Subject to the limitations set forth, and except as otherwise provided, in the Indenture and the Intercreditor Agreement, this Security Agreement shall remain in full force and effect until the Termination Date, shall be binding upon each Grantor and its successors, transferees and assigns and shall inure to the benefit of and be enforceable by each Secured Party and its successors, transferees and assigns; provided that no Grantor shall (unless otherwise permitted under the terms of the Indenture or this Security Agreement) assign any of its obligations hereunder without the Collateral Agent’s prior written consent.

SECTION 8.3. Amendments, etc. No amendment to or waiver of any provision of this Security Agreement, nor consent to any departure by any Grantor from its obligations under this

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Security Agreement, shall in any event be effective unless the same shall be in writing and signed by the Collateral Agent and such Grantor and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

SECTION 8.4. Notices. Except as otherwise provided in this Security Agreement, all notices and other communications provided for hereunder shall be in writing or by facsimile and addressed, delivered or transmitted to the appropriate party at the address or facsimile number of such party specified in the Indenture or on the signature pages of this Security Agreement or at such other address or facsimile number as may be designated by such party in a notice to the other party. Except as otherwise provided in this Security Agreement, any notice or other communication, if mailed and properly addressed with postage prepaid or if properly addressed and sent by pre-paid courier service, shall be deemed given when received; any such notice or other communication, if transmitted by facsimile, shall be deemed given when transmitted and electronically confirmed.

SECTION 8.5. Release of Liens. Collateral shall be released from the Liens created by this Security Agreement as and to the extent provided in the Indenture.

SECTION 8.6. No Waiver; Remedies. In addition to, and not in limitation of Section 2.7, no failure on the part of any Secured Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

SECTION 8.7. Headings. The various headings of this Security Agreement are inserted for convenience only and shall not affect the meaning or interpretation of this Security Agreement or any provisions thereof.

SECTION 8.8. Severability. Any provision of this Security Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Security Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

SECTION 8.9. Counterparts. This Security Agreement may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement. Delivery of an executed counterpart of a signature page to this Security Agreement by facsimile shall be effective as delivery of a manually executed counterpart of this Security Agreement.

SECTION 8.10. Consent as Holder of Equity. Each Grantor hereby consents to (a) the execution by each other Grantor of this Security Agreement and grant by each other Grantor of a security interest, encumbrance, pledge and hypothecation in all Pledged Interests and other Collateral of such other Grantor to the Collateral Agent pursuant hereto, and (b) without limiting the generality of the foregoing, each Grantor consents to the transfer of any Pledged Interest to a Senior Collateral Agent (or, after the Discharge of Senior Obligations, the Collateral Agent) or its nominee following an Event of Default and to the substitution of a Senior Collateral Agent

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(or, after the Discharge of Senior Obligations, the Collateral Agent) or its nominee as a partner under the limited partnership agreement or as a member under the limited liability company agreement, in any case, as heretofore and hereafter amended.

SECTION 8.11. Additional Grantors. Additional Subsidiaries of the Company may from time to time enter into this Security Agreement as a Grantor. Upon execution and delivery after the date hereof by the Collateral Agent and such Subsidiary of an instrument in the form of Annex 1, such Subsidiary shall become a Grantor hereunder with the same force and effect as if originally named as a Grantor herein. The execution and delivery of any instrument adding an additional Grantor as a party to this Security Agreement shall not require the consent of any other Grantor hereunder. The rights and obligations of each Grantor hereunder shall remain in full force and effect notwithstanding the addition of any new Grantor as a party to this Security Agreement.

SECTION 8.12. Waiver of Jury Trial. EACH GRANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, EACH INDENTURE DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE COLLATERAL AGENT, ANY OTHER SECURED PARTY OR ANY OBLIGOR IN CONNECTION THEREWITH. EACH GRANTOR ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER INDENTURE DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE COLLATERAL AGENT, THE TRUSTEE AND EACH EXCHANGING NOTEHOLDER ENTERING INTO THE INDENTURE DOCUMENTS.

SECTION 8.13. Governing Law, Entire Agreement, etc. This Security Agreement shall be deemed to be a contract made under and shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, except to the extent that the validity or perfection of the security interests hereunder, or remedies hereunder, in respect of any particular Collateral are governed by the laws of a jurisdiction other than the State of New York.

SECTION 8.14. Miscellaneous. THIS WRITTEN AGREEMENT AND THE OTHER INDENTURE DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

[Remainder of this page intentionally left blank. Signature pages follow.]

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IN WITNESS WHEREOF, each of the parties hereto has caused this Security Agreement to be duly executed and delivered by its authorized officer as of the date first above written.

GRANTORS:
FLOTEK INDUSTRIES, INC.
By	/s/ John Chisholm
	John Chisholm
	President
TELEDRIFT COMPANY FLOTEK PAYMASTER, INC. MATERIAL TRANSLOGISTICS, INC. PETROVALVE, INC. TURBECO, INC. USA PETROVALVE, INC. FLOTEK INTERNATIONAL, INC. PADKO INTERNATIONAL INCORPORATED FLOTEK ECUADOR MANAGEMENT, LLC FLOTEK ECUADOR INVESTMENTS, LLC
By	/s/ John Chisholm
	John Chisholm
	President
SOONER ENERGY SERVICES, LLC CESI MANUFACTURING, LLC CESI CHEMICAL, INC.
By	/s/ John Chisholm
	John Chisholm
	Chief Executive Officer
FLOTEK INDUSTRIES FZE
By	/s/ John Chisholm
	John Chisholm
	President

Signature Page to Junior Lien Pledge and Security Agreement

COLLATERAL AGENT:
U.S. BANK NATIONAL ASSOCIATION
By:	/s/ Steven A. Finklea
	Name:	Steven A. Finklea
	Title:	Vice President
Address:
U.S. Bank National Association
5555 San Felipe Street
Suite 1150
Houston, Texas
Facsimile: (713) 235-9213
Attention: Corporate Trust Services

Signature Page to Junior Lien Pledge and Security Agreement

SCHEDULE I

to Junior Lien Pledge and Security Agreement

ITEM A – PLEDGED INTERESTS

Common Stock

Pledged Interests Issuer (corporate)	Cert. #	# of Shares	Authorized Shares	% of Shares Pledged
Padko International Incorporated	2	50,000	500,000	100	%
USA Petrovalve, Inc.	2	1,000	100,000	100	%
Turbeco, Inc.	4	500	100,000	100	%
Petrovalve, Inc.	2	1,000	1,000	100	%
Material Translogistics, Inc.	1	1,000	100,000	100	%
Flotek Paymaster, Inc.	1	1,000	100,000	100	%
CESI Chemical, Inc.	1	500	5,000,000	100	%
Teledrift Company	2	1,000	10,000	100	%
Flotek Industries FZE	22924	1	1	100	%
Flotek International, Inc.	1	1,000	100,000	100	%

Limited Liability Company Interests

Pledged Interests Issuer (limited liability company)	% of Limited Liability Company Interests Pledged		Type of Limited Liability Company Interests Pledged
Sooner Energy Services, LLC	100	%	Membership Interests
CESI Manufacturing, LLC	100	%	Membership Interests
Flotek Ecuador Management, LLC	100	%	Membership Interests
Flotek Ecuador Investments, LLC	100	%	Membership Interests

Signature I to Junior Lien Pledge and Security Agreement

Partnership Interests

Pledged Interests Issuer (partnership)	% of Partnership Interests Owned	% of Partnership Interests Pledged
NONE.

ITEM B – PLEDGED NOTES

1. Pledged Note Issuer Description:

NONE.

Signature I to Junior Lien Pledge and Security Agreement

SCHEDULE II

to Junior Lien Pledge and Security Agreement

Item A-1. Location of Grantor for purposes of UCC.

Flotek Industries, Inc.: Delaware

Padko International Incorporated: Oklahoma

Sooner Energy Services, LLC: Oklahoma

USA Petrovalve, Inc.: Texas

CESI Manufacturing, LLC: Oklahoma

Turbeco, Inc.: Texas

Petrovalve, Inc.: Delaware

Material Translogistics, Inc.: Texas

Flotek Paymaster, Inc.: Texas

CESI Chemical, Inc.: Oklahoma

Teledrift Company: Delaware

Flotek Industries FZA: Jebel Ali Free Zone, Dubai, United Arab Emirates

Flotek International, Inc.: Delaware

Flotek Ecuador Investments, LLC: Texas

Flotek Ecuador Management, LLC: Texas

Item A-2. Grantor’s place of business or principal office.

Flotek Industries, Inc.,

USA Petrovalve, Inc.,

Turbeco, Inc.,

Petrovalve, Inc.,

Material Translogistics, Inc.,

Flotek Paymaster, Inc.,

Teledrift Company,

Flotek International, Inc.,

Flotek Ecuador Investments, LLC, and

Flotek Ecuador Management, LLC:

2930 W. Sam Houston Pkwy N.

Houston, Texas 77043

Padko International Incorporated,

Sooner Energy Services, LLC,

CESI Chemical, Inc., and

CESI Manufacturing, LLC:

1004 Plainsman Road

Marlow, Oklahoma 73055

Flotek Industries FZE: Jebel Ali Free Zone, Dubai, United Arab Emirates

Signature II to Junior Lien Pledge and Security Agreement

Item A-3. Taxpayer ID number.

Flotek Industries, Inc.: 90-0023731

Padko International Incorporated: 73-1443489

Sooner Energy Services, LLC: 73-1501526

USA Petrovalve, Inc.: 76-0448098

CESI Manufacturing, LLC: 98-0372943

Turbeco, Inc.: 76-0228889

Petrovalve, Inc.: 76-0513130

Material Translogistics, Inc.: 73-1605226

Flotek Paymaster, Inc.: 30-0094158

CESI Chemical, Inc.: 73-1591850

Teledrift Company: 26-1869123

Flotek Industries FZE: None

Flotek International, Inc.: 27-2091474

Flotek Ecuador Investments, LLC: 27-2091569

Flotek Ecuador Management, LLC: 27-2091663

Item B. Merger or other corporate reorganization.

Description of Merger:

CESI Chemical, Inc.: Esses Inc., Equipment Specialties Inc., Plainsman Technology, Inc., IBS 2000, Inc. and Flotek Acquisition Sub, Inc. were each merged into CESI Chemical, Inc.

Material Translogistics, Inc.: CESI Acquistion, Inc. was merged into Material Translogistics, Inc.

Teledrift Company: Trinity Tool, Inc. and Spidle Sales & Service, Inc. were each merged into Teledrift Company.

Sooner Energy Services, LLC: Sooner Energy Services, Inc. was converted into Sooner Energy Services, LLC.

CESI Manufacturing, LLC: SES Holdings, Inc. was converted into and its name changed to CESI Manufacturing, LLC.

Turbeco, Inc.: CAVO Drilling Motors, Ltd. Co. was merged into Turbeco, Inc.

Item C. Deposit Accounts and Securities Accounts.

Deposit Accounts:
Account Description	Account Number
Wells Fargo - Flotek Industries Inc. - WellsOne Account(Master)	412-1097273

Signature II to Junior Lien Pledge and Security Agreement

Wells Fargo - Flotek Industries Inc. - WellsOne Account(Disbursement Acct)	412-1097299
Wells Fargo - Flotek Industries Inc. - WellsOne Account(Payroll)	412-1097281
Wells Fargo - Flotek Industries Inc. - WellsOne Account(Flexible Spending Acct)	412-1097265
ING Bank Alphen A/D RIJN - CESI Chemical Inc.	68.01.14.769
BankFirst - PADKO International Incorporated	500002100
BankFirst - Sooner Energy Services, LLC CD	4007006921
HSBC Bank Middle East – Flotek Industries FZE	011122215001

Securities Accounts:

NONE.

Item D. Letter of Credit Rights.

NONE.

Item E. Commercial Tort Claims.

NONE.

Signature II to Junior Lien Pledge and Security Agreement

SCHEDULE III – A

to Junior Lien Pledge and Security Agreement

INTELLECTUAL PROPERTY COLLATERAL

Item A. Patent Collateral.

Issued Patents

Country	Patent No.	Filing Date	Inventor(s)	Title
USA	6,533,034	3/18/2003	Troy Barger	Centralized Stop Collar for Floating Centralizer
USA	5,829,952	11/3/1998	Darrel W. Shadden	Check Valve with Reversible Valve Ball and Seat
Canada	2,017,405	2/21/1995		Ball and Seat-Type Valve for Downhole Rod Pump
Canada	2,478,433	12/8/2009	John T. Pursley, David L. Holcomb and Glenn S. Penny	Composition and Process for Well Cleaning
Venezuela	52500	10/7/1994		Ball and Seat-Type Valve for Downhole Rod Pump
USA	6,761,215	7/13/2004	James Eric Morrison and Guy Morrison, III	Downhole Separator Method
China (Peoples Republic)	ZL03824239.7	7/18/2007		Downhole Separator and Method

Signature III to Junior Lien Pledge and Security Agreement

Country	Patent No.	Filing Date	Inventor(s)	Title
Eurasian Patent Organization	007040	8/18/2006		Downhole Separator and Method
USA	7,122,509	10/17/2006	John Todd Sanner, Glenn S. Penny and Roger Padgham	High Temperature Foamer Formulations for Downhole Injection
USA	7,544,639	6/9/2009	John T. Pursley, David L. Holcomb and Glenn S. Penny	Composition and Process for the Treatment of Hydrogen Sulfide
USA	7,380,606	6/3/2008	John T. Pursley, David L. Holcomb and Glenn S. Penny	Composition and Process for Well Cleaning
Australia	2003278716	1/8/2009		Downhole Separator and Method

Pending Patent Applications

Country	Serial No.	Filing Date	Inventor(s)	Title
Patent Cooperation Treaty	PCTUS9602445	2/23/1996		Improved Valve Plunger for a Ball and Seat-Type Check Valve
Canada	2,497,929	8/20/2003		Downhole Separator and Method

Signature III to Junior Lien Pledge and Security Agreement

Country	Serial No.	Filing Date	Inventor(s)	Title
Patent Cooperation Treaty/European Patent Office	03716227.8	2/28/2003	John T. Pursley, David L. Holcomb and Glenn S. Penny	Composition and Process for Well Cleaning
Patent Cooperation Treaty/Norwegian National	2004 4148	2/28/2003	John T. Pursley, David L. Holcomb and Glenn S. Penny	Composition and Process for Well Cleaning
USA	339,248 Abandoned 1/5/09	1/25/2006	Michael M. Brezinski	Method of Treating a Subterranean Formation in the Presence of Ferric Ions and/or Sulfide Ions
USA	518,648	9/11/2006	Manoj Gopalan and Stephen B. Poe	Measurement While Drilling Apparatus and Method of Using the Same
Patent Cooperation Treaty	Publication No. WO/2007/033126	9/12/2006		Measurement While Drilling Apparatus and Method of Using the Same
USA	Application No. 12/156,201	5/30/2008		Process for Well Cleaning
USA	Application No. 12/268,408	11/10/2008		Drag-Reducing Copolymer Compositions
USA	Application No. 61/174,617	5/1/2009		Low Friction Centralizer

Signature III to Junior Lien Pledge and Security Agreement

Country	Serial No.	Filing Date	Inventor(s)	Title
USA	Application No. 12/618,535 Priority No. 61/114,125	11/13/2009		Water-in-Oil Microemulsions for Oilfield Applications

Patent Applications in Preparation

NONE.

Signature III to Junior Lien Pledge and Security Agreement

SCHEDULE III – B

to Junior Lien Pledge and Security Agreement

Item B. Trademark Collateral

Trademarks

Country	Trademark	Registration No.	Issue Date
USA	STIMLUBE	3,620,715	5/12/2009

Trademark Applications in Preparation

Country	Trademark
USA	FLOTEK
USA	PETROVALVE
USA	CESI
USA	“OPEN CIRCLE” SYMBOL

Signature III to Junior Lien Pledge and Security Agreement

SCHEDULE III – C

to Junior Lien Pledge and Security Agreement

Item C. Copyright Collateral.

NONE.

Signature III to Junior Lien Pledge and Security Agreement

Annex 1 to Junior Lien Pledge and Security Agreement

SUPPLEMENT NO.          dated as of                     , 20     (the “Supplement”), to the Junior Lien Pledge and Security Agreement dated as of March 31, 2010 (as amended, supplemented, restated, or otherwise modified from time to time, the “Security Agreement”) among Flotek Industries, Inc., a Delaware corporation (the “Company”) and each subsidiary of the Company signatory thereto (together with the Company, the “Grantors” and individually, a “Grantor”), in favor of U.S. Bank National Association, as Collateral Agent (in such capacity, together with its successors and assigns, the “Collateral Agent”) for the benefit of each of the Secured Parties (as defined in the Security Agreement).

A. Reference is made to that certain Indenture dated as of March 31, 2010 among the Company, as Issuer, each of the subsidiaries of the Company party thereto, as Guarantors (the “Guarantors”), and U.S. Bank National Association, as Trustee (in such capacity, the “Trustee”), as amended and supplemented by the First Supplemental Indenture dated March 31, 2010 among the Company, as Issuer, the Guarantors, and the Trustee (as so amended and supplemented, and as further amended, restated, supplemented or otherwise modified from time to time, the “Indenture”).

B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement and the Indenture.

C. Section 8.11 of the Security Agreement provides that additional Subsidiaries of the Company may become Grantors under the Security Agreement by execution and delivery of an instrument in the form of this Supplement. The undersigned Subsidiary of the Company (the “New Grantor”) is executing this Supplement in accordance with the requirements of the Indenture to become a Grantor under the Security Agreement.

Accordingly, the Collateral Agent and the New Grantor agree as follows:

SECTION 1. In accordance with Section 8.11 of the Security Agreement, the New Grantor by its signature below becomes a Grantor under the Security Agreement with the same force and effect as if originally named therein as a Grantor and the New Grantor hereby agrees (a) to all the terms and provisions of the Security Agreement applicable to it as a Grantor thereunder and (b) represents and warrants that the representations and warranties made by it as a Grantor thereunder are true and correct on and as of the date hereof. In furtherance of the foregoing, the New Grantor, as security for the payment and performance in full of the Secured Obligations (as defined in the Security Agreement), does hereby create and grant to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, their successors and assigns as provided in the Security Agreement, a continuing security interest in and lien on all of the New Grantor’s right, title and interest in and to the Collateral (as defined in the Security Agreement) of the New Grantor. Each reference to a “Grantor” in the Security Agreement shall be deemed to include the New Grantor. The Security Agreement is hereby incorporated herein by reference.

Annex I to Junior Lien Pledge and Security Agreement

Page 1 of 5

SECTION 2. The New Grantor represents and warrants to the Collateral Agent and the other Secured Parties that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)).

SECTION 3. This Supplement may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Supplement shall become effective when the Collateral Agent shall have received counterparts of this Supplement that, when taken together, bear the signatures of the New Grantor and the Collateral Agent. Delivery of an executed signature page to this Supplement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Supplement.

SECTION 4. The New Grantor hereby agrees that the schedules attached to the Security Agreement are hereby supplemented by the corresponding schedules attached to this Supplement. The New Grantor hereby represents and warrants that the information provided in the schedules attached hereto are true and correct as of the date hereof.

SECTION 5. The New Grantor hereby expressly acknowledges and agrees to the terms of Section 6.4. (Indemnity and Expenses) of the Security Agreement and expressly acknowledges the irrevocable proxy provided in Section 4.1(e) of the Security Agreement. In furtherance thereof, NEW GRANTOR HEREBY GRANTS THE COLLATERAL AGENT AN IRREVOCABLE PROXY (WHICH IRREVOCABLE PROXY SHALL CONTINUE IN EFFECT UNTIL THE TERMINATION DATE) EXERCISABLE UNDER THE CIRCUMSTANCES PROVIDED IN SECTION 4.1 OF THE SECURITY AGREEMENT, TO VOTE THE PLEDGED SHARES, PLEDGED INTERESTS, INVESTMENT PROPERTY AND SUCH OTHER COLLATERAL.

SECTION 6. Except as expressly supplemented hereby, the Security Agreement shall remain in full force and effect.

SECTION 7. THIS SUPPLEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTERESTS HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.

SECTION 8. In case any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, neither party hereto shall be required to comply with such provision for so long as such provision is held to be invalid, illegal or unenforceable, but the validity, legality and enforceability of the remaining provisions contained herein and in the Security Agreement shall not in any way be affected or impaired.

Annex I to Junior Lien Pledge and Security Agreement

Page 2 of 5

The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 9. All communications and notices hereunder shall be in writing and given as provided in the Security Agreement. All communications and notices hereunder to the New Grantor shall be given to it at the address set forth under its signature hereto.

SECTION 10. The New Grantor agrees to reimburse the Collateral Agent for its reasonable out-of-pocket expenses in connection with this Supplement, including the reasonable fees, other charges and disbursements of counsel for the Collateral Agent.

SECTION 11. NEW GRANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, EACH INDENTURE DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE COLLATERAL AGENT OR ANY OTHER SECURED PARTY OR ANY GRANTOR IN CONNECTION THEREWITH. NEW GRANTOR ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER INDENTURE DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE COLLATERAL AGENT, THE TRUSTEE AND EACH EXCHANGING NOTEHOLDER ENTERING INTO THE INDENTURE DOCUMENTS.

THIS SUPPLEMENT, THE SECURITY AGREEMENT AND THE OTHER INDENTURE DOCUMENTS, REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.

Annex I to Junior Lien Pledge and Security Agreement

Page 3 of 5

IN WITNESS WHEREOF, the New Grantor and the Collateral Agent have duly executed this Supplement to the Security Agreement as of the day and year first above written.

[Name of New Grantor]

By:

Name:

Title:

Address:

U.S. BANK NATIONAL ASSOCIATION,

as Collateral Agent

By:

Name:

Title:

Annex I to Junior Lien Pledge and Security Agreement

Page 4 of 5

SCHEDULES TO SUPPLEMENT NO. 1

[AS APPROPRIATE]

Annex I to Junior Lien Pledge and Security Agreement

Page 5 of 5

EX-10.4

Exhibit 10.4

JUNIOR LIEN PATENT AND TRADEMARK SECURITY AGREEMENT

This Junior Lien Patent and Trademark Security Agreement dated as of March 31, 2010 (the “Patent and Trademark Security Agreement”) is made by Flotek Industries, Inc., a Delaware corporation (the “Debtor”) and each subsidiary of the Debtor signatory hereto (together with the Debtor, the “Grantors” and individually, a “Grantor”), in favor of U.S. Bank National Association, as Collateral Agent (in such capacity, together with its successors and assigns, the “Collateral Agent”) for the benefit of the Secured Parties (as defined herein).

Preliminary Statement

Pursuant to that certain Exchange Agreement dated as of March 31, 2010 (as amended or otherwise modified from time to time, the “Exchange Agreement”) among Debtor, the other Grantors and Whitebox Hedged High Yield Partners, LP (“WHHY”), IAM Mini-Fund 14 Limited (“IAM”), Pandora Select Partners, LP (“Pandora”), Whitebox Special Opportunities Fund, LP – Series B (“WSOB”), Whitebox Combined Partners, LP (“WCP”), Whitebox Convertible Arbitrage Partners, LP (“WCAP”), Whitebox Intermarket Partners LP (“WIP”), ECF Value Fund, L.P. (“ECF”), ECF Value Fund II, L.P. (“ECF II”) and ECF Value Fund International Ltd. (“ECF International”, together with WHHY, IAM, Pandora, WSOB, WCP, WCAP, WIP, ECF and ECF II, collectively, the “Exchanging Noteholders”), the Debtor is issuing to the Exchanging Noteholders up to $36,004,000 in aggregate principal amount of the Company’s 5.25% Convertible Senior Secured Notes due 2028 (together with any notes issued in substitution or exchange therefor, and as the same may be amended, restated, supplemented or otherwise modified from time to time, collectively, the “Notes”).

Grantors own the patents, patent registration, patent applications, trademarks, trademark registrations, and trademark applications, and are parties to the patent and trademark licenses listed on Schedule I attached hereto and by this reference incorporated herein.

In connection with the Exchange Agreement, the Grantors entered into a Junior Lien Pledge and Security Agreement of even date herewith (as amended or otherwise modified from time to time, the “Pledge and Security Agreement”) in favor of the Collateral Agent for the benefit of the Secured Parties (as defined in the Pledge and Security Agreement), pursuant to which the Grantors have granted to the Collateral Agent a security interest in all right, title and interest of the Grantors in and to the Intellectual Property Collateral, as such term is defined in the Pledge and Security Agreement, including, without limitation, all right, title and interest of Grantors, in, to, and under all now owned and hereafter acquired Patent Collateral and Trademark Collateral (each as defined in the Pledge and Security Agreement), set forth on Schedule I attached hereto, to secure the prompt payment, performance and observance of the Secured Obligations (as defined in the Pledge and Security Agreement).

Agreement

NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, Grantors do hereby further confirm, and put on the public record, their grant to the Collateral Agent of a security interest in, to, and under the following, whether presently existing or hereafter created or acquired (collectively, the “Patent and Trademark Collateral”);

(a) (i) all inventions and discoveries, whether patentable or not, all letters patent and applications for letters patent throughout the world, including but not limited to all the property set forth as “Patents” on Schedule I hereto, and any patent applications in preparation for filing, (ii) all reissues, divisions, continuations, continuations-in-part, extensions, renewals and reexaminations of any of the items described in clause (i), and (iii) all patent licenses, and other agreements providing any Grantor with the right to use any items of the type referred to in clauses (i) and (ii) above;

(b) (i) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, certification marks, collective marks, logos and other source or business identifiers, and all goodwill of the business associated therewith, now existing or hereafter adopted or acquired, including but not limited to all of the property set forth as “Trademarks” on Schedule I hereto, whether currently in use or not, all registrations and recordings thereof and all applications in connection therewith, whether pending or in preparation for filing, including registrations, recordings and applications in the United States Patent and Trademark Office or in any office or agency of the United States of America, or any State thereof or any other country or political subdivision thereof or otherwise, and all common-law rights relating to the foregoing, (ii) the right to obtain all reissues, extensions or renewals of the foregoing, (iii) all trademark licenses for the grant by or to any Grantor of any right to use any trademark, and (iv) all of the goodwill of the business connected with the use of, and symbolized by the items described in, clauses (i) and (ii), and to the extent applicable clause (iii); and

(c) all products and proceeds of the foregoing, and rights associated therewith, including, without limitation, licenses, royalties income, payments, claims, damages and proceeds of infringement suits, any claim by Grantors against third parties for past, present or future (i) infringement or dilution of any patent, trademark, or patent or trademark registrations or licenses referred to herein, the patent or trademark registrations issued with respect to the patent or trademark applications referred to herein and the trademarks licensed under any trademark license, or (ii) injury to the goodwill associated with any patent, trademark, patent or trademark registration, or patent or trademark licensed under any patent or trademark license.

This security interest is granted in conjunction with the security interests granted to Secured Parties pursuant to the Pledge and Security Agreement. Grantors hereby acknowledge and affirm that the rights and remedies of Secured Parties with respect to the security interest in the Patent and Trademark Collateral made and granted hereby are more fully set forth in the Pledge and Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein.

[Signatures on following page]

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IN WITNESS WHEREOF, each of the parties hereto has caused this Junior Lien Patent and Trademark Security Agreement to be duly executed and delivered by its authorized officer as of the date first above written.

GRANTORS:
FLOTEK INDUSTRIES, INC.
By	/s/ John Chisholm
	John Chisholm
	President
TELEDRIFT COMPANY FLOTEK PAYMASTER, INC. MATERIAL TRANSLOGISTICS, INC. PETROVALVE, INC. TURBECO, INC. USA PETROVALVE, INC. FLOTEK INTERNATIONAL, INC. PADKO INTERNATIONAL INCORPORATED FLOTEK ECUADOR MANAGEMENT, LLC FLOTEK ECUADOR INVESTMENTS, LLC
By	/s/ John Chisholm
	John Chisholm
	President
CESI CHEMICAL, INC. CESI MANUFACTURING, LLC SOONER ENERGY SERVICES, LLC
By	/s/ John Chisholm
	John Chisholm
	Chief Executive Officer
FLOTEK INDUSTRIES FZE
By	/s/ John Chisholm
	John Chisholm
	President

Signature Page to Junior Lien Patent and Trademark Security Agreement

SCHEDULE I

TO

JUNIOR LIEN PATENT AND TRADEMARK SECURITY AGREEMENT

Item A. Patent Collateral

Issued Patents

Country	Serial No.	Filing Date	Inventor(s)	Title
USA	6,533,034	3/18/2003	Troy Barger	Centralized Stop Collar for Floating Centralizer
USA	5,829,952	11/3/1998	Darrel W. Shadden	Check Valve with Reversible Valve Ball and Seat
Canada	2,017,405	2/21/1995		Ball and Seat-Type Valve for Downhole Rod Pump
Canada	2,478,433	12/8/2009	John T. Pursley, David L. Holcomb and Glenn S. Penny	Composition and Process for Well Cleaning
Venezuela	52500	10/7/1994		Ball and Seat-Type Valve for Downhole Rod Pump
USA	6,761,215	7/13/2004	James Eric Morrison and Guy Morrison, III	Downhole Separator Method
China (Peoples Republic)	ZL03824239.7	7/18/2007		Downhole Separator and Method
Eurasian Patent Organization	007040	8/18/2006		Downhole Separator and Method

Schedule I to Junior Lien Patent and Trademark Security Agreement

Country	Serial No.	Filing Date	Inventor(s)	Title
USA	7,122,509	10/17/2006	John Todd Sanner, Glenn S. Penny and Roger Padgham	High Temperature Foamer Formulations for Downhole Injection
USA	7,544,639	6/9/2009	John T. Pursley, David L. Holcomb and Glenn S. Penny	Composition and Process for the Treatment of Hydrogen Sulfide
USA	7,380,606	6/3/2008	John T. Pursley, David L. Holcomb and Glenn S. Penny	Composition and Process for Well Cleaning
Australia	2003278716	1/8/2009		Downhole Separator and Method

Pending Patent Applications

Country	Serial No.	Filing Date	Inventor(s)	Title
Patent Cooperation Treaty	PCTUS9602445	2/23/1996		Improved Valve Plunger for a Ball and Seat-Type Check Valve
Canada	2,497,929	8/20/2003		Downhole Separator and Method

Schedule I to Junior Lien Patent and Trademark Security Agreement

Country	Serial No.	Filing Date	Inventor(s)	Title
Patent Cooperation Treaty/European Patent Office	03716227.8	2/28/2003	John T. Pursley, David L. Holcomb and Glenn S. Penny	Composition and Process for Well Cleaning
Patent Cooperation Treaty/Norwegian National	2004 4148	2/28/2003	John T. Pursley, David L. Holcomb and Glenn S. Penny	Composition and Process for Well Cleaning
USA	339,248 Abandoned	1/25/2006	Michael M. Brezinski	Method of Treating a Subterranean Formation in the Presence of Ferric Ions and/or Sulfide Ions
USA	518,648	9/11/2006	Manoj Gopalan and Stephen B. Poe	Measurement While Drilling Apparatus and Method of Using the Same
Patent Cooperation Treaty	Publication No. WO/2007/033126	9/12/2006		Measurement While Drilling Apparatus and Method of Using the Same
USA	Application No. 12/156,201	5/30/2008		Process for Well Cleaning
USA	Application No. 12/268,408	11/10/2008		Drag-Reducing Copolymer Compositions
USA	Application No. 61/174,617	5/1/2009		Low Friction Centralizer

Schedule I to Junior Lien Patent and Trademark Security Agreement

Country	Serial No.	Filing Date	Inventor(s)	Title
USA	Application No. 12/618,535 Priority No. 61/114,125	11/13/2009		Water-in-Oil Microemulsions for Oilfield Applications

Patent Applications in Preparation

NONE.

Item B. Trademark Collateral

Trademarks

Country	Trademark	Registration No.	Issue Date
USA	STIMLUBE	3,620,715	5/12/2009

Trademark Applications in Preparation

Country	Trademark
USA	FLOTEK
USA	PETROVALVE
USA	CESI
USA	“OPEN CIRCLE” SYMBOL

Schedule I to Junior Lien Patent and Trademark Security Agreement

EX-10.5

Exhibit 10.5

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT, dated as of March 31, 2010 (this “Agreement”), is made by and among Flotek Industries, Inc., a Delaware corporation, with headquarters located at 2930 W. Sam Houston Parkway North, Suite 300, Houston, Texas 77043 (the “Company”), and the investors named on the signature pages hereto (the “Investors”).

RECITALS:

A. Pursuant to a Securities Exchange Agreement dated as of the date hereof (the “Exchange Agreement”) by and among the Company and the Investors, the Company will issue to the Investors 1,568,874 shares (the “Initial Shares”) of common stock, par value $0.0001 per share, of the Company (the “Common Stock”) and up to $36,004,000 principal amount of its 5.25% Convertible Senior Secured Notes due 2028 (the “2010 Convertible Senior Notes”) which are convertible into Common Stock, in exchange for $40,000,000 aggregate principal amount of the Company’s 5.25% Convertible Senior Notes due 2028.

B. In order to induce the Investors to execute and deliver the Exchange Agreement, the Company has agreed to provide certain registration rights under the Securities Act and applicable state securities laws with respect to the Common Shares (as hereinafter defined).

In consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Investors hereby agree as follows:

ARTICLE I

DEFINITIONS

Capitalized terms used and not otherwise defined herein have the respective meanings given them set forth in the Exchange Agreement. In addition, as used in this Agreement, the following terms have the following meanings:

1.1 “Common Shares” means the Initial Shares and the shares of Common Stock issued or issuable upon conversion of the 2010 Convertible Senior Notes.

1.2 “Exchange Price” means the greater of (i) the 95% of the Volume Weighted Average Price of the Common Stock, as determined using Bloomberg function VWAP for the 10 consecutive trading days ending two days before the Closing Date, beginning at 9:30 a.m. (New York time) on the first day of the period and ending at 4:30 p.m. (New York time) on the last day of the period, or (ii) 95% of the closing price of the Common Stock on the day before the Closing Date.

1.3 “FINRA” means the Financial Industry Regulatory Authority, Inc.

1.4 “Investors” means the investors named on the signature pages hereto and any of their transferees or assignees who agree to become bound by the provisions of this Agreement in accordance with Article IX hereof.

1.5 “National Securities Exchange” means any national securities exchange under Section 12(b) of the Exchange Act.

1.6 “OTC Bulletin Board” means the OTC Bulletin Board service of broker-dealers admitted the membership in FINRA and their associated person.

1.7 “Registrable Securities” means the 2010 Convertible Senior Notes, the Common Shares (without regard to any limitations on conversion or exercise) and any shares of capital stock issued or issuable from time to time (with any adjustments) in exchange for, or otherwise with respect to, the 2010 Convertible Senior Notes or the Common Shares.

1.8 “Registration Period” means the period between the date of this Agreement and the earlier of (i) the date on which all of the Registrable Securities have been sold under a Registration Statement and no further Registrable Securities may be issued in the future, or (ii) the date on which all the Registrable Securities (in the opinion of the Investors’ counsel) may be immediately sold without registration and without restriction (including without limitation as to sale volume by each holder thereof) as to the number of Registrable Securities to be sold, pursuant to Rule 144 or otherwise and no further Registrable Securities may be issued in the future.

1.9 “Registration Statement” means a Registration Statement of the Company filed under the Securities Act.

1.10 The terms “register,” “registered,” and “registration” refer to a registration effected by preparing and filing a Registration Statement or statements in compliance with the Securities Act and pursuant to Rule 415 and the declaration or ordering of effectiveness of such Registration Statement by the SEC.

1.11 “Restricted Securities” means restricted securities as defined in Rule 144 under the Securities Act.

1.12 “Rule 415” means Rule 415 under the Securities Act, or any successor Rule providing for offering securities on a continuous basis, and applicable rules and regulations thereunder.

1.13 “SEC” means the United States Securities and Exchange Commission.

ARTICLE II

REGISTRATION

2.1 Mandatory Registration.

(a) The Company will file with the SEC a Registration Statement on Form S-3 registering the Registrable Securities and no securities other than additional securities held by Investors for resale by April 30, 2010 (the “Required Filing Date”). If Form S-3 is not available at that time, then the Company will file a Registration Statement on such form as is then available to effect a registration of the Registrable Securities by such date, subject to the consent of the Investors, which consent will not be unreasonably withheld.

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(b) To the extent allowable under the Securities Act and the rules promulgated thereunder (including Rule 416 under the Securities Act), the Registration Statement will include the Registrable Securities and such indeterminate number of additional shares of Common Stock as may become issuable upon conversion of the 2010 Convertible Senior Notes (i) to prevent dilution resulting from stock splits, stock dividends or similar transactions, or (ii) by reason of changes in the conversion price of the 2010 Convertible Senior Notes in accordance with the terms thereof.

(c) Notwithstanding anything to the contrary contained in this Agreement, but subject to the payment of the Late Payments pursuant to Section 2.4 hereof, if the staff of the SEC (the “Staff”) or the SEC seeks to characterize any offering pursuant to a Registration Statement filed pursuant to this Agreement as constituting an offering of securities by or on behalf of the Company, or in any other manner, such that the Staff or the SEC do not permit such Registration Statement to become effective and used for resales in a manner that does not constitute such an offering and that permits the continuous resale at the market by the Investors participating therein (or as otherwise may be acceptable to each Investor) without being named therein as “underwriters,” then the Company shall reduce the amount of Registrable Securities to be included in such Registration Statement by all Investors to such amount as the Staff and the SEC will permit for such Registration Statement to become effective without such Investors being so named. In making such reduction, the Company shall reduce the amount of Registrable Securities to be included by all Investors on a pro rata basis (based upon the number of Registrable Securities otherwise required to be included for each Investor) unless the inclusion of Registrable Securities by a particular Investor or a particular set of Investors are resulting in the Staff or the SEC’s “by or on behalf of the Company” offering position, in which event the Registrable Securities held by such Investor or set of Investors shall be the only Registrable Securities subject to reduction (and if by a set of Investors on a pro rata basis by such Investors or on such other basis as would result in the exclusion of the least amount of Registrable Securities by all such Investors). In addition, if the Staff or the SEC requires any Investor seeking to sell Registrable Securities under a Registration Statement filed pursuant to this Agreement to be specifically identified as an “underwriter” in order to permit such Registration Statement to become effective, and such Investor does not consent to being so named in such Registration Statement, then, in each such case, the Company shall reduce the total amount of Registrable Securities to be registered on behalf of such Investor, to such amount as the Staff or the SEC will permit without requiring such identification. In the event of any reduction in Registrable Securities pursuant to this paragraph, an affected Investor shall have the right to require, upon delivery of a written request to the Company signed by such Investor, the Company to file a Registration Statement within 30 days of such request (subject to any restrictions imposed by Rule 415 or required by the Staff or the SEC) for resale of Registrable Securities by such Investor in a manner reasonably acceptable to such Investor, and the Company shall following such request cause to be and keep effective such Registration Statement in the same manner as otherwise contemplated in this Agreement for Registration Statements hereunder, in each case until such time as: (i) all Registrable Securities held by such Investor have been registered and sold pursuant to an effective Registration Statement in a manner acceptable to such Investor, or

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(ii) the Registrable Securities may be immediately sold without registration and without restriction (including without limitation as to manner of sale volume by each holder thereof) as to the number of Registrable Securities to be sold, pursuant to Rule 144 or otherwise (it being understood that the special demand right under this sentence may be exercised by an Investor multiple times and with respect to limited amounts of Registrable Securities in order to permit the resale thereof by such Investor as contemplated above).

2.2 Effectiveness of the Registration Statement.

(a) The Company will use its best efforts to cause the Registration Statement contemplated by Section 2.1 to be declared effective by the SEC as soon as practicable after filing, and in any event no later than the 90th day after the Required Filing Date (the “Required Effective Date”). If the SEC takes the position that under Rule 415 of the Securities Act, the amount of Registrable Securities needs to be reduced to clear the SEC review, the Investors shall agree to reduce their Registrable Securities to be registered pro rata to meet the SEC requirement with the understanding the Company shall promptly file another Registration Statement to register the Registrable Securities not registered at a time when such Registration Statement is allowed.

(b) The Company’s best efforts will include, but not be limited to, promptly responding to all comments received from the staff of the SEC. If the Company receives notification from the SEC that the Registration Statement will receive no action or review from the SEC, then the Company will cause the Registration Statement to become effective as soon as practicable after such SEC notification.

(c) Once the Registration Statement is declared effective by the SEC, the Company will cause the Registration Statement to remain effective throughout the Registration Period, except as permitted under Section 3.1.

2.3 Payments by the Company. If (i) at any time after effectiveness of the Registration Statement, sales cannot be made thereunder during the Registration Period for any reason (including any suspension of the use of the Registration Statement under Section 3.6 hereof) for a period of more than 10 consecutive business days, or 30 days in the aggregate, during any 12-month period or (ii) the Common Stock is not listed on a National Securities Exchange or included for quotation on the OTC Bulletin Board for more than an aggregate of 10 business days in any 12-month period, then the Company will thereafter make a payment (by wire transfer or check) to each Investor as partial compensation for such delay. The amount of the payment made to each Investor will be equal to 0.5% of the Outstanding Principal Amount (as hereinafter defined) for the each month that sales cannot be made under the effective Registration Statement or the Common Stock is not listed on a National Securities Exchange or included for quotation on the OTC Bulletin Board, continuing through the date that sales can be made under the effective Registration Statement or the Common Stock is listed on a National Securities Exchange or included for quotation on the OTC Bulletin Board. The term “Outstanding Principal Amount” for purposes of computing the amount of payment to be made to an Investor under Section 2.3 and Section 2.4 shall mean the sum of (x) the number of Initial Shares that are Restricted Securities held by such Investor multiplied by the Exchange Price (the

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“Outstanding Exchange Stock Amount”), (y) the principal amount of the then-outstanding 2010 Convertible Senior Notes that are Restricted Securities held by such Investor (the “Outstanding Note Amount”), and (z) in the case of Common Shares or other Registrable Securities held by such Investor issued upon conversion of 2010 Convertible Senior Notes that are Restricted Securities, the principal amount of the 2010 Convertible Senior Notes from which such Common Shares or other Registrable Securities were converted (the “Outstanding Note Conversion Amount”). Such payments will be prorated on a daily basis for partial months and will be paid to each Investor by wire transfer or check within five business days following the end of each month.

2.4 Effect of Late Filing or Effectiveness. If (a) the Company fails to file the Registration Statement by the time required by Section 2.1 (a “Filing Failure”); (b) the Registration Statement required pursuant to Section 2.1 above has not been declared effective by the Required Effective Date for any reason, including, without limitation, by reason of the inability of the Company to utilize a particular registration statement form that would provide for a shorter time to effectiveness, the failure by the Company to file its reports required under the Exchange Act or the Company’s failure to fulfill its obligations under Section 2.1(a) and Section 2.2(b) (an “Effectiveness Failure”), then the Company shall pay to each Investor, for each day of such Filing Failure or Effectiveness Failure, an amount equal to (i) the product of (A) such Investor’s Outstanding Exchange Stock Amount and (B) the quotient obtained by dividing 6% by 360 (the “Exchange Stock Late Payments”), plus (ii) the product of (A) such Investor’s Outstanding Note Amount plus such Investor’s Outstanding Note Conversion Amount and (B) the Exchange Note Late Payment Quotient (as defined below) (the “Exchange Note Late Payments” and together with the Exchange Stock Late Payments, the “Late Payments”). The Late Payments will be paid to the Investors by wire transfer or check within five business days after the earlier of (i) the end of each month following the Required Filing Date or Required Effective Date or (ii) the effective date of the Registration Statement. Nothing herein limits any Investor’s right to pursue actual damages for the Company’s failure to file a Registration Statement on or prior to the Required Filing Date or to have it declared effective by the SEC on or prior to the Required Effective Date in accordance with the terms of this Agreement.

The “Exchange Note Late Payment Quotient” shall mean: (a) for the first 30 days of such Filing Failure or Effectiveness Failure, the quotient obtained by dividing 3% by 360, (b) for the period from the 31^st day to 60^th day of such Filing Failure or Effectiveness Failure, the quotient obtained by dividing 4.2% by 360, (c) for all days following the 60^th day of such Filing Failure or Effectiveness Failure, the quotient obtained by dividing 6% by 360.

2.5 Piggyback Registrations.

(a) If, at any time prior to the expiration of the Registration Period, the Company decides to register any of its securities for its own account or for the account of others, then the Company will promptly give the Investors written notice thereof and will use its best efforts to include in such registration all or any part of the Registrable Securities requested by such Investors to be included therein (excluding any Registrable Securities previously included in a Registration Statement). This requirement does not apply to Company registrations on Form S-4 or S-8 or their equivalents relating to equity securities to be issued solely in connection with

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an acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans. Each Investor must give its request for registration under this paragraph to the Company in writing within 15 days after receipt from the Company of notice of such pending registration. If the registration for which the Company gives notice is a public offering involving an underwriting, the Company will so advise the Investors as part of the above-described written notice. In that event, if the managing underwriter(s) of the public offering impose a limitation (which may be a complete exclusion) on the number of shares of Common Stock that may be included in the Registration Statement because, in such underwriter(s)’ judgment, such limitation would be necessary to effect an orderly public distribution or reduce the number of securities which could be sold by the Company, then the Company will be obligated to include only such limited portion, if any, of the Registrable Securities with respect to which such Investors have requested inclusion hereunder. Any exclusion of Registrable Securities will be made pro rata among all holders of the Company’s securities seeking to include shares of Common Stock in proportion to the number of shares of Common Stock sought to be included by those holders. However, the Company will not exclude any Registrable Securities unless the Company has first excluded all outstanding securities the holders of which are not entitled by right to inclusion of securities in such Registration Statement or are not entitled pro rata inclusion with the Registrable Securities. If any Investor or other person does not agree to the terms of such underwriting or otherwise fails to comply with the terms of this Agreement, such Investor or other person shall be excluded therefrom upon written notice from the Company or underwriter. Any Registrable Securities or other securities excluded or withdrawn from such underwriting shall be withdrawn from such registration.

(b) No right to registration of Registrable Securities under this Section 2.5 limits in any way the registration required under Section 2.1 above. The obligations of the Company under this Section 2.5 expire upon the expiration of the Registration Period.

(c) The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 2.5 prior to the effectiveness of such registration whether or not any Investor has elected to include securities in such registration. The expenses of such withdrawn registration shall be borne by the Company.

2.6 Eligibility to use Form S-3. The Company represents and warrants that it meets the requirements for the use of Form S-3 for registration of the resale by the Investors of the Registrable Securities. The Company will use its best efforts to file all reports required to be filed by the Company with the SEC in a timely manner so as to preserve its eligibility for the use of Form S-3.

ARTICLE III

ADDITIONAL OBLIGATIONS OF THE COMPANY

3.1 Continued Effectiveness of Registration Statement. The Company will keep the Registration Statement covering the Registrable Securities effective under Rule 415 at all times during the Registration Period. In the event that the number of shares available under a Registration Statement filed pursuant to this Agreement is insufficient to cover all of the Registrable Securities, the Company will (if permitted) amend the Registration Statement or file

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a new Registration Statement (on the short form available therefor, if applicable), or both, so as to cover all of the Registrable Securities. The Company will file such amendment or new Registration Statement as soon as practicable, but in no event later than 20 business days after the necessity therefor arises (based upon the market price of the Common Stock and other relevant factors on which the Company reasonably elects to rely). The Company will use its best efforts to cause such amendment or new Registration Statement to become effective as soon as is practicable after the filing thereof, but in no event later than 90 days after the date on which the Company reasonably first determines (or reasonably should have determined) the need therefor.

3.2 Accuracy of Registration Statement. Any Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) filed by the Company covering Registrable Securities will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading. The Company will promptly prepare and file with the SEC such amendments (including post-effective amendments) and supplements to the Registration Statement and the prospectus used in connection with the Registration Statement as may be necessary to permit sales pursuant to the Registration Statement at all times during the Registration Period, and, during such period, will comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities of the Company covered by the Registration Statement until the termination of the Registration Period, or if earlier, until such time as all of such Registrable Securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in the Registration Statement.

3.3 Furnishing Documentation. The Company will furnish to each Investor whose Registrable Securities are included in a Registration Statement, and to its legal counsel, (a) promptly after each document is prepared and publicly distributed, filed with the SEC or received by the Company, one copy of any Registration Statement filed pursuant to this Agreement and any amendments thereto, each preliminary prospectus and final prospectus and each amendment or supplement thereto; and, in the case of a Registration Statement filed under Section 2.1 above, each letter written by or on behalf of the Company to the SEC and each item of correspondence from, or order issued by, the SEC or the staff of the SEC, in each case relating to such Registration Statement (other than any portion of any item thereof which contains information for which the Company has sought confidential treatment); and (b) a number of copies of a prospectus, including a preliminary prospectus (if any), and all amendments and supplements thereto, and such other documents as the Investor may reasonably request in order to facilitate the disposition of the Registrable Securities owned by the Investor. The Company will promptly notify in writing each Investor whose Registrable Securities are included in any Registration Statement of the effectiveness of the Registration Statement and any post-effective amendment.

3.4 Additional Obligations. The Company will use its best efforts to (a) register and qualify the Registrable Securities covered by a Registration Statement under such other securities or blue sky laws of such jurisdictions as each Investor who holds (or has the right to hold) Registrable Securities being offered reasonably requests, (b) prepare and file in those jurisdictions any amendments (including post-effective amendments) and supplements to such

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registrations and qualifications as may be necessary to maintain their effectiveness during the Registration Period, (c) take any other actions necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (d) take any other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions. Notwithstanding the foregoing, the Company is not required, in connection such obligations, to (i) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3.4, (ii) subject itself to general taxation in any such jurisdiction, (iii) file a general consent to service of process in any such jurisdiction, (iv) provide any undertakings that cause material expense or burden to the Company, or (v) make any change in its charter or bylaws, which in each case the Board of Directors of the Company determines to be contrary to the best interests of the Company and its stockholders.

3.5 Underwritten Offerings. If the Investors who hold a majority in interest of the Registrable Securities being offered in an offering pursuant to a Registration Statement or any amendment or supplement thereto under this Agreement select underwriters reasonably acceptable to the Company for such offering, the Company will enter into and perform its obligations under an underwriting agreement in usual and customary form including, without limitation, customary indemnification and contribution obligations, with the managing underwriter of such offering, but the Company will not be obligated to pay any fees or expenses of such underwriters related to the offering.

3.6 Suspension of Registration.

(a) The Company will notify (by telephone and also by facsimile and reputable overnight courier) each Investor who holds Registrable Securities being sold pursuant to a Registration Statement of the happening of any event of which the Company has knowledge as a result of which the prospectus included in the Registration Statement as then in effect includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company will make such notification as promptly as practicable after the Company becomes aware of the event (but in no event will the Company disclose to any Investor any of the facts or circumstances regarding the event), will promptly (but in no event more than ten business days) prepare and file with the SEC a supplement or amendment to the Registration Statement to correct such untrue statement or omission, and will deliver a number of copies of such supplement or amendment to each Investor as such Investor may reasonably request. The Company will use its best efforts to keep the length of any such suspension to as short a period as is practicable given the then existing circumstances and may so defer or suspend the use of the Registration Statement no more than two times in any 18-month period, and provided, further, that, after deferring or suspending the use of the Registration Statement, the Company may not again defer or suspend the use of the Registration Statement until a period of thirty days has elapsed after resumption of the use of the Registration Statement. Notwithstanding anything to the contrary contained herein or in the Exchange Agreement, if the use of the Registration Statement is suspended by the Company, the Company will promptly give notice of the suspension to all Investors whose securities are covered by the Registration Statement, and will promptly notify each such Investor as soon as the use of the Registration Statement may be resumed. Notwithstanding anything to the contrary contained herein or in the

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Exchange Agreement, the Company will cause the Transfer Agent to deliver unlegended shares of Common Stock to a transferee of an Investor in accordance with the terms of the Exchange Agreement in connection with any sale of Registrable Securities with respect to which such Investor has entered into a contract for sale prior to receipt of notice of such suspension and for which such Investor has not yet settled unless, in the opinion of Company’s legal counsel, such delivery without legends would be in violation of applicable securities laws and/or otherwise subject the Company to liability.

(b) Notwithstanding anything to the contrary herein (but subject to the last sentence of this Section 3.6(b)), at any time after the Effective Date of the applicable Registration Statement, the Company may delay the disclosure of material, non-public information concerning the Company or any of its Subsidiaries the disclosure of which at the time is not, in the good faith opinion of the Board of Directors of the Company, in the best interest of the Company and, in the opinion of counsel to the Company, otherwise required (a “Grace Period”); provided, that the Company shall promptly (i) notify the Investors in writing of the existence of material, non-public information giving rise to a Grace Period (provided that in each notice the Company will not disclose the content of such material, non-public information to the Investors) and the date on which the Grace Period will begin, and (ii) notify the Investors in writing of the date on which the Grace Period ends; and, provided further, that no Grace Period shall exceed ten (10) consecutive days and during any three hundred sixty five (365) day period such Grace Periods shall not exceed an aggregate of thirty (30) days and the first day of any Grace Period must be at least five (5) Trading Days after the last day of any prior Grace Period; provided, that no Grace Period may exist during the first sixty (60) Business Days after the Effective Date of the applicable Registration Statement. For purposes of determining the length of a Grace Period above, the Grace Period shall begin on and include the date the Investors receive the notice referred to in clause (i) and shall end on and include the later of the date the Investors receive the notice referred to in clause (ii) and the date referred to in such notice. The provisions of Section 3.6(a) hereof shall not be applicable during any Grace Period. Upon expiration of the Grace Period, the Company shall again be bound by Section 3.6(a) with respect to the information giving rise thereto unless such material, nonpublic information is no longer applicable.

(c) Subject to the Company’s rights under Section 3.1, the Company will use its best efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement and, if such an order is issued, will use its best efforts to obtain the withdrawal of such order at the earliest possible time and will promptly notify each Investor that holds Registrable Securities being sold (or, in the event of an underwritten offering, the managing underwriters) of the issuance of such order and the resolution thereof.

3.7 Review by the Investors. The Company will permit each Investor’s legal counsel to review the Registration Statement and all amendments and supplements thereto (as well as all requests for acceleration or effectiveness thereof) a reasonable period of time prior to their filing with the SEC, and will not file any document in a form to which such counsel reasonably objects unless such counsel fails to notify the Company of his or her objection within 3 business days after receipt of the proposed Registration Statement, and unless otherwise required by law in the

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opinion of the Company’s counsel. The sections of any such Registration Statement including information with respect to the Investors, the Investors’ beneficial ownership of securities of the Company or the Investors’ intended method of disposition of Registrable Securities must conform to the information provided to the Company by each of the Investors.

3.8 Information. The Company will make generally available to its security holders as soon as practicable, but not later than 90 days after the close of the period covered thereby, an earnings statement (in a form complying with the provisions of Rule 158 under the Securities Act) covering a 12-month period beginning not later than the first day of the Company’s fiscal quarter next following the effective date of the Registration Statement.

3.9 Comfort Letter; Legal Opinion. If the Investors request an underwritten offering in accordance with Section 3.5 above, then, at the request of the underwriters for the offering, on the date that Registrable Securities are delivered to the underwriters for sale in connection with the Registration Statement, the Company will furnish to the Investors and the underwriters (i) a letter, dated such date, from the Company’s independent certified public accountants, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters; and (ii) an opinion, dated such date, from counsel representing the Company for purposes of the Registration Statement, in form and substance as is customarily given in an underwritten public offering, addressed to the underwriters and Investors.

3.10 Due Diligence; Confidentiality.

(a) The Company will make available for inspection by any Investor whose Registrable Securities are being sold pursuant to a Registration Statement, any underwriter participating in any disposition pursuant to the Registration Statement, and any attorney or accountant retained by any such Investor or underwriter (collectively, the “Inspectors”), all pertinent financial and other records, pertinent corporate documents and properties of the Company (collectively, the “Records”), as each Inspector reasonably deems necessary to enable the Inspector to exercise its due diligence responsibility in connection with or related to the contemplated offering. The Company will cause its officers, directors and employees to supply all information that any Inspector may reasonably request for purposes of performing such due diligence.

(b) Each Inspector will hold in confidence, and will not make any disclosure (except to an Investor) of, any Records or other information that the Company determines in good faith to be confidential, and of which determination the Inspectors are so notified, unless (i) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in any Registration Statement, (ii) the release of such Records is ordered pursuant to a subpoena or other order from a court or government body of competent jurisdiction, (iii) the information in such Records has been made generally available to the public other than by disclosure in violation of this or any other agreement (to the knowledge of the relevant Inspector), (iv) the Records or other information was developed independently by an Inspector without breach of this Agreement, (v) the information was known to the Inspector before receipt of such information from the Company, or (vi) the information was disclosed to the Inspector by a third party not

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under an obligation of confidentiality. The Company is not required to disclose any confidential information in the Records to any Inspector unless and until such Inspector has entered into a confidentiality agreement (in form and substance satisfactory to the Company) with the Company with respect thereto, substantially in the form of this Section 3.10. Each Investor will, upon learning that disclosure of Records containing confidential information is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company and allow the Company, at the Company’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, the Records deemed confidential. Nothing herein will be deemed to limit the Investor’s ability to sell Registrable Securities in a manner that is otherwise consistent with applicable laws and regulations.

(c) The Company will hold in confidence, and will not make any disclosure of, information concerning an Investor provided to the Company under this Agreement unless (i) disclosure of such information is necessary to comply with federal or state securities laws, or any exchange listing or similar rules and regulations, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement, (iii) the release of such information is ordered pursuant to a subpoena or other order from a court or governmental body of competent jurisdiction, (iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any other agreement or (v) such Investor consents to the form and content of any such disclosure. If the Company learns that disclosure of such information concerning an Investor is sought in or by a court or governmental body of competent jurisdiction or through other means, the Company will give prompt notice to such Investor prior to making such disclosure and allow such Investor, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.

3.11 Listing. The Company will (i) cause all of the Common Shares covered by each Registration Statement to be listed on each National Securities Exchange on the Common Stock is then listed, if any, if the listing of such Common Shares is then permitted under the rules of such exchange, or (ii) to the extent the Common Stock is not then listed on a National Securities Exchange, use its best efforts to secure the quotation of all of the Common Shares covered by each Registration Statement on the OTC Bulletin Board and, without limiting the generality of the foregoing, arrange for at least two market makers, meeting the applicable FINRA requirements, to display two-sided markets for the Common Stock.

3.12 Transfer Agent; Registrar. The Company will provide a transfer agent and registrar, which may be a single entity, for the Registrable Securities not later than the effective date of the Registration Statement.

3.13 Notes/Share Certificates. The Company will cooperate with the Investors who hold Registrable Securities being sold and with the managing underwriter(s), if any, to facilitate the timely preparation and delivery of notes or certificates (in each case not bearing any restrictive legends) representing Registrable Securities to be offered pursuant to a Registration Statement and will enable such notes or certificates to be in such denominations or amounts as the case may be, and registered in such names as the Investors or the managing underwriter(s), if any, may reasonably request.

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3.14 Plan of Distribution. Subject to Section 3.17 hereof, at the request of an Investor holding an interest of the Registrable Securities registered pursuant to a Registration Statement, the Company will promptly prepare and file with the SEC such amendments (including post-effective amendments) and supplements to the Registration Statement, and the prospectus used in connection with the Registration Statement, as may be necessary in order to change the plan of distribution set forth in such Registration Statement.

3.15 Securities Laws Compliance. The Company will comply with all applicable laws related to any Registration Statement relating to the sale of Registrable Securities and to offering and sale of securities and with all applicable rules and regulations of governmental authorities in connection therewith (including, without limitation, the Securities Act, the Exchange Act and the rules and regulations promulgated by the SEC).

3.16 Further Assurances. The Company will take all other reasonable actions as any Investor or the underwriters, if any, may reasonably request to expedite and facilitate disposition by such Investor of the Registrable Securities pursuant to the Registration Statement.

3.17 No Additional Selling Securityholders. The Company will not, and will not agree to, allow the holders of any securities of the Company to include any of their securities in any Registration Statement under Section 2.1 hereof, or any amendment or supplement thereto under Section 3.2 hereof, without the consent of the holders of a majority the Registrable Securities (determined on an as-if-converted basis).

ARTICLE IV

OBLIGATIONS OF THE INVESTORS

4.1 Investor Information. As a condition to the obligations of the Company to complete any registration pursuant to this Agreement with respect to the Registrable Securities of each Investor, such Investor will furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it as is reasonably required by the Company to effect the registration of the Registrable Securities. At least 10 business days prior to the first anticipated filing date of a Registration Statement for any registration under this Agreement, the Company will notify each Investor of the information the Company requires from that Investor if the Investor elects to have any of its Registrable Securities included in the Registration Statement. If, within three business days prior to the filing date, the Company has not received the requested information from an Investor, then the Company may file the Registration Statement without including Registrable Securities of that Investor. Any and all information provided by the Investor pursuant to this Section 4.1 shall be true, accurate, correct and complete in all material respects.

4.2 Further Assurances. Each Investor will cooperate with the Company, as reasonably requested by the Company, in connection with the preparation and filing of any Registration Statement hereunder, unless such Investor has notified the Company in writing of such Investor’s election to exclude all of such Investor’s Registrable Securities from the Registration Statement.

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4.3 Suspension of Sales. Upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3.6, each Investor will immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until (i) it receives copies of a supplemented or amended prospectus contemplated by Section 3.6 or (ii) the Company advises the Investor that a suspension of sales under Section 3.6 has terminated. If so directed by the Company, each Investor will deliver to the Company (at the expense of the Company) or destroy (and deliver to the Company a certificate of destruction) all copies in the Investor’s possession (other than a limited number of file copies) of the prospectus covering such Registrable Securities that is current at the time of receipt of such notice.

4.4 Underwritten Offerings.

(a) If Investors holding a majority in interest of the Registrable Securities being registered (with the approval of a majority in interest of the Investors) elect to engage the services of an underwriter, each Investor will enter into and perform such Investor’s obligations under an underwriting agreement, in usual and customary form, including, without limitation, customary indemnification and contribution obligations, with the managing underwriter of such offering, and will take such other actions as are reasonably required in order to expedite or facilitate the disposition of the Registrable Securities, unless such Investor has notified the Company in writing of such Investor’s election to exclude all of its Registrable Securities from such Registration Statement.

(b) Without limiting any Investor’s rights under Section 2.1 hereof, no Investor may participate in any underwritten distribution hereunder unless such Investor (i) agrees to sell such Investor’s Registrable Securities on the basis provided in any underwriting arrangements approved by the Investors entitled hereunder to approve such arrangements, (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements, and (iii) agrees to pay its pro rata share of all underwriting discounts and commissions and other fees and expenses of investment bankers and any manager or managers of such underwriting, and legal expenses of the underwriter, applicable with respect to its Registrable Securities, in each case to the extent not payable by the Company under the terms of this Agreement.

ARTICLE V

EXPENSES OF REGISTRATION

The Company will bear all reasonable expenses, other than underwriting discounts and commissions, incurred in connection with registrations, filings or qualifications pursuant to Articles II and III of this Agreement, including, without limitation, all registration, listing and qualifications fees, printers and accounting fees, the fees and disbursements of counsel for the Company, and the reasonable fees and disbursements of each Investor’s legal counsel to review the Registration Statement and all amendments and supplements thereto pursuant to Section 3.7 hereof.

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ARTICLE VI

INDEMNIFICATION

In the event that any Registrable Securities are included in a Registration Statement under this Agreement:

6.1 To the extent permitted by law, the Company will indemnify and hold harmless each Investor that holds such Registrable Securities, any underwriter (as defined in the Securities Act) for the Investors, any directors, officers or advisors of such Investor or such underwriter and any person who controls such Investor or such underwriter within the meaning of the Securities Act or the Exchange Act (each, an “Indemnified Person”) against any losses, claims, damages, expenses or liabilities (joint or several) (collectively, and together with actions, proceedings or inquiries by any regulatory or self-regulatory organization, whether commenced or threatened in respect thereof, “Claims”) to which any of them become subject under the Securities Act, the Exchange Act or otherwise, insofar as such Claims arise out of or are based upon any of the following statements, omissions or violations in a Registration Statement filed pursuant to this Agreement, any post-effective amendment thereof or any prospectus included therein: (a) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any post-effective amendment thereof or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, (b) any untrue statement or alleged untrue statement of a material fact contained in the prospectus (as it may be amended or supplemented) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading, or (c) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any other law, including without limitation any state securities law or any rule or regulation thereunder (the matters in the foregoing clauses (a) through (c) being, collectively, “Violations”). The Company will reimburse the Investors and each such underwriter or controlling person and each such other Indemnified Person, promptly as such expenses are incurred and are due and payable, for any legal fees or other reasonable expenses incurred by them in connection with investigating or defending any Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6.1 (i) does not apply to Claims arising out of or based upon a Violation that occurs in reliance upon and in conformity with information furnished in writing to the Company by an Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto, if such prospectus was timely made available by the Company pursuant to Section 3.3 hereof; and (ii) does not apply to amounts paid in settlement of any Claim if such settlement is made without the prior written consent of the Company, which consent will not be unreasonably withheld. This indemnity obligation will remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Persons and will survive the transfer of the Registrable Securities by the Investors under Article IX of this Agreement.

6.2 In connection with any Registration Statement in which an Investor is participating, each such Investor will indemnify and hold harmless, to the same extent and in the same manner set forth in Section 6.1 above, the Company, each of its directors, each of its officers who signs the Registration Statement, each person, if any, who controls the Company

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within the meaning of the Securities Act or the Exchange Act, and any other shareholder selling securities pursuant to the Registration Statement and any of its directors and officers and any person who controls such shareholder within the meaning of the Securities Act or the Exchange Act (each an “Indemnified Person”) against any Claim to which any of them may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such Claim arises out of or is based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished to the Company by such Investor expressly for use in connection with such Registration Statement. Subject to the restrictions set forth in Section 6.3, such Investor will promptly reimburse the Company and each such other Indemnified Person, any legal or other expenses (promptly as such expenses are incurred and due and payable) reasonably incurred by them in connection with investigating or defending any such Claim. However, the indemnity agreement contained in this Section 6.2 does not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of such Investor, which consent will not be unreasonably withheld, and no Investor will be liable under this Agreement (including this Section 6.2 and Article VII) for the amount of any Claim that exceeds the net proceeds actually received by such Investor as a result of the sale of Registrable Securities pursuant to such Registration Statement. This indemnity will remain in full force and effect regardless of any investigation made by or on behalf of an Indemnified Party and will survive the transfer of the Registrable Securities by the Investors under Article IX of this Agreement.

6.3 Promptly after receipt by an Indemnified Person under this Article VI of notice of the commencement of any action (including any governmental action), such Indemnified Person will, if a Claim in respect thereof is to be made against any indemnifying party under this Article VI, deliver to the indemnifying party a written notice of the commencement thereof. The indemnifying party may participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly given notice, assume control of the defense thereof with counsel mutually satisfactory to the indemnifying parties and the Indemnified Person. In that case, the indemnifying party will diligently pursue such defense. If, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of the Indemnified Person and the indemnifying party would be inappropriate due to actual or potential conflicts of interest between the Indemnified Person and any other party represented by such counsel in such proceeding or the actual or potential defendants in, or targets of, any such action including the Indemnified Person, and such Indemnified Person reasonably determines that there may be legal defenses available to such Indemnified Person that are different from or in addition to those available to the indemnifying party, then the Indemnified Person is entitled to assume such defense and may retain its own counsel, with the fees and expenses to be paid by the indemnifying party (subject to the restrictions on settlement under Section 6.1 or Section 6.2, as applicable). The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action does not relieve an indemnifying party of any liability to an Indemnified Person under this Article VI, except to the extent that the indemnifying party is prejudiced in its ability to defend such action. The indemnification required by this Article VI will be made by periodic payments of the amount thereof during the course of the investigation or defense, as such expense, loss, damage or liability is incurred and is due and payable. Each Indemnified Person shall furnish such

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information regarding itself or the claim in question as an Indemnifying Person may reasonably request in writing and shall be reasonably required in connection with the defense of such claim and litigation resulting therefrom.

ARTICLE VII

CONTRIBUTION

To the extent that any indemnification provided for herein is prohibited or limited by law, the indemnifying party will make the maximum contribution with respect to any amounts for which it would otherwise be liable under Article VI to the fullest extent permitted by law. However, (a) no contribution will be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Article VI, (b) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any seller of Registrable Securities who was not guilty of such fraudulent misrepresentation, and (c) contribution (together with any indemnification or other obligations under this Agreement) by any seller of Registrable Securities will be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities.

ARTICLE VIII

EXCHANGE ACT REPORTING

In order to make available to the Investors the benefits of Rule 144 or any similar rule or regulation of the SEC that may at any time permit the Investors to sell securities of the Company to the public without registration, the Company will:

(a) Use its best efforts to file with the SEC in a timely manner, and make and keep available, all reports and other documents required of the Company under the Securities Act and the Exchange Act so long as the Company remains subject to such requirements and the filing and availability of such reports and other documents is required for the applicable provisions of Rule 144; and

(b) Furnish to each Investor who so requests, so long as such Investor holds 2010 Convertible Senior Notes or Registrable Securities, promptly upon the Investor’s request, (i) a written statement by the Company regarding whether it has complied with the reporting requirements of Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents filed by the Company with the SEC and (iii) such other information as may be reasonably requested to permit the Investors to sell such securities pursuant to Rule 144 without registration.

ARTICLE IX

ASSIGNMENT OF REGISTRATION RIGHTS

The rights of the Investors hereunder, including the right to have the Company register Registrable Securities pursuant to this Agreement, will be automatically assigned by the Investors

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to transferees or assignees of all or any portion of the Investors rights under the Exchange Agreement, the 2010 Convertible Senior Notes or Registrable Securities, but only if (a) the Investor agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment, (b) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being transferred or assigned, (c) after such transfer or assignment, the further disposition of such securities by the transferee or assignee is restricted under the Securities Act and applicable state securities laws, (d) at or before the time the Company received the written notice contemplated by clause (b) of this sentence, the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein, (e) such transfer is made in accordance with the applicable requirements of the Exchange Agreement, and (f) the transferee is an “accredited investor” as that term is defined in Rule 501 under the Exchange Act. Any transferee or assignee of an Investor under this Article IX shall be deemed an “Investor” for all purposes of this Agreement, and shall be entitled to all rights of, and subject to all obligations (including indemnification obligations) of, an Investor hereunder; provided, however, that such a transferee will not be eligible to be named in a Registrations Statement or an amendment thereto until such transferee has completed a Questionnaire of Selling Securityholders in the form of Exhibit A and delivered it to the Company.

ARTICLE X

AMENDMENT OF REGISTRATION RIGHTS

This Agreement may be amended and the obligations hereunder may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written consent of the Company and Investors holding a majority (determined on an as-if-converted basis) of the Registrable Securities (but not including any Investor who is not affected by such amendment or waiver). Any amendment or waiver effected in accordance with this Article X is binding upon each Investor (and each future holder of all such Registrable Securities) and the Company. Notwithstanding the foregoing, no amendment or waiver will retroactively affect any Investor without its consent, or will prospectively adversely affect any Investor who no longer owns any 2010 Convertible Senior Notes or Registrable Securities without its consent. Neither Article VI nor Article VII hereof may be amended or waived in a manner adverse to an Investor without its consent.

ARTICLE XI

MISCELLANEOUS

11.1 Conflicting Instructions. A person or entity is deemed to be a holder of Registrable Securities whenever such person or entity owns of record such Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more persons or entities with respect to the same Registrable Securities, the Company will act upon the basis of instructions, notice or election received from the registered owner of such Registrable Securities.

17

11.2 Notices. Any notices required or permitted to be given under the terms of this Agreement will be given and deemed received as set forth in Section 7.7 of the Exchange Agreement.

11.3 Waiver. Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, does not operate as a waiver thereof.

11.4 Governing Law. This Agreement will be governed by and interpreted in accordance with the laws of the State of New York without regard to the principles of conflict of laws.

11.5 Severability. If any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision will be deemed modified in order to conform to such statute or rule of law. Any provision hereof that may prove invalid or unenforceable under any law will not affect the validity or enforceability of any other provision hereof.

11.6 Entire Agreement. This Agreement, the Exchange Agreement, the 2010 Indenture and the 2010 Convertible Senior Notes (including all schedules and exhibits thereto) (the “Transaction Documents”) constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein or therein. This Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof.

11.7 Successors and Assigns. Subject to the requirements of Article IX hereof, this Agreement inures to the benefit of and is binding upon the successors and assigns of each of the parties hereto. Notwithstanding anything to the contrary herein, including, without limitation, Article IX, the rights of an Investor hereunder are assignable to and exercisable by a bona fide pledgee of the Registrable Securities in connection with an Investor’s margin or brokerage accounts.

11.8 Use of Pronouns. All pronouns refer to the masculine, feminine or neuter, singular or plural, as the context may require.

11.9 Headings. The headings of this Agreement are for convenience of reference only, are not part of this Agreement and do not affect its interpretation.

11.10 Counterparts. This Agreement may be executed in two or more counterparts, each of which is deemed an original but all of which constitute one and the same agreement. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission, and facsimile signatures are binding on the parties hereto.

11.11 Further Assurances. Each party will do and perform, or cause to be done and performed, all such further acts and things, and will execute and deliver all other agreements,

18

certificates, instruments and documents, as another party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

11.12 Consents. All consents and other determinations to be made by the Investors pursuant to this Agreement will be made by the Investors holding a majority in interest of the then-outstanding Registrable Securities, determined as if all 2010 Convertible Senior Notes then outstanding had been converted into or exercised for Registrable Securities.

11.13 No Strict Construction. The language used in this Agreement is deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

11.14 No Third-Party Beneficiaries. Other than as specifically provided herein, this Agreement is intended to inure to the benefit of the parties hereto only, and no other party shall have any rights, express or implied, by reason of this Agreement.

11.15 Saturdays, Sundays, Holidays, Etc. If the last or appointed day for the taking of any action required or permitted hereby shall be a Saturday, Sunday, a nationally recognized holiday, or a state holiday in the State of Minnesota, then such action may be taken on the next succeeding business day.

11.16 Independent Nature of Investors’ Obligations and Rights. The obligations of each Investor under any of the Transaction Documents are several and not joint with the obligations of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor under any Transaction Document. Nothing contained herein or in any Transaction Document, and no action taken by any Investor pursuant thereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Document. Each Investor shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Investor to be joined as an additional party in any proceeding for such purpose. The Company has elected to provide all Investors with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by the Investors.

[signature pages follow]

19

IN WITNESS WHEREOF, the undersigned Investors and the Company have caused this Agreement to be duly executed as of the date first above written.

COMPANY:
FLOTEK INDUSTRIES, INC.
By:	/s/ John Chisholm
Name:	John Chisholm
Title:	President

[Signatures continued on next page]

[Signature Page to Registration Rights Agreement - Notes]

INVESTORS:
WHITEBOX HEDGED HIGH YIELD PARTNERS, LP
By:	Whitebox Hedged High Yield Advisors, LLC
Its:	General Partner
By:	Whitebox Advisors LLC
Its:	Managing Member
By:	/s/ Mark Strefling
Name:	Mark Strefling
Title:	Chief Legal Officer
IAM MINI-FUND 14 LIMITED
By:	Whitebox Advisors LLC
Its:	Investment Manager
By:	/s/ Mark Strefling
Name:	Mark Strefling
Title:	Chief Legal Officer

[Signature Page to Registration Rights Agreement]

PANDORA SELECT PARTNERS, LP
By:	Pandora Select Advisors, LLC
Its:	General Partner
By:	Whitebox Advisors LLC
Its:	Managing Member
By:	/s/ Mark Strefling
Name:	Mark Strefling
Title:	Chief Legal Officer
WHITEBOX SPECIAL OPPORTUNITIES FUND, LP – SERIES B
By:	Whitebox Special Opportunities Advisors, LLC
Its:	General Partner
By:	Whitebox Advisors LLC
Its:	Managing Member
By:	/s/ Mark Strefling
Name:	Mark Strefling
Title:	Chief Legal Officer
WHITEBOX COMBINED PARTNERS, LP
By:	Whitebox Combined Advisors, LLC
Its:	General Partner
By:	Whitebox Advisors LLC
Its:	Managing Member
By:	/s/ Mark Strefling
Name:	Mark Strefling
Title:	Chief Legal Officer

[Signature Page to Registration Rights Agreement - Notes]

WHITEBOX CONVERTIBLE ARBITRAGE PARTNERS, LP
By:	Whitebox Convertible Arbitrage Advisors, LLC
Its:	General Partner
By:	Whitebox Advisors LLC
Its:	Managing Member
By:	/s/ Mark Strefling
Name:	Mark Strefling
Title:	Chief Legal Officer

ADDRESS OF EACH INVESTOR:

c/o Whitebox Advisors LLC

3033 Excelsior Blvd., Suite 300

Minneapolis, MN 55416

Attention: Jake Mercer

Facsimile: 612-253-6100

(any notice hereunder to this Investor shall include a copy to):

Faegre & Benson LLP

2200 Wells Fargo Center

90 South Seventh Street

Minneapolis, Minnesota 55402

Attn: Michael K. Coddington

Facsimile: 612-766-1600

[Signature Page to Registration Rights Agreement - Notes]

WHITEBOX INTERMARKET PARTNERS LP
By:	Whitebox Intermarket Advisors LLC
Its:	General Partner
By:	Whitebox Advisors LLC
Its:	Managing Member
By:	/s/ Mark Strefling
Name:	Mark Strefling
Title:	Chief Legal Officer

ADDRESS OF EACH INVESTOR:

c/o Whitebox Advisors LLC

3033 Excelsior Blvd., Suite 300

Minneapolis, MN 55416

Attention: Jake Mercer

Facsimile: 612-253-6100

(any notice hereunder to this Investor shall include a copy to):

Faegre & Benson LLP

2200 Wells Fargo Center

90 South Seventh Street

Minneapolis, Minnesota 55402

Attn: Michael K. Coddington

Facsimile: 612-766-1600

[Signature Page to Registration Rights Agreement - Notes]

ECF VALUE FUND, L.P.
By:	Gates Capital Partners, L.P.
Its:	General Partner
By:	Gates Capital Management, Inc.
Its:	General Partner
By:	/s/ Jeffrey L. Gates
Name:	Jeffrey L. Gates
Title:	President
ECF VALUE FUND II, L.P.
By:	Gates Capital Partners, L.P.
Its:	General Partner
By:	Gates Capital Management, Inc.
Its:	General Partner
By:	/s/ Jeffrey L. Gates
Name:	Jeffrey L. Gates
Title:	President
ECF VALUE FUND INTERNATIONAL LTD.
By:	Gates Capital Management, Inc.
Its:	Investment Advisor
By:	/s/ Jeffrey L. Gates
Name:	Jeffrey L. Gates
Title:	President

[Signature Page to Registration Rights Agreement - Notes]

EXHIBIT A

FLOTEK INDUSTRIES, INC.

(the “Company”)

QUESTIONNAIRE TO THE SELLING SECURITYHOLDERS

This Questionnaire is to be completed, signed and faxed or emailed to                      at                      or                     , by the person or entity indicated on the cover of this Questionnaire (the “Selling Securityholder”) whose securities of the Company are being registered pursuant to a Registration Statement on Form S-3. Retain a duplicate copy for your files. If you do not return the Questionnaire by the foregoing deadline, your shares may not be included in the Registration Statement.

If you are uncertain about any of the following questions as they apply to your situation, please supply all relevant facts. Include separate sheets with details if necessary. If you have any questions, please call the Company’s counsel, W. Mark Young, Esquire, at (713) 220-4323.

Please notify me immediately if any of the information disclosed in your answers changes. Please answer all questions. Indicate “none” or “not applicable” when appropriate. Information should be given as of the date of this Questionnaire, even if previously reported to the Company.

IN ANSWERING THESE QUESTIONS, PLEASE REFER TO THE INSTRUCTIONS AT THE BEGINNING OF THIS QUESTIONNAIRE.

Name of Selling Securityholder:                                                                                  

A-1

Instructions and Definitions

The following instructions and definitions are furnished to aid you in preparing your answers to this Questionnaire.

1. For purposes of this Questionnaire the term “Company” means Flotek Industries, Inc.

2. “Beneficial” ownership. Beneficial ownership shall have the meaning ascribed to it in Section 13(d) of the Securities Exchange Act of 1934, as amended. The SEC has taken the position that if you have sole or shared voting power or dispositive power or the ability to acquire either sole or shared voting or dispositive power of a security within 60 days, you are the beneficial owner of that security, even though that security is not registered in your name. Thus, for example, you could be the beneficial owner of securities in a trust or estate of which you are a trustee or executor, or of which you are one of the trustees or executors, or you could be the beneficial owner of securities which you have a right to purchase.

3. The term “affiliate” for purposes of this Questionnaire means any person directly or indirectly through one or more intermediaries controlling, controlled by, or under common control with the Selling Securityholder.

4. The term “broker” for the purposes of this Questionnaire means any person engaged in the business of effecting transactions in securities for the account of others.

5. The term “dealer” for the purposes of this Questionnaire means any person engaged in the business of buying or selling securities for such person’s own account through a broker or otherwise.

6. The term “FINRA Member” for the purposes of this Questionnaire means any individual, partnership, corporation or other legal entity that is a broker or dealer admitted to membership in the Financial Industry Regulatory Authority, Inc. (FINRA Manual, By-laws Article I, Definitions)

7. The term “control”(including the terms “controlling,” “controlled by” and “under common control with”) for the purposes of this Questionnaire means the possession, direct or indirect, of the power, either individually or with others, to direct or cause the direction of the

A-2

management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise. (Rule 405 under the Securities Act of 1933, as amended)

8. The term “person associated with a member of FINRA” for the purposes of this Questionnaire means every sole proprietor, partner, officer, director, branch manager or executive representative of any FINRA Member, or any natural person occupying a similar status or performing similar functions, or any natural person engaged in the investment banking or securities business who is directly or indirectly controlling or controlled by a FINRA Member, whether or not such person is registered or exempt from registration with the Financial Industry Regulatory Authority, Inc. pursuant to its bylaws. (FINRA Manual, By-laws Article I, Definitions)

9. The term “underwriter or a related person” for the purposes of this Questionnaire means, with respect to a proposed offering, underwriters, underwriters’ counsel, financial consultants and advisors, finders, members of the selling or distribution group, and any and all other persons associated with or related to any of such persons. (FINRA Interpretation)

A-3

1. Broker-Dealer Status.

(a) Are you, or are you an affiliate of, a broker or a dealer registered under the Securities Exchange Act of 1934?

Yes                                                       No              

If “yes,” please give details below.

(b) Please confirm the following statement: The Company’s equity securities that are being issued to you were acquired in the ordinary course of your business, and at the time the securities were issued to you, you did not have any agreement or understanding, directly or indirectly, with any person to distribute the securities.

Confirmed                      Cannot Confirm              

If “cannot confirm,” please give details below.

2. Relationships with the Company.

(a) Have you or your organization held any position or office with the Company, its predecessors or affiliates within the last three years?

Yes                                                       No              

If “yes,” please give details below.

(b) Have you or your organization had any other material relationship with the Company, its predecessors or affiliates within the last three years?

Yes                                                       No              

If “yes,” please give details below.

A-4

3. Equity Securities Beneficially Owned By You.

(a) Please state the number and type of equity securities of the Company beneficially owned (please see instructions and definitions on page 2) by you as of the date of this Questionnaire, including securities which are exercisable or convertible into equity securities within 60 days of the date of this Questionnaire.

Class of Security Number of Shares Beneficially Owned

(b) If any natural person or entity other than you holds or shares voting power, dispositive power and/or investment control with respect to the Company’s equity securities listed in response to Question 3(a), please provide the names of the natural persons (including titles) or entities that hold or share such voting power or dispositive power and indicate the number of the Company’s equity securities covered thereby.

(c) With respect to the Company’s equity securities listed in response to Questions 3(a) and 3(b) for which an entity holds or shares voting power or dispositive power, please provide the names of the natural persons (including titles) or entities that control the entity or entities listed in response to Questions 3(a) and 3(b).

(d) Please continue to list the natural persons or entities that control the entities listed in response to Question 3(c) and the entities listed in response to this Question 3(d) until you have listed only natural persons (including titles) that control the applicable entity or entities. For example, if you are a general partnership, please identify the general partners in the partnership.

A-5

(e) If any person or entity disclaims beneficial ownership of any of the equity securities you have listed in response to Question 3, please so indicate:

4. FINRA Membership

(a) Are you (i) an FINRA Member (see definition above), (ii) a Controlling (see definition) shareholder of an FINRA Member, (iii) a Person Associated with a Member of FINRA(see definition), or (iv) an Underwriter or a Related Person (see definition) with respect to the proposed offering; or (b) do you own any shares or other securities of any FINRA Member not purchased in the open market; or (c) have you made any outstanding subordinated loans to any FINRA Member?

Yes                                                       No              

If “yes,” please give details below.

A-6

EX-10.6

Exhibit 10.6

AMENDED AND RESTATED CREDIT AGREEMENT

dated as of March 31, 2010

Among

FLOTEK INDUSTRIES, INC.

as Borrower,

WHITEBOX ADVISORS LLC

as Administrative Agent,

and

THE LENDERS NAMED HEREIN

as Lenders

$40,000,000

Table of Contents

		Page
ARTICLE 1 DEFINITIONS AND ACCOUNTING TERMS		1
Section 1.1	Certain Defined Terms	1
Section 1.2	Computation of Time Periods	15
Section 1.3	Accounting Terms; Changes in GAAP	15
Section 1.4	Miscellaneous	16
ARTICLE 2 CREDIT FACILITIES		16
Section 2.1	Term Commitments	16
Section 2.2	Intentionally Omitted	17
Section 2.3	Intentionally Omitted	17
Section 2.4	Intentionally Omitted	17
Section 2.5	Prepayments	17
Section 2.6	Repayment	18
Section 2.7	Fees	19
Section 2.8	Interest	22
Section 2.9	Beneficial Ownership	22
Section 2.10	Intentionally Omitted	23
Section 2.11	Increased Costs	24
Section 2.12	Payments and Computations	24
Section 2.13	Taxes	25
Section 2.14	Replacement of Lenders	28
Section 2.15	Intentionally Omitted	28
ARTICLE 3 CONDITIONS OF LENDING		28
Section 3.1	Conditions Precedent to Term Borrowing and Amendment and Restatement	28
Section 3.2	Intentionally Omitted	31
Section 3.3	Determinations Under Section 3.1	31
ARTICLE 4 REPRESENTATIONS AND WARRANTIES		31
Section 4.1	Organization	31
Section 4.2	Authorization	32
Section 4.3	Enforceability	32
Section 4.4	Financial Condition	32
Section 4.5	Ownership and Liens; Real Property	33

-i-

Table of Contents

(continued)

Section 4.6	True and Complete Disclosure	33
Section 4.7	Litigation	33
Section 4.8	Compliance with Agreements	33
Section 4.9	Pension Plans	34
Section 4.10	Environmental Condition	34
Section 4.11	Subsidiaries	35
Section 4.12	Investment Company Act	35
Section 4.13	Exemption from Securities Registration	35
Section 4.14	Taxes	36
Section 4.15	Permits, Licenses, etc.	36
Section 4.16	Use of Proceeds	36
Section 4.17	Condition of Property; Casualties	37
Section 4.18	Insurance	37
Section 4.19	Securities Laws	37
Section 4.20	Capital Stock	37
Section 4.21	Valid Issuance of Securities	38
Section 4.22	Form S-3 Eligibility; Registration Rights	38
Section 4.23	Exchange Act Compliance	38
Section 4.24	No General Solicitation	38
Section 4.25	Stockholder Approval	39
ARTICLE 5 AFFIRMATIVE COVENANTS		39
Section 5.1	Organization	39
Section 5.2	Reporting	39
Section 5.3	Insurance	42
Section 5.4	Compliance with Laws	43
Section 5.5	Taxes	43
Section 5.6	New Subsidiaries	43
Section 5.7	Security	44
Section 5.8	Accounts	44
Section 5.9	Records; Inspection	45
Section 5.10	Maintenance of Property	45
Section 5.11	Accounting Changes	45

-ii-

Table of Contents

(continued)

Section 5.12	Collateral Examinations	45
Section 5.13	Intentionally Omitted	45
Section 5.14	Executive Compensation Plans	45
Section 5.15	Listing	46
Section 5.16	Form D and State Securities Filings	46
Section 5.17	Shareholder Vote With Respect to Issuance of Additional Stock	46
ARTICLE 6 NEGATIVE COVENANTS		47
Section 6.1	Debt	47
Section 6.2	Liens	49
Section 6.3	Investments	50
Section 6.4	Acquisitions	50
Section 6.5	Agreements Restricting Liens	51
Section 6.6	Use of Proceeds	51
Section 6.7	Corporate Actions	52
Section 6.8	Sale of Assets	52
Section 6.9	Restricted Payments; Subordinated Debt	52
Section 6.10	Affiliate Transactions	53
Section 6.11	Line of Business	53
Section 6.12	Hazardous Materials	53
Section 6.13	Compliance with ERISA	53
Section 6.14	Sale and Leaseback Transactions	54
Section 6.15	Operating Leases	54
Section 6.16	Limitation on Hedging	54
Section 6.17	Non-Public Information	55
Section 6.18	Limits on Additional Issuances	55
Section 6.19	Intentionally Omitted	55
Section 6.20	Shareholder Approval	55
Section 6.21	Capital Expenditures	55
Section 6.22	Landlord Agreements	55
Section 6.23	Amendment of Permitted Subordinated Debt Terms	56
Section 6.24	Convertible Senior Notes	56

-iii-

Table of Contents

(continued)

Section 6.25	Intentionally Omitted	56
Section 6.26	Series A Preferred Stock	57
Section 6.27	Trade Payables	57
Section 6.28	Equity Issuances	57
Section 6.29	Bank Accounts	57
ARTICLE 7 DEFAULT AND REMEDIES		57
Section 7.1	Events of Default	57
Section 7.2	Optional Acceleration of Maturity	60
Section 7.3	Automatic Acceleration of Maturity	60
Section 7.4	Default Fee	60
Section 7.5	Set-off	60
Section 7.6	Remedies Cumulative, No Waiver	61
Section 7.7	Application of Payments	61
Section 7.8	Restructuring After Event of Default	62
ARTICLE 8 THE ADMINISTRATIVE AGENT		62
Section 8.1	Appointment, Powers, and Immunities	62
Section 8.2	Reliance by Administrative Agent	63
Section 8.3	Defaults	63
Section 8.4	Rights as Lender	63
Section 8.5	Indemnification	64
Section 8.6	Non-Reliance on Administrative Agent and Other Lenders	65
Section 8.7	Resignation of Administrative Agent	65
Section 8.8	Collateral Matters	66
ARTICLE 9 MISCELLANEOUS		66
Section 9.1	Costs and Expenses	66
Section 9.2	Indemnification	67
Section 9.3	Waivers and Amendments	68
Section 9.4	Severability	68
Section 9.5	Survival of Representations and Obligations	68
Section 9.6	Binding Effect	69
Section 9.7	Lender Assignments and Participations	69
Section 9.8	Confidentiality	71

-iv-

Table of Contents

(continued)

Section 9.9	Notices, Etc.	71
Section 9.10	Intentionally Omitted	71
Section 9.11	Usury Not Intended	71
Section 9.12	Usury Recapture	72
Section 9.13	Governing Law; Submission to Jurisdiction	72
Section 9.14	Execution in Counterparts	73
Section 9.15	Waiver of Jury	73
Section 9.16	USA Patriot Act	73
Section 9.17	Waiver of Consequential Damages, Etc.	73
Section 9.18	Representations of Lenders	74
Section 9.19	Portfolio Interest	76

EXHIBITS:
Exhibit A	– Form of Assignment and Acceptance
Exhibit B	– Form of Compliance Certificate
Exhibit C	– Form of Guaranty
Exhibit D	– Form of Pledge and Security Agreement
Exhibit E	– Form of Note
Exhibit F	– Form of Registration Rights Agreement

SCHEDULES:
Schedule I	– Commitments, Applicable Lending Offices, Contact Information
Schedule 4.1	– Organizational Information
Schedule 4.5	– Owned and Leased Real Properties
Schedule 4.10	– Environmental
Schedule 4.11	– Subsidiaries
Schedule 6.1	– Existing Debt
Schedule 6.2	– Permitted Liens
Schedule 6.3	– Permitted Investments

-v-

AMENDED AND RESTATED CREDIT AGREEMENT

This AMENDED AND RESTATED CREDIT AGREEMENT dated as of March 31, 2010 (the “Agreement”) is among (a) Flotek Industries, Inc., a Delaware corporation (“Borrower”), (b) the Lenders (as defined below), and (c) Whitebox Advisors LLC, as Administrative Agent (as defined below) for the Lenders.

WITNESSTH:

A. Borrower, Wells Fargo Bank, National Association, as Administrative Agent (the “Original Agent”), and Wells Fargo Bank, National Association, The Prudential Insurance Company of America, Prudential Retirement Insurance and Annuity Company, and Comerica Bank (collectively, the “Original Lenders”) are parties to that certain Credit Agreement dated as of March 31, 2008 (as heretofore amended, restated, supplemented or otherwise modified prior to the effectiveness of this Agreement, the “Original Credit Agreement”).

B. Pursuant to a Nonrecourse Assignment Agreement dated March 17, 2010, the Original Lenders and the Original Agent assigned all their rights and obligations under the Original Credit Agreement to the Administrative Agent and the Lenders.

C. The parties hereto desire to enter into this Agreement to, among other things, amend and restate in its entirety the Original Credit Agreement, without constituting novation of the obligations, liabilities and indebtedness of the Borrower thereunder, on the terms and subject to the conditions contained herein.

In consideration of the mutual covenants and agreements herein contained, the parties hereto hereby agree to amend and restate the Original Credit Agreement as follows:

ARTICLE 1

DEFINITIONS AND ACCOUNTING TERMS

Section 1.1 Certain Defined Terms. 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):

“2008 Convertible Senior Notes” means the senior, unsecured convertible notes of the Borrower issued pursuant to the 2008 Indenture and in an amount not to exceed an aggregate principal amount of $150,000,000.

“2008 Indenture” means the Indenture dated February 14, 2008, as supplemented by the First Supplemental Indenture dated February 14, 2008, and related to the 2008 Convertible Senior Notes by and among the Borrower, the subsidiary guarantors party thereto, and the trustee thereunder that governs the 2008 Convertible Senior Notes.

“2010 Convertible Senior Notes” means the senior, second lien convertible notes of the Borrower issued pursuant to the 2010 Indenture in an amount not to exceed an aggregate principal amount of $36,004,000.

“2010 Indenture” means the Indenture dated March 31, 2010, as supplemented by the First Supplemental Indenture dated March 31, 2010, and related to the 2010 Convertible Senior Notes by and among the Borrower, the subsidiary guarantors party thereto, and the trustee thereunder that will govern the 2010 Convertible Senior Notes.

“Acceptable Security Interest” means a security interest which (a) exists in favor of the Administrative Agent for its benefit and the ratable benefit of the Secured Parties, (b) is superior to all other security interests (other than the Permitted Liens), (c) secures the Obligations, and (d) is perfected and enforceable against the Credit Party which created such security interest.

“Account Control Agreement” shall mean, as to any deposit account of Borrower or any Guarantor held with a bank, an agreement or agreements in form and substance reasonably acceptable to Administrative Agent among the Borrower or Guarantor, as applicable, owning such deposit account, the Administrative Agent and such other bank governing such deposit account.

“Acquisition” means the purchase by the Borrower or any of its Subsidiaries of any business, including the purchase of associated assets or operations or the Equity Interests of a Person.

“Administrative Agent” means Whitebox Advisors LLC, in its capacity as agent for the Lenders pursuant to Article 8 and any successor agent pursuant to Section 8.7.

“Advance” means any advance by a Lender to the Borrower as a part of a Borrowing, including any Term Advance.

“Affiliate” means, as to any Person, any other Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, 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 direct or cause the direction of the management and policies of a Person, whether through ownership, by contract, or otherwise.

“Affected Lender” has the meaning set forth in Section 2.14.

“Agreement” means this Amended and Restated Credit Agreement among the Borrower, the Lenders and the Administrative Agent as it may be amended, supplemented, restated and otherwise modified from time to time.

“Applicable Lending Office” means, with respect to any Lender, the office of such Lender specified as its “Applicable Lending Office” opposite its name on Schedule I or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Administrative Agent.

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

“Artificial Lift Division” means the business segment of the Borrower that manufactures and markets artificial lift equipment and which includes the Petrovalve line of beam pump components, electric submersible pumps, gas separators, valves and services to support coal bed methane production.

“Assignment and Acceptance” means an assignment and acceptance executed by a Lender and an Eligible Assignee and accepted by the Administrative Agent, in substantially the same form as Exhibit A.

“Beneficial Ownership Limitation” means, at any given time and with respect to a given Lender, 9.99% of the sum of (i) the number of shares of the Borrower’s common stock outstanding immediately after giving effect to the issuance of shares of the Borrower’s common stock issuable pursuant to this Agreement at such time, plus (ii) the number of shares of the Borrower’s common stock the beneficial ownership of which such Lender (together with such Lender’s Affiliates and any other Persons acting as a group together with such Lender or any of such Lender’s Affiliates) has the right to acquire within 60 days. For purposes of the foregoing sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. A Lender, upon not less than 61 days’ prior written notice to the Borrower, may increase or decrease the Beneficial Ownership Limitation, provided that such Beneficial Ownership Limitation may not, at any time, be less than 9.99% and provided that any such increase or decrease will not be effective until the 61st day after such notice is delivered to the Borrower.

“Bilateral Agreement” means that certain Credit Agreement dated as of August 31, 2007 between the Borrower and Wells Fargo as the sole lender, as heretofore amended, restated, supplemented or otherwise modified.

“Bilateral Collateral” means the real and personal properties of the Borrower subject to a real estate mortgage or deed of trust in favor of Wells Fargo in effect prior to the Restatement Effective Date and securing the Borrower’s obligations under the Bilateral Agreement or any Guarantor’s obligations under any guaranty agreement executed in connection with the Bilateral Agreement.

“Borrower” means Flotek Industries, Inc., a Delaware corporation.

“Borrowing” means a Term Borrowing.

“Business Day” means a day other than a Saturday, Sunday, or other day on which the Administrative Agent is authorized to close under the laws of, or is in fact closed in, New York.

“Capital Expenditures” for any Person and period of its determination means, without duplication, the aggregate of all expenditures and costs (whether paid in cash or accrued as liabilities during that period and including that portion of payments under Capital Leases that are capitalized on the balance sheet of such Person) of such Person during such period that, in

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conformity with GAAP, are required to be included in or reflected by the property, plant, or equipment or similar fixed asset accounts reflected in the balance sheet of such Person, less any reimbursement received from customers for tools “lost in-hole.”

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

“CERCLA” means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, state and local analogs, and all rules and regulations and requirements thereunder in each case as now or hereafter in effect.

“Certificate of Designations” means the Certificate of Designations Series A Cumulative Convertible Preferred Stock of Flotek Industries, Inc., a copy of which is attached to the Third Amendment and Waiver to Credit Agreement dated August 6, 2009, effective as of June 30, 2009, among the Borrower, the Original Agent and the Originals Lenders.

“Change in Control” means the occurrence of any of the following events: (a) the Borrower ceases to own, either directly or indirectly, 100% of the Equity Interest in any Subsidiary other than as a result of transaction permitted under Section 6.7 or Section 6.8; (b) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes a “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire (such right, an “option right”), whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 35% or more of the Equity Interests of the Borrower entitled to vote for members of the board of directors or equivalent governing body of the Borrower on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right), or (c) during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of the Borrower cease to be composed of individuals (A) who were members of that board or equivalent governing body on the first day of such period, (B) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (A) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (C) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (A) and (B) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body.

“Code” means the Internal Revenue Code of 1986, as amended, and the regulations and published interpretations thereof.

“Collateral” means (a) all property of the Credit Parties which is “Collateral” and “Mortgaged Property” (as defined in each of the Mortgages and the Security Agreements, as applicable) or similar terms used in the Security Documents, and (b) all amounts contained in the Borrower’s and its Subsidiaries’ bank accounts.

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“Commitment Fee” means the fee required under Section 2.7(a).

“Commitment Fee Price” means the greater of VWAP determined as of the Restatement Effective Date and the closing price of the Borrower’s common stock on the Restatement Effective Date.

“Commitments” means, as to any Lender, its Term Commitment.

“Compliance Certificate” means a compliance certificate executed by a Responsible Officer of the Borrower or such other Person as required by this Agreement in substantially the same form as Exhibit B.

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

“Credit Documents” means this Agreement, the Notes, the Guaranties, the Registration Rights Agreement, the Exchange Agreement, the Intercreditor Agreement, the Notices of Borrowing, the Security Documents, the Fee Letter and each other agreement, instrument, or document executed at any time in connection with this Agreement.

“Credit Parties” means the Borrower and the Guarantors.

“Debt” means, for any Person, without duplication: (a) indebtedness of such Person for borrowed money, including the face amount of any letters of credit supporting the repayment of indebtedness for borrowed money issued for the account of such Person and obligations under letters of credit and agreements relating to the issuance of letters of credit or acceptance financing; (b) obligations of such Person evidenced by bonds, debentures, notes or other similar instruments (including the portions of such obligations which would otherwise be considered and calculated as equity or liability pursuant to the FASB Staff Position APB 14-1), (c) obligations of such Person to pay the deferred purchase price of property, services, or Acquisitions (including, without limitation, any earn-out obligations, contingent obligations, or other similar obligations associated with such purchase, and including obligations that are non-recourse to the credit of such Person but are secured by the assets of such Person, but excluding trade accounts payable); (d) obligations of such Person as lessee under Capital Leases and obligations of such Person in respect of synthetic leases; (e) obligations of such Person under any Hedging Arrangement; (f) obligations of such Person owing in respect of redeemable preferred stock or other preferred Equity Interest of such Person; (g) obligations of such Person under direct or indirect guaranties in respect of, and obligations (contingent or otherwise) of such Person to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in clauses (a) through (f) above; (h) indebtedness or obligations of others of the kinds referred to in clauses (a) through (g) secured by any Lien on or in respect of any Property of such Person, and (i) all liabilities of such Person in respect of unfunded vested benefits under any Plan.

“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.

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

“EBITDA” means, without duplication, for the Borrower, the sum of (a) the Borrower’s consolidated Net Income for such period plus (b) to the extent deducted in determining Borrower’s consolidated Net Income, Interest Expense, income taxes, depreciation, amortization and other non-cash charges for such period.

“Eligible Assignee” means (a) a Lender, (b) any Affiliate of a Lender approved by the Administrative Agent, (c) any Approved Fund approved by the Administrative Agent, or (d) any other Person (other than a natural Person) approved by the Administrative Agent and, unless an Event of Default has occurred and is continuing at the time any assignment is effected in accordance with Section 9.7, the Borrower, such approval not to be unreasonably withheld or delayed by the Borrower and such approval to be deemed given by the Borrower if no objection is received by the Administrative Agent from the Borrower within five Business Days after notice of such proposed assignment has been provided to the Borrower; provided, however, that (i) neither the Borrower nor any Affiliate of the Borrower shall qualify as an Eligible Assignee, and (ii) approval by the Administrative Agent of an Eligible Assignee shall not be unreasonably withheld, provided however, any disapproval by the Administrative Agent of a Person that fails to meet any of the following criteria shall not be considered unreasonable: (A) any commercial bank, savings and loan association or savings bank organized under the laws of the United States of America, or any state thereof, or any other Person, that has a combined capital and surplus of less than $100,000,000, (B) any commercial bank or Person organized under the laws of any other country, or a political subdivision of any such country, which is not a member of the Organization for Economic Cooperation and Development, (C) any commercial bank or Person organized under the laws of any other country, or a political subdivision of any such country, which is a member of the Organization for Economic Cooperation and Development and has a combined capital and surplus of less than $100,000,000, or (D) any hedge fund or of its Affiliates that has assets less than $100,000,000.

“Environment” or “Environmental” shall have the meanings set forth in 42 U.S.C. 9601(8) (1988).

“Environmental Claim” means any third party (including governmental agencies and employees) action, lawsuit, claim, demand, regulatory action or proceeding, order, decree, consent agreement or notice of potential or actual responsibility or violation (including claims or proceedings under the Occupational Safety and Health Acts or similar laws or requirements relating to health or safety of employees) which seeks to impose liability under any Environmental Law.

“Environmental Law” means all federal, state, and local laws, rules, regulations, ordinances, orders, decisions, agreements, and other requirements, including common law theories, now or hereafter in effect and relating to, or in connection with the Environment, health, or safety, including without limitation CERCLA, relating to (a) pollution, contamination, injury, destruction, loss, protection, cleanup, reclamation or restoration of the air, surface water, groundwater, land surface or subsurface strata, or other natural resources; (b) solid, gaseous or liquid waste generation, treatment, processing, recycling, reclamation, cleanup, storage, disposal or transportation; (c) exposure to pollutants, contaminants, hazardous, medical infections, or

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toxic substances, materials or wastes; (d) the safety or health of employees; or (e) the manufacture, processing, handling, transportation, distribution in commerce, use, storage or disposal of hazardous, medical infections, or toxic substances, materials or wastes.

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

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

“Equity Interest” means with respect to any Person, any shares, interests, participation, or other equivalents (however designated) of corporate stock, membership interests or partnership interests (or any other ownership interests) of such Person.

“Equity Issuance” means any issuance of equity securities or any other Equity Interests (including any preferred equity securities) by the Borrower or any of its Subsidiaries other than equity securities issued (i) to the Borrower or one of its Subsidiaries, (ii) pursuant to employee or director and officer stock option plans in the ordinary course of business, or (iii) to the seller(s) as consideration in connection with any Acquisition.

“Event of Default” has the meaning specified in Section 7.1.

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

“Exchange Agreement” means the Exchange Agreement to be dated as of the Restatement Effective Date among the Borrower, the other Credit Parties, and the Investors named therein.

“Executive Compensation Information” means, with respect to each of the Named Executives, (i) the Named Executive’s base salary, (ii) the Named Executive’s target bonus amount, (iii) the Named Executive’s minimum and maximum bonus amounts, (iv) the type of metrics (e.g. EBITDA or revenue) used to determine the bonus, but not including the actual dollar or other amount of the metric, and (v) the Named Executive’s equity compensation.

“Fee Letter” means the Fee Letter dated as of March 31, 2010 between the Borrower and the Administrative Agent, setting forth certain fees to be paid by the Borrower to the Administrative Agent for the Administrative Agent’s own account, as more fully set forth therein.

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

“Financial Statements” means, for any period, the consolidated and consolidating financial statements of the Borrower and its Subsidiaries, including statements of income, retained earnings, changes in equity and cash flow for such period as well as a balance sheet as of the end of such period, all prepared in accordance with GAAP.

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“Foreign Subsidiary” means any Subsidiary of Borrower that is a “controlled foreign corporation” as defined in Section 957 of the Code.

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

“GAAP” means United States of America generally accepted accounting principles as in effect from time to time, applied on a basis consistent with the requirements of Section 1.3.

“Governmental Authority” means, with respect to any Person, any foreign governmental authority, the United States of America, any state of the United States of America, the District of Columbia, and any subdivision of any of the foregoing, and any agency, department, commission, board, authority or instrumentality, bureau or court having jurisdiction over such Person.

“Guarantors” means any Person that now or hereafter executes a Guaranty, including (a) the Subsidiaries listed on Schedule 4.11; and (b) each Subsidiary of the Borrower that becomes a guarantor of all or a portion of the Obligations and which has entered into either a joinder agreement substantially in the form attached to the Guaranty or a new Guaranty; provided that no Foreign Subsidiary of the Borrower shall be required to become a Guarantor hereunder if the provision of such guaranty by such Subsidiary would be materially disadvantageous to the Borrower from a tax perspective.

“Guaranty” means the Guaranty Agreement executed in substantially the same form as Exhibit C.

“Hazardous Substance” means any substance or material identified as such pursuant to CERCLA and those regulated under any other Environmental Law, including without limitation pollutants, contaminants, petroleum, petroleum products, radionuclides, and radioactive materials.

“Hazardous Waste” means any substance or material regulated or designated as such pursuant to any Environmental Law, including without limitation, pollutants, contaminants, flammable substances and materials, explosives, radioactive materials, oil, petroleum and petroleum products, chemical liquids and solids, polychlorinated biphenyls, asbestos, toxic substances, and similar substances and materials.

“Hedging Arrangement” means a hedge, call, swap, collar, floor, cap, option, forward sale or purchase or other contract or similar arrangement (including any obligations to purchase or sell any commodity or security at a future date for a specific price) which is entered into to reduce or eliminate or otherwise protect against the risk of fluctuations in prices or rates, including interest rates, foreign exchange rates, commodity prices and securities prices.

“Initial Interest Payment” has the meaning set forth in Section 2.8(b).

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“Intercreditor Agreement” means the Lien Subordination and Intercreditor Agreement to be dated as of the Restatement Effective Date among the Administrative Agent, U.S. Bank National Association, as Note Collateral Agent, the Borrower and the other Credit Parties.

“Interest Expense” means, for any period and with respect to any Person, total cash interest expense, letter of credit fees and other fees and expenses incurred by such Person in connection with any Debt for such period, whether paid or accrued (including that attributable to obligations which have been or should be, in accordance with GAAP, recorded as Capital Leases), including, without limitation, (a) all commissions, discounts, and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing, fees owed with respect to the Obligations, (b) net costs under Hedging Arrangements entered into addressing interest rates, all as determined in conformity with GAAP, and (c) cash or other dividend payments with respect to preferred Equity of a Person but excluding any dividend or distribution payable solely in Equity Interests of such Person.

“Inventory” of any Person means all inventory, including raw materials, work in process or supplies or materials consumed in the business of such Person, now owned or hereafter acquired by such Person, wherever located which is held for sale.

“Legal Requirement” means any law, statute, ordinance, decree, requirement, order, judgment, rule, regulation (or official interpretation of any of the foregoing) of, and the terms of any license or permit issued by, any Governmental Authority, including, but not limited to, Regulations T, U and X.

“Lenders” means the Persons listed on the signature pages hereto as Lenders, any other Person that shall have become a Lender hereto pursuant to Section 2.14, and any other Person that shall have become a Lender hereto pursuant to an Assignment and Acceptance, but in any event, excluding any such Person that ceases to be a party hereto pursuant to an Assignment and Acceptance.

“Lien” means any mortgage, lien, pledge, charge, deed of trust, security interest, or encumbrance to secure or provide for the payment of any obligation of any Person, whether arising by contract, operation of law, or otherwise (including the interest of a vendor or lessor under any conditional sale agreement, Capital Lease, or other title retention agreement).

“Liquid Investments” means (a) readily marketable direct full faith and credit obligations of the United States of America or obligations unconditionally guaranteed by the full faith and credit of the United States of America; (b) commercial paper issued by any commercial banking institutions or corporations rated at least P-1 by Moody’s or A-1 by S&P; (c) certificates of deposit, time deposits, and bankers’ acceptances issued by (i) any of the Lenders or (ii) any other commercial banking institution which is a member of the Federal Reserve System and has a combined capital and surplus and undivided profits of not less than $250,000,000.00 and rated Aa by Moody’s or AA by S&P; (d) repurchase agreements which are entered into with any of the Lenders or any major money center banks included in the commercial banking institutions described in clause (c) and which are secured by readily marketable direct full faith and credit obligations of the government of the United States of America or any agency thereof; (e) investments in any money market fund which holds investments substantially of the type

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described in the foregoing clauses (a) through (d); and (f) other investments made through the Administrative Agent or its Affiliates and approved by the Administrative Agent. All the Liquid Investments described in clauses (a) through (d) above shall have maturities of not more than 365 days from the date of issue.

“Material Adverse Change” means a material adverse change (a) in the business, condition (financial or otherwise), results of operations of the Borrower and its Subsidiaries, taken as a whole; (b) on the validity or enforceability of this Agreement or any of the other Credit Document; or (c) on the Borrower’s or any other Credit Party’s ability to perform its obligations under this Agreement, any Note, the Guaranties or any other Credit Document.

“Maximum Rate” means the maximum nonusurious interest rate under applicable law.

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto which is a nationally recognized statistical rating organization.

“Mortgage” means each mortgage or deed of trust in form acceptable to the Administrative Agent executed by the Borrower or a Subsidiary of the Borrower to secure all or a portion of the Obligations.

“Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA to which the Borrower or any member of the Controlled Group is making or accruing an obligation to make contributions.

“Named Executives” means the Borrower’s named executive officers (as defined under Item 402 of Regulation S-K under the Exchange Act) listed in the Borrower’s last proxy statement and those persons the Borrower reasonably believes will be named executive officers in the Borrower’s next proxy statement.

“Net Income” means, for any period and with respect to any Person, the net income for such period for such Person after taxes as determined in accordance with GAAP, excluding, however, (a) extraordinary items, including (i) any net non-cash gain or loss during such period arising from the sale, exchange, retirement or other disposition of capital assets (such term to include all fixed assets and all securities) other than in the ordinary course of business, and (ii) any write-up or write-down of assets and (b) the cumulative effect of any change in GAAP.

“Nonordinary Course Asset Sales” means, any sales, conveyances, or other transfers of Property made by the Borrower or any Subsidiary of the Borrower (a) of any division of the Borrower or any Subsidiary of the Borrower, (b) of the Equity Interest in (i) the Borrower by the Borrower or any Subsidiary of the Borrower or (ii) a Subsidiary of the Borrower by the Borrower or any Subsidiary of the Borrower or (c) outside the ordinary course of business of any assets of the Borrower or any Subsidiary of a Borrower, whether in a transaction or related series of transactions.

“Note” means a promissory note of the Borrower payable to the order of a Term Lender in the amount of such Lender’s Term Loan, in substantially the same form as Exhibit E, evidencing indebtedness of the Borrower to such Lender resulting from the Previous Advances, any Term Advances and the PIK Portion of the PIK Interest Rate under the Term Loan owing to such Lender.

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“Obligations” means all principal, interest (including post-petition interest), fees, reimbursements, indemnifications, and other amounts now or hereafter owed by any of the Credit Parties to the Lenders or the Administrative Agent under this Agreement and the Credit Documents, and any increases, extensions, and rearrangements of those obligations under any amendments, supplements, and other modifications of the documents and agreements creating those obligations.

“Other Taxes” has the meaning set forth in Section 2.13(b).

“Patriot Act” means the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).

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

“Permitted Debt” has the meaning set forth in Section 6.1.

“Permitted Investments” has the meaning set forth in Section 6.3.

“Permitted Liens” has the meaning set forth in Section 6.2.

“Permitted Subordinated Debt” means Debt of the Borrower to any Person, the terms of which are reasonably satisfactory to the Required Lenders and the payment of which has been subordinated to the payment of the Obligations in a manner, and pursuant to documentation, satisfactory to the Required Lenders in their sole reasonable discretion.

“Person” means an individual, partnership, corporation (including a business trust), joint stock company, trust, limited liability company, limited liability partnership, unincorporated association, joint venture, or other entity, or a government or any political subdivision or agency thereof, or any trustee, receiver, custodian, or similar official.

“PIK Interest Rate” means cash interest payable at the rate of 8% per annum (the “Cash Portion”), plus interest payable at the following rates (determined as of the beginning of each quarterly interest payment period) by increasing the principal amount of the Term Loan (the “PIK Portion”):

Outstanding Principal Amount of Notes at beginning of quarterly period	Rate of Interest per annum
less than $20,000,000	3.5%
$20,000,000 or more and up to and including $30,000,000	4.5%
more than $30,000,000	6.0%

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“Plan” means an employee benefit plan (other than a Multiemployer Plan) maintained for employees of the Borrower or any member of the Controlled Group and covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code.

“Previous Advances” has the meaning set forth in Section 2.1(a)(ii).

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

“Register” has the meaning set forth in Section 9.7(b).

“Registration Rights Agreement” means the Registration Rights Agreement executed in substantially the same form as Exhibit F.

“Regular Interest Rate” means cash interest payable at the following rates, determined as of the beginning of each quarterly interest payment period:

Outstanding Principal Amount of Notes at beginning of quarterly period	Rate of Interest per annum
less than $20,000,000	10.5%
$20,000,000 or more and up to and including $30,000,000	11.5%
more than $30,000,000	12.5%

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

“Release” shall have the meaning set forth in CERCLA or under any other Environmental Law.

“Required Lenders” means Lenders holding more than 66.667% of the then aggregate unpaid principal amount of the Notes.

“Response” shall have the meaning set forth in CERCLA or under any other Environmental Law.

“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA (other than any such event not subject to the provision for 30-day notice to the PBGC under the regulations issued under such section).

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“Responsible Officer” means (a) with respect to any Person that is a corporation, such Person’s Chief Executive Officer, President, Chief Financial Officer, or Vice President, (b) with respect to any Person that is a limited liability company, if such Person has officers, then such Person’s Chief Executive Officer, President, Chief Financial Officer, or Vice President, and if such Person is managed by members, then a Responsible Officer of such Person’s managing member, and if such Person is managed by managers, then a manager (if such manager is an individual) or a Responsible Officer of such manager (if such manager is an entity), and (c) with respect to any Person that is a general partnership, limited partnership or a limited liability partnership, the Responsible Officer of such Person’s general partner or partners.

“Restatement Effective Date” means the date on which all conditions set forth in Section 3.1 have been satisfied or waived by the Administrative Agent and Required Lenders.

“Restricted Payment” means, with respect to any Person, (a) any direct or indirect dividend or distribution (whether in cash, securities or other Property) or any direct or indirect payment of any kind or character (whether in cash, securities or other Property) in consideration for or otherwise in connection with any retirement, purchase, redemption or other acquisition of any Equity Interest of such Person, or any options, warrants or rights to purchase or acquire any such Equity Interest of such Person or (b) principal or interest payments (in cash, Property or otherwise) on, or redemptions of, subordinated debt of such Person; provided that the term “Restricted Payment” shall not include any dividend or distribution payable solely in Equity Interests of the Borrower or warrants, options or other rights to purchase such Equity Interests.

“S&P” means Standard & Poor’s Rating Agency Group, a division of McGraw-Hill Companies, Inc., or any successor thereof which is a national credit rating organization.

“SEC” means, the Securities and Exchange Commission.

“Secured Parties” means the Administrative Agent and the Lenders.

“Secured Obligations” means the Obligations.

“Securities” means the Notes, the Guarantees and shares of the Borrower’s common stock issuable pursuant to Sections 2.6(b) and 2.7(a) hereof.

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

“Security Agreement” means the Pledge and Security Agreement among the Credit Parties and the Administrative Agent in substantially the same form as Exhibit D.

“Security Documents” means, collectively, the Mortgages, Security Agreements, and any and all other instruments, documents or agreements, including Account Control Agreements, now or hereafter executed by any Credit Party or any other Person to secure the Obligations.

“Series A Preferred Stock” means the cumulative, contingent, convertible preferred Equity Interests issued by the Borrower pursuant to the Certificate of Designations.

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“Shareholder Approval” means approval by the Borrower’s shareholders of the Shareholder Proposals as defined in Section 5.17.

“Solvent” means, as to any Person, on the date of any determination (a) the fair value of the Property of such Person is greater than the total amount of debts and other liabilities (including without limitation, contingent liabilities) of such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts and other liabilities (including, without limitation, contingent liabilities) as they become absolute and matured, (c) such Person is able to realize upon its assets and pay its debts and other liabilities (including, without limitation, contingent liabilities) as they mature in the normal course of business, (d) such Person does not intend to, and does not believe that it will, incur debts or liabilities (including, without limitation, contingent liabilities) beyond such Person’s ability to pay as such debts and liabilities mature, (e) such Person is not engaged in, and is not about to engage in, business or a transaction for which such Person’s Property would constitute unreasonably small capital, and (f) such Person has not transferred, concealed or removed any Property with intent to hinder, delay or defraud any creditor of such Person.

“Subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity, a majority of whose outstanding Voting Securities shall at any time be owned by the parent or one more Subsidiaries of the parent. Unless expressly provided otherwise, all references herein and in any other Credit Document to any “Subsidiary” or “Subsidiaries” means a Subsidiary or Subsidiaries of the Borrower.

“Taxes” has the meaning set forth in Section 2.13(a).

“Term Advance” means a one-time advance by a Lender to the Borrower as part of a Term Borrowing.

“Term Borrowing” means the Borrowing consisting of simultaneous Term Advances of the same type made by each Lender pursuant to Section 2.1(a).

“Term Commitment” means, for each Lender, the obligation of each Lender to advance to the Borrower the amount set opposite such Lender’s name on Schedule I as its Term Commitment, or if such Lender has entered into any Assignment and Acceptance, set forth for such Lender as its Term Commitment in the Register; provided that, after Term Advances are made on the Restatement Effective Date, the Term Commitment for each Lender shall be zero; and provided further that, the aggregate Term Commitment shall not exceed $9,318,090.33.

“Term Lenders” means Lenders having a Term Commitment or, if such Term Commitments have been terminated, Lenders that are owed Term Advances.

“Term Loan” means the Previous Advances and the Term Advances made or to be made by the Term Lenders to the Borrower hereunder, together with the PIK Portion of the PIK Interest Rate added to the principal amount of any of the Notes in accordance with Section 2.8(c).

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“Term Maturity Date” means the earlier of (a) November 1, 2012, and (b) the earlier termination in whole of the Term Commitments and acceleration of the Term Loan pursuant to Article 7.

“Termination Event” means (a) a Reportable Event with respect to a Plan, (b) the withdrawal of the Borrower or any member of the Controlled Group from a Plan during a plan year in which it was a “substantial employer” as defined in Section 4001(a)(2) of ERISA, (c) the filing of a notice of intent to terminate a Plan or the treatment of a Plan amendment as a termination under Section 4041(c) of ERISA, (d) the institution of proceedings to terminate a Plan by the PBGC, or (e) any other event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan.

“Voting Securities” means (a) with respect to any corporation, capital stock of the corporation having general voting power under ordinary circumstances to elect directors of such corporation (irrespective of whether at the time stock of any other class or classes shall have or might have special voting power or rights by reason of the happening of any contingency), (b) with respect to any partnership, any partnership interest or other ownership interest having general voting power to elect the general partner or other management of the partnership or other Person, and (c) with respect to any limited liability company, membership certificates or interests having general voting power under ordinary circumstances to elect managers of such limited liability company.

“VWAP” means, as of any date, the Volume Weighted Average Price of the Borrower’s common stock, as determined using Bloomberg function VWAP for the 10 consecutive trading days ending two days before such date, beginning at 9:30 a.m. (New York time) on the first day of the period and ending at 4:30 p.m. (New York time) on the last day of the period.

Section 1.2 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 1.3 Accounting Terms; Changes in GAAP.

(a) All accounting terms not specifically defined in this Agreement shall be construed in accordance with GAAP applied on a consistent basis with those applied in the preparation of the financial statements delivered to the Administrative Agent for the fiscal year ending December 31, 2009 as required under Section 5.2.

(b) Unless otherwise indicated, all financial statements of the Borrower, all calculations for compliance with covenants in this Agreement and all calculations of any amounts to be calculated under the definitions in Section 1.1 shall be based upon the consolidated accounts of the Borrower and its Subsidiaries in accordance with GAAP and consistent with the principles of consolidation applied in preparing the Borrower’s Financial Statements referred to in Section 4.4.

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(c) If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Credit Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders 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 (subject to the approval of the Required Lenders); 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 Administrative Agent and the Lenders 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.

Section 1.4 Miscellaneous. Article, Section, Schedule, and Exhibit references are to this Agreement, unless otherwise specified. All references to instruments, documents, contracts, and agreements are references to such instruments, documents, contracts, and agreements as the same may be amended, supplemented, and otherwise modified from time to time, unless otherwise specified and shall include all schedules and exhibits thereto unless otherwise specified. Any reference herein to any law shall be construed as referring to such law as amended, modified, codified or reenacted, in whole or in part, and in effect from time to time. Any reference herein to any Person shall be construed to include such Person’s successors and assigns (subject to the restrictions contained herein). The words “hereof”, “herein”, and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The term “including” means “including, without limitation,”. Paragraph headings have been inserted in this Agreement as a matter of convenience for reference only and it is agreed that such paragraph headings are not a part of this Agreement and shall not be used in the interpretation of any provision of this Agreement.

ARTICLE 2

CREDIT FACILITIES

Section 2.1 Term Commitments.

(a) Term Commitments.

(i) Each Lender severally agrees, on the terms and conditions set forth in this Agreement, to make to the Borrower on the Restatement Effective Date, a Term Advance in an amount not to exceed such Lender’s Term Commitment. The Term Loan is not a revolving facility; once the Term Advances are made, the Lenders shall have no further obligation to make any additional Advances to the Borrower, whether or not any amounts are repaid thereunder.

(ii) $30,681,909.67 of the Term Loan was previously advanced to Borrower under the Original Credit Agreement (the “Previous Advances”). As of the Restatement Effective Date immediately prior to giving effect to the transaction contemplated by this Agreement, the outstanding principal balance of the Term Loan was $30,681,909.67.

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Subject to the terms and conditions of this Agreement, the principal balance of the Previous Advances and entire principal balance of the Term Advances made pursuant to Section 2.1(a)(i) shall constitute the outstanding principal balance of Term Loans under this Agreement.

(b) Reduction of the Term Commitments. On the making of the Term Advances on the Restatement Effective Date, each Lender’s Term Commitment shall be reduced to zero. Any reduction or termination of the Term Commitments pursuant to this Section 2.1(b) shall be permanent, with no obligation of the Lenders to reinstate such Commitments.

(c) Notes. The indebtedness of the Borrower to each Lender resulting from Term Advances owing to such Lender made pursuant to Section 2.1(a) and PIK Interest pursuant to Section 2.8(c) shall be evidenced by a Note.

Section 2.2 Intentionally Omitted

Section 2.3 Intentionally Omitted.

Section 2.4 Intentionally Omitted.

Section 2.5 Prepayments.

(a) Right to Prepay. The Borrower shall have no right to prepay any principal amount of any Term Loan except as provided in this Section 2.5.

(b) Optional. The Borrower may elect to prepay the Term Loan without penalty or premium after giving by 12:00 p.m. (New York time) at least three Business Days’ prior written notice to the Administrative Agent stating the proposed date and aggregate principal amount of such prepayment. If any such notice is given, the Borrower shall prepay the Term Loan in whole or ratably in part in an aggregate principal amount equal to the amount specified in such notice, together with accrued interest to the date of such prepayment on the principal amount prepaid.

(c) Mandatory.

(i) If in any fiscal quarter, commencing with the fiscal quarter ending June 30, 2010, the Borrower has EBITDA in excess of $4,500,000, the Borrower shall prepay the Term Loan on the date Financial Statements for such fiscal quarter are delivered pursuant to Section 5.2(b) in an amount equal to 50% of the EBITDA in excess of $4,500,000, as determined with reference to the Compliance Certificate delivered by the Borrower for such period.

(ii) If the Borrower completes a sale of its Artificial Lift Division that results in cash proceeds to the Borrower in excess of $5,000,000, the Borrower will prepay the Term Loan upon the closing of such sale in an amount equal to (i) 50% of the amount of such cash proceeds in excess of $5,000,000 and up to and including $15,000,000, plus (ii) 75% of such cash proceeds in excess of $15,000,000.

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(iii) If the Borrower completes an asset sale permitted by Section 6.8(iii), the Borrower will prepay the Term Loan to the extent the cash proceeds of such sale are not reinvested in similar equipment within 90 days after the receipt of such proceeds.

(iv) If the Borrower receives a refund of any income taxes prior to the maturity of the 2010 Convertible Senior Notes, within three days following the receipt of such refund, the Borrower will prepay the Term Loan in an amount equal to 75% of such refund.

(d) Interest; Costs. Each prepayment pursuant to this Section 2.5 shall be accompanied by accrued interest on the amount prepaid to the date of such prepayment.

(e) Application of Prepayments. Each prepayment of the Term Loan pursuant to Sections 2.5(b) and 2.5(c) shall be applied to the scheduled principal installments of the Term Advances in the inverse order of maturity until such time as the Term Loan is repaid in full.

Section 2.6 Repayment.

(a) Cash Payments. The Borrower shall pay to the Administrative Agent for the ratable benefit of each Term Lender the aggregate outstanding principal amount of the Term Loan in quarterly installments of cash of (i) $250,000 on September 30, 2010, (ii) $500,000 on December 31, 2010, (iii) $750,000 on March 31, 2011 and (iv) $1,000,000.00 each, payable on each March 31, June 30, September 30, and December 31 thereafter, commencing with June 30, 2011, and a final installment of the remaining, unpaid principal balance of the Term Loan payable on the Term Maturity Date.

(b) Stock Payments. Subject to Section 2.9, if as of 10 Business Days prior to any quarterly payment date (the “Determination Date”), commencing with the quarterly payment date on June 30, 2010, (i) Shareholder Approval has occurred and (ii) the VWAP is equal to or greater than the Commitment Fee Price, upon election by any Lender given at least five Business Days prior to such quarterly payment date, the Borrower shall issue to each such electing Lender on the applicable quarterly payment date a number of shares of the Borrower’s common stock determined by dividing (A) such Lender’s ratable share of $1,000,000 (the “Stock Payment Amount”) by (B) 95% of the VWAP as of such Determination Date (the “Stock Payment Price”), and the principal amount of the Term Loan held by such Lender shall be reduced by such Stock Payment Amount. In the event that the Borrower is not able to issue to a Lender common stock in payment of the Stock Payment Amount owed to such Lender due to the limitations of Section 2.9, the Borrower shall limit the number of shares of common stock issued to such Lender to the amount allowed by Section 2.9, if any, and the principal amount of the Term Loan held by such Lender shall be reduced by an amount equal to the number of shares of common stock so issued multiplied by the Stock Payment Price. Limitations on the amount of common stock which may be issued by the Borrower under this Section 2.6(b) to one Lender due to the limitations of Section 2.9 shall not affect the amount of common stock which may be issued by the Borrower to other electing Lenders under this Section 2.6(b), unless the application of Section 2.9 would also limit those payments. As used in this Section 2.6(b), a Lender’s ratable share shall be determined with reference to such Lender’s pro rata share of the Term Loan on the applicable Determination Date.

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Section 2.7 Fees.

(a) Commitment Fee. The Borrower agrees to pay to the Administrative Agent for the account of each Lender a Commitment Fee of $7,300,000. The Commitment Fee will be fully earned on the Restatement Effective Date and will be payable by the Borrower to the Administrative Agent for the ratable account of each Lender as set forth in this Section 2.7. As used in this Section 2.7(a), a Lender’s ratable share shall be determined with reference to such Lender’s pro rata share of the Term Loan on the Restatement Effective Date.

(i) Initial Commitment Fee. On the Restatement Effective Date, the Borrower shall pay to the Administrative Agent, for the ratable account of each Lender, the following increments of the Commitment Fee:

(A) $800,000 in cash; and

(B) subject to Section 2.9, $4,500,000 in common stock of the Borrower. The number of shares of the Borrower’s common stock to be issued to each Lender will be determined by dividing (I) such Lender’s ratable share of $4,500,000 by (II) the greater of (1) 95% of VWAP determined as of the Restatement Effective Date and (2) 95% of the closing price of the Borrower’s common stock on the Restatement Effective Date (any such payment in accordance with this clause (B), the “Initial Commitment Fee Stock Payment”).

Notwithstanding clause (B) above, if the Initial Commitment Fee Stock Payment will result in a Lender (together with such Lender’s Affiliates, and any other Persons acting as a group together with such Lender or any of such Lender’s Affiliates), beneficially owning in excess of the Beneficial Ownership Limitation, the portion of the Initial Commitment Fee Stock Payment due to such Lender that is in excess of the Beneficial Ownership Limitation (such amount, the “Excess Initial Commitment Fee Payment”) shall be paid to such Lender in cash; provided, however, that to the extent the Excess Initial Commitment Fee Payment payable to such Lender exceeds $250,000, the amount of the Excess Initial Commitment Fee Payment remaining after the payment to such Lender of $250,000 in cash (such remaining amount, the “Remaining Excess Initial Commitment Fee Payment”) shall be paid as follows:

(x) subject to Section 2.9, 50% of the Remaining Excess Initial Commitment Fee Payment shall be paid in the Borrower’s common stock by the Borrower to such Lender on the Six Month Commitment Fee Payment Date (as hereinafter defined) together with the Six Month Commitment Fee Payment (as hereinafter defined), and the number of shares of the Borrower’s common stock to be issued to such Lender in

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payment of this portion of the Remaining Excess Initial Commitment Fee Payment will be determined by dividing (I) such portion of the Remaining Excess Initial Commitment Fee Payment by (II) the greater of (1) 90% of VWAP determined as of the Restatement Effective Date and (2) 90% of the closing price of the Borrower’s common stock on the Restatement Effective Date; and

(y) subject to Section 2.9, 50% of the Remaining Excess Initial Commitment Fee Payment shall be paid in the Borrower’s common stock by the Borrower to such Lender on the One Year Commitment Fee Payment Date (as hereinafter defined) together with the One Year Commitment Fee Payment (as hereinafter defined), and the number of shares of the Borrower’s common stock to be issued to such Lender in payment of this portion of the Remaining Excess Initial Commitment Fee Payment will be determined by dividing (I) such portion of the Remaining Excess Initial Commitment Fee Payment by (II) the greater of (1) 85% of VWAP determined as of the Restatement Effective Date and (2) 85% of the closing price of the Borrower’s common stock on the Restatement Effective Date.

To the extent any portion of the Remaining Excess Initial Commitment Fee Payment cannot be made to a Lender under the foregoing clauses (x) or (y) due to the operation of Section 2.9, such portion of the Remaining Excess Initial Commitment Fee Payment must be paid on the dates described in such clauses by the Borrower to the Administrative Agent, for the account of such Lender, in cash.

(ii) Six Month Commitment Fee Payment. On the six month anniversary of the Restatement Effective Date (the “Six Month Commitment Fee Payment Date”), the Borrower shall pay to the Administrative Agent, for the ratable account of each Lender, $1,000,000 (the “Six Month Commitment Fee Payment”) in cash, unless the Borrower or a Lender elects (to the extent permitted by Section 2.9) to receive Borrower’s common stock in accordance with the following:

(A) If the VWAP as of the Business Day immediately preceding the Six Month Commitment Fee Payment Date is equal to or greater than $1.00, then the Borrower may elect to pay all or any portion of the Six Month Commitment Fee Payment in the Borrower’s common stock.

(B) If the VWAP as of the Business Day immediately preceding the Six Month Commitment Fee Payment Date is less than $1.00, then each Lender may elect, in such Lender’s sole discretion, to receive all or any portion of its ratable share of the Six Month Commitment Fee Payment in the Borrower’s common stock.

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The number of shares of the Borrower’s common stock to be issued to each Lender in payment under this clause (ii) will be determined by dividing (I) (x) in the case of an election by the Borrower under subclause (A), such Lender’s ratable share of the portion of the Six Month Commitment Fee Payment that the Borrower has elected to pay in common stock and (y) in the case of an election by a Lender under subclause (B), the portion of such Lender’s ratable share of the Six Month Commitment Fee that such Lender has elected to take in common stock by (II) the greater of (1) 90% of VWAP determined as of the Restatement Effective Date and (2) 90% of the closing price of the Borrower’s common stock on the Restatement Effective Date. To the extent any payment or portion of a payment under the foregoing subclauses (A) or (B) cannot be made to a Lender due to the operation of Section 2.9, such payment or portion thereof must be paid on the Six Month Commitment Fee Payment Date by the Borrower to the Administrative Agent, for the account of such Lender, in cash.

(iii) One Year Commitment Fee Payment. On the one year anniversary of the Restatement Effective Date (the “One Year Commitment Fee Payment Date”), the Borrower shall pay to the Administrative Agent, for the ratable account of each Lender, $1,000,000 (the “One Year Commitment Fee Payment”) in cash, unless the Borrower or a Lender elects (to the extent permitted by Section 2.9) to receive the Borrower’s common stock of the Borrower in accordance with the following:

(A) If the VWAP as of the Business Day immediately preceding the One Year Commitment Fee Payment Date is equal to or greater than $1.00, then the Borrower may elect to pay all or any portion of the One Year Commitment Fee Payment in the Borrower’s common stock.

(B) If the VWAP as of the Business Day immediately preceding the One Year Commitment Fee Payment Date is less than $1.00, then each Lender may elect, in such Lender’s sole discretion, to receive all or any portion of its ratable share of the One Year Commitment Fee Payment in the Borrower’s common stock.

The number of shares of the Borrower’s common stock to be issued to each Lender in payment under this clause (iii) will be determined by dividing (I) (x) in the case of an election by the Borrower under subclause (A), such Lender’s ratable share of the portion of the One Year Commitment Fee Payment that the Borrower has elected to pay in common stock and (y) in the case of an election by a Lender under subclause (B), the portion of such Lender’s ratable share of the One Year Commitment Fee that such Lender has elected to take in common stock by (II) the greater of (1) 85% of VWAP determined as of the Restatement Effective Date and (2) 85% of the closing price of the Borrower’s common stock on the Restatement Effective Date. To the extent any payment or portion of a payment under the foregoing subclauses (A) or (B) cannot be made to a Lender due to the operation of Section 2.9, such payment or portion thereof must be paid on the One Year Commitment Fee Payment Date by the Borrower to the Administrative Agent, for the account of such Lender, in cash.

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Notwithstanding anything to the contrary contained in this Section 2.7(a), the Borrower shall have no right to elect to pay any portion of the Commitment Fee in the Borrower’s common stock to a Lender to the extent that after giving effect to the issuance of the common stock hereunder, such Lender (together with the Lender’s Affiliates, and any other Persons acting as a group together with the Lender or any of the Lender’s Affiliates), would beneficially own in excess of the Beneficial Ownership Limitation, calculated in accordance with Section 2.9.

(b) Administrative Agent Fee. The Borrower agrees to pay the fees to the Administrative Agent as set forth in the Fee Letter.

Section 2.8 Interest.

(a) Regular Interest. Subject to Section 2.8(c), the Notes shall bear interest at the Regular Interest Rate in effect from time to time for such period, provided that while an Event of Default is continuing the Notes shall bear interest at the rate of 15% per annum. The Borrower shall pay to Administrative Agent for the ratable account of each Lender, in cash, all accrued but unpaid interest on such Lender’s Notes on each March 31, June 30, September 30, and December 31, commencing on June 30, 2010, and on the Term Maturity Date.

(b) Payment of First Period Interest. On the Restatement Effective Date, the Borrower shall pay to the Administrative Agent for the ratable account of each Lender, in cash, interest which will accrue on the Notes for the period from the Restructuring Effective Date through June 30, 2010, calculated in accordance with Section 2.8(a) (the “Initial Interest Payment”).

(c) PIK Interest. So long as no Default is continuing, the Borrower may elect by giving the Administrative Agent written notice at least 90 days prior to any interest payment date, commencing with the interest payment date on September 30, 2010, to pay interest at the PIK Interest Rate for the quarter ending on such interest payment date. If the Borrower makes such an election, (i) the Notes shall bear interest at the PIK Interest Rate for the quarter ending on such interest payment date, (ii) the Borrower shall pay to the Administrative Agent for the ratable account of each Lender, in cash, the Cash Portion of the PIK Interest Rate, (iii) the principal amount of the Notes shall be increased by the PIK Portion of the PIK Interest Rate, and (iv) at the request of any Lender, the Borrower will execute and deliver a new Note to such Lender in a principal amount equal to the outstanding principal amount owed to such Lender; provided that if an Event of Default is continuing, then, notwithstanding any prior election by the Borrower to pay interest at the PIK Interest Rate, the Notes shall bear interest at the rate of 15% per annum, payable only in cash.

Section 2.9 Beneficial Ownership. Notwithstanding anything to the contrary in this Agreement, a Lender shall not have the right to receive shares of the Borrower’s common

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stock pursuant to this Agreement and the Borrower shall not issue shares of the Borrower’s common stock to such Lender, in each case to the extent that after giving effect to the issuance of such common stock of the Borrower, the Lender (together with the Lender’s Affiliates, and any other Persons acting as a group together with the Lender or any of the Lender’s Affiliates), would beneficially own in excess of the Beneficial Ownership Limitation. For purposes of the foregoing sentence, beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section 2.9 applies, the determination of whether the Lender may elect to receive shares of the Borrower’s common stock under this Agreement (in relation to other securities owned by the Lender together with any Affiliates) and of the amount of shares of the Borrower’s common stock that the Lender may elect to receive under this Agreement shall be in the sole discretion of the Lender, and the submission of an election under Section 2.6(b) or 2.7(a) of this Agreement shall be deemed to be the Lender’s determination of whether it may elect to receive shares of the Borrower’s common stock under such Section (in relation to other securities owned by the Lender together with any Affiliates) and of the amount of shares of the Borrower’s common stock that the Lender may elect to receive under Section 2.6(b) or 2.7(a), in each case subject to the Beneficial Ownership Limitation, and the Borrower shall have no obligation to verify or confirm the accuracy of such determination.

To the extent that the limitation contained in this Section 2.9 applies, the determination of whether the Borrower may issue shares of common stock to a Lender under this Agreement (in relation to other securities owned by the Lender together with any Affiliates) and of the amount of shares of the Borrower’s common stock that the Borrower may issue to the Lender under this Agreement shall be in the sole discretion of the Lender. Prior to any issuance of shares of common stock by the Borrower pursuant to Section 2.7(a), the Borrower will confirm with each Lender whether the Borrower may issue shares of common stock and if so, in what amounts, to such Lender and such Lender’s determination of whether it may receive shares of the Borrower’s common stock under Section 2.7(a) (in relation to other securities owned by the Lender together with any Affiliates) and of the amount of shares of the Borrower’s common that the Lender may receive under Section 2.7(a), in each case subject to the Beneficial Ownership Limitation, and the Borrower shall have no obligation to verify or confirm the accuracy of such determination.

In addition, a determination as to any group status as contemplated in this Section shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2.9, in determining the number of outstanding shares of the Borrower’s common stock, a Lender may rely on the number of outstanding shares of the Borrower’s common stock as reflected in (i) the Borrower’s most recent periodic or annual report filed with the SEC, (ii) a more recent public announcement by the Borrower or (iii) a more recent written notice by the Borrower or the transfer agent of the Borrower’s common stock setting forth the number of shares of the Borrower’s common stock outstanding. Upon the written or oral request of a Lender, the Borrower shall within two business days confirm orally and in writing to the Lender the number of shares of the Borrower’s common stock then outstanding.

Section 2.10 Intentionally Omitted.

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Section 2.11 Increased Costs.

(a) Capital Adequacy. If, after the Restatement Effective Date, any Lender shall have determined that the adoption of any applicable law, rule, or regulation regarding capital adequacy or any change therein or in the interpretation or administration thereof by any governmental authority, central bank, or comparable agency charged with the interpretation or administration thereof, or any request or directive regarding capital adequacy (whether or not having the force of law) of any such governmental authority, central bank, or comparable agency, has or would have the effect of reducing the rate of return on the capital of financial institutions generally, including such Lender or any corporation controlling such Lender, as a consequence of such Lender’s obligations hereunder to a level below that which such Lender or such corporation could have achieved but for such adoption, change, request, or directive (taking into consideration its policies with respect to capital adequacy), then from time to time within three Business Days after written demand by such Lender, the Borrower shall pay to such Lender such additional amount or amounts as such Lender determines in good faith to be necessary to compensate such Lender for such reduction.

(b) Mitigation. Each Lender shall promptly notify the Borrower and the Administrative Agent of any event of which it has knowledge, occurring after the Restatement Effective Date, which will entitle such Lender to compensation pursuant to this Section 2.11 and will designate a different Applicable Lending Office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the reasonable judgment of such Lender, be otherwise disadvantageous to it. Any Lender claiming compensation under this Section 2.11 shall furnish to the Borrower and the Administrative Agent a statement setting forth the additional amount or amounts to be paid to it hereunder which shall be determined by such Lender in good faith and which shall be conclusive in the absence of manifest error. In determining such amount, such Lender may use any reasonable averaging and attribution methods.

Section 2.12 Payments and Computations.

(a) Payments. All payments of principal, interest, and other amounts to be made by the Borrower under this Agreement and other Credit Documents shall be made to the Administrative Agent in Dollars and in immediately available funds, without setoff, deduction, or counterclaim.

(b) Payment Procedures. The Borrower shall make each payment under this Agreement and under the Notes not later than 12:00 p.m. (New York time) on the day when due in Dollars to the Administrative Agent at the location referred to in the Notes (or such other location as the Administrative Agent shall designate in writing to the Borrower) in same day funds. The Administrative Agent will promptly thereafter, and in any event prior to the close of business on the day any timely payment is made, cause to be distributed like funds relating to the payment of principal, interest or fees ratably (other than amounts payable solely to the Administrative Agent or a specific Lender pursuant to Sections 2.11, 2.13, 2.14, and 9.2 but after taking into account payments effected pursuant to Section 9.1) in accordance with each Lender’s applicable pro rata

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share to the Lenders for the account of their respective Applicable Lending Offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon receipt of other amounts due solely to the Administrative Agent or a specific Lender, the Administrative Agent shall distribute such amounts to the appropriate party to be applied in accordance with the terms of this Agreement.

(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.

(d) Computations. All computations of all interest and fees shall be made by the Administrative Agent 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 Administrative Agent of an amount of interest or fees shall be conclusive and binding for all purposes, absent manifest error.

(e) Sharing of Payments, Etc. If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of setoff, or otherwise) on account of the Advances made by it in excess of its ratable share of payments on account of the Advances obtained by the Lenders, such Lender shall notify the other Lenders and forthwith purchase from the other Lenders such participations in the Advances made by it as shall be necessary to cause such purchasing Lender to share the excess payment ratably with the other Lenders; provided that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from the other Lenders shall be rescinded and each such Lender shall repay to the purchasing Lender the purchase price to the extent of such Lender’s ratable share, but without interest. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 2.12(e) may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of setoff) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation.

(f) In connection with the payment of any amounts hereunder by the delivery of shares of common stock, no fractional shares of common stock shall be issued, but the Borrower shall pay a cash adjustment in respect of any fractional interest in an amount equal to the fractional interest multiplied by the per share value of such common stock for purposes of such payment, rounded to the nearest whole cent.

Section 2.13 Taxes.

(a) No Deduction for Certain Taxes. Any and all payments by the Borrower under any of the Credit Documents to the Administrative Agent or a Lender shall be made, in accordance with Section 2.12, free and clear of and without deduction for any

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and all present or future taxes, levies, imposts, deductions, charges, or withholdings, and all liabilities with respect thereto, excluding, in the case of the Administrative Agent or a Lender, (i) taxes imposed on its income and franchise or similar taxes imposed on it by the jurisdiction (or any political subdivision thereof) under the laws of which (or under the laws of a political subdivision of which) (A) the Administrative Agent or such Lender is organized or in which its principal executive office is located or (B) in the case of each Lender, such Lender’s Applicable Lending Office is located and (ii) any taxes imposed by the United States of America by means of withholding at the source, if and to the extent such United States withholding taxes are in effect on the date a Lender becomes a Lender hereunder (all such nonexcluded taxes, levies, imposts, deductions, charges, withholdings, and liabilities being hereinafter referred to as “Taxes”). Except as provided in Section 2.13(f), if the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable to the Administrative Agent, or any Lender, (i) the sum payable shall be increased as may be necessary so that, after making all required deductions (including deductions applicable to additional sums payable under this Section 2.13), such Lender receives an amount equal to the sum it would have received had no such deductions been made; (ii) the Borrower shall make such deductions; and (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Authority or other authority in accordance with applicable law.

(b) Other Taxes. In addition, except as provided in Section 2.13(f), the Borrower agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges, or similar levies which arise from any payment made under any Credit Document or from the execution, delivery, or registration of, or otherwise with respect to, this Agreement, the Notes, or the other Credit Documents (hereinafter referred to as “Other Taxes”).

(c) Indemnification. EXCEPT AS PROVIDED IN SECTION 2.13(F), THE BORROWER INDEMNIFIES EACH LENDER AND THE ADMINISTRATIVE AGENT FOR THE FULL AMOUNT OF TAXES OR OTHER TAXES (INCLUDING, WITHOUT LIMITATION, ANY TAXES OR OTHER TAXES IMPOSED ON AMOUNTS PAYABLE UNDER THIS SECTION 2.13) PAID BY SUCH LENDER OR THE ADMINISTRATIVE AGENT (AS THE CASE MAY BE) AND ANY LIABILITY (INCLUDING INTEREST AND EXPENSES) ARISING THEREFROM OR WITH RESPECT THERETO, WHETHER OR NOT SUCH TAXES OR OTHER TAXES WERE CORRECTLY OR LEGALLY ASSERTED.

(d) Evidence of Tax Payments. As soon as practicable after any payment of Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of any receipt issued by such Governmental Authority evidencing such payment.

(e) Foreign Lender Withholding Exemption. Each Lender that is not incorporated under the laws of the United States of America or a state thereof and that is entitled to an exemption from United States withholding tax with respect to payments under this Agreement under applicable law or any treaty to which the United States is a party shall deliver to the Borrower (with a copy to the Administrative Agent), at the time

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or times prescribed by applicable law, such properly completed and executed documentation (including Internal Revenue Service Forms W-8BEN or W-8ECI) prescribed by applicable law or reasonably requested by the Borrower as will permit such payments to be made without withholding.

(f) Failure to Provide Forms. For any period with respect to which a Lender has failed to provide the Borrower or the Administrative Agent with the appropriate forms referred to in this Section 2.13 (unless such failure is due to a change in treaty, law or regulation occurring after the date on which such Lender becomes a Lender hereunder), such Lender shall not be entitled to indemnification or payment under the Section 2.13(a), (b), or (c) with respect to Taxes imposed by the United States; provided that if a Lender, that is otherwise exempt from or subject to a reduced rate of withholding tax, becomes subject to Taxes because of its failure to deliver a form required hereunder, the Borrower shall take such steps as such Lender shall reasonably request, and at the expenses of such Lender, to assist such Lender to recover such Taxes.

(g) Mitigation. Each Lender shall use reasonable efforts (consistent with its internal policies and legal and regulatory restrictions) to select a jurisdiction for its Applicable Lending Office or change the jurisdiction of its Applicable Lending Office, as the case may be, so as to avoid the imposition of any Taxes or Other Taxes or to eliminate or reduce the payment of any additional sums under this Section 2.13; provided, that no such selection or change of jurisdiction for its Applicable Lending Office shall be made if, in the reasonable judgment of such Lender, such selection or change would be disadvantageous to such Lender.

(h) Tax Credits and Refunds. If the Administrative Agent or a Lender has determined that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional sums pursuant to this Section 2.13, or if the Administrative Agent or a Lender has determined that it received a credit from any Governmental Authority to which the Administrative Agent or such Lender would not be entitled but for the payment by the Borrower of Taxes, Other Taxes or additional sums pursuant to this Section 2.13, at the Borrower’s request it shall pay over the amount of such refund or credit to the Borrower (but only to the extent of indemnity payments made, or additional sums paid, by the Borrower under this Section 2.13 with respect to the Taxes or Other Taxes giving rise to such refund or credit), net of all out-of-pocket expenses of the Administrative Agent or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund or credit); provided, that the Borrower, upon the request of the Administrative Agent or such Lender, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in the event and to the extent that the Administrative Agent or such Lender is required to repay such refund or credit to such Governmental Authority.

(i) Payment. If the Administrative Agent or any Lender becomes entitled to receive payment of Taxes, Other Taxes or additional sums pursuant to this Section 2.13, it shall give notice and demand thereof to the Borrower, and the Borrower (unless the

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Administrative Agent or Lender shall withdraw such notice and demand or the Borrower is not obligated to pay such amounts) shall pay such Taxes, Other Taxes or additional sums within 30 days after the Borrower’s receipt of such notice and demand.

Section 2.14 Replacement of Lenders. If the Borrower is required pursuant to Sections 2.11 or 2.13 to make any additional payment to any Lender (any such Lender, an “Affected Lender”), then, in the case of any Affected Lender, the Borrower may, upon notice to the Affected Lender and the Administrative Agent and at the Borrower’s sole cost and expense, require such Affected Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 9.7), all of its interests, rights and obligations under this Agreement and the related Credit Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that, in any event:

(a) as to assignments requested by the Borrower, the Borrower shall have paid to the Administrative Agent the assignment fee specified in Section 9.7;

(b) such Affected Lender shall have received payment of an amount equal to the outstanding principal of its Term Advances, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Credit Documents in its capacity as a Term Lender from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);

(c) in the case of any such assignment resulting from a claim for compensation under Section 2.13, such assignment will result in a reduction in such compensation or payments thereafter; and

(d) such assignment does not conflict with applicable Legal Requirements.

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower or the Administrative Agent to require such assignment and delegation cease to apply.

Section 2.15 Intentionally Omitted.

ARTICLE 3

CONDITIONS OF LENDING

Section 3.1 Conditions Precedent to Term Borrowing and Amendment and Restatement. The amendment and restatement of the Original Credit Agreement pursuant to the terms of this Agreement and the obligation of each Lender to make the Term Advances shall be subject to the conditions precedent that:

(a) Documentation. The Administrative Agent shall have received the following, duly executed by all the parties thereto, in form and substance reasonably satisfactory to the Administrative Agent and the Lenders:

(i) this Agreement and all attached Exhibits and Schedules and the Notes payable to the order of each applicable Lender;

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(ii) the Guaranty executed by each Guarantor;

(iii) the Security Agreement executed by the Borrower and each of its Subsidiaries, together with appropriate UCC-1 and UCC-3 financing statements, if any, necessary or desirable for filing with the appropriate authorities and any other documents, agreements, or instruments necessary to create, perfect or maintain an Acceptable Security Interest in the Collateral described in the Security Agreement;

(iv) amendments to each of the Mortgages, duly executed and delivered by the Borrower and each Subsidiary holding an interest in the underlying real property;

(v) the Registration Rights Agreement executed by the Borrower;

(vi) the Exchange Agreement executed by the Borrower, the other Credit Parties and the Investors party thereto;

(vii) the Intercreditor Agreement executed by the Note Collateral Agent, the Borrower and the other Credit Parties;

(viii) evidence that the Administrative Agent has an Acceptable Security Interest in the Collateral;

(ix) certificates of insurance naming the Administrative Agent as loss payee or additional insured, as applicable, and covering the Borrower’s or its Subsidiaries Properties with such insurance carriers, for such amounts and covering such risks that are acceptable to the Administrative Agent;

(x) a certificate from an authorized officer of the Borrower dated as of the Restatement Effective Date stating that as of such date (A) all representations and warranties of the Borrower set forth in this Agreement are true and correct in all material respects and (B) no Default has occurred and is continuing;

(xi) a secretary’s certificate from Borrower and each Guarantor certifying such Person’s (A) officers’ incumbency, (B) authorizing resolutions, (C) organizational documents, and (D) governmental approvals, if any, with respect to the Credit Documents to which such Person is a party;

(xii) certificates of good standing for the Borrower and each Guarantor in each state in which each such Person is organized or qualified to do business, which certificate shall be dated a date not earlier than 30 days prior to Restatement Effective Date;

(xiii) a legal opinions of (A) Doherty & Doherty LLP, (B) Andrews Kurth LLP, and (C) Crowe & Dunlevy, each as outside counsel to the Borrower and the Guarantors, in form and substance reasonably acceptable to the Administrative Agent;

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(xiv) evidence that all obligations outstanding under the Bilateral Agreement have been satisfied in full and all Liens in favor of Whitebox Advisors LLC, as Administrative Agent on behalf of the lenders party to the Bilateral Agreement, related to the Bilateral Collateral have been released, terminated and otherwise satisfied; and

(xv) such other documents, governmental certificates, agreements, and lien searches as the Administrative Agent or any Lender may reasonably request.

(b) Consents; Authorization; Conflicts. The Borrower shall have received any consents, licenses and approvals required in accordance with applicable law, or in accordance with any document, agreement, instrument or arrangement to which the Borrower, or any of its Subsidiaries, is a party, in connection with the execution, delivery, performance, validity and enforceability of this Agreement and the other Credit Documents. In addition, the Borrower and its Subsidiaries shall have all such material consents, licenses and approvals required in connection with the continued operation of the Borrower and its Subsidiaries, 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 by any competent authority which would restrain, prevent or otherwise impose adverse conditions on this Agreement and the actions contemplated hereby.

(c) Representations and Warranties. The representations and warranties contained in Article 4 and in each other Credit Document shall be true and correct in all material respects on and as of the Restatement Effective Date before and after giving effect to the Borrowings and to the application of the proceeds from such Borrowing, as though made on and as of such date.

(d) Payment of Fees; Initial Interest Payment. The Borrower shall have paid (i) the fees and expenses required to be paid as of the Restatement Effective Date by Sections 2.7 and 9.1 or any other provision of a Credit Document, including, without limitation, all legal fees and expenses of Faegre & Benson LLP; and (ii) the Initial Interest Payment to the Administrative Agent for the ratable account of each Lender, in cash.

(e) Payment of Interest on Previous Advances. The Borrower shall have paid in full all interest accrued on the Previous Advances through the Restatement Effective Date to the Administrative Agent for the ratable account of each Lender, in cash.

(f) Other Proceedings. 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 judgment of the Administrative Agent, could reasonably be expected to result in a Material Adverse Change.

(g) Other Reports. The Administrative Agent shall have received, in form and substance reasonably satisfactory to it, all environmental reports, and such other reports, audits or certifications as it may reasonably request, which reports the Administrative Agent acknowledges it has received as of the date of this Agreement.

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(h) Material Adverse Change. No event or circumstance that could reasonably be expected to result in a material adverse change in the business, condition (financial or otherwise), prospects, or results of operations of the Borrower and its Subsidiaries, taken as a whole, shall have occurred since December 31, 2009.

(i) No Default. No Default shall have occurred and be continuing.

(j) Solvency. The Administrative Agent shall have received a certificate in form and substance reasonably satisfactory to the Administrative Agent from a senior financial officer of the Borrower and each Guarantor of the Borrower certifying that the Borrower and each such Guarantor is Solvent (assuming with respect to each Guarantor, that the fraudulent conveyance savings language contained in the Guaranty applicable to such Guarantor will be given full effect).

(k) Exchange Agreement. The Closing (as defined in the Exchange Agreement) shall have occurred.

(l) Delivery of Financial Statements. The Administrative Agent shall have received true and correct copies of the audited consolidated Financial Statements of the Borrower and its Subsidiaries for the fiscal year ended December 31, 2009.

(m) USA Patriot Act. The Borrower has delivered to each Lender that is subject to the Patriot Act such information requested by such Lender in order to comply with the Patriot Act.

Section 3.2 Intentionally Omitted.

Section 3.3 Determinations Under Section 3.1. For purposes of determining compliance with the conditions specified in Section 3.1, each Lender shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to the Lenders unless an officer of the Administrative Agent responsible for the transactions contemplated by the Credit Documents shall have received written notice from such Lender prior to the Borrowings hereunder specifying its objection thereto and such Lender shall not have made available to the Administrative Agent such Lender’s ratable portion of such Borrowings.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants as follows:

Section 4.1 Organization. Each Credit Party is duly and validly organized and existing and in good standing under the laws of its jurisdiction of incorporation or formation and is authorized to do business and is in good standing in all jurisdictions in which such

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qualifications or authorizations are necessary except where the failure could not reasonably be expected to result in a Material Adverse Change. As of the Restatement Effective Date, each Credit Party’s type of organization and jurisdiction of incorporation or formation are set forth on Schedule 4.1.

Section 4.2 Authorization. The execution, delivery, and performance by each Credit Party of each Credit Document to which such Credit Party is a party and the consummation of the transactions contemplated thereby (a) are within such Credit Party’s powers, (b) have been duly authorized by all necessary corporate, limited liability company or partnership action, (c) do not contravene any articles or certificate of incorporation or bylaws, partnership or limited liability company agreement binding on or affecting such Credit Party, (d) do not contravene any law or any contractual restriction binding on or affecting such Credit Party, (e) do not result in or require the creation or imposition of any Lien prohibited by this Agreement, and (f) do not require any authorization or approval or other action by, or any notice or filing with, any Governmental Authority. At the time of each Advance, such Advance and the use of the proceeds of such Advance are within the Borrower’s corporate powers, have been duly authorized by all necessary corporate action, do not contravene (i) the Borrower’s articles or certificate (as applicable) of incorporation or bylaws or (ii) any law or any contractual restriction binding on or affecting the Borrower, will not result in or require the creation or imposition of any Lien prohibited by this Agreement, and do not require any authorization or approval or other action by, or any notice or filing with, any Governmental Authority.

Section 4.3 Enforceability. The Credit Documents have each been duly executed and delivered by each Credit Party that is a party thereto and each Credit Document constitutes the legal, valid, and binding obligation of each Credit Party that is a party thereto enforceable against such Credit Party in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws at the time in effect affecting the rights of creditors generally and by general principles of equity whether applied by a court of law or equity.

Section 4.4 Financial Condition.

(a) The Borrower has delivered to the Administrative Agent the unaudited Financial Statements for the Borrower and its Subsidiaries dated as of December 31, 2009 for the fiscal year ending thereon. The Financial Statements referred to in the preceding sentence have been prepared in accordance with GAAP and present fairly the consolidated financial condition of the aforementioned Persons as of the respective dates thereof. As of the date of the aforementioned Financial Statements, there were no material contingent obligations, liabilities for taxes, unusual forward or long-term commitments, or unrealized or anticipated losses of the applicable Persons, except as disclosed therein and adequate reserves for such items have been made in accordance with GAAP.

(b) Since December 31, 2009, no event or condition has occurred that could reasonably be expected to result in Material Adverse Change.

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Section 4.5 Ownership and Liens; Real Property. Each of the Borrower and its Subsidiaries (a) has good and marketable title to, or a valid and subsisting leasehold interest in, all real property, and good title to all personal Property, used in its business, and (b) none of the Property owned or leased by the Borrower or a Subsidiary of the Borrower is subject to any Lien except Permitted Liens. As of the Restatement Effective Date, the Borrower and its Subsidiaries do not own or lease any real property other than that listed on Schedule 4.5.

Section 4.6 True and Complete Disclosure. All written factual information (whether delivered before or after the date of this Agreement) prepared by or on behalf of the Borrower and its Subsidiaries and furnished to the Administrative Agent or the Lenders for purposes of or in connection with this Agreement, any other Credit Document or any transaction contemplated hereby or thereby does not contain any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. There is no fact known to any officer of the Borrower on the date of this Agreement that has not been disclosed to the Administrative Agent that could reasonably be expected to result in a Material Adverse Change. All projections, estimates, budgets, and pro forma financial information furnished by the Borrower or any of its Subsidiaries (or on behalf of the Borrower or any such Subsidiary), were prepared on the basis of assumptions, data, information, tests, or conditions (including current and reasonably foreseeable business conditions) believed to be reasonable at the time such projections, estimates, and pro forma financial information were furnished.

Section 4.7 Litigation. There are no actions, suits, or proceedings pending or, to Borrower’s knowledge, threatened against the Borrower or any Subsidiary of the Borrower, at law, in equity, or in admiralty, or by or before any Governmental Authority, which could reasonably be expected to result in a Material Adverse Change. Additionally, except as disclosed in writing to the Administrative Agent and the Lenders, there is no pending or, to the knowledge of the Borrower, threatened action or proceeding instituted against any of the Borrower or any of Subsidiary of the Borrower which seeks to adjudicate any of the Borrower or any of Subsidiary of the Borrower as bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or for any substantial part of its Property; provided that this Section 4.7 does not apply with respect to Environmental Claims.

Section 4.8 Compliance with Agreements.

(a) Neither the Borrower nor any of its Subsidiaries is a party to any indenture, loan or credit agreement or any lease or any other types of agreement or instrument or subject to any charter or corporate restriction or provision of applicable law or governmental regulation the performance of or compliance with which could reasonably be expected to cause a Material Adverse Change. Neither the Borrower nor any of its Subsidiaries is in default under or with respect to any contract, agreement, lease or any other types of agreement or instrument to which the Borrower or such Subsidiary is a party and which could reasonably be expected to cause a Material Adverse Change. To the best knowledge of the Borrower, neither the Borrower nor any of its Subsidiaries

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is in default under, or has received a notice of default under, any contract, agreement, lease or any other document or instrument to which the Borrower or its Subsidiaries is a party which is continuing and which, if not cured, could reasonably be expected to cause a Material Adverse Change.

(b) No Default has occurred and is continuing.

(c) The consummation of the transactions contemplated by this Agreement does not result in any acceleration, or permit the acceleration, of the maturity of any Debt prior to the stated maturity thereof, or permit any Person to exercise any put or redemption rights or otherwise exercise any rights under any securities issued by the Borrower.

Section 4.9 Pension Plans. (a) Except for matters that could not reasonably be expected to result in a Material Adverse Change, all Plans are in compliance in all material respects with all applicable provisions of ERISA, (b) no Termination Event has occurred with respect to any Plan that would result in an Event of Default under Section 7.1(i), and, except for matters that could not reasonably be expected to result in a Material Adverse Change, each Plan has complied with and been administered in all material respects in accordance with applicable provisions of ERISA and the Code, (c) no “accumulated funding deficiency” (as defined in Section 302 of ERISA) has occurred, and for plan years after December 31, 2009, no unpaid minimum required contribution exists, and there has been no excise tax imposed under Section 4971 of the Code, (d) to the knowledge of Borrower, no Reportable Event has occurred with respect to any Multiemployer Plan, and each Multiemployer Plan has complied with and been administered in accordance with applicable provisions of ERISA and the Code, (e) the present value of all benefits vested under each Plan (based on the assumptions used to fund such Plan) did not, as of the last annual valuation date applicable thereto, exceed the value of the assets of such Plan allocable to such vested benefits in an amount that could reasonably be expected to result in a Material Adverse Change, (f) neither the Borrower nor any member of the Controlled Group has had a complete or partial withdrawal from any Multiemployer Plan for which there is any unsatisfied withdrawal liability that could reasonably be expected to result in a Material Adverse Change or an Event of Default under Section 7.1(j), and (g) except for matters that could not reasonably result in a Material Adverse Change, as of the most recent valuation date applicable thereto, neither the Borrower nor any member of the Controlled Group would become subject to any liability under ERISA if the Borrower or any Subsidiary of the Borrower has received notice that any Multiemployer Plan is insolvent or in reorganization. Based upon GAAP existing as of the date of this Agreement and current factual circumstances, the Borrower has no reason to believe that the annual cost during the term of this Agreement to the Borrower or any Subsidiary of the Borrower for post-retirement benefits to be provided to the current and former employees of the Borrower or any Subsidiary of the Borrower under Plans that are welfare benefit plans (as defined in Section 3(1) of ERISA) could, in the aggregate, reasonably be expected to cause a Material Adverse Change.

Section 4.10 Environmental Condition.

(a) Permits, Etc. The Credit Parties (i) have obtained all material Environmental Permits necessary for the ownership and operation of their respective

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Properties and the conduct of their respective businesses; (ii) except as set forth in Schedule 4.10, have at all times been and are in material compliance with all terms and conditions of such Permits and with all other material requirements of applicable Environmental Laws; (iii) have not received written notice of any material violation or alleged material violation of any Environmental Law or Environmental Permit; and (iv) are not subject to any actual or contingent Environmental Claim which could reasonably be expected to cause a Material Adverse Change.

(b) Certain Liabilities. Except as set forth on Schedule 4.10, to the Borrower’s best knowledge, none of the present or previously owned or operated Property any of the Credit Parties or of any of their former Subsidiaries, wherever located, (i) has been placed on or proposed to be placed on the National Priorities List, the Comprehensive Environmental Response Compensation Liability Information System list, or their state or local analogs, or have been otherwise investigated, designated, listed, or identified as a potential site for removal, remediation, cleanup, closure, restoration, reclamation, or other response activity under any Environmental Laws; (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 any Obligor, wherever located, which could reasonably be expected to cause a Material Adverse Change; or (iii) has been the site of any Release of Hazardous Substances or Hazardous Wastes from present or past operations which has caused at the site or at any third-party site any condition that has resulted in or could reasonably be expected to result in the need for Response that could cause a Material Adverse Change.

(c) Certain Actions. Without limiting the foregoing, (i) all necessary material notices have been properly filed, and no further action is required under current applicable Environmental Law as to each Response or other restoration or remedial project undertaken by the Borrower, any of its Subsidiaries or any of the Borrower’s or such Subsidiary’s former Subsidiaries on any of their presently or formerly owned or operated Property and (ii) the present and, to the Borrower’s best knowledge, future liability, if any, of the Borrower or of any Borrower’s Subsidiary which could reasonably be expected to arise in connection with requirements under Environmental Laws will not result in a Material Adverse Change.

Section 4.11 Subsidiaries. As of the Restatement Effective Date, the Borrower has no Subsidiaries other than those listed on Schedule 4.11. Each Subsidiary of the Borrower (including any such Subsidiary formed or acquired subsequent to the Restatement Effective Date) has complied with the requirements of Section 5.6.

Section 4.12 Investment Company Act. Neither the Borrower nor any of its Subsidiaries is an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended. Neither the Borrower nor any of its Subsidiaries is subject to regulation under any Federal or state statute, regulation or other Legal Requirement which limits its ability to incur Debt.

Section 4.13 Exemption from Securities Registration. Assuming the accuracy of the representations of the Lenders in Section 9.18 of this Agreement on the date hereof, on the

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Restatement Effective Date and the date(s) of the issuance of any shares of the Borrower’s common stock pursuant to Sections 2.6(b) or 2.7(a) hereof, the offer and issuance of the Securities to Lenders hereunder (assuming no change in applicable law prior to the date the such Securities are issued), are and will be exempt from the registration and prospectus delivery requirements of the Securities Act and have been or will be registered or qualified (or are or will be exempt from registration and qualification) under the registration, permit or qualification requirements of all applicable state securities laws. Neither the Borrower, nor any of its Affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales of any security or solicited any offers to buy any security under circumstances that would require registration under the Securities Act of the issuance of the Securities to the Lenders. Other than material filed by the Borrower with the SEC, the Borrower has not distributed and will not distribute prior to the Restatement Effective Date any offering material in connection with the issuance of the Securities to the Lenders. The Borrower has not taken any action to sell, offer for sale or solicit offers to buy any securities of the Borrower that would bring the issuance of shares of the Securities to the Lenders within the provisions of Section 5 of the Securities Act, unless such offer, issuance or sale was or shall be within the exemptions of Section 4 of the Securities Act.

Section 4.14 Taxes. Proper and accurate (in all material respects), federal, state, local and foreign tax returns, reports and statements required to be filed (after giving effect to any extension granted in the time for filing) by the Borrower, each Subsidiary of the Borrower, and each member of the Affiliated Group as determined under Section 1504 of the Code (hereafter collectively called the “Tax Group”) have been filed with the appropriate Governmental Authorities, and all taxes (which are material in amount) and other impositions due and payable have been timely paid prior to the date on which any fine, penalty, interest, late charge or loss may be added thereto for non-payment thereof except where contested in good faith and by appropriate proceeding or to the extent existing on the date hereof and described on Schedule 4.14. Neither the Borrower nor any member of the Tax Group has given, or been requested to give, a waiver of the statute of limitations relating to the payment of any federal, state, local or foreign taxes or other impositions. None of the Property owned by the Borrower or any other member of the Tax Group is Property which the Borrower or any member of the Tax Group is required to treat as being owned by any other Person pursuant to the provisions of Section 168(f)(8) of the Code. Proper and accurate amounts have been withheld by the Borrower and all other members of the Tax Group from their employees for all periods to comply in all material respects with the tax, social security and unemployment withholding provisions of applicable federal, state, local and foreign law.

Section 4.15 Permits, Licenses, etc. Each of the Borrower and its Subsidiaries possesses all permits, licenses, patents, patent rights or licenses, trademarks, trademark rights, trade names rights, and copyrights which are material to the conduct of its business. Each of the Borrower and its Subsidiaries manages and operates its business in accordance with all applicable Legal Requirements except where the failure to so manage or operate could not reasonably be expected to result in a Material Adverse Change; provided that this Section 4.15 does not apply with respect to Environmental Permits.

Section 4.16 Use of Proceeds. The proceeds of the Advances will be used by the Borrower for the purposes described in Section 6.6. The Borrower is not engaged in the

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business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U). No proceeds of any Advance will be used to purchase or carry any margin stock in violation of Regulation T, U or X.

Section 4.17 Condition of Property; Casualties. The material Properties used or to be used in the continuing operations of the Borrower and each of its Subsidiaries, are in good working order and condition, normal wear and tear excepted. Neither the business nor the material Properties of the Borrower and each of its Subsidiaries 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, which effect could reasonably be expected to cause a Material Adverse Change.

Section 4.18 Insurance. Each of the Borrower and its Subsidiaries carry insurance (which may be carried by the Borrower on a consolidated basis) with reputable insurers in respect of such of their respective Properties, in such amounts and against such risks as is customarily maintained by other Persons of similar size engaged in similar businesses or, self-insure to the extent that is customary for Persons of similar size engaged in similar businesses.

Section 4.19 Securities Laws. Based in part upon the representations and warranties of the Lenders contained in Section 9.18, no consent, authorization, approval, permit or order of or filing with any Governmental Authority is required under current laws and regulations in connection with the offer, issuance, sale or delivery of the common stock other than the qualification thereof, if required, under applicable state securities laws, which qualification has been or will be effected as a condition of these sales under the transactions contemplated herein. The offer, issuance, sale and delivery of the common stock will not under current laws and regulations require compliance with the prospectus delivery or registration requirements of the Securities Act.

Section 4.20 Capital Stock. The authorized capital stock of the Borrower consists of (i) 80,000,000 shares of common stock, par value $0.0001, of which (A) 25,056,627 shares were issued and outstanding as of the date of this Agreement, and (B) 12,397,137 shares were reserved for issuance upon the exercise or conversion, as the case may be, of outstanding options, warrants or other convertible securities as of the date of this Agreement; and (ii) 100,000 shares of preferred stock, of which 16,000 shares have been designated as Series A Cumulative Convertible Preferred Stock (the “Series A Preferred Stock”), of which 13,220 shares of Series A Preferred Stock were issued and outstanding as of the date of this Agreement, and no shares were reserved for issuance upon the exercise or conversion, as the case may be, of outstanding options, warrants or other convertible securities. All issued and outstanding shares of the Borrower’s common stock and Series A Preferred Stock have been duly authorized and validly issued, are fully paid and nonassessable, have been issued and sold in compliance with the registration requirements (including any exceptions therefrom) of federal and state securities laws or the applicable statutes of limitation have expired, and were not issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. Except as set forth herein or the Borrower’s documents filed with the SEC, there are no (i) outstanding rights

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(including, without limitation, preemptive rights), warrants or options to acquire, or instruments convertible into or exchangeable for, any unissued shares of capital stock or other equity interest in the Borrower, or any contract, commitment, agreement, understanding or arrangement of any kind to which the Borrower or any subsidiary is a party and relating to the issuance or sale of any capital stock or convertible or exchangeable security of the Borrower or any subsidiary, other than 1,594,379 options granted to directors and employees of the Borrower pursuant to its 2003 Long Term Incentive Plan, 2005 Long Term Incentive Plan or 2007 Long Term Incentive Plan; or (ii) obligations of the Borrower to purchase redeem or otherwise acquire any of its outstanding capital stock or any interest therein or to pay any dividend or make any other distribution in respect thereof. Except as disclosed in the Borrower’s documents filed with the SEC, there are no anti-dilution or price adjustment provisions, co-sale rights, registration rights, rights of first refusal or other similar rights contained in the terms governing any outstanding security of the Borrower that will be triggered by the issuance of the Securities.

Section 4.21 Valid Issuance of Securities. The Securities are duly authorized and, when issued and delivered in accordance with the terms hereof, will be duly and validly authorized and issued, fully paid and nonassessable, free from all taxes, liens, claims, encumbrances and charges with respect to the issue thereof; provided, however, that the Securities may be subject to restrictions on transfer under state and/or federal securities laws or as otherwise set forth herein. The issuance and delivery of the Borrower’s common stock issuable pursuant to Sections 2.6(b) and 2.7(a) hereof will not be subject to preemptive rights of stockholders of the Borrower.

Section 4.22 Form S-3 Eligibility; Registration Rights. The Borrower is eligible to register its common stock issuable pursuant to Sections 2.6(b) and 2.7(a) hereof for resale under the Securities Act by the Lenders using a Registration Statement on Form S-3. Other than as disclosed in the Borrower’s documents filed with the SEC, under the Registration Rights Agreement and the Registration Rights Agreement related to the 2010 Convertible Senior Notes, the Borrower has not agreed to register any of its authorized or outstanding securities under the Securities Act.

Section 4.23 Exchange Act Compliance. The Borrower’s common stock is registered pursuant to Section 12(b) of the Exchange Act and is listed on the New York Stock Exchange (the “Principal Market”), and, except as disclosed in the Borrower’s documents filed with the SEC, the Borrower has taken no action designed to, or likely to have the effect of, terminating the registration of the Borrower’s common stock under the Exchange Act or delisting the Borrower’s common stock from the Principal Market. Except as disclosed in the Borrower’s documents filed with the SEC, the Borrower is in compliance with all of the presently applicable requirements for continued listing of the Borrower’s common stock on the Principal Market. Except for the Shareholder Approval, the issuance of the Securities does not require stockholder approval including, without limitation, pursuant to the rules and regulations of the Principal Market.

Section 4.24 No General Solicitation. Neither the Borrower, nor any of its Affiliates, nor any Guarantor, nor any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D promulgated under the Securities Act) in connection with the issuance of the Securities.

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Section 4.25 Stockholder Approval. Stockholder Approval (as defined in the Certificate of Designations) has been obtained pursuant to the terms and conditions of the Certificate of Designations.

ARTICLE 5

AFFIRMATIVE COVENANTS

So long as any Obligation shall remain unpaid, the Borrower agrees to comply with the following covenants.

Section 5.1 Organization. The Borrower shall, and shall cause each of its Subsidiaries to, preserve and maintain its partnership, limited liability company or corporate existence, rights, franchises and privileges in the jurisdiction of its organization, and qualify and remain qualified as a foreign business entity in each jurisdiction in which qualification is necessary or desirable in view of its business and operations or the ownership of its Properties and where failure to qualify could reasonably be expected to cause a Material Adverse Change; provided, however, that nothing herein contained shall prevent any transaction permitted by Section 6.7 or Section 6.8.

Section 5.2 Reporting.

(a) Annual Financial Reports of Borrower. The Borrower shall provide, or shall cause to be provided, to the Administrative Agent, as soon as available, but in any event within 90 days after the end of each fiscal year, commencing with fiscal year ended December 31, 2009, the unqualified audited annual Financial Statements for the Borrower and its consolidated Subsidiaries setting forth in comparative form the audited consolidated figures as of the end of and for the previous fiscal year, all prepared in conformity with GAAP consistently applied and all as audited (other than the consolidating statements) by certified public accountants reasonably acceptable to the Administrative Agent and including any management letters delivered by such accountants to the Borrower in connection with such audit, and (ii) a Compliance Certificate executed by an authorized senior financial Responsible Officer of the Borrower.

(b) Quarterly Financials. The Borrower shall provide, or shall cause to be provided, to the Administrative Agent, as soon as available but in any event not later than 45 days after the end of each fiscal quarter of each fiscal year of the Borrower and its consolidated Subsidiaries, (i) the unaudited Financial Statements for the Borrower and its consolidated Subsidiaries for the period commencing at the end of the previous year and ending with the end of such fiscal quarter and setting forth in comparative form the consolidated figures (including a comparison of the balance sheet and the related consolidated and consolidating statements of income, retained earnings, and cash flow) for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail and duly certified with respect to such consolidated statements (subject to the absence of footnotes and to year-end audit adjustments) by an authorized senior financial Responsible Officer of the Borrower as

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having been prepared in accordance with GAAP and as fairly presenting, in all material respects, the financial condition, results of operations, and cash flows of the Borrower and its Subsidiaries in accordance with GAAP; and (ii) a Compliance Certificate executed by an authorized senior financial Responsible Officer of the Borrower.

(c) With a view to making available to the Lenders the benefits of certain rules and regulations of the SEC which may permit the sale of the Securities to the public without registration, the Borrower agrees to use its best efforts to file with the SEC in a timely manner all reports and other documents required of the Borrower under the Exchange Act. The Borrower will otherwise take such further action as a Lender may reasonably request, all to the extent required from time to time to enable such Lender to sell the Securities without registration under the Securities Act or any successor rule or regulation adopted by the SEC.

(d) Intentionally Omitted.

(e) Intentionally Omitted.

(f) Annual Budget. At the request of the Administrative Agent, the Borrower shall provide to the Administrative Agent an annual operating and capital budget for the current fiscal year.

(g) Defaults. The Borrower shall provide to the Administrative Agent promptly, but in any event within three Business Days after the occurrence thereof, a notice of each Default or Event of Default known to the Borrower or to any of its Subsidiaries, together with a statement of an officer of the Borrower setting forth the details of such Default or Event of Default and the actions which the Borrower has taken and proposes to take with respect thereto.

(h) Other Creditors. The Borrower shall provide to the Administrative Agent promptly after the giving or receipt thereof, copies of any default notices given or received by the Borrower or by any of its Subsidiaries pursuant to the terms of any indenture, loan agreement, credit agreement, or similar agreement.

(i) Litigation. The Borrower shall provide to the Administrative Agent promptly after the commencement thereof, notice of all actions, suits, and proceedings before any Governmental Authority, affecting the Borrower or any of its Subsidiaries that could reasonably be expected to result in a Material Adverse Change.

(j) Environmental Notices. Promptly upon, and in any event no later than 15 days after, the receipt thereof, or the acquisition of knowledge thereof, by the Borrower or any Subsidiary of the Borrower, the Borrower shall provide the Administrative Agent with a copy of any form of request, claim, complaint, order, notice, summons or citation received from any Governmental Authority or any other Person, (i) concerning violations or alleged violations of Environmental Laws, which seeks to impose liability therefore in excess of $500,000, (ii) concerning any action or omission on the part of any of the Credit Parties or any of their former Subsidiaries in connection with Hazardous Waste or Hazardous Substances which could reasonably result in the imposition of liability in

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excess of $500,000 or requiring that action be taken to respond to or clean up a Release of Hazardous Substances or Hazardous Waste into the environment and such action or clean-up could reasonably be expected to exceed $500,000, including without limitation any information request related to, or notice of, potential responsibility under CERCLA, or (iii) concerning the filing of a Lien upon, against or in connection with the Borrower, any Subsidiary of the Borrower, or any of their respective former Subsidiaries, or any of their leased or owned Property, wherever located.

(k) Material Changes. The Borrower shall provide to the Administrative Agent prompt written notice of any condition or event of which the Borrower or any of its Subsidiaries has knowledge, which condition or event has resulted or may reasonably be expected to result in (i) a Material Adverse Change or (ii) a breach of or noncompliance with any material term, condition, or covenant of any material contract to which the Borrower or any of its Subsidiaries is a party or by which their Properties may be bound which breach or noncompliance could reasonably be expected to result in a Material Adverse Change.

(l) Termination Events. As soon as possible and in any event (i) within 30 days after the Borrower or any member of the Controlled Group knows or has reason to know that any Termination Event described in clause (a) of the definition of Termination Event with respect to any Plan has occurred, and (ii) within 10 days after the Borrower or any member of the Controlled Group knows or has reason to know that any other Termination Event with respect to any Plan has occurred, the Borrower shall provide to the Administrative Agent a statement of an authorized officer of the Borrower describing such Termination Event and the action, if any, which the Borrower or any Affiliate of the Borrower proposes to take with respect thereto;

(m) Termination of Plans. Promptly and in any event within five Business Days after receipt thereof by the Borrower or any member of the Controlled Group from the PBGC, the Borrower shall provide to the Administrative Agent copies of each notice received by the Borrower or any such member of the Controlled Group of the PBGC’s intention to terminate any Plan or to have a trustee appointed to administer any Plan;

(n) Other ERISA Notices. Promptly and in any event within five Business Days after receipt thereof by the Borrower or any member of the Controlled Group from a Multiemployer Plan sponsor, the Borrower shall provide to the Administrative Agent a copy of each notice received by the Borrower or any member of the Controlled Group concerning the imposition or amount of withdrawal liability imposed on the Borrower or any member of the Controlled Group pursuant to Section 4202 of ERISA;

(o) Other Governmental Notices. Promptly and in any event within five Business Days after receipt thereof by the Borrower or any Subsidiary of the Borrower, the Borrower shall provide to the Administrative Agent a copy of any notice, summons, citation, or proceeding seeking to modify in any material respect, revoke, or suspend any material contract, license, permit, or agreement with any Governmental Authority;

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(p) Disputes; etc. The Borrower shall provide to the Administrative Agent prompt written notice of (i) any claims, legal or arbitration proceedings, proceedings before any Governmental Authority, or disputes, or to the knowledge of the Borrower, any such actions threatened, or affecting the Borrower or any Subsidiary of the Borrower, which, if adversely determined, could reasonably be expected to cause a Material Adverse Change, or any material labor controversy of which the Borrower or any of its Subsidiaries has knowledge resulting in or reasonably considered to be likely to result in a strike against the Borrower or any Subsidiary of the Borrower, and (ii) any claim, judgment, Lien or other encumbrance (other than a Permitted Lien) affecting any Property of the Borrower or any Subsidiary of the Borrower, if the value of the claim, judgment, Lien, or other encumbrance affecting such Property shall exceed $500,000;

(q) Securities Law Filings and other Public Information. Promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of the Borrower, and copies of all annual, regular, periodic and special reports and registration statements which the Borrower may file or be required to file with the SEC under Section 13 or 15(d) of the Exchange Act or any other securities Governmental Authority, and not otherwise required to be delivered to the Administrative Agent pursuant hereto; and

(r) Other Information. Subject to the confidentiality provisions of Section 9.8, the Borrower shall provide to the Administrative Agent such other information respecting the business, operations, or Property of the Borrower or any Subsidiary of the Borrower, financial or otherwise, as any Lender through the Administrative Agent may reasonably request.

Section 5.3 Insurance.

(a) The Borrower shall, and shall cause each of its Subsidiaries to, with reputable insurers in respect of such of their respective Properties, carry and maintain insurance in such amounts and against such risks as is customarily maintained by other Persons of similar size engaged in similar businesses or self-insure to the extent that is customary for Persons of similar size engaged in similar businesses; provided that, the amounts of such insurance and the risks covered by such insurance shall not be less than the amounts and risks that are approved by the Administrative Agent on the Restatement Effective Date.

(b) Copies of all policies of insurance or certificates thereof covering the property or business of the Credit Parties, and endorsements and renewals thereof, certified as true and correct copies of such documents by a Responsible Officer of the Borrower shall be delivered by Borrower to and retained by the Administrative Agent. All policies of property insurance with respect to the Collateral either shall have attached thereto a lender’s loss payable endorsement in favor of the Administrative Agent for its benefit and the ratable benefit of the Lenders or name the Administrative Agent as loss payee for its benefit and the ratable benefit of the Secured Parties, in either case, in form reasonably satisfactory to the Administrative Agent, and all policies of liability insurance shall name the Administrative Agent for its benefit and the ratable benefit of the Secured

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Parties as an additional insured. All policies or certificates of insurance shall set forth the coverage, the limits of liability, the name of the carrier, the policy number, and the period of coverage. All such policies shall contain a provision that notwithstanding any contrary agreements between the Borrower, its Subsidiaries, and the applicable insurance company, such policies will not be canceled or allowed to lapse without renewal without at least 30 days’ prior written notice to the Administrative Agent. In the event that, notwithstanding the “lender’s loss payable endorsement” requirement of this Section 5.3, the proceeds of any insurance policy described above are paid to the Borrower or a Guarantor, the Borrower shall deliver, or cause to be delivered, such proceeds to the Administrative Agent immediately upon receipt.

(c) If at any time the area in which any real property constituting Collateral is located is designated a “flood hazard area” in any Flood Insurance Rate Map published by the Federal Emergency Management Agency (or any successor agency), the Borrower shall, and shall cause each of its Subsidiaries to, obtain flood insurance in such total amount as required by Regulation H of the Federal Reserve Board, as from time to time in effect and all official rulings and interpretations thereunder or thereof, and otherwise comply with the National Flood Insurance Program as set forth in the Flood Disaster Protection Act of 1973, as it may be amended from time to time.

(d) Any proceeds of insurance referred to in this Section 5.3 which are paid to the Administrative Agent shall (i) if no Event of Default has occurred and is continuing, be returned to the Borrower and shall be reinvested in Collateral or applied to repair or replace the damaged Property, and (ii) if an Event of Default has occurred and is continuing, be immediately applied to the Obligations in accordance with Section 7.7.

Section 5.4 Compliance with Laws. The Borrower shall, and shall cause each of its Subsidiaries to, comply with all federal, state, and local laws and regulations (including Environmental Laws) which are applicable to the operations and Property of the Borrower or any of the Credit Parties and maintain all related permits necessary for the ownership and operation of the Borrower’s and each Credit Parties’ Property and business, except in any case where the failure to so comply could not reasonably be expected to result in a Material Adverse Change, provided that this Section 5.4 shall not prevent the Borrower or any of its Subsidiaries from, in good faith and with reasonable diligence, contesting the validity or application of any such laws or regulations by appropriate legal proceedings for which adequate reserves have been established.

Section 5.5 Taxes. The Borrower shall, and shall cause each of its Subsidiaries to pay and discharge all taxes, assessments, and other charges and claims related thereto imposed on the Borrower or any of its Subsidiaries prior to the date on which penalties attach; provided that nothing in this Section 5.5 shall require the Borrower or any of its Subsidiaries to pay any tax, assessment, charge, or claims which is being contested in good faith and for which adequate reserves have been established in compliance with GAAP.

Section 5.6 New Subsidiaries. Within 10 days after the creation of a new Subsidiary or the purchase by the Borrower or any of its Subsidiaries of the Equity Interests of any Person, which purchase results in such Person becoming a Subsidiary of the Borrower, the

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Borrower shall cause (a) such Subsidiary to execute and deliver to the Administrative Agent (i) a joinder to the Guaranty, (ii) a joinder to the Security Agreement, (iii) if such Subsidiary owns any real property, a Mortgage covering such real properties, and (iv) such evidence of corporate authority to enter into such Guaranty, Security Agreement, and Mortgage as the Administrative Agent may reasonably request and (b) the equity holder of such Subsidiary to execute a pledge agreement pledging 100% of the Equity Interest owned by such equity holder of such Subsidiary and such evidence of corporate, limited liability company or partnership authority to enter into such pledge agreement as the Administrative Agent may reasonably request, along with share certificates pledged thereby and appropriately executed stock powers in blank, if applicable; provided that, no new Foreign Subsidiary shall be required to enter into a Guaranty, Security Agreement or pledge agreement and the Borrower or any Subsidiary that is an equity holder of a Foreign Subsidiary shall only be required to pledge 66 2/3% of the Equity Interest of such Foreign Subsidiary.

Section 5.7 Security. The Borrower agrees that at all times before the termination of this Agreement, payment in full of the Obligations (other than reimbursement and indemnity obligations which survive but are not due and payable) and termination in full of the Commitments, the Administrative Agent shall have an Acceptable Security Interest in the Collateral to secure the performance and payment of the Obligations. The Borrower shall, and shall cause each of its Subsidiaries to, grant to the Administrative Agent a Lien in any Property of the Borrower or any Subsidiary now owned or hereafter acquired promptly and to take such actions as may be required under the Security Documents to ensure that the Administrative Agent has an Acceptable Security Interest in such Property. Notwithstanding the generality of the foregoing, from and after the Restatement Effective Date, if (a) the Borrower or any Guarantor acquires any fee interest in real property having a book value in excess of $100,000 or (b) at the time any Person becomes a Guarantor, such Person owns or holds any such fee interest in real property of such value, such Credit Party shall deliver to the Administrative Agent, at its request after such acquisition of such property or such Person becomes a Guarantor, as the case may be, the following:

(i) A fully executed and notarized Mortgage duly recorded in all appropriate places in all applicable jurisdictions, encumbering the interest of such Credit Party in such property; and

(ii) If requested by the Administrative Agent, a title report issued by a title company acceptable to the Administrative Agent with respect thereto, dated not more than 30 days prior to the date such Mortgage is to be recorded and satisfactory in form and substance to the Administrative Agent, together with copies of any documents listed as exceptions to such title and, to the extent the Borrower or any Subsidiary obtains an owner’s title policy on said property, a mortgagee’s policy in an equal amount insuring the Lien in subsection (i) above.

Section 5.8 Accounts. Within 30 days after the Restatement Effective Date, the Borrower shall, and shall cause each of its Subsidiaries to, open and maintain their principal operating accounts and other deposit accounts with depositary banks that are subject to Account Control Agreements.

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Section 5.9 Records; Inspection. Borrower shall, and shall cause each of its Subsidiaries to, maintain proper, complete and consistent books of record with respect to such Person’s operations, affairs, and financial condition. From time to time upon reasonable prior notice, the Borrower shall permit the Administrative Agent and any Lender, and their respective employees, accountants, attorneys or agents, and shall cause each of its Subsidiaries to permit the Administrative Agent and any Lender, and their respective employees, accountants, attorneys or agents, at such reasonable times and intervals and to a reasonable extent and under the reasonable guidance of officers of or employees delegated by officers of the Borrower or such Subsidiary of the Borrower, to, subject to any applicable confidentiality considerations, examine and copy the books and records of the Borrower or such Subsidiary of the Borrower, to visit and inspect the Property of the Borrower or such Subsidiary of the Borrower, and to discuss the business operations and Property of the Borrower or such Subsidiary of the Borrower with the officers and directors thereof.

Section 5.10 Maintenance of Property. The Borrower shall, and shall cause each of its Subsidiaries to, maintain their owned, leased, or operated Property in good condition and repair, normal wear and tear excepted; and shall abstain from, and cause each of its Subsidiaries to abstain from, knowingly or willfully permitting the commission of waste or other injury, destruction, or loss of natural resources, or the occurrence of pollution, contamination, or any other condition in, on or about the owned or operated Property involving the Environment that could reasonably be expected to result in Response activities and that could reasonably be expected to cause a Material Adverse Change.

Section 5.11 Accounting Changes. The Borrower shall not make a change in the method of accounting from those employed in the preparation of the Financial Statements referred to in Section 4.4 or change the fiscal year end of the Borrower unless required to conform to GAAP or approved in writing by the Administrative Agent.

Section 5.12 Collateral Examinations. The Borrower shall, and shall cause each of its Subsidiaries to, permit the Administrative and any Lender, and their respective employees, accountants, attorneys or agents, to examine and inspect any of the Properties and the Collateral of the Borrower and its Subsidiaries at any time during ordinary business hours upon reasonable notice from the Administrative Agent or such Lender, as applicable. Each of the Administrative Agent and the Lenders may also, from time to time, obtain one or more appraisals of all or any portion of the Properties and the Collateral of the Borrower and its Subsidiaries by an appraiser acceptable to the Administrative Agent or such Lender, as applicable, in its sole discretion. All such examinations and appraisals shall be performed at the Borrower’s sole cost and expense.

Section 5.13 Intentionally Omitted.

Section 5.14 Executive Compensation Plans. Promptly following the Borrower’s compensation committee’s tentative determination of proposed compensation of the Named Executives for 2010 and for each subsequent year, the Borrower shall provide the Lenders with the Executive Compensation Information relating to the proposed compensation of the Named Executives. The Required Lenders shall have the right to disapprove of the proposed compensation of the Named Executives by delivering a notice to the Borrower within 15 days of receiving the Executive Compensation Information. While disapproval by the Required Lenders

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will be at their discretion, the Required Lenders will not be unreasonable in exercising their right to disapprove of the proposed compensation of the Named Executives. The Borrower will not submit to its compensation committee for final approval or pay any compensation of the Named Executives that has been disapproved of by the Required Lenders and the Borrower will provide the Required Lenders 15 days to disapprove of any revised proposed compensation of the Named Executives. In fulfilling its obligations under this section, the Borrower will provide the Executive Compensation Information and will not provide any material non-public information to the Lenders. In addition, the Borrower will not submit to its compensation committee for approval or pay any discretionary compensation of the Named Executives for past periods without the approval of the Required Lenders, which will not be unreasonably withheld.

Section 5.15 Listing. So long as a Lender owns any of the Securities, the Borrower will use its reasonable best efforts to maintain the automated quotation of its common stock, including shares issuable pursuant to Sections 2.6(b) and 2.7(a) hereof, on the Principal Market or an alternative listing on the NASDAQ Stock Market or, if such quotation on the Principal Market or the NASDAQ Stock Market is not possible, qualification for trading on the OTCBB, and will comply in all material respects with the Borrower’s reporting, filing and other obligations under the bylaws or rules of the Financial Industry Regulatory Authority, Inc. and such exchange or listing, if applicable.

Section 5.16 Form D and State Securities Filings. If applicable, the Borrower will file with the SEC a Notice of Sale of Securities on Form D with respect to the Securities, as required under Regulation D under the Securities Act, no later than 15 days after the Restatement Effective Date. The Borrower will promptly and timely file all documents and pay all filing fees required by any states’ securities laws in connection with the issuance of Securities.

Section 5.17 Shareholder Vote With Respect to Issuance of Additional Stock.

(a) The Borrower shall, in accordance with any applicable federal, state, local or foreign order, writ, injunction, judgment, settlement, award, decree, statute, law, rule or regulation and the Borrower’s Amended and Restated Certificate of Incorporation and By-laws, take all action necessary to convene a meeting of its stockholders to consider and vote upon (i) the approval of the payment by the Borrower of principal on the Notes in shares of Borrower’s common stock pursuant to Section 2.6(b) (the “Principal Payment Approval”); and (ii) the approval of the payment by the Borrower of the additional Commitment Fee in shares of Borrower’s common stock after the Restatement Effective Date pursuant to Section 2.7(a) (the “Commitment Fee Approval” and, together with the Principal Payment Approval, the “Shareholder Proposals”). Such meeting shall be convened as soon as practicable following the Restatement Effective Date, but in any event not later than 90 days following the Restatement Effective Date. Subject to fiduciary duties under applicable law, the board of directors of the Borrower shall, in connection with such meeting, recommend approval of the Shareholder Proposals and shall take all other lawful action to solicit the approval of the Shareholder Proposals. The Borrower shall retain a proxy solicitor to assist in obtaining the approval of the Shareholder Proposals, and shall use its commercially reasonable efforts to retain Innisfree M&A Incorporated as such proxy solicitor.

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(b) If the Shareholder Proposals are not approved by the stockholders at the meeting contemplated by Section 5.17(a), upon written notice from the Lenders holding a majority of the Notes, the Borrower shall be obligated to convene another meeting of its stockholders on the terms set forth in Section 5.17(a) (except that such meeting shall take place no later than 120 days after the meeting contemplated by Section 5.17(a)), and the board of directors of the Borrower shall again be obligated to take the actions set forth in Section 5.17(a) with respect to such meeting. If the approval of the Borrower’s stockholders is not obtained at this second meeting, then the Borrower shall be obligated to include the Shareholder Proposals as proposals to be voted upon at no more than two subsequent meetings of its stockholders within 120 days after the preceding meeting, and its Board of Directors shall remain obligated to take the actions set forth in Section 5.17(a) with respect to each such meeting.

ARTICLE 6

NEGATIVE COVENANTS

So long as any Obligation shall remain unpaid, the Borrower agrees to comply with the following covenants.

Section 6.1 Debt. The Borrower shall not, nor shall it permit any of its Subsidiaries to, create, assume, incur, suffer to exist, or in any manner become liable, directly, indirectly, or contingently in respect of, any Debt other than the following (collectively, the “Permitted Debt”):

(a) the Obligations;

(b) intercompany Debt incurred in the ordinary course of business owed by any Credit Party to any other Credit Party; provided that, if applicable, such Debt as an investment is also permitted in Section 6.3;

(c) [Reserved];

(d) obligations of the Borrower owing in respect of the 20,000 shares of Series A Preferred Stock issued on or about August 12, 2009 in an aggregate amount not to exceed $20,000,000;

(e) purchase money indebtedness or Capital Leases in an aggregate principal amount not to exceed $1,000,000 at any time; provided neither the Borrower nor any Subsidiary of the Borrower may enter into additional indebtedness of the type described in this clause (e) if a Default is continuing or entering into the additional indebtedness could reasonably be expected to cause a Default;

(f) Debt existing on the Restatement Effective Date and set forth in Schedule 6.1; provided that, (i) the Borrower shall not amend the maturity date thereof to a date that is at or earlier than the scheduled Maturity Date, (ii) the Borrower shall not make any prepayments thereof other than as expressly provided by the terms thereof existing on the date hereof, and (ii) the amount of such Debt may not be increased other than as a result of fees and expenses reasonably incurred in connection with any refinancing, refunding, renewal, or extension thereof;

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(g) Debt represented by the 2008 Convertible Senior Notes pursuant to the 2008 Indenture and the subsidiary guarantees thereof pursuant to the 2008 Indenture; provided that (i) all of such Debt shall have been issued prior to the Restatement Effective Date, and (ii) such Debt shall not have (A) any affirmative or negative covenant (including financial covenants) that is more restrictive than those set forth in this Agreement, provided that the inclusion of any covenant that is customary with respect to such type of Debt and that is not found in this Agreement shall not be deemed to be more restrictive for purposes of this clause (g), (B) any restriction on the ability of the Borrower or any of its Subsidiaries to enter into or amend, modify, restate or otherwise supplement this Agreement or the other Credit Documents, (C) any collateral or other security for such Indebtedness, (D) any restrictions on the ability of any Subsidiary of the Borrower to guarantee the Obligations, (E) any restrictions on the ability of any Subsidiary or the Borrower to pledge assets as collateral security for the Obligations or (F) a scheduled maturity date that is earlier than June 30, 2011;

(h) Debt represented by the 2010 Convertible Senior Notes pursuant to the 2010 Indenture and the subsidiary guarantees thereof pursuant to the 2010 Indenture; provided that (i) all of such Debt shall have been issued in exchange for 2008 Convertible Senior Notes held by the Lenders, (ii) such Debt shall not have (A) any affirmative or negative covenant (including financial covenants) that is more restrictive than those set forth in this Agreement, provided that the inclusion of any covenant that is customary with respect to such type of Debt and that is not found in this Agreement shall not be deemed to be more restrictive for purposes of this clause (h), (B) any restriction on the ability of the Borrower or any of its Subsidiaries to enter into or amend, modify, restate or otherwise supplement this Agreement or the other Credit Documents, (C) any restrictions on the ability of any Subsidiary of the Borrower to guarantee the Obligations, (D) any restrictions on the ability of any Subsidiary or the Borrower to pledge assets as collateral security for the Obligations or (E) a scheduled maturity date that is earlier than November 1, 2012, (iii) any liens or other security for such Debt shall be subordinate to the liens securing the Obligations, and (iv) the trustee under the 2010 Indenture shall have entered into an Intercreditor Agreement satisfactory to the Administrative Agent and the Required Lenders;

(i) (A) unsecured Debt of Persons which become Subsidiaries of the Borrower after the Restatement Effective Date pursuant to an Acquisition in accordance with Section 6.4 and (B) unsecured seller Debt incurred pursuant to an Acquisition of assets in accordance with Section 6.4; provided, however, that in no event shall the aggregate amount of the unsecured Debt incurred under this clause (i) during the term of this Agreement exceed $3,000,000, less any cash consideration paid by the Borrower or any Subsidiary in connection with a permitted Acquisition pursuant to Section 6.4; and

(j) Permitted Subordinated Debt.

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Section 6.2 Liens. The Borrower shall not, nor shall it permit any of its Subsidiaries to, create, assume, incur, or suffer to exist any Lien on the Property of the Borrower or any Subsidiary of the Borrower, whether now owned or hereafter acquired, or assign any right to receive any income, other than the following (collectively, the “Permitted Liens”):

(a) Liens securing the Obligations;

(b) Liens imposed by law, such as materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s liens, and other similar liens arising in the ordinary course of business securing obligations which are not overdue for a period of more than 30 days or are being contested in good faith by appropriate procedures or proceedings and for which adequate reserves have been established;

(c) Liens arising in the ordinary course of business out of pledges or deposits under workers compensation laws, unemployment insurance, old age pensions, or other social security or retirement benefits, or similar legislation to secure public or statutory obligations;

(d) Liens for taxes, assessment, or other governmental charges which are not yet due and payable or which are being actively contested in good faith by appropriate proceedings;

(e) Liens securing purchase money debt or Capital Lease obligations permitted under Section 6.1(e); provided that each such Lien encumbers only the Property purchased in connection with the creation of any such purchase money debt or the subject of any such Capital Lease and the amount secured thereby is not increased;

(f) Liens arising from precautionary UCC financing statements regarding operating leases to the extent such operating leases are permitted hereby;

(g) encumbrances consisting of minor easements, zoning restrictions, or other restrictions on the use of real property that do not (individually or in the aggregate) materially affect the value of the assets encumbered thereby or materially impair the ability of the Borrower or such Subsidiary to use such assets in its business, and none of which is violated in any material aspect by existing or proposed structures or land use;

(h) Liens arising solely by virtue of any statutory or common law provision relating to banker’s liens, rights of set-off or similar rights and remedies and burdening only deposit accounts or other funds maintained with a depository institution;

(i) Liens on cash or securities pledged to secure performance of tenders, surety and appeal bonds, government contracts, performance and return of money bonds, bids, trade contracts, leases, statutory obligations, regulatory obligations and other obligations of a like nature incurred in the ordinary course of business;

(j) judgment and attachment Liens not giving rise to an Event of Default, provided that (i) any appropriate legal proceedings which may have been duly initiated for the review of such judgment shall not have been finally terminated or the period within which such proceeding may be initiated shall not have expired and (ii) no action to enforce such Lien has been commenced;

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(k) Liens existing on the Restatement Effective Date and set forth in Schedule 6.2 and covering only such property that is covered by such Lien on the Restatement Effective Date; and

(l) Liens securing the 2010 Convertible Senior Notes, which liens are at all time subject to and subordinate to the liens securing the Obligations pursuant to the Intercreditor Agreement.

Section 6.3 Investments. The Borrower shall not, nor shall it permit any of its Subsidiaries to, make or hold any direct or indirect investment in any Person, including capital contributions to the Person, investments in or the acquisition of the debt or equity securities of the Person, or any loans, guaranties, trade credit, or other extensions of credit to any Person, other than the following (collectively, the “Permitted Investments”):

(a) investments in the form of trade credit to customers of a Credit Party arising in the ordinary course of business and represented by accounts from such customers;

(b) Liquid Investments;

(c) loans, advances, or capital contributions to, or investments in, or purchases or commitments to purchase any stock or other securities or evidences of indebtedness of or interests in any Person and existing on the Restatement Effective Date, in each case as specified in the attached Schedule 6.3; provided that, the respective amounts of such loans, advances, capital contributions, investments, purchases and commitments shall not be increased (other than appreciation);

(d) loans and advances by a Credit Party to any other Credit Party;

(e) intentionally omitted; and

(f) (i) creation of any additional Subsidiaries domiciled in the U.S. in compliance with Section 5.6. and (ii) creation of any additional Subsidiaries domiciled outside of the U.S. in compliance with Section 5.6; provided that with respect to any Subsidiary domiciled outside of the U.S., the initial capitalization of such Subsidiary by the Borrower or any of its Subsidiaries shall not be in excess of the greater of (a) the minimum amount required by law and (b) $5,000; provided further that, with respect to a Subsidiary domiciled in or outside of the U.S., any contributions, loans, or advances to, or investments in such Subsidiary (other than the initial capitalization of such Subsidiary) by a Borrower or any of its Subsidiaries shall be otherwise permitted under this Section 6.3.

Section 6.4 Acquisitions. The Borrower shall not, nor shall it permit any of its Subsidiaries to, make an Acquisition in a transaction or related series of transactions unless each of the following criteria is met with each such Acquisition:

(a) no Default or Event of Default exists both before and after giving effect to such Acquisition;

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(b) both before and after giving effect to such Acquisition, the aggregate cash consideration paid by the Borrower and its Subsidiaries in connection with all Acquisitions during the term of this Agreement does not exceed $3,000,000, less any Debt incurred pursuant to Section 6.1(i);

(c) both before and after giving effect to such Acquisition, the Borrower provides evidence to the Administrative Agent that it has available cash balances of at least $3,000,000;

(d) such Acquisition is substantially related to the business of the Borrower and Subsidiaries, taken as a whole, and is not hostile;

(e) if such Acquisition is an Acquisition of the Equity Interests of a Person, the Acquisition is structured so that the acquired Person shall become a direct or indirect Subsidiary of the Borrower and comply with the provisions of Section 5.6, if applicable; and if such Acquisition is an Acquisition of assets, the Acquisition is structured so that the Borrower or one of its direct or indirect Subsidiaries shall acquire such assets, and such assets are not subject to any Liens in violation of Section 6.2; and

(f) no Credit Party shall, as a result of or in connection with any such Acquisition, assume or incur any direct or contingent liabilities (whether relating to environmental, tax, litigation, or other matters) that could reasonably be expected, as of the date of such Acquisition, to result in the existence or occurrence of a Material Adverse Change.

Section 6.5 Agreements Restricting Liens. The Borrower shall not, nor shall it permit any of its Subsidiaries to, create, incur, assume or permit to exist any contract, agreement or understanding (other than this Agreement, the Security Documents and agreements governing Debt permitted by Section 6.1(d) to the extent such restrictions govern only the asset financed pursuant to such Debt incurred pursuant to Section 6.1(d)) which in any way prohibits or restricts the granting, conveying, creation or imposition of any Lien on any of its Property, whether now owned or hereafter acquired, to secure the Obligations or restricts any Subsidiary of the Borrower from paying Restricted Payments to the Borrower, or which requires the consent of or notice to other Persons in connection therewith.

Section 6.6 Use of Proceeds. The Borrower shall not, nor shall it permit any of its Subsidiaries to: (a) use the proceeds of the Term Advances for any purposes other than (i) working capital purposes, and (ii) general corporate purposes, including the payment of fees and expenses related to the entering into of this Agreement and the other Credit Documents; and (b) to repay principal, interest, fees and other outstanding obligations under the Bilateral Agreement. The Borrower shall not, directly or indirectly, nor shall it permit any of its Subsidiaries to, use any part of the proceeds of Advances for any purpose which violates, or is inconsistent with, Regulations T, U, or X.

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Section 6.7 Corporate Actions.

(a) The Borrower shall not, nor shall it permit any of its Subsidiaries to, merge or consolidate with or into any other Person, except that the Borrower may merge with any of its wholly-owned Subsidiaries and any Credit Party may merge or be consolidated with or into any other Credit Party, provided that immediately after giving effect to any such proposed transaction no Default would exist and, in the case of any such merger to which the Borrower is a party, the Borrower is the surviving entity.

(b) The Borrower shall not, nor shall it permit any of its Subsidiaries to, change its name or reorganize in another jurisdiction, create or suffer to exist any Subsidiary not existing on the date of this Agreement, sell or otherwise dispose of any of its ownership interest in any of its Subsidiaries, or in any manner rearrange its business structure as it exists on the date of this Agreement, provided that the Borrower may create or acquire new Subsidiaries if such new Subsidiaries comply with Section 5.6 and such transactions otherwise comply with the terms of this Agreement, and the Borrower may sell or otherwise dispose of its Artificial Lift Business as set forth in Section 6.8.

Section 6.8 Sale of Assets. The Borrower shall not, nor shall it permit any of its Subsidiaries to, sell, convey, or otherwise transfer any of its assets except that (i) any Credit Party may sell, convey, or otherwise transfer any of its assets to any other Credit Party so long as no Default or Event of Default has occurred and is continuing or would be caused thereby; provided that the receiving Credit Party shall ratify, grant and confirm the Liens on such assets (and any other related Collateral) pursuant to documentation satisfactory to the Administrative Agent; (ii) the Borrower and its Subsidiaries may sell inventory in the ordinary course of business, (iii) the Borrower and its Subsidiaries may sell equipment for an aggregate amount not to exceed $1,000,000 provided that the proceeds of such sales are either reinvested in similar equipment within 90 days after the receipt thereof or are used to prepay the outstanding Term Advances as required by Section 2.5(c)(iii); and (iv) the Borrower may sell its Artificial Lift Business provided the proceeds of such sale are applied to the prepayment of the Notes to the extent required by Section 2.5(c)(ii); provided that (A) such assets sold as permitted under clauses (ii) – (iv) may not be sold for an amount which is less than fair market value and (B) as to the sale of certificated equipment permitted under clauses (ii)–(iv), the Borrower shall have provided to the Administrative Agent written notice of such sale at least 20 days prior to the completion of such sale (or such shorter time period as acceptable to the Administrative Agent in its sole discretion).

Section 6.9 Restricted Payments; Subordinated Debt. The Borrower shall not, nor shall it permit any of its Subsidiaries to make any Restricted Payments, except (a) the Subsidiaries of the Borrower may make Restricted Payments to the Borrower or any other Credit Party; and (b) so long as no Default exists or would result from the making of such Restricted Payment, (i) the Borrower may make scheduled principal payments of Permitted Subordinated Debt as they become due to the extent permitted under a subordination agreement, satisfactory to the Required Lenders in their sole reasonable discretion, which evidences the subordination of the payment of such Permitted Subordinated Debt to the payment of the Obligations; and (ii) the Borrower may make Restricted Payments in the form of cash dividends in respect of the Series A Preferred Stock to the extent provided for in the Certificate of Designations; provided, however,

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that the Borrower may not make Restricted Payments in the form of cash dividends in respect of the Series A Preferred Stock if, immediately following such payment, the Borrower’s EBITDA for the last 12 months ended prior to the month in which such payment is to be made shall be less than $18,000,000.

Section 6.10 Affiliate Transactions. The Borrower shall not, nor shall it permit any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction or series of transactions (including, but not limited to, the purchase, sale, lease or exchange of Property, the making of any investment, the giving of any guaranty, the assumption of any obligation or the rendering of any service) with any of their Affiliates which are not Credit Parties unless such transaction or series of transactions is on terms no less favorable to the Borrower or any Subsidiary of the Borrower, as applicable, than those that could be obtained in a comparable arm’s length transaction with a Person that is not such an affiliate.

Section 6.11 Line of Business. The Borrower shall not, and shall not permit any of its Subsidiaries to, change the character of the Borrower’s and its Subsidiaries collective business as conducted on the date of this Agreement, or engage in any type of business not reasonably related to the Borrower’s and its Subsidiaries collective business as presently and normally conducted.

Section 6.12 Hazardous Materials. The Borrower (a) shall not, nor shall it permit any of its Subsidiaries to, create, handle, transport, use, or dispose of any Hazardous Substance or Hazardous Waste, except in the ordinary course of its business and except in compliance with Environmental Law other than to the extent that such non-compliance could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Change or in any liability on the Lenders or the Administrative Agent, and (b) shall not, nor shall it permit any of its Subsidiaries to, release any Hazardous Substance or Hazardous Waste into the environment and shall not permit the Borrower’s or its Subsidiaries’ Property to be subjected to any release of Hazardous Substance or Hazardous Waste, except in compliance with Environmental Law other than to the extent that such non-compliance could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Change or in any liability on the Lenders or the Administrative Agent.

Section 6.13 Compliance with ERISA. Except for matters that individually or in the aggregate could not reasonably be expected to cause a Material Adverse Change, the Borrower shall not, nor shall it permit any of its Subsidiaries to, directly or indirectly: (a) engage in any transaction in connection with which the Borrower or any Subsidiary of the Borrower could be subjected to either a civil penalty assessed pursuant to section 502(c), (i) or (l) of ERISA or a tax imposed by Chapter 43 of Subtitle D of the Code; (b) terminate, or permit any member of the Controlled Group to terminate, any Plan in a manner, or take any other action with respect to any Plan, which could result in any liability to the Borrower, any Subsidiary of the Borrower or any member of the Controlled Group to the PBGC; (c) fail to make, or permit any member of the Controlled Group to fail to make, full payment when due of all amounts which, under the provisions of any Plan, agreement relating thereto or applicable law, the Borrower, a Subsidiary of the Borrower or member of the Controlled Group is required to pay as contributions thereto; (d) permit to exist, or allow any Subsidiary of the Borrower or any member of the Controlled Group to permit to exist, any accumulated funding deficiency (or unpaid

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minimum required contribution for plan years after December 31, 2007) within the meaning of Section 302 of ERISA or section 412 of the Code, whether or not waived, with respect to any Plan; (e) permit, or allow any member of the Controlled Group to permit, the actuarial present value of the benefit liabilities (as “actuarial present value of the benefit liabilities” shall have the meaning specified in section 4041 of ERISA) under any Plan that is regulated under Title IV of ERISA to exceed the current value of the assets (computed on a plan termination basis in accordance with Title IV of ERISA) of such Plan allocable to such benefit liabilities; (f) contribute to or assume an obligation to contribute to, or permit any member of the Controlled Group to contribute to or assume an obligation to contribute to, any Multiemployer Plan; (g) acquire, or permit any member of the Controlled Group to acquire, an interest in any Person that causes such Person to become a member of the Controlled Group if such Person sponsors, maintains or contributes to, or at any time in the six-year period preceding such acquisition has sponsored, maintained, or contributed to, (1) any Multiemployer Plan, or (2) any other Plan that is subject to Title IV of ERISA under which the actuarial present value of the benefit liabilities under such Plan exceeds the current value of the assets (computed on a plan termination basis in accordance with Title IV of ERISA) of such Plan allocable to such benefit liabilities; (h) incur, or permit any member of the Controlled Group to incur, a liability to or on account of a Plan under sections 515, 4062, 4063, 4064, 4201 or 4204 of ERISA; (i) contribute to or assume an obligation to contribute to any employee welfare benefit plan, as defined in section 3(1) of ERISA, including, without limitation, any such plan maintained to provide benefits to former employees of such entities, that may not be terminated by such entities in their sole discretion at any time without any liability; or (j) amend or permit any member of the Controlled Group to amend, a Plan resulting in an increase in current liability such that the Borrower, any Subsidiary of the Borrower or any member of the Controlled Group is required to provide security to such Plan under section 401(a)(29) of the Code.

Section 6.14 Sale and Leaseback Transactions. The Borrower shall not, nor shall it permit any of its Subsidiaries to, sell or transfer to a Person any Property, whether now owned or hereafter acquired, if at the time or thereafter the Borrower or a Subsidiary of the Borrower shall lease as lessee such Property or any part thereof or other Property which the Borrower or a Subsidiary of the Borrower intends to use for substantially the same purpose as the Property sold or transferred.

Section 6.15 Operating Leases. The Borrower shall not, nor shall it permit any of its Subsidiaries to, enter into any lease that constitutes an operating lease under GAAP if the obligations of the Borrower or such Subsidiary as lessee under such lease would cause its lease payments (excluding payments for taxes, insurance, and other non-rental expenses to the extent not included within the stated amount of the rental payments under such lease) in respect of all such leases to exceed $2,500,000 during any fiscal year of the Borrower.

Section 6.16 Limitation on Hedging. The Borrower shall not, nor shall it permit any of its Subsidiaries to, (a) purchase, assume, or hold a speculative position in any commodities market or futures market or enter into any Hedging Arrangement for speculative purposes; or (b) be party to or otherwise enter into any Hedging Arrangement which (i) is entered into for reasons other than as a part of its normal business operations as a risk management strategy and/or hedge against changes resulting from market conditions related to the Borrower’s or its Subsidiaries’ operations, (ii) is longer than the term of the Term Loan, or (iii) obligates the Borrower or any of its Subsidiaries to any margin call requirements.

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Section 6.17 Non-Public Information. The Borrower covenants and agrees that neither it nor any other person acting on its behalf will provide any Lender or its agents or counsel with any information that the Borrower believes constitutes material non-public information, unless prior thereto such Lender shall have executed a written agreement regarding the confidentiality and use of such information. The Borrower understands and confirms that each Lender shall be relying on the foregoing representations in effecting transactions in securities of the Borrower.

Section 6.18 Limits on Additional Issuances. The Borrower will not, for a period of six months following the Restatement Effective Date, offer for sale or sell any Securities unless, in the opinion of the Borrower’s counsel, such offer or sale does not jeopardize the availability of exemptions from the registration and qualification requirements under applicable securities laws with respect to the securities being offered hereby. Except for the issuance of the 2010 Convertible Senior Notes, stock options under the Borrower’s stock option plans, the issuance of common stock upon exercise of outstanding options, warrants and convertible securities, the issuance of common stock purchase warrants, and the offering contemplated hereby, the Borrower has not engaged in any offering of equity securities during the six months prior to the date of this Agreement. The foregoing provisions shall not prevent the Borrower from filing a “shelf” registration statement pursuant to Rule 415 under the Securities Act, but the foregoing provisions shall apply to any sale of securities thereunder.

Section 6.19 Intentionally Omitted.

Section 6.20 Shareholder Approval. Notwithstanding any other provision of this Agreement, in no event will the Borrower issue more than an aggregate of 5,011,325 shares of common stock in payment of any fees, principal, interest or other amounts hereunder unless the Borrower has previously received the Shareholder Approval in accordance with, and to the extent required by, the rules of the New York Stock Exchange applicable to companies whose common stock is listed thereon, and any Lender who would otherwise be entitled to receive shares of Borrower’s common stock in payment of any such amount in excess of such number shall instead be entitled to receive cash in the amount of such fees, principal, interest or other amounts due in lieu of shares of common stock in excess of such number.

Section 6.21 Capital Expenditures. The Borrower shall not, nor shall it permit any of its Subsidiaries to, cause the aggregate Capital Expenditures expended by the Borrower or any of its Subsidiaries in each fiscal year (or, with respect to any Subsidiary that was acquired during such fiscal year, the portion of such fiscal year that such Subsidiary was a Subsidiary) to exceed $12,000,000.

Section 6.22 Landlord Agreements. The Borrower shall not, nor shall it permit any of its Subsidiaries to (a) enter into any verbal or written leases with any Person who has not executed a lien waiver or subordination agreement in form and substance satisfactory to the Administrative Agent (other than extensions of existing leases), and (b) without limiting the generality of the forgoing clause (a), hold, store or otherwise maintain more than 20% of the

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aggregate value of the Borrower’s and its Subsidiaries’ Inventory and equipment at locations which are not owned by a Credit Party and which are not covered by a lien waiver or subordination agreement in form and substance satisfactory to the Administrative Agent.

Section 6.23 Amendment of Permitted Subordinated Debt Terms. The Borrower shall not, nor shall it permit any of its Subsidiaries to, amend any of the documents or terms governing any Permitted Subordinated Debt so as to change the stated maturity date of the principal of such debt, or any installment of interest thereon, to an earlier date, increase the rate of interest thereon or any premium payable on the redemption thereof, change any of the redemption or subordination provisions thereof (or the definitions of any defined terms contained therein) or otherwise change in any respect materially adverse to the interests of any of the Secured Parties any of the terms thereof, in each case, without prior written consent of the Required Lenders.

Section 6.24 Convertible Senior Notes.

(a) The Borrower shall not, nor shall it permit any of its Subsidiaries to, amend, modify, waive or otherwise change, or consent or agree to any amendment, modification, waiver or other change to the 2008 or 2010 Convertible Senior Notes or the 2008 or 2010 Indenture (i) which shortens the fixed maturity, or increases the rate or shortens the time of payment of interest on, or increases the amount or shortens the time of payment of any principal or premium payable whether at maturity, at a date fixed for prepayment, by acceleration, by mandatory redemption, repayment, prepayment, or defeasance for cash or otherwise of such 2008 or 2010 Convertible Senior Notes, or increases the amount of, or accelerates the time of payment of, any fees payable in connection therewith; (ii) which relates to the affirmative or negative covenants, events of default or remedies under the documents or instruments evidencing such Debt and the effect of which is to subject the Borrower or any of its Subsidiaries, to any provisions that are more onerous or more restrictive provisions than those set forth in this Agreement; or (iii) which otherwise adversely affects the interests of the Secured Parties as senior creditors or the interests of any of the Secured Parties under this Agreement or any other Credit Documents in any material respect.

(b) The Borrower shall not, nor shall it permit any of its Subsidiaries to, make or offer to make any optional or voluntary repurchase, redemption, prepayment, repayment, defeasance or any other acquisition or retirement for value (or the segregation of funds with respect to any of the foregoing) (whether in whole or in part) of any of the 2008 or 2010 Convertible Senior Notes; provided that, the Borrower may voluntarily convert the 2008 or 2010 Convertible Senior Notes into common stock of the Borrower so long as neither the Borrower nor any of its Subsidiaries may pay or otherwise provide any consideration (cash or otherwise) to the holders of such converted 2008 or 2010 Convertible Senior Notes in connection with, or related to, such conversion other than the shares of common stock of the Borrower.

Section 6.25 Intentionally Omitted.

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Section 6.26 Series A Preferred Stock.

(a) The Borrower shall not, nor shall it permit any of its Subsidiaries to, make or offer to make any optional or voluntary repurchase, redemption, prepayment, repayment, defeasance or any other acquisition or retirement for value (or the segregation of funds with respect to any of the foregoing) (whether in whole or in part) of the Series A Preferred Stock into common stock of the Borrower.

(b) The Borrower shall not, nor shall it permit any of its Subsidiaries to, amend, modify, waive or otherwise change, or consent or agree to any amendment, modification, waiver or other change to the terms of the Series A Preferred Stock or the Certificate of Designations without the prior written consent of the Required Lenders; provided that, the Borrower may extend mandatory redemption or repurchase dates of the Series A Preferred Stock.

Section 6.27 Trade Payables. The Borrower shall not, nor shall it permit any of its Subsidiaries to, create, assume, incur, suffer to exist, or in any manner become liable, directly, indirectly, or contingently in respect of, any obligations in the form of accounts payable to trade creditors for goods or services and current operating liabilities other than such obligations which in each case are not more than 90 days past due, in each case incurred in the ordinary course of business, as presently conducted, unless contested in good faith and by appropriate proceedings; provided that, no such obligations permitted under this Section 6.27 shall be obligations for borrowed money.

Section 6.28 Equity Issuances. During the 9 calendar months beginning on the Restatement Effective Date, the Borrower shall not, nor shall it permit any of its Subsidiaries to make any Equity Issuance; provided, that Borrower and its Subsidiaries may make Equity Issuances to management and employees of the Borrower and its Subsidiaries pursuant to management or director incentive and employee retention plans in effect as of or after the Restatement Effective Date.

Section 6.29 Bank Accounts. The Borrower shall not, and shall not permit any other Credit Party to, maintain or establish any new bank accounts other than the bank accounts set forth on Schedule 6.29 without prior written notice to the Administrative Agent and the Borrower or such other Credit Party and the bank at which the account is to be opened enter into a tri-party agreement regarding such bank account pursuant to which such bank acknowledges the security interest and control of the Administrative Agent in such bank account and agrees to limit its set-off rights on terms satisfactory to the Administrative Agent.

ARTICLE 7

DEFAULT AND REMEDIES

Section 7.1 Events of Default. The occurrence of any of the following events shall constitute an “Event of Default” under this Agreement and any other Credit Document:

(a) Payment Failure. Any Credit Party (i) fails to pay any principal or interest when due under this Agreement, (ii) fails to pay the legal fees and expenses of Faegre & Benson LLP as required by Section 3.1(d) or (iii) fails to pay, within three Business Days of when due, any other amount due under this Agreement or any other Credit Document, including payments of fees, reimbursements, and indemnifications;

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(b) False Representation or Warranties. Any representation or warranty made or deemed to be made by any Credit Party or any officer thereof in this Agreement, in any other Credit Document or in any certificate delivered in connection with this Agreement or any other Credit Document is incorrect, false or otherwise misleading in any material respect (provided such materiality qualifier shall not apply in instances where a specific representation contains a materiality or Material Adverse Change qualifier) at the time it was made or deemed made;

(c) Breach of Covenant. (i) Any breach by any Credit Party of any of the covenants in Section 5.2(g), Section 5.3(a), Section 5.12 or Article 6 of this Agreement or the corresponding covenants in any Guaranty or (ii) any breach by any Credit Party of any other covenant contained in this Agreement or any other Credit Document and such breach is not cured within 30 days after the earlier of the date notice thereof is given to the Borrower by the Administrative Agent or any Lender or the date any officer of the Borrower or any other Credit Party obtained actual knowledge thereof;

(d) Guaranties. Any provisions in the Guaranties shall at any time (before its expiration according to its terms) and for any reason cease to be in full force and effect and valid and binding on the Guarantors party thereto or shall be contested by any party thereto; any Guarantor shall deny it has any liability or obligation under such Guaranties; or any Guarantor shall cease to exist other than as expressly permitted by the terms of this Agreement;

(e) Security Documents. Any Security Document shall at any time and for any reason cease to create an Acceptable Security Interest in the Property purported to be subject to such agreement in accordance with the terms of such agreement or any material provisions thereof shall cease to be in full force and effect and valid and binding on the Credit Party that is a party thereto or any such Person shall so state in writing; provided that, with respect to the acquisition of any new equipment title of which is evidenced by a certificate of title, the Borrower shall have 30 days from the date of acquisition of such equipment to deliver such certificate of title to the Administrative Agent and otherwise create an Acceptable Security Interest in such equipment;

(f) Cross-Default. (i) The Borrower or any Guarantor shall fail to pay any principal of or premium or interest on its Debt which is outstanding in a principal amount of at least $500,000.00 individually or when aggregated with all such Debt of the Borrower and the Subsidiaries so in default (but excluding Debt evidenced by the Notes) when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; (ii) any other event shall occur or condition shall exist under any agreement or instrument relating to Debt which is outstanding in a principal amount of at least $500,000.00 individually or when aggregated with all such Debt of the Borrower and the Subsidiaries so in default (other than Debt evidenced by the Notes), and shall continue

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after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Debt prior to the stated maturity thereof; or (iii) any such Debt shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment); provided that, for purposes of this paragraph (f), the “principal amount” of the obligations in respect of Hedging Arrangements at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that would be required to be paid if such Hedging Arrangements were terminated at such time;

(g) Audit Report. The Borrower shall not have delivered to the Administrative Agent within 2 Business Days after the Restatement Effective Date an audit report of the Borrower’s independent certified public accountants containing an unqualified opinion on Borrower’s Financial Statements for the year ending December 31, 2009;

(h) Bankruptcy and Insolvency. (i) Any Credit Party or any Subsidiary of the Borrower shall terminate its existence or dissolve or (ii) any Credit Party, any Subsidiary of the Borrower (A) admits in writing its inability to pay its debts generally as they become due; makes an assignment for the benefit of its creditors; consents to or acquiesces in the appointment of a receiver, liquidator, fiscal agent, or trustee of itself or any of its Property; files a petition under bankruptcy or other laws for the relief of debtors; or consents to any reorganization, arrangement, workout, liquidation, dissolution, or similar relief or (B) shall have had, without its consent: any court enter an order appointing a receiver, liquidator, fiscal agent, or trustee of itself or any of its Property; any petition filed against it seeking reorganization, arrangement, workout, liquidation, dissolution or similar relief under bankruptcy or other laws for the relief of debtors and such petition shall not be dismissed, stayed, or set aside for an aggregate of 60 days, whether or not consecutive;

(i) Adverse Judgment. The Borrower or any of its Subsidiaries suffers final judgments against any of them since the date of this Agreement in an aggregate amount, less any insurance proceeds covering such judgments which are received or as to which the insurance carriers admit liability, greater than $500,000.00 and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgments or (ii) there shall be any period of 30 consecutive days during which a stay of enforcement of such judgments, by reason of a pending appeal or otherwise, shall not be in effect;

(j) Termination Events. Any Termination Event with respect to a Plan shall have occurred, and, 30 days after notice thereof shall have been given to the Borrower by the Administrative Agent, such Termination Event shall not have been corrected and shall have created and caused to be continuing a material risk of Plan termination or liability for withdrawal from the Plan as a “substantial employer” (as defined in Section 4001(a)(2) of ERISA), which termination could reasonably be expect to result in a liability of, or liability for withdrawal could reasonably be expected to be, greater than $500,000.00;

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(k) Plan Withdrawals. The Borrower or any member of the Controlled Group as employer under a Multiemployer Plan shall have made a complete or partial withdrawal from such Multiemployer Plan and such withdrawing employer shall have incurred a withdrawal liability in an annual amount exceeding $500,000.00; or

(l) Change in Control. The occurrence of a Change in Control.

Section 7.2 Optional Acceleration of Maturity. If any Event of Default (other than an Event of Default pursuant to Section 7.1(h)) shall have occurred and be continuing, then, and in any such event,

(a) the Administrative Agent shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the Notes, all interest thereon, and all other Obligations to be forthwith due and payable, whereupon the Notes, all such interest, and all such amounts shall become and be forthwith due and payable in full, without presentment, demand, protest or further notice of any kind (including, without limitation, any notice of intent to accelerate or notice of acceleration), all of which are hereby expressly waived by the Borrower, and

(b) the Administrative Agent shall at the request of, or may with the consent of, the Required Lenders proceed to enforce its rights and remedies under the Security Documents, the Guaranties, or any other Credit Document for the ratable benefit of the Secured Parties by appropriate proceedings.

Section 7.3 Automatic Acceleration of Maturity. If any Event of Default pursuant to Section 7.1(h) shall occur,

(a) the Notes, all interest on the Notes, and all other Obligations shall immediately and automatically become and be due and payable in full, without presentment, demand, protest or any notice of any kind (including, without limitation, any notice of intent to accelerate or notice of acceleration), all of which are hereby expressly waived by the Borrower, and

(b) the Administrative Agent shall at the request of, or may with the consent of, the Required Lenders proceed to enforce its rights and remedies under the Security Documents, the Guaranties, or any other Credit Document for the ratable benefit of the Secured Parties by appropriate proceedings.

Section 7.4 Default Fee. Upon any optional or automatic acceleration of the Term Loans pursuant to Section 7.2 or Section 7.3, in addition to all other amounts due and payable by operation of such Section 7.2 or Section 7.3, the Borrower agrees to pay to the Administrative Agent, for the ratable benefit of the Lenders, a default fee equal to three percent (3.0%) of the then-outstanding principal balance of the Term Loans, and such default fee shall be fully-earned, due and payable in full in cash immediately upon such acceleration.

Section 7.5 Set-off. Upon (a) the occurrence and during the continuance of any Event of Default and (b) the making of the request or the granting of the consent, if any, specified by Section 7.2 to authorize the Administrative Agent to declare the Notes and any other

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amount payable hereunder due and payable pursuant to the provisions of Section 7.2 or the automatic acceleration of the Notes and all amounts payable under this Agreement pursuant to Section 7.3, the Administrative Agent and each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Administrative Agent or such Lender to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement, the Notes held by the Administrative Agent or such Lender, and the other Credit Documents, irrespective of whether or not the Administrative Agent or such Lender shall have made any demand under this Agreement, such Note, or such other Credit Documents, and although such obligations may be unmatured. Each Lender agrees to promptly notify the Borrower after any such set-off and application made by such Lender, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Administrative Agent and each Lender under this Section 7.5 are in addition to any other rights and remedies (including, without limitation, other rights of set-off) which the Administrative Agent or such Lender may have.

Section 7.6 Remedies Cumulative, No Waiver. No right, power, or remedy conferred to any Lender in this Agreement or the Credit Documents, or now or hereafter existing at law, in equity, by statute, or otherwise shall be exclusive, and each such right, power, or remedy shall to the full extent permitted by law be cumulative and in addition to every other such right, power or remedy. No course of dealing and no delay in exercising any right, power, or remedy conferred to any Lender in this Agreement and the Credit Documents or now or hereafter existing at law, in equity, by statute, or otherwise shall operate as a waiver of or otherwise prejudice any such right, power, or remedy. Any Lender may cure any Event of Default without waiving the Event of Default. No notice to or demand upon the Borrower shall entitle the Borrower to similar notices or demands in the future.

Section 7.7 Application of Payments. Prior to an Event of Default, all payments made hereunder shall be applied by the Administrative Agent as directed by the Borrower, but such payments are subject to the terms of this Agreement, including the application of prepayments according to Section 2.5. During the existence of an Event of Default, all payments and collections received by the Administrative Agent shall be applied to the Obligations in accordance with Section 2.12 and in the following order:

FIRST, to the payment of all costs and expenses incurred by the Administrative Agent (in its capacity as such hereunder or under any other Credit Document) in connection with this Agreement or any of the Obligations, including all court costs and the reasonable fees and expenses of its agents and legal counsel, the repayment of all advances made by the Administrative Agent as secured party hereunder or under any other Credit Document on behalf of any Credit Party and any other reasonable costs or expenses incurred in connection with the exercise of any right or remedy hereunder or under any other Credit Document;

SECOND, to the payment of all accrued interest constituting part of the Obligations (the amounts so applied to be distributed ratably among the Lenders pro rata in accordance with the amounts of the Obligations owed to them on the date of any such distribution);

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THIRD, to the payment of any then due and owing principal constituting part of the Obligations (the amounts so applied to be distributed ratably among the Lenders pro rata in accordance with the principal amounts of the Obligations owed to them on the date of any such distribution);

FOURTH, to the payment of any then due and owing other amounts (including fees and expenses) constituting part of the Obligations (the amounts so applied to be distributed ratably among the Lenders pro rata in accordance with such amounts owed to them on the date of any such distribution); and

FIFTH, to the Credit Parties, their successors or assigns, or as a court of competent jurisdiction may otherwise direct.

Section 7.8 Restructuring After Event of Default. Following an Event of Default under Section 7.1(h) by the Borrower, the Borrower agrees that prior to entering into any restructuring and/or refinancing transaction necessitated by such Event of Default (including, without limitation, a debtor-in-possession credit facility), the Borrower will first provide the Lenders with the option to match the terms, of any proposed restructuring or refinancing. In the event more than one Lender elects to match such terms, such Lenders shall have the right to participate in such restructuring or refinancing on a pro rata basis. Nothing in this Section 7.8 shall be deemed to be or construed to imply an automatic waiver of any such Event of Default by the Administrative Agent or any of the Lenders.

ARTICLE 8

THE ADMINISTRATIVE AGENT

Section 8.1 Appointment, Powers, and Immunities. Each Lender hereby irrevocably appoints and authorizes the Administrative Agent to act as its agent under this Agreement and the other Credit Documents with such powers and discretion as are specifically delegated to the Administrative Agent by the terms of this Agreement and the other Credit Documents, together with such other powers as are reasonably incidental thereto. The Administrative Agent (which term as used in this sentence and in Section 8.5 and the first sentence of Section 8.6 shall include its Affiliates and its own and its Affiliates’ officers, directors, employees, and agents): (a) shall not have any duties or responsibilities except those expressly set forth in this Agreement and shall not be a trustee or fiduciary for any Lender; (b) shall not be responsible to the Lenders for any recital, statement, representation, or warranty (whether written or oral) made in or in connection with any Credit Document or any certificate or other document referred to or provided for in, or received by any of them under, any Credit Document, or for the value, validity, effectiveness, genuineness, enforceability, or sufficiency of any Credit Document, or any other document referred to or provided for therein or for any failure by any Credit Party or any other Person to perform any of its obligations thereunder; (c) shall not be responsible for or have any duty to ascertain, inquire into, or verify the performance or observance of any covenants or agreements by any Credit Party or the satisfaction of any

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condition or to inspect the Property (including the books and records) of any Credit Party or any of its Subsidiaries or Affiliates; (d) shall not be required to initiate or conduct any litigation or collection proceedings under any Credit Document unless requested by the Required Lenders in writing and it receives indemnification satisfactory to it from the Lenders; and (e) shall not be responsible for any action taken or omitted to be taken by it under or in connection with any Credit Document, except for its own gross negligence or willful misconduct. The Administrative Agent may employ agents and attorneys-in-fact and shall not be responsible for the negligence or misconduct of any such agents or attorneys-in-fact selected by the Administrative Agent with reasonable care.

Section 8.2 Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely upon any certification, notice, instrument, writing, or other communication (including, without limitation, any thereof by telephone or telecopy) believed by it to be genuine and correct and to have been signed, sent or made by or on behalf of the proper Person or Persons, and upon advice and statements of legal counsel (including counsel for any Credit Party), independent accountants, and other experts selected by the Administrative Agent. The Administrative Agent may deem and treat the payee of any Notes as the holder thereof for all purposes hereof unless and until the Administrative Agent receives and accepts an Assignment and Acceptance executed in accordance with Section 9.7. As to any matters not expressly provided for by this Agreement, the Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions shall be binding on all of the Lenders; provided, however, that the Administrative Agent shall not be required to take any action that exposes the Administrative Agent to personal liability or that is contrary to any Credit Document or applicable law or unless it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking any such action.

Section 8.3 Defaults. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of a Default or Event of Default unless the Administrative Agent has received written notice from a Lender or the Borrower specifying such Default or Event of Default and stating that such notice is a “Notice of Default”. In the event that the Administrative Agent receives such a notice of the occurrence of a Default or Event of Default, the Administrative Agent shall give prompt notice thereof to the Lenders. The Administrative Agent shall (subject to Section 8.2) take such action with respect to such Default or Event of Default as shall reasonably be directed by the Required Lenders, provided that, unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interest of the Lenders.

Section 8.4 Rights as Lender. With respect to its Commitments and the Advances made by it, Whitebox Advisors LLC (and any successor acting as Administrative Agent) in its capacity as a Lender hereunder shall have the same rights and powers hereunder as any other Lender and may exercise the same as though it were not acting as the Administrative Agent, and the term “Lender” or “Lenders” shall, unless the context otherwise indicates, include the Administrative Agent in its individual capacity. Whitebox Advisors LLC (and any successor acting as Administrative Agent) and its Affiliates may (without having to account therefor to any

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Lender) accept deposits from, lend money to, make investments in, provide services to, and generally engage in any kind of lending, trust, or other business with any Credit Party or any of its Subsidiaries or Affiliates as if it were not acting as Administrative Agent, and Whitebox Advisors LLC (and any successor acting as Administrative Agent) and its Affiliates may accept fees and other consideration from any Credit Party or any of its Subsidiaries or Affiliates for services in connection with this Agreement or otherwise without having to account for the same to the Lenders.

Section 8.5 Indemnification.

(a) THE LENDERS SEVERALLY AGREE TO INDEMNIFY THE ADMINISTRATIVE AGENT AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AND AGENTS (TO THE EXTENT NOT REIMBURSED BY THE BORROWER), RATABLY ACCORDING TO THE RESPECTIVE PRINCIPAL AMOUNTS OF THE ADVANCES THEN HELD BY EACH OF THEM (OR IF NO PRINCIPAL OF THE ADVANCES IS AT THE TIME OUTSTANDING, RATABLY ACCORDING TO THE RESPECTIVE COMMITMENTS HELD BY EACH OF THEM IMMEDIATELY PRIOR TO THE TERMINATION, EXPIRATION OR FULL REDUCTION OF EACH SUCH COMMITMENT), FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES, OR DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THE ADMINISTRATIVE AGENT IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY ACTION TAKEN OR OMITTED BY THE ADMINISTRATIVE AGENT UNDER THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT (INCLUDING THE ADMINISTRATIVE AGENT’S OWN NEGLIGENCE), AND INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL LIABILITIES, PROVIDED THAT NO LENDER SHALL BE LIABLE FOR ANY PORTION OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES, OR DISBURSEMENTS RESULTING FROM THE ADMINISTRATIVE AGENT’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT LIMITATION OF THE FOREGOING, EACH LENDER AGREES TO REIMBURSE THE ADMINISTRATIVE AGENT PROMPTLY UPON DEMAND FOR ITS RATABLE SHARE (DETERMINED AS SET FORTH ABOVE IN THIS PARAGRAPH) OF ANY OUT-OF-POCKET EXPENSES (INCLUDING COUNSEL FEES) INCURRED BY THE ADMINISTRATIVE AGENT IN CONNECTION WITH THE PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION, MODIFICATION, AMENDMENT, OR ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS, LEGAL PROCEEDINGS, OR OTHERWISE) OF, OR LEGAL ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER, THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT, TO THE EXTENT THAT THE ADMINISTRATIVE AGENT IS NOT REIMBURSED FOR SUCH BY THE BORROWER.

(b) INTENTIONALLY OMITTED.

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Section 8.6 Non-Reliance on Administrative Agent and Other Lenders. Each Lender agrees that it has, independently and without reliance on the Administrative Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own credit analysis of the Borrower and the other Credit Parties and decision to enter into this Agreement and that it will, independently and without reliance upon the Administrative Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own analysis and decisions in taking or not taking action under the Credit Documents. Except for notices, reports, and other documents and information expressly required to be furnished to the Lenders by the Administrative Agent hereunder and for other information in the Administrative Agent’s possession which has been requested by a Lender and for which such Lender pays the Administrative Agent’s expenses in connection therewith, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the affairs, financial condition, or business of any Credit Party or any of its Subsidiaries or Affiliates that may come into the possession of the Administrative Agent or any of its Affiliates.

Section 8.7 Resignation of Administrative Agent. The Administrative Agent may resign at any time by giving written notice thereof to the Lenders and the Borrower. Upon receipt of notice of any such resignation, the Required Lenders shall have the right to appoint a successor Administrative Agent with, so long as no Event of Default has occurred and is continuing, the consent of the Borrower, which consent shall not be unreasonably withheld. If no successor Administrative Agent shall have been so appointed by the Required Lenders with the consent of the Borrower, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent’s giving of notice of resignation, then the retiring Administrative Agent may, on behalf of the Lenders and the Borrower, appoint a successor Administrative Agent which shall be a commercial bank organized under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $250,000,000.00 or a Lender; provided that, if the Administrative Agent shall notify the Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (1) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Credit Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders under any of the Credit Documents, the retiring Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (2) all payments, communications and determinations provided to be made by, to or through the retiring Administrative Agent shall instead be made by or to each Lender directly, until such time as the Required Lenders appoint a successor Administrative Agent as provided for above in this paragraph. Upon the acceptance of any appointment as Administrative Agent by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges, and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement and the other Credit Documents. After any retiring Administrative Agent’s resignation as Administrative Agent, the provisions of this Article 8 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement and the other Credit Documents.

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Section 8.8 Collateral Matters.

(a) The Administrative Agent is authorized on behalf of the Secured Parties, without the necessity of any notice to or further consent from such Secured Parties, from time to time, to take any actions with respect to any Collateral or Security Documents which may be necessary to perfect and maintain the Liens upon the Collateral granted pursuant to the Security Documents. The Administrative Agent is further authorized (but not obligated) on behalf of the Secured Parties, without the necessity of any notice to or further consent from the Secured Parties, from time to time, to take any action in exigent circumstances as may be reasonably necessary to preserve any rights or privileges of the Secured Parties under the Credit Documents or applicable Legal Requirements. By accepting the benefit of the Liens granted pursuant to the Security Documents, each Secured Party hereby agrees to the terms of this paragraph (a).

(b) The Lenders hereby, and any other Secured Party by accepting the benefit of the Liens granted pursuant to the Security Documents, irrevocably authorize the Administrative Agent to (i) release any Lien granted to or held by the Administrative Agent upon any Collateral (a) upon termination of this Agreement and the payment in full of all outstanding Advances and all other Obligations payable under this Agreement and under any other Credit Document; (b) constituting property sold or to be sold or disposed of as part of or in connection with any disposition permitted under this Agreement or any other Credit Document so long as no Default exists at the time of such release; (c) constituting property in which no Credit Party owned an interest at the time the Lien was granted or at any time thereafter; or (d) constituting property leased to any Credit Party under a lease which has expired or has been terminated in a transaction permitted under this Agreement or is about to expire and which has not been, and is not intended by such Credit Party to be, renewed or extended; and (ii) so long as no Default exists at the time of such release, release a Guarantor from its obligations under a Guaranty and any other applicable Credit Document if such Person ceases to be a Subsidiary as a result of a transaction permitted under this Agreement. Upon the request of the Administrative Agent at any time, the Secured Parties will confirm in writing the Administrative Agent’s authority to release particular types or items of Collateral pursuant to this Section 8.8.

(c) Notwithstanding anything contained in any of the Credit Documents to the contrary, the Borrower, the Administrative Agent, and each Secured Party hereby agree that no Secured Party shall have any right individually to realize upon any of the Collateral or to enforce the Guaranties, it being understood and agreed that all powers, rights and remedies hereunder and under the Security Documents may be exercised solely by Administrative Agent on behalf of the Secured Parties in accordance with the terms hereof and the other Credit Documents. By accepting the benefit of the Liens granted pursuant to the Security Documents, each Secured Party not party hereto hereby agrees to the terms of this paragraph (c).

ARTICLE 9

MISCELLANEOUS

Section 9.1 Costs and Expenses. The Borrower agrees to pay on demand:

(a) all reasonable out-of-pocket costs and expenses of Administrative Agent and each Lender in connection with the preparation, execution, delivery, administration, modification, and amendment of this Agreement, the Notes, and the other Credit Documents, including costs associated with field examinations, appraisals, and the reasonable fees and out-of-pocket expenses of outside counsel for Administrative Agent and the Lenders, with respect to advising the Administrative Agent as to its rights and responsibilities under this Agreement, and

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(b) all out-of-pocket costs and expenses, if any, of the Administrative Agent and each Lender (including outside counsel fees and expenses of each Lender) in connection with the enforcement (whether through negotiations, legal proceedings, or otherwise) of this Agreement, the Notes, and the other Credit Documents.

Section 9.2 Indemnification. THE BORROWER AGREES TO INDEMNIFY AND HOLD HARMLESS THE ADMINISTRATIVE AGENT AND EACH LENDER AND EACH OF THEIR AFFILIATES AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, AND ADVISORS (EACH, AN “INDEMNIFIED PARTY”) FROM AND AGAINST ANY AND ALL CLAIMS, DAMAGES, LOSSES, LIABILITIES, COSTS, AND EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS’ FEES) THAT MAY BE INCURRED BY OR ASSERTED OR AWARDED AGAINST ANY INDEMNIFIED PARTY, IN EACH CASE ARISING OUT OF OR IN CONNECTION WITH OR BY REASON OF (INCLUDING, WITHOUT LIMITATION, IN CONNECTION WITH ANY INVESTIGATION, LITIGATION, OR PROCEEDING OR PREPARATION OF DEFENSE IN CONNECTION THEREWITH) THE CREDIT DOCUMENTS, ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THE ACTUAL OR PROPOSED USE OF THE PROCEEDS OF THE ADVANCES, INCLUDING SUCH INDEMNIFIED PARTY’S OWN NEGLIGENCE, EXCEPT TO THE EXTENT SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE IS FOUND IN A FINAL, NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM SUCH INDEMNIFIED PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. IN THE CASE OF AN INVESTIGATION, LITIGATION OR OTHER PROCEEDING TO WHICH THE INDEMNITY IN THIS SECTION 9.2 APPLIES, SUCH INDEMNITY SHALL BE EFFECTIVE WHETHER OR NOT SUCH INVESTIGATION, LITIGATION OR PROCEEDING IS BROUGHT BY ANY CREDIT PARTY, ITS DIRECTORS, SHAREHOLDERS OR CREDITORS OR AN INDEMNIFIED PARTY OR ANY OTHER PERSON OR ANY INDEMNIFIED PARTY IS OTHERWISE A PARTY THERETO AND WHETHER OR NOT THE TRANSACTIONS CONTEMPLATED HEREBY ARE CONSUMMATED. THE BORROWER AGREES NOT TO ASSERT ANY CLAIM AGAINST THE ADMINISTRATIVE AGENT, ANY LENDER, ANY OF THEIR AFFILIATES, OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS, AGENTS, AND ADVISERS, ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL, OR PUNITIVE DAMAGES ARISING OUT OF OR OTHERWISE RELATING TO THE CREDIT DOCUMENTS, ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THE ACTUAL OR PROPOSED USE OF THE PROCEEDS OF THE ADVANCES. WITHOUT PREJUDICE TO THE SURVIVAL OF ANY OTHER AGREEMENT OF THE BORROWER HEREUNDER, THE AGREEMENTS AND OBLIGATIONS OF THE BORROWER CONTAINED IN THIS SECTION 9.2 SHALL SURVIVE THE PAYMENT IN FULL OF THE ADVANCES AND ALL OTHER AMOUNTS PAYABLE UNDER THIS AGREEMENT.

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Section 9.3 Waivers and Amendments. No amendment or waiver of any provision of this Agreement, the Notes, or any other Credit Document (other than the Fee Letter), nor consent to any departure by the Borrower or any Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by the Required Lenders and the Borrower, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that:

(a) no amendment, waiver, or consent shall, unless in writing and signed by all the Lenders and the Borrower, do any of the following: (i) reduce the principal of, or interest on, the Notes, (ii) postpone or extend any date fixed for any payment of principal of, or interest on, the Notes, including, without limitation, the Term Maturity Date, (iii) change the number of Lenders which shall be required for the Lenders to take any action hereunder or under any other Credit Document, (iv) reduce any fees or other amounts payable hereunder or under any other Credit Document (other than those specifically addressed above in this Section 9.3), (v) increase the aggregate Commitments, (vi) postpone or extend any date fixed for any payment of any fees or other amounts payable hereunder (other than those otherwise specifically addressed in this Section 9.3), (vii) amend Section 2.12(e), Section 7.7, this Section 9.3 or any other provision in any Credit Document which expressly requires the consent of, or action or waiver by, all of the Lenders, (viii) release any Guarantor from its obligation under any Guaranty or, except as specifically provided in the Credit Documents and as a result of transactions permitted by the terms of this Agreement, release all or a material portion of the Collateral except as permitted under Section 8.8(b); or (ix) amend the definition of “Required Lenders”;

(b) no Commitment of a Lender or any obligations of a Lender may be increased without such Lender’s written consent; and

(c) no amendment, waiver, or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above to take such action, affect the rights or duties of the Administrative Agent under this Agreement or any other Credit Document.

Section 9.4 Severability. In case one or more provisions of this Agreement or the other Credit Documents shall be invalid, illegal or unenforceable in any respect under any applicable law, the validity, legality, and enforceability of the remaining provisions contained herein or therein shall not be affected or impaired thereby.

Section 9.5 Survival of Representations and Obligations. All representations and warranties contained in this Agreement or made in writing by or on behalf of the Borrower in connection herewith shall survive the execution and delivery of this Agreement and the other Credit Documents, the making of the Advances and any investigation made by or on behalf of the Lenders, none of which investigations shall diminish any Lender’s right to rely on such representations and warranties. All obligations of the Borrower provided for in Sections 2.13(c), 9.1 and 9.2 and all of the obligations of the Lenders in Section 8.5 shall survive any termination of this Agreement and repayment in full of the Obligations.

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Section 9.6 Binding Effect. This Agreement shall become effective when it shall have been executed by the Borrower and the Administrative Agent, and when the Administrative Agent shall have, as to each Lender, either received a counterpart hereof executed by such Lender or been notified by such Lender that such Lender has executed it and thereafter shall be binding upon and inure to the benefit of the Borrower, the Administrative Agent, and each Lender and their respective successors and assigns, except that neither the Borrower nor any other Credit Party shall have the right to assign its rights or delegate its duties under this Agreement or any interest in this Agreement without the prior written consent of each Lender.

Section 9.7 Lender Assignments and Participations.

(a) Each Lender may assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Term Loans and its Notes,); provided, however, that (i) each such assignment shall be to an Eligible Assignee; (ii) except in the case of an assignment to another Lender or an assignment of all of a Lender’s rights and obligations under this Agreement, any such partial assignment with respect to the Term Loan shall be in an amount at least equal to $5,000,000; (iii) each assignment of a Lender’s rights and obligations with respect to Term Advances and its Term Commitment shall be of an constant, and not varying percentage of all of its rights and obligations under this Agreement as a Term Lender and the Term Notes (other than rights of reimbursement and indemnity arising before the effective date of such assignment) and shall be of an equal pro rata share of the Assignor’s interest in the Term Advances and Term Commitments; (iv) the parties to such assignment shall execute and deliver to the Administrative Agent for its acceptance an Assignment and Acceptance, together with any Notes subject to such assignment and the assignor or assignee Lender shall pay a processing fee of $3,500.00; and (v) each such Lender has provided the Administrative Agent written notice of its intent to assign and has offered to Whitebox Advisors LLC the exclusive right to accept such assignment for a period of two Business Days, it being acknowledged and understood that if Whitebox Advisors LLC does not elect to purchase the Term Loans and Notes being offered by such Lender, such Lender may sell and assign such rights to any Eligible Assignee on terms no less favorable to such Lender than the terms offered to Whitebox Advisors LLC. Only upon execution, delivery, and acceptance of such Assignment and Acceptance and payment of the processing fee, and the entry of the transfer in the Register (as hereinafter defined), the assignee thereunder shall be a party hereto and, to the extent of such assignment, have the obligations, rights, and benefits of a Lender hereunder and the assigning Lender shall, to the extent of such assignment, relinquish its rights and be released from its obligations under this Agreement. Upon the consummation of any assignment pursuant to this Section 9.7, the assignor, the Administrative Agent and the Borrower shall make appropriate arrangements so that, if required, new Notes are issued to the assignor and the assignee. If the assignee is not incorporated under the laws of the United States of America or a state thereof, it shall deliver to the Borrower and the Administrative Agent certification as to exemption from deduction or withholding of Taxes in accordance with Section 2.13(e).

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(b) The Administrative Agent shall maintain at its address referred to in Section 9.9 a copy of each Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of the Lenders and the Commitments of, and principal amount of the Advances owing to, each Lender from time to time (the “Register”). Solely for purposes of keeping the Register, the Administrative Agent shall be deemed an agent of the Borrower for purposes of Treasury Regulation Section 1.871-14(c)(1). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Credit Parties, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Administrative Agent will promptly provide all executed Assignment and Assumption Agreements to the Borrower and, at the request of the Borrower, provide a current copy of the Register.

(c) Upon its receipt of an Assignment and Acceptance executed by the parties thereto, together with any Notes subject to such assignment and payment of the processing fee, the Administrative Agent shall, if such Assignment and Acceptance has been completed, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register, and (iii) give prompt notice thereof to the parties thereto.

(d) Each Lender may sell participations to one or more Persons in all or a portion of its rights, obligations or rights and obligations under this Agreement (including all or a portion of its Commitments or its Advances) provided, however, that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) the participant shall be entitled to the benefit of the right of set-off contained in Section 7.5, and (iv) the Borrower shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement, and such Lender shall retain the sole right to enforce the obligations of the Borrower relating to its Advances and its Notes and to approve any amendment, modification, or waiver of any provision of this Agreement (other than amendments, modifications, or waivers decreasing the amount of principal of or the rate at which interest is payable on such Advances or Notes, extending any scheduled principal payment date or date fixed for the payment of interest on such Advances or Notes, or extending its Commitment).

(e) Notwithstanding any other provision set forth in this Agreement, any Lender may at any time assign and pledge all or any portion of its Advances and its Notes to any Federal Reserve Bank as collateral security pursuant to Regulation A and any Operating Circular issued by such Federal Reserve Bank. No such assignment shall release the assigning Lender from its obligations hereunder.

(f) Any Lender may furnish any information concerning the Borrower or any of its Subsidiaries in the possession of such Lender from time to time to assignees and participants (including prospective assignees and participants), subject, however, to the provisions of the following paragraph Section 9.8.

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Section 9.8 Confidentiality. The Administrative Agent and each Lender (each a “Lending Party”) agree to keep confidential any information furnished or made available to it by any Credit Party pursuant to this Agreement; provided that nothing herein shall prevent any Lending Party from disclosing such information (a) to any other Lending Party or any Affiliate of any Lending Party, or any officer, director, employee, agent, or advisor of any Lending Party or Affiliate of any Lending Party for purposes of administering, negotiating, considering, processing, implementing, syndicating, assigning, or evaluating the credit facilities provided herein and the transactions contemplated hereby, (b) to any other Person if directly incidental to the administration of the credit facilities provided herein, (c) as required by any Legal Requirement, (d) upon the order of any court or administrative agency, (e) upon the request or demand of any regulatory agency or authority, (f) that is or becomes available to the public or that is or becomes available to any Lending Party other than as a result of a disclosure by any other Lending Party prohibited by this Agreement, (g) in connection with any litigation relating to this Agreement or any other Credit Document to which such Lending Party or any of its Affiliates may be a party, (h) to the extent necessary in connection with the exercise of any right or remedy under this Agreement or any other Credit Document, and (i) to any actual or proposed participant or assignee, in each case, subject to provisions similar to those contained in this Section 9.8. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, nothing in this Agreement shall (a) restrict any Lending Party from providing information to any bank or other regulatory or governmental authorities, including the Federal Reserve Board and its supervisory staff; (b) require or permit any Lending Party to disclose to any Credit Party that any information will be or was provided to the Federal Reserve Board or any of its supervisory staff; or (c) require or permit any Lending Party to inform any Credit Party of a current or upcoming Federal Reserve Board examination or any nonpublic Federal Reserve Board supervisory initiative or action.

Section 9.9 Notices, Etc. All notices and other communications shall be in writing and hand delivered with written receipt, telecopied, sent by facsimile (with a hard copy sent as otherwise permitted in this Section 9.9), sent by a nationally recognized overnight courier, or sent by certified mail, return receipt requested as follows: if to the Borrower or a Guarantor, as specified on Schedule II and if to any Lender, at its credit contact specified under its name on Schedule II. Each party may change its notice address by written notification to the other parties. All such notices and communications shall be effective when delivered, except that notices and communications to any Lender pursuant to Article 2 shall not be effective until received and, in the case of telecopy, such receipt is confirmed by such Lender, verbally or in writing.

Section 9.10 Intentionally Omitted.

Section 9.11 Usury Not Intended. It is the intent of the Borrower and each Lender in the execution and performance of this Agreement and the other Credit Documents to contract in strict compliance with applicable usury laws, including conflicts of law concepts, governing the Advances of each Lender including such applicable laws of the State of New York, if any, and the United States of America from time to time in effect. In furtherance

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thereof, the Lenders and the Borrower stipulate and agree that none of the terms and provisions contained in this Agreement or the other Credit Documents shall ever be construed to create a contract to pay, as consideration for the use, forbearance or detention of money, interest at a rate in excess of the Maximum Rate and that for purposes of this Agreement “interest” shall include the aggregate of all charges which constitute interest under such laws that are contracted for, charged or received under this Agreement; and in the event that, notwithstanding the foregoing, under any circumstances the aggregate amounts taken, reserved, charged, received or paid on the Advances, include amounts which by applicable law are deemed interest which would exceed the Maximum Rate, then such excess shall be deemed to be a mistake and each Lender receiving same shall credit the same on the principal of its Notes (or if such Notes shall have been paid in full, refund said excess to the Borrower). In the event that the maturity of the Notes are accelerated by reason of any election of the holder thereof resulting from any Event of Default under this Agreement or otherwise, or in the event of any required or permitted prepayment, then such consideration that constitutes interest may never include more than the Maximum Rate, and excess interest, if any, provided for in this Agreement or otherwise shall be canceled automatically as of the date of such acceleration or prepayment and, if theretofore paid, shall be credited on the applicable Notes (or, if the applicable Notes shall have been paid in full, refunded to the Borrower of such interest). In determining whether or not the interest paid or payable under any specific contingencies exceeds the Maximum Rate, the Borrower and the Lenders shall to the maximum extent permitted under applicable law amortize, prorate, allocate and spread in equal parts during the period of the full stated term of the Notes all amounts considered to be interest under applicable law at any time contracted for, charged, received or reserved in connection with the Obligations. The provisions of this Section shall control over all other provisions of this Agreement or the other Credit Documents which may be in apparent conflict herewith.

Section 9.12 Usury Recapture. In the event the rate of interest chargeable under this Agreement at any time 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 Administrative Agent for the account of the Lenders 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 Lenders ever receive, collect or apply 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.

Section 9.13 Governing Law; Submission to Jurisdiction. This Agreement, the Notes and the other Credit Documents (unless otherwise expressly provided therein) shall be

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governed by, and construed and enforced in accordance with, the laws of the State of New York. The Borrower hereby irrevocably submits to the jurisdiction of any New York state or federal court sitting in New York in any action or proceeding arising out of or relating to this Agreement or the other Credit Documents, and the Borrower hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such court. The Borrower hereby unconditionally and irrevocably waives, to the fullest extent it may effectively do so, any right it may have to the defense of an inconvenient forum to the maintenance of such action or proceeding. The Borrower hereby agrees that service of copies of the summons and complaint and any other process which may be served in any such action or proceeding may be made by mailing or delivering a copy of such process to such Borrower at its address set forth in this Agreement. The Borrower agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Section shall affect the rights of any Lender to serve legal process in any other manner permitted by the law or affect the right of any Lender to bring any action or proceeding against the Borrower or its Property in the courts of any other jurisdiction.

Section 9.14 Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

Section 9.15 Waiver of Jury. THE BORROWER, THE LENDERS, THE ADMINISTRATIVE AGENT, THE ISSUING LENDER, AND THE SWING LINE LENDER HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN RESPECT OF ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER CREDIT DOCUMENT, OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 9.16 USA Patriot Act. Each Lender that is subject to the Patriot Act and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the Patriot Act it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower in accordance with the Patriot Act.

Section 9.17 Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable law, no Credit Party shall assert and the Borrower, on behalf of itself and its Subsidiaries, agrees not to assert, and hereby waives, any claim against any Indemnified Party, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Credit Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Advance or the use of the proceeds thereof. No Indemnified Party referred to in Section 9.2 above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such Indemnified Party through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Credit

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Documents or the transactions contemplated hereby or thereby other than for direct or actual damages resulting from the gross negligence or willful misconduct of such Indemnified Party as determined by a final and nonappealable judgment of a court of competent jurisdiction.

Section 9.18 Representations of Lenders. In connection with the issuance of the Securities, each Lender, for itself and no other Lender, makes the following representations:

(a) The Lender is acquiring the Securities for its own account, not as nominee or agent, and not with a view to, or for resale in connection with, any distribution or public offering thereof within the meaning of the Securities Act; provided, however, that by making the representations herein, the Lender does not agree to hold any of the Securities for any minimum or specific term and reserves the right to dispose of the securities at any time in accordance with, or pursuant to, a registration statement or an exemption from the registration requirements of the Securities Act.

(b) The Lender understands that (i) the Securities have not been registered under the Securities Act; (ii) the Securities are being issued pursuant to an exemption from registration, based in part upon the Borrower’s reliance upon the statements and representations made by the Lenders in this Agreement, and that the Securities must be held by the Lender indefinitely, and that the Lender must, therefore, bear the economic risk of such investment indefinitely, unless a subsequent disposition thereof is registered under the Securities Act or is exempt from such registration; (iii) each certificate representing Borrower’s common stock issuable pursuant to Sections 2.6(b) and 2.7(a) hereof will be endorsed with the following legend, and each book entry evidencing Borrower’s common stock issuable pursuant to Sections 2.6(b) and 2.7(a) hereof shall contain the following notation, until the earlier of (1) the time at which the Securities, as applicable, have been sold under a Registration Statement under the Securities Act, or (2) the date on which the Securities may be immediately sold without registration and without restriction (including without limitation as to sales volume by each holder thereof) as to the number of Securities, as applicable, to be sold, pursuant to Rule 144 under the Securities Act or otherwise:

THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE FORM AND SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE ISSUER, THE REGISTRAR AND THE TRANSFER AGENT. THESE SECURITIES MAY BE PLEDGED IN

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CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT.

(iv) the Borrower will instruct any transfer agent not to register any transfer of the Securities (or any portion thereof) until the applicable time set forth in clause (iii) above unless the conditions specified in the foregoing legends are satisfied or, if the opinion of counsel referred to above is to the further effect that such legend is not required in order to establish compliance with any provisions of the Securities Act or this Agreement, or other satisfactory assurances of such nature are given to the Borrower.

The Borrower acknowledges and agrees that any Lender may from time to time pledge, and/or grant a security interest in some or all of the Securities pursuant to a bona fide margin agreement in connection with a bona fide margin account with a financial institution that is an “accredited investor,” as defined in Rule 501(a) under the Securities Act, and, if required under the terms of such agreement or account, the Lender may transfer pledged or secured Securities to the pledgees or secured parties. Such a pledge or transfer shall not be subject to approval or consent of the Borrower and no legal opinion of legal counsel to the pledgee, secured party or pledgor shall be required in connection with the pledge, but such legal opinion may be required in connection with a subsequent transfer following default by the Lender transferee of the pledge. No notice shall be required of such pledge. At the applicable Lender’s expense, the Borrower will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities including the preparation and filing of any required prospectus supplement under Rule 424(b)(3) of the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of Selling Stockholders thereunder.

Book entries evidencing, and certificates representing, the Borrower’s common stock issuable pursuant to Sections 2.6(b) and 2.7(a) hereof shall not contain any notation or legend, as applicable, (including the notation and legend set forth in this Section): (i) following a sale of such shares of the Borrower’s common stock to an effective registration statement; (ii) following a sale of such shares of the Borrower’s common stock pursuant to Rule 144, or (iii) while such shares of the Borrower’s common stock are eligible for sale under Rule 144 without volume or manner of sale limitations, or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the SEC). Following such time as restrictive notations are not required to be made relative to any book entry evidencing, or legends are not required to be placed on certificates representing, the Borrower’s common stock issuable pursuant to Sections 2.6(b) and 2.7(a), the Borrower will (A) promptly upon a request by a Lender, instruct the transfer agent for the Borrower to remove the restrictive notation from Book Entries evidencing such Borrower’s common stock; and (B) no later than three Business Days following the delivery by a Lender to the Borrower or the Borrower’s transfer agent of a certificate representing such Borrower’s common stock containing a restrictive legend, deliver or cause to be delivered to such Lender a certificate representing the Borrower’s common stock that is free from all restrictive and other legends.

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The Borrower shall cause its counsel to issue a legal opinion to the Borrower’s transfer agent promptly after the effective date of a registration statement covering the Borrower’s common stock issuable pursuant to Sections 2.6(b) and 2.7(a) if required by the Borrower’s transfer agent to effect the removal of any notation on the book entries evidencing, or legend on the certificates representing, the Borrower’s common stock. The Borrower may not make any notation on its records or give instructions to any transfer agent of the Borrower that enlarge the restrictions on transfer set forth in this Section. Certificates for the Borrower’s common stock issuable pursuant to Sections 2.6(b) and 2.7(a) subject to legend removal hereunder shall be transmitted by the transfer agent of the Borrower to the Lenders by crediting the account of the Lender’s prime broker with the Depository Trust Company system.

Each Lender, severally and not jointly with the other Lenders, agrees that the removal of the restrictive notation on the book entries evidencing, or legend from certificates representing, the Borrower’s common stock issuable pursuant to Sections 2.6(b) and 2.7(a), as set forth in this Section 9.18, is predicated upon the Borrower’s reliance that the Lender will sell the Borrower’s common stock pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom.

(c) The Lender has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in connection with the transactions contemplated in this Agreement.

(d) The Lender is an “accredited investor” as such term is defined in Rule 501(a) under the Securities Act.

(e) The Lender is organized under the laws of the state set forth beneath such Lender’s name on Schedule I attached hereto, and its principal place of operations is in the state set forth beneath such Lender’s name on Schedule I attached hereto.

Section 9.19 Portfolio Interest. It is the intention of the parties to this Agreement that the Notes will be considered instruments eligible for the portfolio interest exemption under sections 871(h) or 881(c) of the Code.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

[Remainder of this page intentionally left blank. Signature pages follow.]

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EXECUTED as of the date first above written.

BORROWER:
FLOTEK INDUSTRIES, INC.
By:	/s/ John Chisholm
Name:	John Chisholm
Title:	President

Signature page to Amended and Restated Credit Agreement

(Flotek Industries, Inc.)

ADMINISTRATIVE AGENT:
WHITEBOX ADVISORS LLC
By:	/s/ Mark Strefling
Name:	Mark Strefling
Title:	Chief Legal Officer
LENDERS:
WHITEBOX HEDGED HIGH YIELD PARTNERS, LP
By:	Whitebox Hedged High Yield Advisors, LLC
Its:	General Partner
By:	Whitebox Advisors LLC
Its:	Managing Member
By:	/s/ Mark Strefling
Name:	Mark Strefling
Title:	Chief Legal Officer
IAM MINI-FUND 14 LIMITED
By:	Whitebox Advisors LLC
Its:	Investment Manager
By:	/s/ Mark Strefling
Name:	Mark Strefling
Title:	Chief Legal Officer
PANDORA SELECT PARTNERS, LP
By:	Pandora Select Advisors, LLC
Its:	General Partner
By:	Whitebox Advisors LLC
Its:	Managing Member
By:	/s/ Mark Strefling
Name:	Mark Strefling
Title:	Chief Legal Officer

Signature page to Amended and Restated Credit Agreement

(Flotek Industries, Inc.)

WHITEBOX SPECIAL OPPORTUNITIES FUND, LP – SERIES B
By:	Whitebox Special Opportunities Advisors, LLC
Its:	General Partner
By:	Whitebox Advisors LLC
Its:	Managing Member
By:	/s/ Mark Strefling
Name:	Mark Strefling
Title:	Chief Legal Officer
WHITEBOX COMBINED PARTNERS, LP
By:	Whitebox Combined Advisors, LLC
Its:	General Partner
By:	Whitebox Advisors LLC
Its:	Managing Member
By:	/s/ Mark Strefling
Name:	Mark Strefling
Title:	Chief Legal Officer
WHITEBOX CONVERTIBLE ARBITRAGE PARTNERS, LP
By:	Whitebox Convertible Arbitrage Advisors, LLC
Its:	General Partner
By:	Whitebox Advisors LLC
Its:	Managing Member
By:	/s/ Mark Strefling
Name:	Mark Strefling
Title:	Chief Legal Officer

Signature page to Amended and Restated Credit Agreement

(Flotek Industries, Inc.)

ECF VALUE FUND, L.P.
By:	Gates Capital Partners, L.P.
Its:	General Partner
By:	Gates Capital Management, Inc.
Its:	General Partner
By:	/s/ Jeffrey L. Gates
Name:	Jeffrey L. Gates
Title:	President
ECF VALUE FUND II, L.P.
By:	Gates Capital Partners, L.P.
Its:	General Partner
By:	Gates Capital Management, Inc.
Its:	General Partner
By:	/s/ Jeffrey L. Gates
Name:	Jeffrey L. Gates
Title:	President
ECF VALUE FUND INTERNATIONAL LTD.
By:	Gates Capital Management, Inc.
Its:	Investment Advisor
By:	/s/ Jeffrey L. Gates
Name:	Jeffrey L. Gates
Title:	President

Signature page to Amended and Restated Credit Agreement

(Flotek Industries, Inc.)

SCHEDULE I

Commitments, Applicable Lending Offices, Contact Information

ADMINISTRATIVE AGENT
Whitebox Advisors LLC (Delaware)	Address:	3033 Excelsior Blvd, Ste 300 Minneapolis, Minnesota 55416
	Attn:	Jake Mercer
	Telephone:	(612) 253-6049
	Facsimile:	(612) 253-6149
	with a copy to:	Faegre & Benson LLP
	Address:	2200 Wells Fargo Center
		90 South Seventh St.
		Minneapolis, Minnesota 55402
	Attn:	Michael Coddington
	Telephone:	(612) 766-7328
	Facsimile:	(612) 766-1600
CREDIT PARTIES
Borrower/Guarantors	Address for Notices:
	2930 W. Sam Houston Parkway North, Suite 300 Houston, Texas 77043
	Attn:	Jempy Neyman
	Telephone:	(713) 726-5370
	Facsimile:	(713) 726-5363
LENDERS
Whitebox Hedged High Yield Partners, LP	Applicable Lending
(British Virgin Islands)	Office:	c/o Whitebox Advisors LLC
		3033 Excelsior Blvd, Ste 300
Term Commitment: $858,309.64		Minneapolis, Minnesota 55416
	Address for Notices:
		3033 Excelsior Blvd, Ste 300 Minneapolis, Minnesota 55416
	Attn:	Jake Mercer
	Telephone:	(612) 253-6049
	Facsimile:	(612) 253-6149
IAM Mini-Fund 14 Limited	Applicable Lending
(United Kingdom)	Office:	c/o Whitebox Advisors LLC
		3033 Excelsior Blvd, Ste 300
Term Commitment: $230,906.93		Minneapolis, Minnesota 55416
	Address for Notices:
		3033 Excelsior Blvd, Ste 300 Minneapolis, Minnesota 55416
	Attn:	Jake Mercer
	Telephone:	(612) 253-6049
	Facsimile:	(612) 253-6149

Schedule I

Page 1 of 3

Pandora Select Partners, LP	Applicable Lending
(British Virgin Islands)	Office:	c/o Whitebox Advisors LLC
		3033 Excelsior Blvd, Ste 300
Term Commitment: $397,814.27		Minneapolis, Minnesota 55416
	Address for Notices:
		3033 Excelsior Blvd, Ste 300 Minneapolis, Minnesota 55416
	Attn:	Jake Mercer
	Telephone:	(612) 253-6049
	Facsimile:	(612) 253-6149
Whitebox Special Opportunities Fund, LP – Series B (Delaware)	Applicable Lending
	Office:	c/o Whitebox Advisors LLC 3033 Excelsior Blvd, Ste 300 Minneapolis, Minnesota 55416
Term Commitment:
$125,612.51	Address for Notices:
		3033 Excelsior Blvd, Ste 300 Minneapolis, Minnesota 55416
	Attn:	Jake Mercer
	Telephone:	(612) 253-6049
	Facsimile:	(612) 253-6149
Whitebox Combined Partners, LP	Applicable Lending
(British Virgin Islands)	Office:	c/o Whitebox Advisors LLC
		3033 Excelsior Blvd, Ste 300
Term Commitment:		Minneapolis, Minnesota 55416
$2,660,519.36
	Address for Notices:
		3033 Excelsior Blvd, Ste 300 Minneapolis, Minnesota 55416
	Attn:	Jake Mercer
	Telephone:	(612) 253-6049
	Facsimile:	(612) 253-6149
Whitebox Convertible Arbitrage	Applicable Lending
Partners, LP	Office:	c/o Whitebox Advisors LLC
(British Virgin Islands)		3033 Excelsior Blvd, Ste 300 Minneapolis, Minnesota 55416
Term Commitment:
$968,263.10	Address for Notices:
		3033 Excelsior Blvd, Ste 300 Minneapolis, Minnesota 55416
	Attn:	Jake Mercer
	Telephone:	(612) 253-6049
	Facsimile:	(612) 253-6149

Schedule I

Page 2 of 3

ECF Value Fund, L.P.	Applicable Lending
(Delaware)	Office:	c/o Gates Capital Management
		1177 Ave. of Americas, 32nd Floor
Term Commitment: $2,071,411.48		New York, NY 10036
	Address for Notices:	c/o Gates Capital Management 1177 Ave. of Americas, 32nd Floor New York, NY 10036
	Attn:	Jeff Gates
	Telephone:	(212) 626-0220
	Facsimile:
ECF Value Fund II, L.P.	Applicable Lending
(Delaware)	Office:	c/o Gates Capital Management
		1177 Ave. of Americas, 32nd Floor
Term Commitment: $1,307,328.07		New York, NY 10036
	Address for Notices:	c/o Gates Capital Management
		1177 Ave. of Americas, 32nd Floor
		New York, NY 10036
	Attn:	Jeff Gates
	Telephone:	(212) 626-0220
	Facsimile:
ECF Value Fund International Ltd.	Applicable Lending
(British Virgin Islands)	Office:	c/o Gates Capital Management
		1177 Ave. of Americas, 32nd Floor
Term Commitment: $697,924.96		New York, NY 10036
	Address for Notices:	c/o Gates Capital Management
		1177 Ave. of Americas, 32nd Floor
		New York, NY 10036
	Attn:	Jeff Gates
	Telephone:	(212) 626-0220
	Facsimile:

Schedule I

Page 3 of 3

EX-10.7

Exhibit 10.7

AMENDED AND RESTATED GUARANTY AGREEMENT

This Amended and Restated Guaranty Agreement (this “Guaranty”) dated as of March 31, 2010 is made by each of the undersigned (individually each a “Guarantor” and collectively, the “Guarantors”) in favor of WHITEBOX ADVISORS LLC, as Administrative Agent (in such capacity, together with its successors and assigns, the “Administrative Agent”) for the ratable benefit of itself and the Lenders (as defined below) (the Administrative Agent and the Lenders, individually each a “Beneficiary”, and collectively, the “Beneficiaries”).

WITNESSETH:

A. Flotek Industries, Inc., a Delaware corporation (the “Borrower”), Wells Fargo Bank, National Association, as administrative agent (the “Original Agent”), and various lenders party thereto (the “Original Lenders”) are parties to that certain Credit Agreement dated as of March 31, 2008 (as heretofore amended, restated, supplemented or otherwise modified from time to time, the “Original Credit Agreement”).

B. In connection with the Original Credit Agreement, the Guarantors executed a Guaranty Agreement dated as of March 31, 2008 (as heretofore amended, restated, supplemented or otherwise modified from time to time, the “Original Guaranty”) in favor of the Original Agent.

C. Pursuant to a Nonrecourse Assignment Agreement (Syndicated Faciity) dated as of March 17, 2010, the Original Lenders and the Original Agent assigned all of their rights and obligations under, among other things, the Original Credit Agreement and the Original Guaranty to the Administrative Agent and the Lenders (as defined in the Credit Agreement defined below).

D. The Borrower, the Administrative Agent and the lenders party thereto from time to time (the “Lenders”) are party to that certain Amended and Restated Credit Agreement of even date herewith (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), pursuant to which the Borrower, the Administrative Agent and the Lenders agreed to amend and restate the Original Credit Agreement in its entirety.

E. It is a condition precedent to the effectiveness of the Credit Agreement that the Guarantors execute and deliver this Guaranty to amend and restate the Original Guaranty in its entirety as set forth herein without constituting a novation of the obligations, liabilities and indebtedness of the Guarantors thereunder

F. Each Guarantor is a Subsidiary of the Borrower and will derive substantial direct and indirect benefit from the transactions contemplated by the Credit Agreement and the other Credit Documents (as defined in the Credit Agreement).

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Guarantors and the Administrative Agent for the benefit of the Beneficiaries, do hereby further agree to amend and restate the Original Guaranty as follows:

AGREEMENT

Section 1. Definitions. All capitalized terms not otherwise defined in this Guaranty that are defined in the Credit Agreement shall have the meanings assigned to such terms by the Credit Agreement.

Section 2. Guaranty.

(a) Each Guarantor hereby absolutely, unconditionally and irrevocably guarantees the punctual payment and performance, when due, whether at stated maturity, by acceleration or otherwise, of all Obligations, whether absolute or contingent and whether for principal, interest (including, without limitation, interest that but for the existence of a bankruptcy, reorganization or similar proceeding would accrue), fees, amounts required to be provided as collateral, indemnities, expenses or otherwise (collectively, the “Guaranteed Obligations”). Without limiting the generality of the foregoing, each Guarantor’s liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by the Borrower to the Administrative Agent or any Lender under the Credit Documents but for the fact that they are unenforceable or not allowable due to insolvency or the existence of a bankruptcy, reorganization or similar proceeding involving the Borrower.

(b) It is the intention of the Guarantors and each Beneficiary that the amount of the Guaranteed Obligations guaranteed by each Guarantor shall be in, but not in excess of, the maximum amount permitted by fraudulent conveyance, fraudulent transfer and similar Legal Requirement applicable to such Guarantor. Accordingly, notwithstanding anything to the contrary contained in this Guaranty or in any other agreement or instrument executed in connection with the payment of any of the Guaranteed Obligations, the amount of the Guaranteed Obligations guaranteed by a Guarantor under this Guaranty shall be limited to an aggregate amount equal to the largest amount that would not render such Guarantor’s obligations hereunder subject to avoidance under Section 548 of the United States Bankruptcy Code or any comparable provision of any other applicable law.

Section 3. Guaranty Absolute. Each Guarantor guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of the Credit Documents, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Administrative Agent or any Lender with respect thereto but subject to Section 2(b) above. The liability of each Guarantor executing this Guaranty, and of any other Person or entity guarantying any or all of the Guaranteed Obligations, shall be joint and several. The obligations of each Guarantor under this Guaranty are independent of the Guaranteed Obligations or any other obligations of any other Person under the Credit Documents, and a separate action or actions may be brought and prosecuted against a Guarantor to enforce this Guaranty, irrespective of whether any action is brought against the Borrower, any other Guarantor or any other Person or whether the Borrower, any other Guarantor or any other Person is joined in any such action or actions. The liability of each Guarantor under this Guaranty shall be irrevocable, absolute and unconditional irrespective of, and each Guarantor hereby irrevocably waives any defenses it may now or hereafter have in any way relating to, any or all of the following:

(a) any lack of validity or enforceability of any Credit Document or any agreement or instrument relating thereto or any part of the Guaranteed Obligations being irrecoverable;

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(b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations or any other obligations of any Person under the Credit Documents, or any other amendment or waiver of or any consent to departure from any Credit Document, including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to the Borrower or otherwise;

(c) any taking, exchange, release or non-perfection of any Collateral, or any taking, release or amendment or waiver of or consent to departure from any other guaranty, for all or any of the Guaranteed Obligations;

(d) any manner of application of Collateral, or proceeds thereof, to all or any of the Guaranteed Obligations, or any manner of sale or other disposition of any Collateral for all or any of the Guaranteed Obligations or any other obligations of any other Person under the Credit Documents or any other assets of the Borrower or any of its Subsidiaries;

(e) any change, restructuring or termination of the corporate structure or existence of the Borrower or any of its Subsidiaries;

(f) any failure of any Lender, the Administrative Agent or any other Beneficiary to disclose to the Borrower or any Guarantor any information relating to the business, condition (financial or otherwise), operations, properties or prospects of any Person now or in the future known to the Administrative Agent, any Lender or any other Beneficiary (and each Guarantor hereby irrevocably waives any duty on the part of any Beneficiary to disclose such information);

(g) any signature of any officer of the Borrower being mechanically reproduced in facsimile or otherwise; or

(h) any other circumstance or any existence of or reliance on any representation by any Beneficiary that might otherwise constitute a defense available to, or a discharge of, the Borrower, any Guarantor or any other guarantor, surety or other Person.

Section 4. Continuation and Reinstatement, Etc. Each Guarantor agrees that, to the extent that payments of any of the Guaranteed Obligations are made, or any Lender or the Administrative Agent receives any proceeds of Collateral, and such payments or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, or otherwise required to be repaid, then to the extent of such repayment the Guaranteed Obligations shall be reinstated and continued in full force and effect as of the date such initial payment or collection of proceeds occurred. EACH GUARANTOR SHALL DEFEND AND INDEMNIFY EACH BENEFICIARY FROM AND AGAINST ANY CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE UNDER THIS SECTION 4 (INCLUDING REASONABLE ATTORNEYS’ FEES AND EXPENSES) IN THE DEFENSE OF ANY SUCH ACTION OR SUIT, INCLUDING SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE ARISING AS A RESULT OF THE INDEMNIFIED

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BENEFICIARY’S OWN NEGLIGENCE BUT EXCLUDING SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE THAT IS FOUND IN A FINAL, NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM SUCH INDEMNIFIED BENEFICIARY’S GROSS NEGLIGENCE, WILLFUL MISCONDUCT, OR BAD FAITH.

Section 5. Waivers and Acknowledgments.

(a) Each Guarantor hereby waives promptness, diligence, presentment, notice of acceptance and any other notice with respect to any of the Guaranteed Obligations and this Guaranty and any requirement that any Beneficiary protect, secure, perfect or insure any Lien or any property or exhaust any right or take any action against the Borrower or any other Person or any collateral.

(b) Each Guarantor hereby irrevocably waives any right to revoke this Guaranty, and acknowledges that this Guaranty is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future.

(c) Each Guarantor acknowledges that it will receive substantial direct and indirect benefits from the financing arrangements involving the Borrower or any Subsidiary of the Borrower contemplated by the Credit Documents and that the waivers set forth in this Guaranty are knowingly made in contemplation of such benefits.

Section 6. Subrogation and Subordination.

(a) No Guarantor will exercise any rights that it may now have or hereafter acquire against the Borrower or any other Person to the extent that such rights arise from the existence, payment, performance or enforcement of such Guarantor’s obligations under this Guaranty or any other Credit Document, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of any Beneficiary against the Borrower or any other Person, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from the Borrower or any other Person, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right, unless and until all of the Guaranteed Obligations and any and all other amounts payable by the Guarantors under this Guaranty shall have been paid in full in cash and all Commitments shall have expired or terminated. If any amount shall be paid to a Guarantor in violation of the preceding sentence at any time prior to (a) the payment in full in cash of the Guaranteed Obligations and any and all other amounts payable by the Guarantors under this Guaranty and (b) the termination of the Commitments, such amount shall be held in trust for the benefit of the Beneficiaries and shall forthwith be paid to the Administrative Agent to be credited and applied to the Guaranteed Obligations and any and all other amounts payable by the Guarantors under this Guaranty, whether matured or unmatured, in accordance with the terms of the Credit Documents.

(b) Each Guarantor and the Borrower agrees that all Subordinated Guarantor Obligations (as hereinafter defined) are and shall be subordinate and inferior in rank, preference

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and priority to all obligations of such Guarantor in respect of the Guaranteed Obligations hereunder, and the Borrower and such Guarantor shall, if requested by the Administrative Agent, execute a subordination agreement reasonably satisfactory to the Administrative Agent to more fully set out the terms of such subordination. Each Guarantor and the Borrower agrees that none of the Subordinated Guarantor Obligations shall be secured by a Lien on any Collateral or any other assets of such Guarantor or any ownership interests in any Subsidiary of such Guarantor. “Subordinated Guarantor Obligations” means any and all obligations and liabilities of a Guarantor owing to the Borrower or any other Guarantor, direct or contingent, due or to become due, now existing or hereafter arising, including, without limitation, all future advances, with interest, attorneys’ fees, expenses of collection and costs.

Section 7. Representations and Warranties. Each Guarantor hereby represents and warrants as follows:

(a) There are no conditions precedent to the effectiveness of this Guaranty. Such Guarantor benefits from executing this Guaranty.

(b) Such Guarantor has, independently and without reliance upon the Administrative Agent or any Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Guaranty, and such Guarantor has established adequate means of obtaining from the Borrower and each other relevant Person on a continuing basis information pertaining to, and is now and on a continuing basis will be completely familiar with, the business, condition (financial and otherwise), operations, properties and prospects of the Borrower and each other relevant Person.

(c) The obligations of such Guarantor under this Guaranty are the valid, binding and legally enforceable obligations of such Guarantor, (except as limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws at the time in effect affecting the rights of creditors generally and (ii) general principles of equity whether applied by a court of law or equity), and the execution and delivery of this Guaranty by such Guarantor has been duly and validly authorized in all respects by all requisite corporate, limited liability company or partnership actions on the part of such Guarantor, and the Person who is executing and delivering this Guaranty on behalf of such Guarantor has full power, authority and legal right to so do, and to observe and perform all of the terms and conditions of this Guaranty on such Guarantor’s part to be observed or performed.

Section 8. Right of Set-Off. Upon the occurrence and during the continuance of any Event of Default, any Lender, the Administrative Agent and any other Beneficiary is hereby authorized at any time, to the fullest extent permitted by law, to set-off and apply any deposits (general or special, time or demand, provisional or final) and other indebtedness owing by such Beneficiary to the account of each Guarantor against any and all of the obligations of the Guarantors under this Guaranty, irrespective of whether or not such Beneficiary shall have made any demand under this Guaranty and although such obligations may be contingent and unmatured. Such Beneficiary shall promptly notify the affected Guarantor after any such set-off and application is made, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Beneficiaries under this Section 8 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which any Beneficiary may have.

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Section 9. Amendments, Etc. No amendment or waiver of any provision of this Guaranty and no consent to any departure by any Guarantor therefrom shall in any event be effective unless the same shall be in writing and signed by the affected Guarantor and the Administrative Agent, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

Section 10. Notices, Etc. All notices and other communications provided for hereunder shall be sent in the manner provided for in Section 9.9 of the Credit Agreement in writing and mailed, telecopied or delivered, if to a Guarantor, at its address for notices specified in Schedule I to the Security Agreement, and if to the Administrative Agent or any Lender, at its address specified in or pursuant to the Credit Agreement. All such notices and communications shall be effective when delivered, except that notices and communications to the Administrative Agent shall not be effective until received by the Administrative Agent.

Section 11. No Waiver: Remedies. No failure on the part of the Administrative Agent or any other Beneficiary to exercise, and no delay in exercising, any right or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right or remedy. The rights and remedies herein provided are cumulative and not exclusive of any rights and remedies provided by law.

Section 12. Continuing Guaranty: Assignments under the Credit Agreement. This Guaranty is a continuing guaranty and shall (a) remain in full force and effect until the payment in full of all Guaranteed Obligations and all other amounts payable under the Credit Documents (other than reimbursement and indemnity obligations which survive but are not yet due and payable) and the termination of all the Commitments, (b) be binding upon each Guarantor and its successors and assigns, and (c) inure to the benefit of and be enforceable by the Administrative Agent and each Lender and their respective successors, and, in the case of transfers and assignments made in accordance with the Credit Agreement, transferees and assigns. Without limiting the generality of the foregoing clause (c), subject to Section 9.7 of the Credit Agreement, any Lender may assign or otherwise transfer all or any portion of its rights and obligations under the Credit Agreement (including, without limitation, all or any portion of its Commitment, the Advances owing to it and the Note or Notes held by it) to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such Lender herein or otherwise, subject, however, in all respects to the provisions of the Credit Agreement. Each Guarantor acknowledges that upon any Person becoming a Lender or the Administrative Agent in accordance with the Credit Agreement, such Person shall be entitled to the benefits hereof.

Section 13. Governing Law. This Guaranty shall be governed by, and construed and enforced in accordance with, the laws of the State of New York. Each Guarantor hereby irrevocably submits to the jurisdiction of any New York state or federal court sitting in New York in any action or proceeding arising out of or relating to this Guaranty and the other Credit Documents, and each Guarantor hereby irrevocably agrees that all claims in respect of such

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action or proceeding may be heard and determined in such court. Each Guarantor hereby irrevocably waives, to the fullest extent it may effectively do so, any right it may have to the defense of an inconvenient forum to the maintenance of such action or proceeding. Each Guarantor hereby agrees that service of copies of the summons and complaint and any other process which may be served in any such action or proceeding may be made by mailing or delivering a copy of such process to such Guarantor at its address set forth in the Credit Agreement or set forth on the signature page of this Guaranty. Each Guarantor agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Section shall affect the rights of any Beneficiary to serve legal process in any other manner permitted by the law or affect the right of any Beneficiary to bring any action or proceeding against any Guarantor or its Property in the courts of any other jurisdiction.

Section 14. INDEMNIFICATION. EACH GUARANTOR SHALL INDEMNIFY EACH OF THE BENEFICIARIES AND THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS FROM, AND DISCHARGE, RELEASE, AND HOLD EACH OF THEM HARMLESS AGAINST, ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, CLAIMS, EXPENSES, OR DAMAGES OF ANY KIND OR NATURE WHATSOEVER TO WHICH ANY OF THEM MAY BECOME SUBJECT RELATING TO OR ARISING OUT OF THIS GUARANTY, INCLUDING ANY LIABILITIES, OBLIGATIONS, LOSSES, CLAIMS, EXPENSES, OR DAMAGES WHICH ARISE OUT OF OR RESULT FROM (A) ANY ACTUAL OR PROPOSED USE BY THE BORROWER, ANY GUARANTOR OR ANY AFFILIATE OF THE BORROWER OR ANY GUARANTOR OF THE PROCEEDS OF THE ADVANCES, (B) ANY BREACH BY THE BORROWER OR ANY GUARANTOR OF ANY PROVISION OF THE CREDIT AGREEMENT OR ANY OTHER CREDIT DOCUMENT, (C) ANY INVESTIGATION, LITIGATION OR OTHER PROCEEDING (INCLUDING ANY THREATENED INVESTIGATION OR PROCEEDING) RELATING TO THE FOREGOING, (D) ANY ENVIRONMENTAL CLAIM OR REQUIREMENT OF ENVIRONMENTAL LAWS CONCERNING OR RELATING TO THE PRESENT OR PREVIOUSLY-OWNED OR OPERATED PROPERTIES OF THE BORROWER, ANY GUARANTOR OR THE OPERATIONS OR BUSINESS, OF THE BORROWER OR ANY GUARANTOR INCLUDING ANY MATTERS DISCLOSED WITHIN THE CREDIT AGREEMENT, OR (E) ANY ENVIRONMENTAL CLAIM OR REQUIREMENT OF ENVIRONMENTAL LAWS CONCERNING OR RELATED TO THE BORROWER’S OR ANY GUARANTOR’S PROPERTIES AND EACH GUARANTOR SHALL REIMBURSE THE BENEFICIARIES AND THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS UPON DEMAND FOR ANY REASONABLE OUT-OF-POCKET EXPENSES (INCLUDING REASONABLE OUTSIDE LEGAL FEES) INCURRED IN CONNECTION WITH ANY SUCH INVESTIGATION, LITIGATION OR OTHER PROCEEDING; AND EXPRESSLY INCLUDING ANY SUCH LOSSES, LIABILITIES, CLAIMS, DAMAGES, OR EXPENSE INCURRED BY REASON OF THE PERSON BEING INDEMNIFIED’S OWN NEGLIGENCE, BUT EXCLUDING ANY SUCH LOSSES, LIABILITIES, CLAIMS, DAMAGES OR EXPENSES THAT IS FOUND IN A FINAL, NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM SUCH INDEMNIFIED PERSON’S GROSS NEGLIGENCE, WILLFUL MISCONDUCT, OR BAD FAITH.

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Section 15. WAIVER OF JURY TRIAL. EACH GUARANTOR HEREBY ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED BY AND HAS CONSULTED WITH COUNSEL OF ITS CHOICE, AND HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN RESPECT OF ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY, ANY OTHER CREDIT DOCUMENT, OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

Section 16. Additional Guarantors. Pursuant to Section 5.6 of the Credit Agreement, certain Subsidiaries of the Borrower that were not in existence on the date of the Credit Agreement are required to enter into this Guaranty as a Guarantor upon becoming a Subsidiary. Upon execution and delivery after the date hereof by the Administrative Agent and such Subsidiary of an instrument in the form of Annex 1, such Subsidiary shall become a Guarantor hereunder with the same force and effect as if originally named as a Guarantor herein. The execution and delivery of any instrument adding an additional Guarantor as a party to this Guaranty shall not require the consent of any other Guarantor hereunder. The rights and obligations of each Guarantor hereunder shall remain in full force and effect notwithstanding the addition of any new Guarantor as a party to this Guaranty.

Section 17. USA Patriot Act. Each Beneficiary that is subject to the Act (as hereinafter defined) hereby notifies each Guarantor that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies such Guarantor, which information includes the name and address of such Guarantor and other information that will allow such Beneficiary or the Administrative Agent, as applicable, to identify such Guarantor in accordance with the Act. Following a request by any Beneficiary, each Guarantor shall promptly furnish all documentation and other information that such Beneficiary reasonably requests in order to comply with the its ingoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Act.

Section 18. Miscellaneous. THIS GUARANTY AND THE CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THE LIABILITY OF ALL PERSONS AND ENTITIES WHO ARE IN ANY MANNER OBLIGATED HEREUNDER SHALL BE JOINT AND SEVERAL. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

Section 19. Amendment to and Restatement of Earlier Agreement. This Guaranty constitutes an amendment to, and a complete restatement of, the Original Guaranty, but does not constitute a novation of the obligations, liabilities and indebtedness of the Grantors thereunder.

[Remainder of this page intentionally left blank.]

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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly executed as of the date first above written.

GUARANTORS:
TELEDRIFT COMPANY FLOTEK PAYMASTER, INC. MATERIAL TRANSLOGISTICS, INC. PETROVALVE, INC. TURBECO, INC. USA PETROVALVE, INC. FLOTEK INTERNATIONAL, INC. PADKO INTERNATIONAL INCORPORATED FLOTEK ECUADOR INVESTMENTS, LLC FLOTEK ECUADOR MANAGEMENT, LLC
By	/s/ John Chisholm
	John Chisholm
	President
SOONER ENERGY SERVICES, LLC CESI MANUFACTURING, LLC CESI CHEMICAL, INC.
By	/s/ John Chisholm
	John Chisholm
	Chief Executive Officer
FLOTEK INDUSTRIES FZE
By	/s/ John Chisholm
	John Chisholm
	President
BORROWER: FLOTEK INDUSTRIES, INC.
By	/s/ John Chisholm
	John Chisholm
	President

Signature Page to Amended and Restated Guaranty Agreement

Annex 1 to the Guaranty Agreement

SUPPLEMENT NO.              dated as of                      (the “Supplement”), to the Amended and Restated Guaranty Agreement dated as of             , 2010 (as amended, supplemented or otherwise modified from time to time, the “Guaranty Agreement”), by each subsidiary of the Borrower party thereto (individually each a “Guarantor” and collectively, the “Guarantors”) and in favor of Whitebox Advisors LLC, as Administrative Agent (in such capacity, together with its successors and assigns, the “Administrative Agent”) for the ratable benefit of the Beneficiaries (as defined in the Guaranty Agreement).

A. Reference is made to the Amended and Restated Credit Agreement dated as of             , 2010 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Flotek Industries, Inc., a Delaware corporation (the “Borrower”), the lenders from time to time party thereto (the “Lenders”) and the Administrative Agent.

B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Guaranty Agreement and the Credit Agreement.

C. The Guarantors entered into the Guaranty Agreement in order to induce the Lenders to make Advances to the Borrower. Section 16 of the Guaranty Agreement provides that additional Subsidiaries of the Borrower may become Guarantors under the Guaranty Agreement by execution and delivery of an instrument in the form of this Supplement. The undersigned Subsidiary of the Borrower (the “New Guarantor”) is executing this Supplement in accordance with the requirements of the Credit Agreement to become a Guarantor under the Guaranty Agreement in order to induce the Lenders to continue to extend certain credit accommodations to the Borrower.

Accordingly, the Administrative Agent and the New Guarantor agree as follows:

SECTION 1. In accordance with Section 16 of the Guaranty Agreement, the New Guarantor by its signature below becomes a Guarantor under the Guaranty Agreement with the same force and effect as if originally named therein as a Guarantor and the New Guarantor hereby (a) agrees to all the terms and provisions of the Guaranty Agreement applicable to it as a Guarantor thereunder and (b) represents and warrants that the representations and warranties made by it as a Guarantor thereunder are true and correct in all material respects on and as of the date hereof. Each reference to a “Guarantor” in the Guaranty Agreement shall be deemed to include the New Guarantor. The Guaranty Agreement is hereby incorporated herein by reference.

SECTION 2. The New Guarantor represents and warrants to the Administrative Agent and the other Beneficiaries that this Supplement has been duly authorized, executed and delivered by it by all requisite corporate limited liability company or partnership action and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)).

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SECTION 3. This Supplement may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Supplement shall become effective when the Administrative Agent shall have received counterparts of this Supplement that, when taken together, bear the signatures of the New Guarantor and the Administrative Agent. Delivery of an executed signature page to this Supplement by fax transmission shall be as effective as delivery of a manually executed counterpart of this Supplement.

SECTION 4. Except as expressly supplemented hereby, the Guaranty Agreement shall remain in full force and effect.

SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. The New Guarantor hereby irrevocably submits to the jurisdiction of any New York state or federal court sitting in New York in any action or proceeding arising out of or relating to this Supplement or the Guaranty and the other Credit Documents, and the New Guarantor hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such court. The New Guarantor hereby irrevocably waives, to the fullest extent it may effectively do so, any right it may have to the defense of an inconvenient forum to the maintenance of such action or proceeding. The New Guarantor hereby agrees that service of copies of the summons and complaint and any other process which may be served in any such action or proceeding may be made by mailing or delivering a copy of such process to such Guarantor at its address set forth on the signature page hereof. The New Guarantor agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Section shall affect the rights of any Beneficiary to serve legal process in any other manner permitted by the law or affect the right of any Beneficiary to bring any action or proceeding against the New Guarantor or its Property in the courts of any other jurisdiction.

SECTION 6. In case any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and in the Guaranty Agreement shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision hereof in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 7. All communications and notices hereunder shall be in writing and given as provided in Section 10 of the Guaranty Agreement.

THIS SUPPLEMENT, THE GUARANTY AGREEMENT AND THE OTHER CREDIT DOCUMENTS, AS DEFINED IN THE CREDIT AGREEMENT REFERRED TO IN THIS

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SUPPLEMENT, REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.

IN WITNESS WHEREOF, the New Guarantor and the Administrative Agent have duly executed this Supplement to the Guaranty Agreement as of the day and year first above written.

[Name of New Guarantor]

By:

Name:

Title:

Whitebox Advisors LLC, as Administrative Agent

By:

Name:

Title:

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EX-10.8

Exhibit 10.8

AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT

This AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT (this “Security Agreement”) dated as of March 31, 2010, is made by FLOTEK INDUSTRIES, INC., a Delaware corporation (the “Borrower”), and each subsidiary of the Borrower signatory hereto (together with the Borrower, the “Grantors” and individually, a “Grantor”), in favor of Whitebox Advisors LLC, as Administrative Agent for the Lenders (as defined in the Credit Agreement described below) (in such capacity, together with its successors and assigns, the “Administrative Agent”) for the benefit of each of the Secured Parties (as defined in the Credit Agreement described below).

WITNESSETH:

A. The Borrower, Wells Fargo Bank, National Association, as administrative agent (the “Original Agent”), and various lenders party thereto (the “Original Lenders”) are parties to that certain Credit Agreement dated as of March 31, 2008 (as heretofore amended, restated, supplemented or otherwise modified from time to time, the “Original Credit Agreement”).

B. In connection with the Original Credit Agreement, the Grantors executed a Pledge and Security Agreement dated as of March 31, 2008 (as heretofore amended, restated, supplemented or otherwise modified from time to time, the “Original Pledge and Security Agreement”) in favor of the Original Agent.

C. Pursuant to a Nonrecourse Assignment Agreement (Syndicated Facility) dated as of March 17, 2010, the Original Lenders and the Original Agent assigned all of their rights and obligations under, among other things, the Original Credit Agreement and the Original Pledge and Security Agreement to the Administrative Agent and the Lenders (as defined in the Credit Agreement defined below).

D. The Borrower, the Administrative Agent and the lenders party thereto from time to time (the “Lenders”) are party to that certain Amended and Restated Credit Agreement of even date herewith (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), pursuant to which the Borrower, the Administrative Agent and the Lenders agreed to amended and restate the Original Credit Agreement in its entirety.

E. It is a condition precedent to the effectiveness of the Credit Agreement that the Grantors execute and deliver this Security Agreement to amend and restate the Original Pledge and Security Agreement in its entirety as set forth herein, without constituting a novation of the obligations, liabilities and indebtedness of the Grantors thereunder.

F. Each Grantor will derive substantial direct and indirect benefits from the transactions contemplated by the Credit Agreement, each Grantor is willing to execute and deliver and perform its obligations under this Security Agreement to secure its obligations under the Credit Agreement, the Guaranty and the other Credit Documents.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Grantor agrees, for the benefit of the Secured Parties, to amend and restate the Original Pledge and Security Agreement as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1. Certain Terms. The following terms (whether or not underscored) when used in this Security Agreement, including its preamble and recitals, shall have the following meanings (such definitions to be equally applicable to the singular and plural forms thereof):

“Administrative Agent” is defined in the preamble.

“Certificated Equipment” means any Equipment the ownership of which is evidenced by a certificate of title or for which applicable Legal Requirement requires the issuance of a certificate of title.

“Collateral” is defined in Section 2.1.

“Collateral Account” is defined in Section 4.3(b).

“Computer Hardware and Software Collateral” means (a) all computer and other electronic data processing hardware, integrated computer systems, central processing units, memory units, display terminals, printers, features, computer elements, card readers, tape drives, hard and soft disk drives, cables, electrical supply hardware, generators, power equalizers, accessories and all peripheral devices and other related computer hardware, including all operating system software, utilities and application programs in whatsoever form, (b) software programs (including both source code, object code and all related applications and data files), designed for use on the computers and electronic data processing hardware described in clause (a) above, (c) all firmware associated therewith, (d) all documentation (including flow charts, logic diagrams, manuals, guides, specifications, training materials, charts and pseudo codes) with respect to such hardware, software and firmware described in the preceding clauses (a) through (c), and (e) all rights with respect to all of the foregoing, including copyrights, licenses, options, warranties, service contracts, program services, test rights, maintenance rights, support rights, improvement rights, renewal rights and indemnifications and any substitutions, replacements, improvements, error corrections, updates, additions or model conversions of any of the foregoing.

“Control Agreement” means an authenticated record in form and substance reasonably satisfactory to the Administrative Agent, that provides for the Administrative Agent (for the ratable benefit of the Secured Parties) to have “control” (as defined in the UCC) over certain Collateral.

“Copyright Collateral” means all copyrights of any Grantor, registered or unregistered and whether published or unpublished, now or hereafter in force throughout the world including all of such Grantor’s rights, titles and interests in and to all copyrights registered in the United States Copyright Office or anywhere else in the world, including without limitation those copyrights referred to in Item C of Schedule III hereto, and registrations and recordings thereof

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and all applications for registration thereof, whether pending or in preparation, all copyright licenses, the right to sue for past, present and future infringements of any of the foregoing, all rights corresponding thereto, all extensions and renewals of any thereof and all Proceeds of the foregoing, including licenses, royalties, income, payments, claims, damages and Proceeds of suit, which are owned or licensed by such Grantor.

“Credit Agreement” is defined in the first recital.

“Distributions” means all cash, cash dividends, stock dividends, other distributions, liquidating dividends, shares of stock resulting from (or in connection with the exercise of) stock splits, reclassifications, warrants, options, non-cash dividends, and all other distributions or payments (whether similar or dissimilar to the foregoing) on or with respect to, or on account of, any Pledged Share or Pledged Interest or other rights or interests constituting Collateral.

“Equipment” is defined in Section 2.1(a).

“Excluded Stock” means 34% of the Equity Interests in each direct Foreign Subsidiary of the Grantors.

“General Intangibles” means all “general intangibles” and all “payment intangibles”, each as defined in the UCC, and shall include all interest rate or currency protection or hedging arrangements, all tax refunds, all licenses, permits, concessions and authorizations and all Intellectual Property Collateral (in each case, regardless of whether characterized as general intangibles under the UCC).

“Governmental Approval” is defined in Section 2.1(f).

“Grantor” is defined in the preamble.

“Indemnified Parties” is defined in Section 6.4(a).

“Intellectual Property Collateral” means, collectively, the Computer Hardware and Software Collateral, the Copyright Collateral, the Patent Collateral, the Trademark Collateral and the Trade Secrets Collateral.

“Inventory” is defined in Section 2.1(b).

“Lenders” is defined in the first recital.

“Obligor” means the Borrower or any Guarantor.

“Patent Collateral” means (a) all inventions and discoveries, whether patentable or not, all letters patent and applications for letters patent throughout the world, including without limitation those patents referred to in Item A of Schedule III hereto, and any patent applications in preparation for filing, (b) all reissues, divisions, continuations, continuations-in-part, extensions, renewals and reexaminations of any of the items described in clause (a), (c) all patent licenses, and other agreements providing any Grantor with the right to use any items of the type referred to in clauses (a) and (b) above, and (d) all Proceeds of, and rights associated with, the

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foregoing (including licenses, royalties income, payments, claims, damages and Proceeds of infringement suits), the right to sue third parties for past, present or future infringements of any patent or patent application, and for breach or enforcement of any patent license.

“Permitted Liens” means all Liens permitted by Section 6.2 of the Credit Agreement or any other Credit Document.

“Pledged Interests” means all Equity Interests or other ownership interests of any Pledged Interests Issuer described in Item A of Schedule I hereto; all registrations, certificates, articles, by-laws, regulations, limited liability company agreements or constitutive agreements governing or representing any such interests; all options and other rights, contractual or otherwise, at any time existing with respect to such interests, as such interests are amended, modified, or supplemented from time to time, and together with any interests in any Pledge Interests Issuer taken in extension or renewal thereof or substitution therefor.

“Pledged Interests Issuer” means each Person identified in Item A of Schedule I hereto as the issuer of the Pledged Shares or the Pledged Interests identified opposite the name of such Person.

“Pledged Note Issuer” means each Person identified in Item B of Schedule I hereto as the issuer of the Pledged Notes identified opposite the name of such Person.

“Pledged Notes” means all promissory notes of any Pledged Note Issuer evidencing Debt incurred pursuant to Section 6.1(b) of the Credit Agreement in form and substance reasonably satisfactory to the Administrative Agent delivered by any Grantor to the Administrative Agent as Pledged Property hereunder, as such promissory notes, in accordance with Section 7.3, are amended, modified or supplemented from time to time and together with any promissory note of any Pledged Note Issuer taken in extension or renewal thereof or substitution therefor.

“Pledged Property” means all Pledged Notes, Pledged Interests, Pledged Shares, all assignments of any amounts due or to become due with respect to the Pledged Interests or the Pledged Shares, all other instruments which are now being delivered by any Grantor to the Administrative Agent or may from time to time hereafter be delivered by any Grantor to the Administrative Agent for the purpose of pledge under this Security Agreement or any other Credit Document, and all proceeds of any of the foregoing.

“Pledged Shares” means all Equity Interests of any Pledged Interests Issuer identified under Item A of Schedule I which are delivered by any Grantor to the Administrative Agent as Pledged Property hereunder.

“Receivables” is defined in Section 2.1(c).

“Related Contracts” is defined in Section 2.1(c).

“Secured Obligations” is defined in Section 2.2.

“Secured Party” is defined in the preamble.

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“Securities Act” is defined in Section 6.2(a).

“Security Agreement” is defined in the preamble.

“Termination Date” means the date that all Secured Obligations (other than contingent Obligations with respect to indemnity and reimbursement of expenses as to which no claim has been made as of the time of determination) have been paid in full in cash, all Hedging Arrangements with any Secured Party have been terminated or novated to a counterparty that is not a Secured Party, and all Commitments shall have terminated.

“Trademark Collateral” means (a) (i) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, certification marks, collective marks, logos and other source or business identifiers, and all goodwill of the business associated therewith, now existing or hereafter adopted or acquired, including without limitation those trademarks referred to in Item B of Schedule III hereto, whether currently in use or not, all registrations and recordings thereof and all applications in connection therewith, whether pending or in preparation for filing, including registrations, recordings and applications in the United States Patent and Trademark Office or in any office or agency of the United States of America, or any State thereof or any other country or political subdivision thereof or otherwise, and all common-law rights relating to the foregoing, and (ii) the right to obtain all reissues, extensions or renewals of the foregoing (collectively referred to as the “Trademark”), (b) all trademark licenses for the grant by or to any Grantor of any right to use any trademark, (c) all of the goodwill of the business connected with the use of, and symbolized by the items described in, clause (a), and to the extent applicable clause (b), (d) the right to sue third parties for past, present and future infringements of any Trademark Collateral described in clause (a) and, to the extent applicable, clause (b), and (e) all Proceeds of, and rights associated with, the foregoing, including any claim by any Grantor against third parties for past, present or future infringement or dilution of any Trademark, Trademark registration or Trademark license, or for any injury to the goodwill associated with the use of any such Trademark or for breach or enforcement of any Trademark license and all rights corresponding thereto throughout the world.

“Trade Secrets Collateral” means all common law and statutory trade secrets and all other confidential, proprietary or useful information and all know-how obtained by or used in or contemplated at any time for use in the business of any Grantor, (all of the foregoing being collectively called a “Trade Secret”), including all Documents and things embodying, incorporating or referring in any way to such Trade Secret, all Trade Secret licenses, and including the right to sue for and to enjoin and to collect damages for the actual or threatened misappropriation of any Trade Secret and for the breach or enforcement of any such Trade Secret license.

“UCC” means the Uniform Commercial Code as in effect in the State of New York, as the same may be amended from time to time.

SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined herein or the context otherwise requires, terms used in this Security Agreement, including its preamble and recitals, have the meanings provided in the Credit Agreement.

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SECTION 1.3. UCC Definitions. Unless otherwise defined herein or the context otherwise requires, terms for which meanings are provided in the UCC are used in this Security Agreement, including its preamble and recitals, with such meanings.

ARTICLE II

SECURITY INTEREST

SECTION 2.1. Grant of Security Interest. Each Grantor hereby pledges, hypothecates, assigns, charges, mortgages, delivers, and transfers to the Administrative Agent, for its benefit and the ratable benefit of each of the other Secured Parties, and hereby grants to the Administrative Agent, for its benefit and the ratable benefit of each of the other Secured Parties, a continuing security interest in all of such Grantor’s following property, whether now or hereafter existing, owned or acquired by such Grantor, and wherever located, (collectively, the “Collateral”):

(a) all equipment in all of its forms (including but not limited to drilling platforms and rigs and remotely operated vehicles, trenchers, and other equipment used by any Grantor, vehicles, motor vehicles, rolling stock, vessels, aircraft), of such Grantor, wherever located, and all machinery, apparatus, installation facilities and other tangible personal property, and all parts thereof and all accessions, additions, attachments, improvements, substitutions, replacements and proceeds thereto and therefore (any and all of the foregoing being the “Equipment”);

(b) all inventory in all of its forms of such Grantor, wherever located, including (i) all oil, gas, or other hydrocarbons and all products and substances derived therefrom, all raw materials and work in process therefore, finished goods thereof, and materials used or consumed in the manufacture or production thereof, (ii) all goods in which such Grantor has an interest in mass or a joint or other interest or right of any kind (including goods in which such Grantor has an interest or right as consignee), and (iii) all goods which are returned to or repossessed by such Grantor, and all accessions thereto, products thereof and documents therefore (any and all such inventory, materials, goods, accessions, products and documents being the “Inventory”);

(c) all accounts, money, payment intangibles, deposit accounts (including the Collateral Accounts and all amounts on deposit therein and all cash equivalent investments carried therein and all proceeds thereof), contracts, contract rights, all rights constituting a right to the payment of money, chattel paper, documents, documents of title, instruments, letters of credit, letter-of-credit rights and General Intangibles of such Grantor, whether or not earned by performance or arising out of or in connection with the sale or lease of goods or the rendering of services, including all moneys due or to become due in repayment of any loans or advances, and all rights of such Grantor now or hereafter existing in and to all security agreements, guaranties, leases, agreements and other contracts securing or otherwise relating to any such accounts, money, payment intangibles, deposit accounts, contracts, contract rights, rights to the payment of money, chattel paper, documents, documents of title, instruments, letters of credit, letter-of-credit rights and General Intangibles (any and all such accounts, money, payment intangibles, deposit accounts, contracts, contract rights, rights to the payment of money, chattel paper,

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documents, documents of title, instruments, letters of credit, letter-of-credit rights and General Intangibles being the “Receivables”, and any and all such security agreements, guaranties, leases, agreements and other contracts being the “Related Contracts”);

(d) all Intellectual Property Collateral of such Grantor;

(e) all books, correspondence, credit files, records, invoices, tapes, cards, computer runs, writings, data bases, information in all forms, paper and documents and other property relating to, used or useful in connection with, evidencing, embodying, incorporating or referring to, any of the foregoing in this Section 2.1;

(f) all governmental approvals, permits, licenses, authorizations, consents, rulings, tariffs, rates, certifications, waivers, exemptions, filings, claims, orders, judgments and decrees (each a “Governmental Approval”), to the extent a security interest may be granted therein; provided that any Governmental Approval that by its terms or by operation of law would be void, voidable, terminable or revocable if mortgaged, pledged or assigned hereunder is expressly excepted and excluded from the Liens and terms of this Security Agreement, including the grant of security interest in this Section 2.1;

(g) all interest rate swap agreements, interest rate cap agreements and interest rate collar agreements, and all other agreements or arrangements designed to protect such Grantor against fluctuations in interest rates or currency exchange rates and all commodity hedge, commodity swap, exchange, forward, future, floor, collar or cap agreements, fixed price agreements and all other agreements or arrangements designed to protect such Grantor against fluctuations in commodity prices (including, without limitation, any Hedging Arrangement);

(h) to the extent not included in the foregoing, all bank accounts, investment property, fixtures and supporting obligations;

(i) all Pledged Interests, Pledged Notes, Pledged Shares and any other Pledged Property whether now or hereafter delivered to the Administrative Agent in connection with this Security Agreement and all Distributions, interest, and other payments and rights with respect to such Pledged Property;

(j) all accessions, substitutions, replacements, products, offspring, rents, issues, profits, returns, income and proceeds of and from any and all of the foregoing Collateral (including proceeds which constitute property of the types described in clauses (a), (b), (c), (d), (e), (f), (g), (h), and (i) and proceeds deposited from time to time in any lock boxes of such Grantor, and, to the extent not otherwise included, all payments and proceeds under insurance (whether or not the Administrative Agent is the loss payee thereof), or any condemnation award, indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the Collateral); and

(k) all of such Grantor’s other property and rights of every kind and description and interests therein, including without limitation, all other “Accounts”, “Certificated Securities”, “Chattel Paper”, “Commercial Tort Claims”, “Commodity

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Accounts”, “Commodity Contracts”, “Deposit Accounts”, “Documents”, “Equipment”, “Fixtures”, “General Intangibles”, “Goods”, “Instruments”, “Inventory”, “Investment Property”, “Letter of Credit Rights”, “Letters of Credit”, “Money”, “Proceeds”, “Promissory Notes”, “Securities”, “Securities Account”, “Security Entitlements”, “Supporting Obligations” and “Uncertificated Securities” as such terms are defined in the UCC.

Notwithstanding anything to the contrary contained herein, Excluded Stock shall be excluded from the lien and security interest granted hereunder (and shall, as applicable, not be included as “Collateral”, “General Intangibles”, “Investment Property”, or “Pledged Property” for the purposes hereof).

SECTION 2.2. Security for Obligations. This Security Agreement, and the Collateral in which the Administrative (for the benefit of the Secured Parties) is granted a security interest hereunder by each Grantor, secures the prompt and indefeasible payment in full and performance of all Obligations (as defined in the Credit Agreement) of each Grantor and each other Obligor now or hereafter existing, whether for principal, interest, costs, fees, expenses or otherwise, howsoever created, arising or evidenced, whether direct or indirect, primary or secondary, fixed or absolute or contingent, joint or several, now or hereafter existing (all such Obligations, collectively, the “Secured Obligations”).

SECTION 2.3. Continuing Security Interest; Transfer of Loans; Reinstatement. This Security Agreement shall create continuing security interests in the Collateral and shall (a) remain in full force and effect until the Termination Date, (b) be binding upon each Grantor and its successors, transferees and assigns, and (c) inure, together with the rights and remedies of the Administrative Agent hereunder, to the benefit of the Administrative Agent and each other Secured Party and its respective successors, transferees and assigns, subject to the limitations set forth in the Credit Agreement. Without limiting the generality of the foregoing clause (c), any Lender may assign or otherwise transfer (in whole or in part) any Note or any Advance held by it as provided in Section 9.7 of the Credit Agreement, and any successor or assignee thereof shall thereupon become vested with all the rights and benefits in respect thereof granted to such Secured Party under any Credit Document (including this Security Agreement), or otherwise, subject, however, to any contrary provisions in such assignment or transfer, and as applicable to the provisions of Section 9.7 and Article 8 of the Credit Agreement. If at any time all or any part of any payment theretofore applied by the Administrative Agent or any Secured Party to any of the Secured Obligations is or must be rescinded or returned by the Administrative Agent or any such Secured Party for any reason whatsoever (including, without limitation, the insolvency, bankruptcy, reorganization or other similar proceeding of any Grantor or any other Person), such Secured Obligations shall, for purposes of this Security Agreement, to the extent that such payment is or must be rescinded or returned, be deemed to have continued to be in existence, notwithstanding any application by the Administrative Agent or such Secured Party or any termination agreement or release provided to any Grantor, and this Security Agreement shall continue to be effective or reinstated, as the case may be, as to such Secured Obligations, all as though such application by the Administrative Agent or such Secured Party had not been made.

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SECTION 2.4. Grantors Remain Liable. Anything herein to the contrary notwithstanding, (a) each Grantor shall remain liable under the contracts and agreements included in the Collateral to the extent set forth therein, and will perform all of its duties and obligations under such contracts and agreements to the same extent as if this Security Agreement had not been executed, (b) the exercise by the Administrative Agent of any of its rights hereunder shall not release any Grantor from any of its duties or obligations under any such contracts or agreements included in the Collateral, and (c) neither the Administrative Agent nor any other Secured Party shall have any obligation or liability under any contracts or agreements included in the Collateral by reason of this Security Agreement, nor shall the Administrative Agent nor any Secured Party be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

SECTION 2.5. Delivery of Pledged Property.

(a) Other than as provided in the last sentence of Section 4.5 below, all certificates or instruments representing or evidencing any Collateral, including all Pledged Shares and Pledged Notes, shall be delivered to and held by or on behalf of (or in the case of the Pledged Notes, endorsed to the order of) the Administrative Agent pursuant hereto, shall be in suitable form for transfer by delivery, and shall be accompanied by all necessary indorsements or instruments of transfer or assignment, duly executed in blank.

(b) To the extent any of the Collateral constitutes an “uncertificated security” (as defined in Section 8-102(a)(18) of the UCC) or a “security entitlement” (as defined in Section 8-102(a)(17) of the UCC), the applicable Grantor shall take and cause the appropriate Person (including any issuer, entitlement holder or securities intermediary thereof) to take all actions necessary to grant “control” (as defined in Section 8-106 of the UCC) to the Administrative Agent (for the ratable benefit of the Secured Parties) over such Collateral.

SECTION 2.6. Distributions on Pledged Shares. In the event that any Distribution with respect to any Pledged Shares or Pledged Interests pledged hereunder is permitted to be paid (in accordance with Section 6.9 of the Credit Agreement), such Distribution or payment may be paid directly to the applicable Grantor. If any Distribution is made in contravention of Section 6.9 of the Credit Agreement, the applicable Grantor shall hold the same segregated and in trust for the Administrative Agent until paid to the Administrative Agent in accordance with Section 4.1(e).

SECTION 2.7. Security Interest Absolute, etc. This Security Agreement shall in all respects be a continuing, absolute, unconditional and irrevocable grant of security interest, and shall remain in full force and effect until the Termination Date. All rights of the Secured Parties and the security interests granted to the Administrative Agent (for its benefit and the ratable benefit of each other Secured Party) hereunder, and all obligations of each Grantor hereunder, shall, in each case, be absolute, unconditional and irrevocable irrespective of (a) any lack of validity, legality or enforceability of any Credit Document, (b) the failure of any Secured Party (i) to assert any claim or demand or to enforce any right or remedy against any Grantor or any other Person under the provisions of any Credit Document or otherwise, or (ii) to exercise any

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right or remedy against any other guarantor of, or collateral securing, any Secured Obligations, (c) any change in the time, manner or place of payment of, or in any other term of, all or any part of the Secured Obligations, or any other extension, compromise or renewal of any Secured Obligations, (d) any reduction, limitation, impairment or termination of any Secured Obligations (except in the case of the occurrence of the Termination Date) for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and each Grantor hereby waives any right to or claim of) any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality, nongenuineness, irregularity, compromise, unenforceability of, or any other event or occurrence affecting, any Secured Obligations or otherwise, (e) any amendment to, rescission, waiver, or other modification of, or any consent to or departure from, any of the terms of any Credit Document, (f) any addition, exchange or release of any Collateral, or any surrender or non-perfection of any collateral, or any amendment to or waiver or release or addition to, or consent to or departure from, any other guaranty held by any Secured Party securing any of the Secured Obligations, or (g) any other circumstance which might otherwise constitute a defense available to, or a legal or equitable discharge of, any Grantor or any other Obligor, any surety or any guarantor.

SECTION 2.8. Waiver of Subrogation. Until one year and one day after the Termination Date, each Grantor hereby irrevocably waives any claim or other rights which it may now or hereafter acquire against any Obligor that arise from the existence, payment, performance or enforcement of such Grantor’s obligations under this Security Agreement or any other Credit Document, including any right of subrogation, reimbursement, exoneration or indemnification, any right to participate in any claim or remedy of any Secured Party against any Obligor or any collateral which any Secured Party now has or hereafter acquires, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law, including the right to take or receive from any Obligor, directly or indirectly, in cash or other property or by set-off or in any manner, payment or security on account of such claim or other rights. If any amount shall be paid to any Grantor in violation of the preceding sentence and the Secured Obligations shall not have been indefeasibly paid in full in cash or all Commitments and all other commitments by any Secured Party to any Obligor have not been terminated or expired, then such amount shall be deemed to have been paid to such Grantor for the benefit of, and held in trust for, the Administrative Agent (on behalf of the Secured Parties), and shall forthwith be paid to the Administrative Agent to be credited and applied upon the Secured Obligations, whether matured or unmatured. Each Grantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Credit Agreement and that the waiver set forth in this Section 2.8 is knowingly made in contemplation of such benefits.

SECTION 2.9. Election of Remedies. Except as otherwise provided in the Credit Agreement, if any Secured Party may, under applicable law, proceed to realize its benefits under any of this Security Agreement or the other Credit Documents giving any Secured Party a Lien upon any Collateral, either by judicial foreclosure or by non-judicial sale or enforcement, such Secured Party may, at its sole option, determine which of its remedies or rights it may pursue without affecting any of its rights and remedies under this Security Agreement. If, in the exercise of any of its rights and remedies, any Secured Party shall forfeit any of its rights or remedies, including its right to enter a deficiency judgment against any Obligor or any other Person, whether because of any applicable laws pertaining to “election of remedies” or the like, each Grantor hereby consents to such action by such Secured Party and waives any claim based

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upon such action, even if such action by such Secured Party shall result in a full or partial loss of any rights of subrogation that such Grantor might otherwise have had but for such action by such Secured Party.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

In order to induce the Secured Parties to enter into the Credit Agreement and make Advances thereunder, each Grantor represents and warrants unto each Secured Party, as at date hereof and at the date of each pledge and delivery hereunder by such Grantor to the Administrative Agent of any Collateral (including each pledge and delivery of any Pledged Shares or Pledged Notes), as set forth in this Article.

SECTION 3.1. Validity, etc. This Security Agreement and the other Credit Documents to which such Grantor is a party constitutes the legal, valid and binding obligations of such Grantor, enforceable against such Grantor in accordance with their respective terms (except, in any case, as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally and by principles of equity).

SECTION 3.2. Ownership, No Liens, etc. Such Grantor is the legal and beneficial owner of, and has good and defensible title to (and has full right and authority to pledge, grant and assign) the Collateral, free and clear of all Liens, except for any Lien (a) granted pursuant to this Security Agreement in favor of the Administrative Agent, or (b) that is a Permitted Lien. No effective UCC financing statement or other filing similar in effect covering all or any part of the Collateral is on file in any recording office, except those filed in favor of the Administrative Agent relating to this Security Agreement, Permitted Liens or as to which a duly authorized termination statement relating to such UCC financing statement or other instrument has been delivered to the Administrative Agent on the Restatement Effective Date. This Security Agreement creates a valid security interest in the Collateral, securing the payment of the Secured Obligations, and, except for the proper filing of the applicable filing statements with the Secretary of State of the States of Delaware, Texas and Oklahoma, all filings and other actions necessary to perfect and protect such security interest have been duly taken and such security interest shall be a first priority security interest.

SECTION 3.3. As to Equity Interests of the Subsidiaries, Investment Property.

(a) With respect to the Pledged Shares, all such Pledged Shares are duly authorized and validly issued, fully paid and non-assessable, and represented by a certificate.

(b) With respect to the Pledged Interests, no such Pledged Interests (i) are dealt in or traded on securities exchanges or in securities markets, (ii) expressly provide that such Pledged Interests are securities governed by Article 8 of the UCC, or (iii) are held in a Securities Account, except, with respect to this clause (b), Pledged Interests (A) for which the Administrative Agent is the registered owner or (B) with respect to which the Pledged Interests Issuer has agreed in an authenticated record with such Grantor and the Administrative Agent to comply with any instructions of the Administrative Agent without the consent of such Grantor.

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(c) Such Grantor has delivered all Certificated Securities constituting Collateral held by such Grantor to the Administrative Agent, together with duly executed undated blank stock powers, or other equivalent instruments of transfer reasonably acceptable to the Administrative Agent.

(d) With respect to Uncertificated Securities constituting Collateral owned by such Grantor, such Grantor has caused the Pledged Interests Issuer or other issuer thereof either (i) to register the Administrative Agent as the registered owner of such security, or (ii) to agree in an authenticated record with such Grantor and the Administrative Agent that such Pledged Interests Issuer or other issuer will comply with instructions with respect to such security originated by the Administrative Agent without further consent of such Grantor.

(e) The percentage of the issued and outstanding Pledged Shares and Pledged Interests of each Issuer pledged by such Grantor hereunder is as set forth on Schedule I. All of the Pledged Shares and Pledged Interests constitute one hundred percent (100%) of such Grantor’s interest in the applicable Pledged Interests Issuer and the percentage of the total membership, partnership and/or other equity interests in the Pledged Interests Issuer indicated on Schedule I.

(f) Such Grantor has no outstanding rights, rights to subscribe, options, warrants or convertible securities outstanding or any other rights outstanding whereby any Person would be entitled to acquire shares, member interests or units of any Pledged Interest Issuer.

(g) In the case of each Pledged Note, all of such Pledged Notes have been duly authorized, executed, endorsed, issued and delivered, and are the legal, valid and binding obligation of the issuers thereof, and are not in default.

SECTION 3.4. Grantor’s Name, Location, etc.

(a) (i) The jurisdiction in which such Grantor is located for purposes of Sections 9-301 and 9-307 of the UCC is set forth in Item A-1 of Schedule II hereto, (ii) the place of business of such Grantor or, if such Grantor has more than one place of business, the chief executive office of such Grantor and the office where such Grantor keeps its records concerning the Receivables, and all originals of all chattel paper which evidence Receivables, is set forth in Item A-2 of Schedule II hereto, and (iii) such Grantor’s federal taxpayer identification number is set forth in Item A-3 of Schedule II hereto.

(b) Such Grantor has not been known by any legal name different from the one set forth on the signature page hereto, nor has such Grantor been the subject of any merger or other corporate reorganization, except as set forth in Item B of Schedule II hereto.

(c) Such Grantor is not a party to any federal, state or local government contract except contracts with Mineral Management Services or other Federal leases.

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(d) Such Grantor does not maintain any Deposit Accounts, Securities Accounts or Commodity Accounts with any Person, in each case, except as set forth on Item C of Schedule II.

(e) None of the Receivables is evidenced by a promissory note or other instrument other than a promissory note or instrument that has been delivered to the Administrative Agent (with appropriate endorsements).

(f) Such Grantor is not the beneficiary of any Letters of Credit, except as set forth on Item D of Schedule II (as such schedule may be amended or supplemented from time to time) hereto and such Grantor has obtained the consent of each issuer of any Letter of Credit with a stated amount in excess of $250,000 to the assignment of the proceeds of the letter of credit to the Administrative Agent.

(g) Such Grantor does not have Commercial Tort Claims (i) in which a suit has been filed by such Grantor, and (ii) where the amount of damages reasonably expected to be claimed exceeds $250,000, except as set forth on Item E of Schedule II.

(h) The name set forth on the signature page attached hereto is the true and correct legal name (as defined in the UCC) of such Grantor.

(i) Such Grantor has obtained a legal, valid and enforceable consent of each issuer of any Letter of Credit with a stated amount in excess of $250,000 to the assignment of the Proceeds of such Letter of Credit to the Administrative Agent and has not consented to, and is otherwise aware of, any Person (other than the Administrative Agent pursuant hereto) having control (within the meaning of Section 9-107 of the UCC) over, or any other interest in any of such Grantor’s rights in respect thereof.

SECTION 3.5. Possession of Inventory, Control; etc. Such Grantor (a) has exclusive possession and control, subject to Permitted Liens, of the Equipment and Inventory, and (b) is the sole entitlement holder of its Accounts and no other Person (other than the Administrative Agent pursuant to this Security Agreement or any other Person with respect to Permitted Liens) has “control” or “possession” of, or any other interest in, any of its Accounts or any other securities or property credited thereto except as permitted pursuant to this Security Agreement.

SECTION 3.6. Negotiable Documents, Instruments and Chattel Paper. Such Grantor has delivered to the Administrative Agent possession of all originals of all Documents, Instruments, Promissory Notes, Pledged Notes and tangible Chattel Paper owned or held by such Grantor (duly endorsed, in blank, if requested by the Administrative Agent).

SECTION 3.7. Intellectual Property Collateral. Such Grantor represents that except for any Patent Collateral, Trademark Collateral, and Copyright Collateral specified in Item A, Item B and Item C, respectively, of Schedule III hereto, and any Trade Secrets Collateral, such Grantor neither owns and nor has any other interest in any Intellectual Property Collateral as of the date hereof, other than the Computer Hardware and Software Collateral. Such Grantor further represents and warrants that, with respect to all Intellectual Property Collateral (a) such Intellectual Property Collateral is valid, subsisting, unexpired and enforceable and has not been abandoned or adjudged invalid or unenforceable, in whole or in part except as could not

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reasonably be expected to result in a Material Adverse Change, (b) such Grantor is the sole and exclusive owner of the entire and unencumbered right, title and interest in and to such Intellectual Property Collateral, subject to Permitted Liens, and no claim has been made that the use of such Intellectual Property Collateral does or may, conflict with, infringe, misappropriate, dilute, misuse or otherwise violate any of the rights of any third party in any material respects, (c) such Grantor has made all necessary filings and recordations to protect its interest in such material Intellectual Property Collateral, including recordations of any of its interests in the Patent Collateral and Trademark Collateral in the United States Patent and Trademark Office and in corresponding offices throughout the world, and its claims to the Copyright Collateral in the United States Copyright Office and in corresponding offices throughout the world, and, to the extent necessary, has used proper statutory notice in connection with its use of any material patent, trademark and copyright in any of the Intellectual Property Collateral, (d) such Grantor has taken all reasonable steps to safeguard its Trade Secrets and to its knowledge none of the Trade Secrets of such Grantor has been used, divulged, disclosed or appropriated for the benefit of any other Person other than such Grantor, (e) to such Grantor’s knowledge, no third party is infringing upon any material Intellectual Property owned or used by such Grantor in any material respect, or any of its respective licensees, (f) no settlement or consents, covenants not to sue, nonassertion assurances, or releases have been entered into by such Grantor or to which such Grantor is bound that adversely affects its rights to own or use any Intellectual Property except as would not reasonably be expected to result in a Material Adverse Change, (g) such Grantor has not made a previous assignment, sale, transfer or agreement constituting a present or future assignment, sale or transfer of any Intellectual Property for purposes of granting a security interest or as Collateral that has not been terminated or released, (h) such Grantor uses adequate standards of quality in the manufacture, distribution, and sale of all products sold and in the provision of all services rendered under or in connection with any trademarks and has taken all commercially reasonable action necessary to insure that any licensees of any trademarks owned by such Grantor use such adequate standards of quality, (i) the consummation of the transactions contemplated by the Credit Agreement and this Security Agreement will not result in the termination or material impairment of any material portion of the Intellectual Property Collateral, and (j) such Grantor owns directly or is entitled to use by license or otherwise, any patents, trademarks, tradenames, Trade Secrets, copyrights, mask works, licenses, technology, know-how, processes and rights with respect to any of the foregoing used in, and necessary for the conduct of such Grantor’s business in any material respect.

SECTION 3.8. Authorization, Approval, etc. Except as have been obtained or made and are in full force and effect, no Governmental Approval, authorization, approval or other action by, and no notice to or filing with, any Governmental Authority or any other third party is required either (a) for the grant by such Grantor of the security interest granted hereby or for the execution, delivery and performance of this Security Agreement by such Grantor, (b) for the perfection or maintenance of the security interests hereunder including the first priority (subject to Permitted Liens) nature of such security interest (except with respect to the filing statements or, with respect to Intellectual Property Collateral, the recordation of any agreements with the U.S. Patent and Trademark Office or the U.S. Copyright Office) or the exercise by the Administrative Agent of its rights and remedies hereunder, or (c) for the exercise by the Administrative Agent of the voting or other rights provided for in this Security Agreement, except (i) with respect to any Pledged Shares or Pledged Interests, as may be required in connection with a disposition of such Pledged Shares or Pledged Interests by laws affecting the offering and sale of securities generally and (ii) any “change of control” or similar filings required by state licensing agencies.

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SECTION 3.9. Best Interests. It is in the best interests of each Grantor (other than the Borrower) to execute this Security Agreement in as much as such Grantor will, as a result of being an Affiliate or Subsidiary of the Borrower, derive substantial direct and indirect benefits from the Loans and other extensions of credit made from time to time to one or both of the Borrower by the Lenders and the Issuing Lender pursuant to the Credit Agreement, and each Grantor agrees that the Secured Parties are relying on this representation in agreeing to make such Loans and other extensions of credit pursuant to the Credit Agreement to the Borrower.

SECTION 3.10. Certificated Equipment. Such Grantor has delivered, or will deliver as set forth in Section 4.5, to the Administrative Agent possession of the originals of all certificates of title (with any necessary endorsements) with respect to Certificated Equipment owned or held by such Grantor.

SECTION 3.11. Reaffirmation of Representations and Warranties. All of the representations and warranties made by the Borrower or any other Obligor regarding any Grantor in the Credit Agreement or in any other Credit Document are true and correct in all respects as if such representations and warranties were incorporated herein in their entirety and made by such Grantor.

ARTICLE IV

COVENANTS

Each Grantor covenants and agrees that, until the Termination Date, it will perform, comply with and be bound by the obligations set forth below.

SECTION 4.1. As to Investment Property, etc.

(a) Equity Interests of Subsidiaries. No Grantor shall allow or permit any of its Subsidiaries (i) that is a corporation, business trust, joint stock company or similar Person, to issue Uncertificated Securities, unless such Person promptly takes the actions set forth in Section 4.1(b)(ii) with respect to any such Uncertificated Securities, (ii) that is a partnership or limited liability company, to (A) issue Equity Interests that are to be dealt in or traded on securities exchanges or in securities markets, (B) expressly provide in its organizational documents that its Equity Interests are securities governed by Article 8 of the UCC, or (C) place such Subsidiary’s Equity Interests in a Securities Account, unless such Person promptly takes the actions set forth in Section 4.1(b)(ii) with respect to any such Equity Interests, and (iii) to issue Equity Interests in addition to or in substitution for the Pledged Property or any other Equity Interests pledged hereunder, except for additional Equity Interests issued to such Grantor; provided that (A) such Equity Interests are immediately pledged and delivered to the Administrative Agent, and (B) such Grantor delivers a supplement to Schedule I to the Administrative Agent identifying such new Equity Interests as Pledged Property, in each case pursuant to the terms of this Security Agreement. No Grantor shall permit any of its Subsidiaries to issue any warrants, options, contracts or other commitments or other securities that are convertible to any of the foregoing or that entitle any Person to purchase any of the foregoing, and except for

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this Security Agreement, any other Credit Document or the 2010 Indenture (and the other documents related to the Permitted Liens securing the 2010 Convertible Senior Notes), shall not, and shall not permit any of its Subsidiaries to, enter into any agreement creating any restriction or condition upon the transfer, voting or control of any Pledged Property.

(b) Investment Property (other than Certificated Securities). With respect to any Deposit Accounts, Securities Accounts, Commodity Accounts, Commodity Contracts or Security Entitlements constituting Investment Property owned or held by any Grantor, such Grantor will, unless otherwise permitted under the Credit Agreement, upon the Administrative Agent’s request either (i) cause the intermediary maintaining such Investment Property to execute a Control Agreement relating to such Investment Property pursuant to which such intermediary agrees to comply with the Administrative Agent’s instructions with respect to such Investment Property without further consent by such Grantor, or (ii) transfer such Investment Property to intermediary’s that have or will agree to execute such Control Agreements. With respect to any Uncertificated Securities (other than Uncertificated Securities credited to a Securities Account) constituting Investment Property owned or held by any Grantor, such Grantor will cause the Pledged Interests Issuer or other issuer of such securities to either (i) register the Administrative Agent as the registered owner thereof on the books and records of the issuer, or (ii) execute a Control Agreement relating to such Investment Property pursuant to which the Pledged Interests Issuer or other issuer agrees to comply with the Administrative Agent’s instructions with respect to such Uncertificated Securities without further consent by such Grantor.

(c) Certificated Securities (Stock Powers). Each Grantor agrees that all Pledged Shares (and all other certificated shares of Equity Interests constituting Collateral) delivered by such Grantor pursuant to this Security Agreement will be accompanied by duly endorsed undated blank stock powers, or other equivalent instruments of transfer acceptable to the Administrative Agent. Each Grantor will, from time to time upon the request of the Administrative Agent, promptly deliver to the Administrative Agent such stock powers, instruments and similar documents, satisfactory in form and substance to the Administrative Agent, with respect to the Collateral as the Administrative Agent may reasonably request and will, from time to time upon the request of the Administrative Agent during the continuance of any Default, promptly transfer any Pledged Shares, Pledged Interests or other shares of Equity Interests constituting Collateral into the name of any nominee designated by the Administrative Agent.

(d) Continuous Pledge. Each Grantor will (subject to the terms of the Credit Agreement) deliver to the Administrative Agent and at all times keep pledged to the Administrative Agent pursuant hereto, on a first-priority, perfected basis all Pledged Property, Investment Property, all Dividends and Distributions with respect thereto, all Payment Intangibles to the extent they are evidenced by a Document, Instrument, Promissory Note or Chattel Paper, and all interest and principal with respect to such Payment Intangibles, and all Proceeds and rights from time to time received by or distributable to such Grantor in respect of any of the foregoing Collateral. Each Grantor agrees that it will, promptly (but in any event no later than ten (10) Business Days)

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following receipt thereof, deliver to the Administrative Agent possession of all originals of Pledged Interests, Pledged Shares, Pledged Notes and any other Pledged Property, negotiable Documents, Instruments, Promissory Notes and Chattel Paper that it acquires following the date of this Security Agreement and shall deliver to the Administrative Agent a supplement to Schedule I identifying any such new Pledged Interests, Pledged Shares, Pledged Notes or other Pledged Property.

(e) Voting Rights; Dividends, etc. Each Grantor agrees:

(i) that promptly upon receipt of notice of the occurrence and continuance of an Event of Default from the Administrative Agent and without any request therefor by the Administrative Agent, so long as such Event of Default shall continue, to deliver (properly endorsed where required hereby or requested by the Administrative Agent) to the Administrative Agent all Distributions with respect to Investment Property, all interest, principal and other cash payments on Payment Intangibles, the Pledged Property and all Proceeds of the Pledged Property or any other Collateral, in case thereafter received by such Grantor, all of which shall be held by the Administrative Agent as additional Collateral; and

(ii) if an Event of Default shall have occurred and be continuing and the Administrative Agent has notified such Grantor of the Administrative Agent’s intention to exercise its voting power under this Section 4.1(e)(ii),

(A) the Administrative Agent may exercise (to the exclusion of such Grantor) the voting power and all other incidental rights of ownership with respect to any Pledged Shares, Investment Property or other Equity Interests constituting Collateral. EACH GRANTOR HEREBY GRANTS THE ADMINISTRATIVE AGENT AN IRREVOCABLE PROXY (WHICH IRREVOCABLE PROXY SHALL CONTINUE IN EFFECT UNTIL SUCH DEFAULT SHALL HAVE BEEN CURED OR WAIVED) EXERCISABLE UNDER SUCH CIRCUMSTANCES, TO VOTE THE PLEDGED SHARES, PLEDGED INTERESTS, INVESTMENT PROPERTY AND SUCH OTHER COLLATERAL; AND

(B) the Grantor shall promptly deliver to the Administrative Agent such additional proxies and other documents as may be necessary to allow the Administrative Agent to exercise such voting power.

All Distributions, interest, principal, cash payments, Payment Intangibles and Proceeds that may at any time and from time to time be held by any Grantor but which such Grantor is then obligated to deliver to the Administrative Agent, shall, until delivery to the Administrative Agent, be held by such Grantor separate and apart from its other property in trust for the Administrative Agent. The Administrative Agent agrees that unless a Default shall have occurred and be continuing and the Administrative Agent shall have given the notice referred to in Section 4.1(e), each Grantor shall be entitled to receive and retain all Distributions and shall have the exclusive voting power, and is granted a proxy, with respect to any Equity Interests

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(including any of the Pledged Shares) constituting Collateral. The Administrative Agent shall, upon the written request of any Grantor, promptly deliver such proxies and other documents, if any, as shall be reasonably requested by such Grantor which are necessary to allow such Grantor to exercise that voting power with respect to any such Equity Interests (including any of the Pledged Shares) constituting Collateral; provided, however, that no vote shall be cast, or consent, waiver, or ratification given, or action taken by such Grantor that would violate any provision of the Credit Agreement or any other Credit Document (including this Security Agreement).

SECTION 4.2. Organizational Documents; Change of Name, etc. No Grantor will change its state of incorporation, formation or organization or its name, identity, organizational identification number or corporate structure unless such Grantor shall have (a) given the Administrative Agent at least thirty (30) days’ prior notice of such change, (b) obtained the consent of the requisite Secured Parties, if such consent is so required by the Credit Documents, and (c) taken all actions necessary or as requested by the Administrative Agent to ensure that the Liens on the Collateral granted in favor of the Administrative Agent for the benefit of the Lender Parties remain perfected, first-priority Liens.

SECTION 4.3. As to Accounts.

(a) Each Grantor shall have the right to collect all Accounts so long as no Event of Default shall have occurred and be continuing.

(b) Upon (i) the occurrence and continuance of an Event of Default and (ii) the delivery of notice by the Administrative Agent to each Grantor, all Proceeds of Collateral received by any Grantor shall be delivered in kind to the Administrative Agent for deposit in a Deposit Account of such Grantor (A) maintained with the Administrative Agent or (B) maintained at a depositary bank other than the Administrative Agent to which such Grantor, the Administrative Agent and the depositary bank have entered into a Control Agreement in form and substance acceptable to the Administrative Agent in its sole discretion providing that the depositary bank will comply with the instructions originated by the Administrative Agent directing disposition of the funds in the account without further consent by such Grantor (any such Deposit Accounts, together with any other Deposit Accounts pursuant to which any portion of the Collateral is deposited with the Administrative Agent, a “Collateral Account,” and collectively, the “Collateral Accounts”), and such Grantor shall not commingle any such Proceeds, and shall hold separate and apart from all other property, all such Proceeds in express trust for the benefit of the Administrative Agent until delivery thereof is made to the Administrative Agent.

(c) Following the delivery of notice pursuant to clause (b)(ii), the Administrative Agent shall have the right to apply any amount in the Collateral Account to the payment of any Secured Obligations which are due and payable or in accordance with the Credit Documents.

(d) With respect to each of the Collateral Accounts, it is hereby confirmed and agreed that (i) deposits in such Collateral Account are subject to a security interest as contemplated hereby, (ii) such Collateral Account shall be under the control of the Administrative Agent and (iii) the Administrative Agent shall have the sole right of withdrawal over such Collateral Account; provided that withdrawals shall only be made during the existence of a Default.

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(e) No Grantor shall adjust, settle, or compromise the amount or payment of any Receivable, nor release wholly or partly any account debtor or obligor thereof, nor allow any credit or discount thereon; provided that, a Grantor may make such adjustments, settlements or compromises and release wholly or partly any account debtor or obligor thereof and allow any credit or discounts thereon so long as (i) no Event of Default has occurred and is continuing, (ii) such action is taken in the ordinary course of business and consistent with past practices, (iii) such action is, in such Grantor’s good faith business judgment, commercially reasonable, and (iv) the aggregate amount of such adjustments, settlements and compromises which are effected each fiscal year shall not exceed $200,000.

SECTION 4.4. As to Grantor’s Use of Collateral.

(a) Subject to clause (b), each Grantor (i) may in the ordinary course of its business, at its own expense, sell, lease or furnish under the contracts of service any of the Inventory normally held by such Grantor for such purpose, and use and consume, in the ordinary course of its business, any raw materials, work in process or materials normally held by such Grantor for such purpose, (ii) shall, at its own expense, endeavor to collect, as and when due, all amounts due with respect to any of the Collateral, including the taking of such action with respect to such collection as the Administrative Agent may request following the occurrence and during the continuance of a Default or, in the absence of such request, as such Grantor may deem advisable, and (iii) may grant, in the ordinary course of business, to any party obligated on any of the Collateral, any rebate, refund or allowance to which such party may be lawfully entitled, and may accept, in connection therewith, the return of Goods, the sale or lease of which shall have given rise to such Collateral.

(b) At any time following the occurrence and during the continuance of a Default, whether before or after the maturity of any of the Secured Obligations, the Administrative Agent may (i) revoke any or all of the rights of any Grantor set forth in clause (a), (ii) notify any parties obligated on any of the Collateral to make payment to the Administrative Agent of any amounts due or to become due thereunder, and (iii) enforce collection of any of the Collateral by suit or otherwise and surrender, release, or exchange all or any part thereof, or compromise or extend or renew for any period (whether or not longer than the original period) any indebtedness thereunder or evidenced thereby.

(c) Upon request of the Administrative Agent following the occurrence and during the continuance of a Default, each Grantor will, at its own expense, notify any parties obligated on any of the Collateral to make payment to the Administrative Agent of any amounts due or to become due thereunder.

(d) At any time following the occurrence and during the continuation of a Default, the Administrative Agent may endorse, in the name of the applicable Grantor, any item, howsoever received by the Administrative Agent, representing any payment on or other Proceeds of any of the Collateral.

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SECTION 4.5. As to Equipment and Inventory and Goods. Not later than 30 days following the date of this Security Agreement, each Grantor shall deliver the original certificates of title (with any necessary endorsements) with respect to all Certificated Equipment now owned by such Grantor to the Administrative Agent. Each Grantor hereby agrees that it shall (a) keep all of the Equipment and Inventory (other than Inventory sold in the ordinary course of business) and Goods located in a jurisdiction within the United States of America or its offshore waters where all representations and warranties set forth in Article III shall be true and correct, and all action required pursuant to the second sentence of Section 4.12 shall have been taken with respect to the Equipment and Inventory and Goods, and (b) pay promptly when due all property and other taxes, assessments and governmental charges or levies imposed upon, and all claims (including claims for labor, materials and supplies) against, the Equipment and Inventory and Goods, except to the extent the validity thereof is being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP have been set aside. Notwithstanding the foregoing, the Grantors may keep Equipment, Inventory and Goods located in a jurisdiction outside of the United States of America or its offshore waters so long as the aggregate book value of the Equipment, Inventory and Goods located in such foreign jurisdictions does not exceed $2,500,000 at any time. With respect to Certificated Equipment hereafter owned by a Grantor, such Grantor shall promptly deliver such title to the Administrative Agent and take any other action necessary to enable the Administrative Agent perfect its Lien in such Equipment, including endorsing certificates of title or executing applications for transfer of title, as is reasonably required by the Administrative Agent to enable it to properly perfect and protect its Lien on such Certificated Equipment and to transfer the same.

SECTION 4.6. As to Intellectual Property Collateral. Each Grantor covenants and agrees to comply with the following provisions as such provisions relate to any Intellectual Property Collateral material to the operations or business of such Grantor:

(a) such Grantor will not (i) do or fail to perform any act whereby any material Patent Collateral may lapse or become abandoned or dedicated to the public or unenforceable, (ii) permit any of its licensees to (A) fail to continue to use any of the Trademark Collateral in order to maintain all of the Trademark Collateral in full force free from any claim of abandonment for non-use, (B) fail to maintain as in the past the quality of products and services offered under all of the Trademark Collateral, (C) fail to employ all of the Trademark Collateral registered with any federal or state or foreign authority with an appropriate notice of such registration, (D) adopt or use any other Trademark which is confusingly similar or a colorable imitation of any of the Trademark Collateral, (E) use any of the Trademark Collateral registered with any federal, state or foreign authority except for the uses for which registration or application for registration of all of the Trademark Collateral has been made, or (F) do or permit any act or knowingly omit to do any act whereby any of the Trademark Collateral may lapse or become invalid or unenforceable, or (iii) do or permit any act or knowingly omit to do any act whereby any of the Copyright Collateral or any of the Trade Secrets Collateral may lapse or become invalid or unenforceable or placed in the public domain except

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upon expiration of the end of an unrenewable term of a registration thereof, unless, in the case of any of the foregoing requirements in clauses (i), (ii) and (iii), such Grantor shall either (x) reasonably and in good faith determine that any of such Intellectual Property Collateral is of negligible economic value to such Grantor, or (y) the loss of the Intellectual Property Collateral would not be reasonably likely to result in a Material Adverse Change;

(b) such Grantor shall promptly notify the Administrative Agent if it knows that any application or registration relating to any material item of the Intellectual Property Collateral may become abandoned or dedicated to the public or placed in the public domain or invalid or unenforceable, or of any adverse determination or development (including the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, the United States Copyright Office or any foreign counterpart thereof or any court) regarding such Grantor’s ownership of any of the Intellectual Property Collateral, its right to register the same or to keep and maintain and enforce the same;

(c) in no event will such Grantor or any of its agents, employees, designees or licensees file an application for the registration of any material Intellectual Property Collateral with the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency in any other country or any political subdivision thereof, unless it promptly informs the Administrative Agent, and upon request of the Administrative Agent (subject to the terms of the Credit Agreement), executes and delivers all agreements, instruments and documents as the Administrative Agent may reasonably request to evidence the Administrative Agent’s security interest in such Intellectual Property Collateral;

(d) such Grantor will take all necessary steps, including in any proceeding before the United States Patent and Trademark Office, the United States Copyright Office or (subject to the terms of the Credit Agreement) any similar office or agency in any other country or any political subdivision thereof, to maintain and pursue any application (and to obtain the relevant registration) filed with respect to, and to maintain any registration of, each material Intellectual Property Collateral, including the filing of applications for renewal, affidavits of use, affidavits of incontestability and opposition, interference and cancellation proceedings and the payment of fees and taxes (except to the extent that dedication, abandonment or invalidation is permitted under the foregoing clause (a) or (b));

(e) following the obtaining of an interest in any material Intellectual Property by such Grantor, such Grantor shall deliver a supplement to Schedule II identifying such new Intellectual Property; and

(f) following the obtaining of an interest in any material Intellectual Property by such Grantor or, following the occurrence and during the continuance of an Event of Default, upon the request of the Administrative Agent, such Grantor shall deliver all agreements, instruments and documents the Administrative Agent may reasonably request to evidence the Administrative Agent’s security interest in such Intellectual

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Property Collateral and as may otherwise be required to acknowledge or register or perfect the Administrative Agent’s interest in any part of such item of Intellectual Property Collateral unless such Grantor shall determine in good faith (with the consent of the Administrative Agent) that any Intellectual Property Collateral is of negligible economic value to such Grantor.

SECTION 4.7. As to Letter-of-Credit Rights.

(a) Each Grantor, by granting a security interest in its Letter-of-Credit Rights to the Administrative Agent, intends to (and hereby does) collaterally assign to the Administrative Agent its rights (including its contingent rights) to the Proceeds of all Letter-of-Credit Rights of which it is or hereafter becomes a beneficiary or assignee. Promptly following the date on which any Grantor obtains any Letter of Credit Rights after the date hereof, such Grantor shall (i) deliver a supplement to Schedule II identifying such new Letter-of-Credit Right and (ii) with respect to Letter of Credit Rights in excess of $250,000 cause the issuer of each Letter of Credit and each nominated person (if any) with respect thereto to consent to such assignment of the Proceeds thereof in a consent agreement in form and substance reasonably satisfactory to the Administrative Agent and deliver written evidence of such consent to the Administrative Agent.

(b) During the existence of an Event of Default, each Grantor will, promptly upon request by the Administrative Agent, (i) notify (and each Grantor hereby authorizes the Administrative Agent to notify) the issuer and each nominated person with respect to each of the Letters of Credit that the Proceeds thereof have been assigned to the Administrative Agent hereunder and any payments due or to become due in respect thereof are to be made directly to the Administrative Agent and (ii) arrange for the Administrative Agent to become the transferee beneficiary Letter of Credit.

SECTION 4.8. As to Commercial Tort Claims. Each Grantor covenants and agrees that, until the Termination Date, with respect to any Commercial Tort Claim in excess of $250,000 individually or in the aggregate hereafter arising, it shall deliver to the Administrative Agent a supplement to Schedule II in form and substance reasonably satisfactory to the Administrative Agent, identifying such new Commercial Tort Claims.

SECTION 4.9. Electronic Chattel Paper and Transferable Records. If any Grantor at any time holds or acquires an interest in any electronic chattel paper or any “transferable record,” as that term is defined in Section 201 of the U.S. Federal Electronic Signatures in Global and National Commerce Act, or in Section 16 of the U.S. Uniform Electronic Transactions Act as in effect in any relevant jurisdiction, with a value in excess of $250,000, such Grantor shall promptly notify the Administrative Agent thereof and, at the request of the Administrative Agent, shall take such action as the Administrative Agent may request to vest in the Administrative Agent control (for the ratable benefit of Secured Parties) under Section 9-105 of the UCC of such electronic chattel paper or control under Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or, as the case may be, Section 16 of the Uniform Electronic Transactions Act, as so in effect in such jurisdiction, of such transferable record. The Administrative Agent agrees with each Grantor that the Administrative Agent will

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arrange, pursuant to procedures reasonably satisfactory to the Administrative Agent and so long as such procedures will not result in the Administrative Agent’s loss of control, for such Grantor to make alterations to the electronic chattel paper or transferable record permitted under Section 9-105 of the UCC or, as the case may be, Section 201 of the U.S. Federal Electronic Signatures in Global and National Commerce Act or Section 16 of the U.S. Uniform Electronic Transactions Act for a party in control to allow without loss of control, unless an Event of Default has occurred and is continuing or would occur after taking into account any action by such Grantor with respect to such electronic chattel paper or transferable record.

SECTION 4.10. Transfers and Other Liens. No Grantor shall: (a) sell, assign (by operation of law or otherwise) or otherwise dispose of any of the Collateral, except Inventory in the ordinary course of business or as specifically permitted by the Credit Agreement, or (b) create or suffer to exist any Lien or other charge or encumbrance upon or with respect to any of the Collateral to secure Debt of any Person or entity, except for the security interest created by this Security Agreement and except for Permitted Liens.

SECTION 4.11. Taxes. Each Grantor agrees to comply in all material respects with all applicable law, including the appropriate payment (before the same become delinquent), by, or on behalf of, such Grantor of all Taxes imposed upon such Grantor or any of its direct or indirect Subsidiaries or upon their property except to the extent being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP have been set aside on the books of such Grantor or such Subsidiaries, as applicable.

SECTION 4.12. Further Assurances, etc. Each Grantor shall warrant and defend the right, title and interest herein granted unto the Administrative Agent in and to the Collateral (and all right, title and interest represented by the Collateral) against the claims and demands of all Persons whomsoever. Each Grantor agrees that, from time to time at its own expense, it will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or that the Administrative Agent may reasonably request, in order to perfect, preserve and protect any security interest granted or purported to be granted hereby or to enable the Administrative Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Each Grantor agrees that, upon the acquisition after the date hereof by such Grantor of any Collateral, with respect to which the security interest granted hereunder is not perfected automatically upon such acquisition, to take such actions with respect to such Collateral or any part thereof as required by the Credit Documents. Without limiting the generality of the foregoing, each Grantor will:

(a) from time to time upon the request of the Administrative Agent, promptly deliver to the Administrative Agent such stock powers, instruments and similar documents, reasonably satisfactory in form and substance to the Administrative Agent, with respect to such Collateral as the Administrative Agent may reasonably request and will, from time to time upon the request of the Administrative Agent, after the occurrence and during the continuance of any Event of Default, promptly transfer any securities constituting Collateral into the name of any nominee designated by the Administrative Agent; if any Collateral shall be evidenced by an Instrument, negotiable Document, Promissory Note or tangible Chattel Paper, deliver and pledge to the Administrative Agent hereunder such Instrument, negotiable Document, Promissory Note, Pledged Note

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or tangible Chattel Paper duly endorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance reasonably satisfactory to the Administrative Agent;

(b) file (and hereby authorizes the Administrative Agent to file after delivery of a copy thereof to such Grantor) such filing statements or continuation statements, or amendments thereto, and such other instruments or notices (including any assignment of claim form under or pursuant to the federal assignment of claims statute, 31 U.S.C. § 3726, any successor or amended version thereof or any regulation promulgated under or pursuant to any version thereof), as may be necessary or that the Administrative Agent may request in order to perfect and preserve the security interests and other rights granted or purported to be granted to the Administrative Agent hereby. The authorization contained in this Section 4.12 shall be irrevocable and continuing until the Termination Date;

(c) deliver to the Administrative Agent and at all times keep pledged to the Administrative Agent pursuant hereto, on a first-priority, perfected basis (except for Permitted Liens), at the request of the Administrative Agent, all Investment Property constituting Collateral, all Distributions with respect thereto (which shall only be delivered to the Administrative Agent during the continuance of a Default), and all interest and principal with respect to Promissory Notes, and all Proceeds and rights from time to time received by or distributable to such Grantor in respect of any of the foregoing Collateral;

(d) not take or omit to take any action the taking or the omission of which would result in any impairment or alteration of any obligation of the maker of any Payment Intangible or other Instrument constituting Collateral, except as provided in Section 4.4;

(e) not create any tangible Chattel Paper without placing a legend on such tangible Chattel Paper reasonably acceptable to the Administrative Agent indicating that the Administrative Agent has a security interest in such Chattel Paper;

(f) furnish to the Administrative Agent, from time to time at the Administrative Agent’s request, statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Administrative Agent may reasonably request, all in reasonable detail; and

(g) do all things reasonably requested by the Administrative Agent in accordance with this Security Agreement in order to enable the Administrative Agent to have and maintain control over the Collateral consisting of Investment Property, Deposit Accounts, Letter-of-Credit-Rights and Electronic Chattel Paper.

Each Grantor agrees that a carbon, photographic or other reproduction of this Security Agreement or any UCC financing statement covering the Collateral or any part thereof shall be sufficient as a UCC financing statement where permitted by law. Each Grantor hereby authorizes the Administrative Agent to file financing statements describing as the collateral covered thereby “all of the debtor’s personal property or assets”, “all assets” or words to that effect, notwithstanding that such wording may be broader in scope than the Collateral described in this Security Agreement.

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ARTICLE V

THE ADMINISTRATIVE AGENT

SECTION 5.1. Administrative Agent Appointed Attorney-in-Fact. Each Grantor hereby irrevocably appoints the Administrative Agent its attorney-in-fact, with full authority in the place and stead of such Grantor and in the name of such Grantor or otherwise, from time to time in the Administrative Agent’s discretion, following the occurrence and during the continuance of an Event of Default, to take any action and to execute any instrument which the Administrative Agent may deem necessary or advisable to accomplish the purposes of this Security Agreement, including (a) to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral, (b) to receive, endorse, and collect any drafts or other Instruments, Documents and Chattel Paper, in connection with clause (a) above, (c) to file any claims or take any action or institute any proceedings which the Administrative Agent may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Administrative Agent with respect to any of the Collateral, and (d) to perform the affirmative obligations of such Grantor hereunder. EACH GRANTOR HEREBY ACKNOWLEDGES, CONSENTS AND AGREES THAT THE POWER OF ATTORNEY GRANTED PURSUANT TO THIS SECTION 5.1 IS IRREVOCABLE AND COUPLED WITH AN INTEREST AND SHALL BE EFFECTIVE UNTIL THE TERMINATION DATE.

SECTION 5.2. Administrative Agent May Perform. If any Grantor fails to perform any agreement contained herein, the Administrative Agent may itself perform, or cause performance of, such agreement, and the expenses of the Administrative Agent incurred in connection therewith shall be payable by such Grantor pursuant to Section 6.4 hereof and Section 9.1 of the Credit Agreement and the Administrative Agent may from time to time take any other action which the Administrative Agent reasonably deems necessary for the maintenance, preservation or protection of any of the Collateral or of its security interest therein.

SECTION 5.3. Administrative Agent Has No Duty. The powers conferred on the Administrative Agent hereunder are solely to protect its interest (on behalf of the Secured Parties) in the Collateral and shall not impose any duty on it to exercise any such powers. Except for reasonable care of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Administrative Agent shall have no duty as to any Collateral or responsibility for (a) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Investment Property and any other Pledged Property, whether or not the Administrative Agent has or is deemed to have knowledge of such matters, or (b) taking any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral.

SECTION 5.4. Reasonable Care. The Administrative Agent is required to exercise reasonable care in the custody and preservation of any of the Collateral in its possession; provided, that the Administrative Agent shall be deemed to have exercised reasonable care in the custody and preservation of any of the Collateral (a) if such Collateral is accorded treatment

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substantially equal to that which the Administrative Agent accords its own personal property, or (b) if the Administrative Agent takes such action for that purpose as any Grantor reasonably requests in writing at times other than upon the occurrence and during the continuance of an Event of Default; provided, further, that failure of the Administrative Agent to comply with any such request at any time shall not in itself be deemed a failure to exercise reasonable care.

ARTICLE VI

REMEDIES

SECTION 6.1. Certain Remedies. If any Event of Default shall have occurred and be continuing:

(a) The Administrative Agent may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party on default under the UCC (whether or not the UCC applies to the affected Collateral) and also may (i) take possession of any Collateral not already in its possession without demand and without legal process, (ii) require any Grantor to, and each Grantor hereby agrees that it will, at its expense and upon request of the Administrative Agent forthwith, assemble all or part of the Collateral as directed by the Administrative Agent and make it available to the Administrative Agent at a place to be designated by the Administrative Agent that is reasonably convenient to both parties, (iii) subject to applicable law or agreements with landlords, enter onto the property where any Collateral is located and take possession thereof without demand and without legal process, (iv) without notice except as specified below, lease, license, sell or otherwise dispose of the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Administrative Agent’s offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Administrative Agent may deem commercially reasonable. Each Grantor agrees that, to the extent notice of sale shall be required by law, at least ten (10) days’ prior notice to the applicable Grantor of the time and place of any public sale or the time of any private sale is to be made shall constitute reasonable notification; provided, however, that with respect to Collateral that is (x) perishable or threatens to decline speedily in value, or (y) is of a type customarily sold on a recognized market (including but not limited to, Investment Property), no notice of sale or disposition need be given. For purposes of this Article VI, notice of any intended sale or disposition of any Collateral may be given by first-class mail, hand-delivery (through a delivery service or otherwise), facsimile or email, and shall be deemed to have been “sent” upon deposit in the U.S. Mails with adequate postage properly affixed, upon delivery to an express delivery service or upon electronic submission through telephonic or internet services, as applicable. The Administrative Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Administrative Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.

(b) Each Grantor agrees and acknowledges that a commercially reasonable disposition of Inventory, Equipment, Goods, Computer Hardware and Software Collateral, or Intellectual Property may be by lease or license of, in addition to the sale

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of, such Collateral. Each Grantor further agrees and acknowledges that each of the following shall be deemed a reasonable commercial disposition: (i) a disposition made in the usual manner on any recognized market, (ii) a disposition at the price current in any recognized market at the time of disposition, and (iii) a disposition in conformity with reasonable commercial practices among dealers in the type of property subject to the disposition.

(c) All cash Proceeds received by the Administrative Agent in respect of any sale of, collection from, or other realization upon, all or any part of the Collateral shall be applied by the Administrative Agent against, all or any part of the Obligations as set forth in Section 7.7 of the Credit Agreement. The Administrative Agent shall not be obligated to apply or pay over for application noncash proceeds of collection or enforcement unless (i) the failure to do so would be commercially unreasonable, and (ii) the affected party has provided the Administrative Agent with a written demand to apply or pay over such noncash proceeds on such basis.

(d) The Administrative Agent may do any or all of the following: (i) transfer all or any part of the Collateral into the name of the Administrative Agent or its nominee, with or without disclosing that such Collateral is subject to the Lien hereunder, (ii) notify the parties obligated on any of the Collateral to make payment to the Administrative Agent of any amount due or to become due thereunder, (iii) withdraw, or cause or direct the withdrawal, of all funds with respect to any Collateral Account or any other Deposit Account subject to an Account Control Agreement, (iv) enforce collection of any of the Collateral by suit or otherwise, and surrender, release or exchange all or any part thereof, or compromise or extend or renew for any period (whether or not longer than the original period) any obligations of any nature of any party with respect thereto, (v) endorse any checks, drafts, or other writings in the applicable Grantor’s name to allow collection of the Collateral, (vi) take control of any Proceeds of the Collateral, or (vii) execute (in the name, place and stead of the applicable Grantor) endorsements, assignments, stock powers and other instruments of conveyance or transfer with respect to all or any of the Collateral.

SECTION 6.2. Securities Laws. If the Administrative Agent shall determine to exercise its right to sell all or any of the Collateral that are Equity Interests pursuant to Section 6.1, each Grantor agrees that, upon request of the Administrative Agent, such Grantor will, at its own expense:

(a) execute and deliver, and cause (or, with respect to any issuer which is not a Subsidiary of such Grantor, use its reasonable efforts to cause) each Pledged Interests Issuer or other issuer of the Collateral contemplated to be sold and the directors and officers thereof to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts and things, as may be necessary or, in the reasonable opinion of the Administrative Agent, advisable to register such Collateral under the provisions of the Securities Act of 1933, as from time to time amended (the “Securities Act”), and cause the registration statement relating thereto to become effective and to remain effective for such period as prospectuses are required by law to be furnished, and to make all amendments and supplements thereto and to the related prospectus which, in

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the reasonable opinion of the Administrative Agent, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the SEC applicable thereto;

(b) use its reasonable efforts to exempt the Collateral under the state securities or “Blue Sky” laws and to obtain all necessary Governmental Approvals for the sale of the Collateral, as requested by the Administrative Agent;

(c) cause (or, with respect to any issuer that is not a Subsidiary of such Grantor, use its reasonable efforts to cause) each such Pledged Interests Issuer or other issuer to make available to its security holders, as soon as practicable, an earnings statement that will satisfy the provisions of Section 11(a) of the Securities Act; and

(d) do or cause to be done all such other acts and things as may be reasonably necessary to make such sale of the Collateral or any part thereof valid and binding and in compliance with applicable law.

Each Grantor acknowledges the impossibility of ascertaining the amount of damages that would be suffered by the Administrative Agent or the Secured Parties by reason of the failure by such Grantor to perform any of the covenants contained in this Section and consequently agrees that, if such Grantor shall fail to perform any of such covenants, it shall pay, as liquidated damages and not as a penalty, an amount equal to the value (as reasonably determined by the Administrative Agent in good faith) of such Collateral on the date the Administrative Agent shall demand compliance with this Section 6.2.

SECTION 6.3. Compliance with Restrictions. Each Grantor agrees that in any sale of any of the Collateral whenever an Event of Default shall have occurred and be continuing, the Administrative Agent is hereby authorized to comply with any limitation or restriction in connection with such sale as it may be advised by counsel is necessary in order to avoid any violation of applicable law (including compliance with such procedures as may restrict the number of prospective bidders and purchasers, require that such prospective bidders and purchasers have certain qualifications, and restrict such prospective bidders and purchasers to Persons who will represent and agree that they are purchasing for their own account for investment and not with a view to the distribution or resale of such Collateral), or in order to obtain any required approval of the sale or of the purchaser by any Governmental Authority or official, and each Grantor further agrees that such compliance shall not result in such sale being considered or deemed not to have been made in a commercially reasonable manner, nor shall the Administrative Agent be liable nor accountable to such Grantor for any discount allowed by the reason of the fact that such Collateral is sold in compliance with any such limitation or restriction.

SECTION 6.4. Indemnity and Expenses.

(a) Without limiting the generality of the provisions of Section 9.2 of the Credit Agreement, each Grantor hereby indemnifies and holds harmless the Administrative Agent, each Secured Party and each of their respective officers, directors, employees and agents (the “Indemnified Parties”) from and against any and all claims, losses and liabilities arising out of or resulting from this Security Agreement or any other

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Credit Document (including, without limitation, enforcement of this Security Agreement), except claims, losses or liabilities resulting from such Indemnified Party’s gross negligence, willful misconduct or unlawful acts; PROVIDED, HOWEVER, THAT IT IS THE INTENTION OF THE PARTIES HERETO THAT EACH INDEMNIFIED PARTY BE INDEMNIFIED IN THE CASE OF ITS OWN NEGLIGENCE (OTHER THAN GROSS NEGLIGENCE), REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE OR CONTRIBUTORY, ACTIVE OR PASSIVE, IMPUTED, JOINT OR TECHNICAL. If and to the extent that the foregoing undertaking may be unenforceable for any reason, each Grantor hereby agrees to make the maximum contribution to the payment and satisfaction of each of the foregoing which is permissible under applicable law.

(b) Other than as set forth in clause (c) below, each Grantor will upon demand pay to the Administrative Agent and any counsel the amount of any and all expenses, including the reasonable fees and disbursements of its counsel and of any experts and agents, which the Administrative Agent and any counsel may incur in connection herewith, including without limitation in connection with the administration of this Security Agreement and the custody, preservation, use or operation of, any of the Collateral.

(c) Each Grantor will upon demand pay to the Administrative Agent and any counsel the amount of any and all expenses, including the fees and disbursements of its counsel and of any experts and agents, which the Administrative Agent and any counsel may incur in connection (i) the sale of, collection from, or other realization upon, any of the Collateral, (ii) the exercise or enforcement of any of the rights of the Administrative Agent and any local counsel or any of the Secured Parties hereunder, or (iii) the failure by any Grantor to perform or observe any of the provisions hereof.

SECTION 6.5. Warranties. The Administrative Agent may sell the Collateral without giving any warranties or representations as to the Collateral. The Administrative Agent may disclaim any warranties of title or the like. Each Grantor agrees that this procedure will not be considered to adversely affect the commercial reasonableness of any sale of the Collateral.

ARTICLE VII

MISCELLANEOUS PROVISIONS

SECTION 7.1. Credit Document. This Security Agreement is a Credit Document executed pursuant to the Credit Agreement and shall (unless otherwise expressly indicated herein) be construed, administered and applied in accordance with the terms and provisions thereof, including Article 9 thereof.

SECTION 7.2. Binding on Successors, Transferees and Assigns; Assignment. This Security Agreement shall remain in full force and effect until the Termination Date, shall be binding upon each Grantor and its successors, transferees and assigns and, subject to the limitations set forth in the Credit Agreement, shall inure to the benefit of and be enforceable by each Secured Party and its successors, transferees and assigns; provided that no Grantor shall (unless otherwise permitted under the terms of the Credit Agreement or this Security Agreement) assign any of its obligations hereunder without the Administrative Agent’s prior written consent.

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SECTION 7.3. Amendments, etc. No amendment to or waiver of any provision of this Security Agreement, nor consent to any departure by any Grantor from its obligations under this Security Agreement, shall in any event be effective unless the same shall be in writing and signed by the Administrative Agent (on behalf of the Lenders or the Majority Lenders, as the case may be, pursuant to Section 9.3 of the Credit Agreement) and such Grantor and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

SECTION 7.4. Notices. Except as otherwise provided in this Security Agreement, all notices and other communications provided for hereunder shall be in writing, by facsimile or by email and addressed, delivered or transmitted to the appropriate party at the address, facsimile number or email address of such party specified in the Credit Agreement, on the signature pages of this Security Agreement or at such other address, facsimile number or email address as may be designated by such party in a notice to the other party. Except as otherwise provided in this Security Agreement, any notice or other communication, if mailed and properly addressed with postage prepaid or if properly addressed and sent by pre-paid courier service, shall be deemed given when received; any such notice or other communication, if transmitted by facsimile or email, shall be deemed given when transmitted and electronically confirmed.

SECTION 7.5. Release of Liens. Upon (a) the disposition of Collateral in accordance with the Credit Agreement or (b) the occurrence of the Termination Date, the security interests granted herein shall automatically terminate with respect to (i) such Collateral (in the case of clause (a)) or (ii) all Collateral (in the case of clause (b)). Upon any such disposition or termination, the Administrative Agent will deliver to the applicable Grantor, at such Grantor’s sole expense, without any representations, warranties or recourse of any kind whatsoever, all Collateral held by the Administrative Agent hereunder, and execute and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence such termination.

SECTION 7.6. No Waiver; Remedies. In addition to, and not in limitation of Section 2.7, no failure on the part of any Secured Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

SECTION 7.7. Headings. The various headings of this Security Agreement are inserted for convenience only and shall not affect the meaning or interpretation of this Security Agreement or any provisions thereof.

SECTION 7.8. Severability. Any provision of this Security Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Security Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

SECTION 7.9. Counterparts. This Security Agreement may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement. Delivery of an executed counterpart of a signature page to this Security Agreement by facsimile shall be effective as delivery of a manually executed counterpart of this Security Agreement.

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SECTION 7.10. Consent as Holder of Equity. Each Grantor hereby consents to (a) the execution by each other Grantor of this Security Agreement and grant by each other Grantor of a security interest, encumbrance, pledge and hypothecation in all Pledged Interests and other Collateral of such other Grantor to the Administrative Agent pursuant hereto, and (b) without limiting the generality of the foregoing, each Grantor consents to the transfer of any Pledged Interest to the Administrative Agent or its nominee following an Event of Default and to the substitution of the Secured Party or its nominee as a partner under the limited partnership agreement or as a member under the limited liability company agreement, in any case, as heretofore and hereafter amended.

SECTION 7.11. Additional Grantors. Additional Subsidiaries of either Borrower may from time to time enter into this Security Agreement as a Grantor. Upon execution and delivery after the date hereof by the Administrative Agent and such Subsidiary of an instrument in the form of Annex 1, such Subsidiary shall become a Grantor hereunder with the same force and effect as if originally named as a Grantor herein. The execution and delivery of any instrument adding an additional Grantor as a party to this Security Agreement shall not require the consent of any other Grantor hereunder. The rights and obligations of each Grantor hereunder shall remain in full force and effect notwithstanding the addition of any new Grantor as a party to this Security Agreement.

SECTION 7.12. Conflicts with Credit Agreement. To the fullest extent possible, the terms and provisions of the Credit Agreement shall be read together with the terms and provisions of this Security Agreement so that the terms and provisions of this Security Agreement do not conflict with the terms and provisions of the Credit Agreement; provided, however, notwithstanding the foregoing, in the event that any of the terms or provisions of this Security Agreement conflict with any terms or provisions of the Credit Agreement, the terms or provisions of the Credit Agreement shall govern and control for all purposes; provided that the inclusion in this Security Agreement of terms and provisions, supplemental rights or remedies in favor of the Administrative Agent not addressed in the Credit Agreement shall not be deemed to be a conflict with the Credit Agreement and all such additional terms, provisions, supplemental rights or remedies contained herein shall be given full force and effect.

SECTION 7.13. Waiver of Jury Trial. EACH GRANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, EACH CREDIT DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE AGENT, ANY OTHER SECURED PARTY OR ANY OBLIGOR IN CONNECTION THEREWITH. EACH GRANTOR ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER CREDIT DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE ADMINISTRATIVE AGENT AND EACH LENDER ENTERING INTO THE CREDIT DOCUMENTS.

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SECTION 7.14. Governing Law, Entire Agreement, etc. This Security Agreement shall be deemed to be a contract made under and shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, except to the extent that the validity or perfection of the security interests hereunder, or remedies hereunder, in respect of any particular Collateral are governed by the laws of a jurisdiction other than the State of New York.

SECTION 7.15. Miscellaneous. THIS WRITTEN AGREEMENT AND THE OTHER CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

SECTION 7.16. Amendment to and Restatement of Earlier Agreement. This Security Agreement constitutes an amendment to, and a complete restatement of, the Original Pledge and Security Agreement, but does not constitute a novation of the obligations, liabilities and indebtedness of any of the Grantors thereunder.

[Remainder of this page intentionally left blank. Signature pages follow.]

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IN WITNESS WHEREOF, each of the parties hereto has caused this Security Agreement to be duly executed and delivered by its Authorized Officer as of the date first above written.

GRANTORS:
FLOTEK INDUSTRIES, INC.
By	/s/ John Chisholm
	John Chisholm
	President
TELEDRIFT COMPANY FLOTEK PAYMASTER, INC. MATERIAL TRANSLOGISTICS, INC. PETROVALVE, INC. TURBECO, INC. USA PETROVALVE, INC. FLOTEK INTERNATIONAL, INC. PADKO INTERNATIONAL INCORPORATED FLOTEK ECUADOR MANAGEMENT, LLC FLOTEK ECUADOR INVESTMENTS, LLC

By	/s/ John Chisholm
	John Chisholm
	President
SOONER ENERGY SERVICES, LLC CESI MANUFACTURING, LLC CESI CHEMICAL, INC.

By	/s/ John Chisholm
	John Chisholm
	Chief Executive Officer
FLOTEK INDUSTRIES FZE

By	/s/ John Chisholm
	John Chisholm
	President

Signature Page to Amended and Restated Pledge and Security Agreement

ADMINISTRATIVE AGENT:
WHITEBOX ADVISORS LLC
By:	/s/ Mark Strefling
	Name:	Mark Strefling
	Title:	Chief Legal Officer

Signature Page to Amended and Restated Pledge and Security Agreement

SCHEDULE I

to Amended and Restated Pledge and Security Agreement

ITEM A – PLEDGED INTERESTS

Common Stock

Pledged Interests Issuer (corporate)	Cert. #	# of Shares	Authorized Shares	% of Shares Pledged
Padko International Incorporated	2	50,000	500,000	100	%
USA Petrovalve, Inc.	2	1,000	100,000	100	%
Turbeco, Inc.	4	500	100,000	100	%
Petrovalve, Inc.	2	1,000	1,000	100	%
Material Translogistics, Inc.	1	1,000	100,000	100	%
Flotek Paymaster, Inc.	1	1,000	100,000	100	%
CESI Chemical, Inc.	1	500	5,000,000	100	%
Teledrift Company	2	1,000	10,000	100	%
Flotek Industries FZE	22924	1	1	100	%
Flotek International, Inc.	1	1,000	100,000	100	%

Limited Liability Company Interests

Pledged Interests Issuer (limited liability company)	% of Limited Liability Company Interests Pledged		Type of Limited Liability Company Interests Pledged
Sooner Energy Services, LLC	100	%	Membership Interests
CESI Manufacturing. LLC	100	%	Membership Interests
Flotek Ecuador Management, LLC	100	%	Membership Interests
Flotek Ecuador Investments, LLC	100	%	Membership Interests

Schedule I to Amended and Restated Pledge and Security Agreement

Partnership Interests

Pledged Interests Issuer (partnership)	% of Partnership Interests Owned	% of Partnership Interests Pledged
NONE.

ITEM B – PLEDGED NOTES

1. Pledged Note Issuer Description:

NONE.

Schedule I to Amended and Restated Pledge and Security Agreement

SCHEDULE II

to Amended and Restated Pledge and Security Agreement

Item A-1. Location of Grantor for purposes of UCC.

Flotek Industries, Inc.: Delaware

Padko International Incorporated: Oklahoma

Sooner Energy Services, LLC: Oklahoma

USA Petrovalve, Inc.: Texas

CESI Manufacturing, LLC: Oklahoma

Turbeco, Inc.: Texas

Petrovalve, Inc.: Delaware

Material Translogistics, Inc.: Texas

Flotek Paymaster, Inc.: Texas

CESI Chemical, Inc.: Oklahoma

Teledrift Company: Delaware

Flotek Industries FZA: Jebel Ali Free Zone, Dubai, United Arab Emirates

Flotek International, Inc.: Delaware

Flotek Ecuador Investments, LLC: Texas

Flotek Ecuador Management, LLC: Texas

Item A-2. Grantor’s place of business or principal office.

Flotek Industries, Inc.,

USA Petrovalve, Inc.,

Turbeco, Inc.,

Petrovalve, Inc.,

Material Translogistics, Inc.,

Flotek Paymaster, Inc.,

Teledrift Company,

Flotek International, Inc.,

Flotek Ecuador Investments, LLC, and

Flotek Ecuador Management, LLC:

2930 W. Sam Houston Pkwy N.

Houston, Texas 77043

Padko International Incorporated,

Sooner Energy Services, LLC,

CESI Chemical, Inc., and

CESI Manufacturing, LLC:

1004 Plainsman Road

Marlow, Oklahoma 73055

Flotek Industries FZE: Jebel Ali Free Zone, Dubai, United Arab Emirates

Schedule II to Amended and Restated Pledge and Security Agreement

Item A-3. Taxpayer ID number.

Flotek Industries, Inc.: 90-0023731

Padko International Incorporated: 73-1443489

Sooner Energy Services, LLC: 73-1501526

USA Petrovalve, Inc.: 76-0448098

CESI Manufacturing, LLC: 98-0372943

Turbeco, Inc.: 76-0228889

Petrovalve, Inc.: 76-0513130

Material Translogistics, Inc.: 73-1605226

Flotek Paymaster, Inc.: 30-0094158

CESI Chemical, Inc.: 73-1591850

Teledrift Company: 26-1869123

Flotek Industries FZE: None

Flotek International, Inc.: 27-2091474

Flotek Ecuador Investments, LLC: 27-2091569

Flotek Ecuador Management, LLC: 27-2091663

Item B. Merger or other corporate reorganization.

Description of Merger:

CESI Chemical, Inc.: Esses Inc., Equipment Specialties Inc., Plainsman Technology, Inc., IBS 2000, Inc. and Flotek Acquisition Sub, Inc. were each merged into CESI Chemical, Inc.

Material Translogistics, Inc.: CESI Acquistion, Inc. was merged into Material Translogistics, Inc.

Teledrift Company: Trinity Tool, Inc. and Spidle Sales & Service, Inc. were each merged into Teledrift Company.

Sooner Energy Services, LLC: Sooner Energy Services, Inc. was converted into Sooner Energy Services, LLC.

CESI Manufacturing, LLC: SES Holdings, Inc. was converted into and its name changed to CESI Manufacturing, LLC.

Turbeco, Inc.: CAVO Drilling Motors, Ltd. Co. was merged into Turbeco, Inc.

Item C. Deposit Accounts and Securities Accounts.

Deposit Accounts:

Account Description	Account Number
Wells Fargo - Flotek Industries Inc. - WellsOne Account(Master)	412-1097273

Schedule II to Amended and Restated Pledge and Security Agreement

Wells Fargo - Flotek Industries Inc. - WellsOne Account(Disbursement Acct)	412-1097299
Wells Fargo - Flotek Industries Inc. - WellsOne Account(Payroll)	412-1097281
Wells Fargo - Flotek Industries Inc. - WellsOne Account(Flexible Spending Acct)	412-1097265
ING Bank Alphen A/D RIJN - CESI Chemical Inc.	68.01.14.769
BankFirst - PADKO International Incorporated	500002100
BankFirst - Sooner Energy Services, LLC CD	4007006921
HSBC Bank Middle East - Flotek Industries FZE	011122215001

Securities Accounts:

NONE.

Item D. Letter of Credit Rights.

NONE.

Item E. Commercial Tort Claims.

NONE.

Schedule II to Amended and Restated Pledge and Security Agreement

SCHEDULE III – A

to Amended and Restated Pledge and Security Agreement

INTELLECTUAL PROPERTY COLLATERAL

Item A. Patent Collateral.

Issued Patents

Country	Patent No.	Filing Date	Inventor(s)	Title
USA	6,533,034	3/18/2003	Troy Barger	Centralized Stop Collar for Floating Centralizer
USA	5,829,952	11/3/1998	Darrel W. Shadden	Check Valve with Reversible Valve Ball and Seat
Canada	2,017,405	2/21/1995		Ball and Seat-Type Valve for Downhole Rod Pump
Canada	2,478,433	12/8/2009	John T. Pursley, David L. Holcomb and Glenn S. Penny	Composition and Process for Well Cleaning
Venezuela	52500	10/7/1994		Ball and Seat-Type Valve for Downhole Rod Pump
USA	6,761,215	7/13/2004	James Eric Morrison and Guy Morrison, III	Downhole Separator Method
China (Peoples Republic)	ZL03824239.7	7/18/2007		Downhole Separator and Method
Eurasian Patent Organization	007040	8/18/2006		Downhole Separator and Method

Schedule III to Amended and Restated Pledge and Security Agreement

Country	Serial No.	Filing Date	Inventor(s)	Title
USA	7,122,509	10/17/2006	John Todd Sanner, Glenn S. Penny and Roger Padgham	High Temperature Foamer Formulations for Downhole Injection
USA	7,544,639	6/9/2009	John T. Pursley, David L. Holcomb and Glenn S. Penny	Composition and Process for the Treatment of Hydrogen Sulfide
USA	7,380,606	6/3/2008	John T. Pursley, David L. Holcomb and Glenn S. Penny	Composition and Process for Well Cleaning
Australia	2003278716	1/ 8/2009		Downhole Separator and Method

Pending Patent Applications

Country	Serial No.	Filing Date	Inventor(s)	Title
Patent Cooperation Treaty	PCTUS9602445	2/23/1996		Improved Valve Plunger for a Ball and Seat-Type Check Valve
Canada	2,497,929	8/20/2003		Downhole Separator and Method
Patent Cooperation Treaty/European Patent Office	03716227.8	2/28/2003	John T. Pursley, David L. Holcomb and Glenn S. Penny	Composition and Process for Well Cleaning

Schedule III to Amended and Restated Pledge and Security Agreement

Country	Serial No.	Filing Date	Inventor(s)	Title
Patent Cooperation Treaty/Norwegian National	2004 4148	2/28/2003	John T. Pursley, David L. Holcomb and Glenn S. Penny	Composition and Process for Well Cleaning
USA	339,248 Abandoned 1/5/09	1/25/2006	Michael M. Brezinski	Method of Treating a Subterranean Formation in the Presence of Ferric Ions and/or Sulfide Ions
USA	518,648	9/11/2006	Manoj Gopalan and Stephen B. Poe	Measurement While Drilling Apparatus and Method of Using the Same
Patent Cooperation Treaty	Publication No. WO/2007/033126	9/12/2006		Measurement While Drilling Apparatus and Method of Using the Same
USA	Application No. 12/156,201	5/30/2008		Process for Well Cleaning
USA	Application No. 12/268,408	11/10/2008		Drag-Reducing Copolymer Compositions
USA	Application No. 61/174,617	5/1/2009		Low Friction Centralizer
USA	Application No. 12/618,535 Priority No. 61/114,125	11/13/2009		Water-in-Oil Microemulsions for Oilfield Applications

Schedule III to Amended and Restated Pledge and Security Agreement

Patent Applications in Preparation

NONE.

Schedule III to Amended and Restated Pledge and Security Agreement

SCHEDULE III – B

to Amended and Restated Pledge and Security Agreement

Item B. Trademark Collateral

Trademarks

Country	Trademark	Registration No.	Issue Date
USA	STIMLUBE	3,620,715	5/12/2009

Trademark Applications in Preparation

Country	Trademark
USA	FLOTEK
USA	PETROVALVE
USA	CESI
USA	“OPEN CIRCLE” SYMBOL

Schedule III to Amended and Restated Pledge and Security Agreement

SCHEDULE III – C

to Amended and Restated Pledge and Security Agreement

Item C. Copyright Collateral.

NONE.

Schedule III to Amended and Restated Pledge and Security Agreement

Annex 1 to Amended and Restated Pledge and Security Agreement

SUPPLEMENT NO.                     dated as of                     , 20    (the “Supplement”), to the Amended and Restated Pledge and Security Agreement dated as of                 , 2010 (as amended, supplemented, restated, or otherwise modified from time to time, the “Security Agreement”), among Flotek Industries, Inc., a Delaware corporation and each Subsidiary of the Borrower signatory thereto (together with the Borrower, the “Grantors” and individually, a “Grantor”), in favor of Whitebox Advisors LLC, as Administrative Agent for the Lenders (as defined in the Credit Agreement described below) (in such capacity, together with its successors and assigns, the “Administrative Agent”) for the benefit of each of the Secured Parties (as defined in the Security Agreement)

A. Reference is made to that certain Amended and Restated Credit Agreement, dated as of                 , 2010 (as amended, supplemented, amended and restated or otherwise modified from time to time, the “Credit Agreement”), among the Borrower, the lenders from time to time parties thereto (the “Lenders”), and the Administrative Agent.

B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement and the Credit Agreement.

C. Section 7.11 of the Security Agreement provides that additional Subsidiaries of the Borrower may become Grantors under the Security Agreement by execution and delivery of an instrument in the form of this Supplement. The undersigned Subsidiary of the Borrower (the “New Grantor”) is executing this Supplement in accordance with the requirements of the Credit Agreement to become a Grantor under the Security Agreement.

Accordingly, the Administrative Agent and the New Grantor agree as follows:

SECTION 1. In accordance with Section 7.11 of the Security Agreement, the New Grantor by its signature below becomes a Grantor under the Security Agreement with the same force and effect as if originally named therein as a Grantor and the New Grantor hereby agrees (a) to all the terms and provisions of the Security Agreement applicable to it as a Grantor thereunder and (b) represents and warrants that the representations and warranties made by it as a Grantor thereunder are true and correct on and as of the date hereof. In furtherance of the foregoing, the New Grantor, as security for the payment and performance in full of the Secured Obligations (as defined in the Security Agreement), does hereby create and grant to the Administrative Agent, its successors and assigns, for the benefit of the Secured Parties, their successors and assigns as provided in the Security Agreement, a continuing security interest in and lien on all of the New Grantor’s right, title and interest in and to the Collateral (as defined in the Security Agreement) of the New Grantor. Each reference to a “Grantor” in the Security Agreement shall be deemed to include the New Grantor. The Security Agreement is hereby incorporated herein by reference.

SECTION 2. The New Grantor represents and warrants to the Administrative Agent and the other Secured Parties that this Supplement has been duly authorized, executed and delivered

Annex I to Amended and Restated Pledge and Security Agreement

Page 1 of 5

by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)).

SECTION 3. This Supplement may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Supplement shall become effective when the Administrative Agent shall have received counterparts of this Supplement that, when taken together, bear the signatures of the New Grantor and the Administrative Agent. Delivery of an executed signature page to this Supplement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Supplement.

SECTION 4. The New Grantor hereby agrees that the schedules attached to the Security Agreement are hereby supplemented by the corresponding schedules attached to this Supplement. The New Grantor hereby represents and warrants that the information provided in the schedules attached hereto are true and correct as of the date hereof.

SECTION 5. The New Grantor hereby expressly acknowledges and agrees to the terms of Section 6.4. (Indemnity and Expenses) of the Security Agreement and expressly acknowledges the irrevocable proxy provided in Section 4.1(e) of the Security Agreement. In furtherance thereof, NEW GRANTOR HEREBY GRANTS THE ADMINISTRATIVE AGENT AN IRREVOCABLE PROXY (WHICH IRREVOCABLE PROXY SHALL CONTINUE IN EFFECT UNTIL THE TERMINATION DATE) EXERCISABLE UNDER THE CIRCUMSTANCES PROVIDED IN SECTION 4.1 OF THE SECURITY AGREEMENT, TO VOTE THE PLEDGED SHARES, PLEDGED INTERESTS, INVESTMENT PROPERTY AND SUCH OTHER COLLATERAL.

SECTION 6. Except as expressly supplemented hereby, the Security Agreement shall remain in full force and effect.

SECTION 7. THIS SUPPLEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTERESTS HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.

SECTION 8. In case any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, neither party hereto shall be required to comply with such provision for so long as such provision is held to be invalid, illegal or unenforceable, but the validity, legality and enforceability of the remaining provisions contained herein and in the Security Agreement shall not in any way be affected or impaired. The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

Annex 1 to Amended and Restated Pledge and Security Agreement

Page 2 of 5

SECTION 9. All communications and notices hereunder shall be in writing and given as provided in the Security Agreement. All communications and notices hereunder to the New Grantor shall be given to it at the address set forth under its signature hereto.

SECTION 10. The New Grantor agrees to reimburse the Administrative Agent for its reasonable out-of-pocket expenses in connection with this Supplement, including the reasonable fees, other charges and disbursements of counsel for the Administrative Agent.

SECTION 11. NEW GRANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, EACH CREDIT DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE AGENT OR ANY OTHER SECURED PARTY, LENDER OR ANY GRANTOR IN CONNECTION THEREWITH. NEW GRANTOR ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER CREDIT DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE ADMINISTRATIVE AGENT AND EACH LENDER ENTERING INTO THE CREDIT DOCUMENTS.

THIS SUPPLEMENT, THE SECURITY AGREEMENT AND THE OTHER CREDIT DOCUMENTS, REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.

Annex 1 to Amended and Restated Pledge and Security Agreement

Page 3 of 5

IN WITNESS WHEREOF, the New Grantor and the Administrative Agent have duly executed this Supplement to the Security Agreement as of the day and year first above written.

[Name of New Grantor]

By:

Name:

Title:

Address:

Whitebox Advisors LLC,

as Administrative Agent

By:

Name:

Title:

Annex I to Amended and Restated Pledge and Security Agreement

Page 4 of 5

SCHEDULES TO SUPPLEMENT NO. 1

[AS APPROPRIATE]

Annex I to Amended and Restated Pledge and Security Agreement

Page 5 of 5

EX-10.9

Exhibit 10.9

AMENDED AND RESTATED PATENT AND TRADEMARK SECURITY

AGREEMENT

This Amended and Restated Patent and Trademark Security Agreement dated as of March 31, 2010 (the “Patent and Trademark Security Agreement”) is made by Flotek Industries, Inc., a Delaware corporation (the “Debtor”) and each subsidiary of the Debtor signatory hereto (together with the Debtor, the “Grantors” and individually, a “Grantor”), in favor of the Secured Parties (as defined herein).

Preliminary Statement

Debtor is a party to the Amended and Restated Credit Agreement dated as of March 31, 2010 (as amended or otherwise modified from time to time, the “Credit Agreement”) among Debtor, the lenders party thereto from time to time (the “Lenders”), and Whitebox Advisors LLC, in its capacity as administrative agent (the “Administrative Agent”).

Grantors own the patents, patent registration, patent applications, trademarks, trademark registrations, and trademark applications, and are parties to the patent and trademark licenses listed on Schedule I attached hereto and by this reference incorporated herein.

In connection with the Credit Agreement, the Grantors entered into an Amended and Restated Pledge and Security Agreement of even date herewith (as amended or otherwise modified from time to time, the “Pledge and Security Agreement”) in favor of the Administrative Agent for the benefit of the Secured Parties (as defined in the Pledge and Security Agreement), pursuant to which the Grantors have granted to the Administrative Agent a security interest in all right, title and interest of the Grantors in and to the Intellectual Property Collateral, as such term is defined in the Pledge and Security Agreement, including, without limitation, all right, title and interest of Grantors, in, to, and under all now owned and hereafter acquired Patent Collateral and Trademark Collateral (each as defined in the Pledge and Security Agreement), set forth on Schedule I attached hereto, to secure the prompt payment, performance and observance of the Secured Obligations (as defined in the Pledge and Security Agreement).

Agreement

NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, Grantors do hereby further confirm, and put on the public record, their grant to the Administrative Agent of a security interest in, to, and under the following, whether presently existing or hereafter created or acquired (collectively, the “Patent and Trademark Collateral”);

(a) (i) all inventions and discoveries, whether patentable or not, all letters patent and applications for letters patent throughout the world, including but not limited to all the property set forth as “Patents” on Schedule I hereto, and any patent applications in preparation for filing, (ii) all reissues, divisions, continuations, continuations-in-part, extensions, renewals and reexaminations of any of the items described in clause (i), and (iii) all patent licenses, and other agreements providing any Grantor with the right to use any items of the type referred to in clauses (i) and (ii) above;

(b) (i) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, certification marks, collective marks, logos and other source or business identifiers, and all goodwill of the business associated therewith, now existing or hereafter adopted or acquired, including but not limited to all of the property set forth as “Trademarks” on Schedule I hereto, whether currently in use or not, all registrations and recordings thereof and all applications in connection therewith, whether pending or in preparation for filing, including registrations, recordings and applications in the United States Patent and Trademark Office or in any office or agency of the United States of America, or any State thereof or any other country or political subdivision thereof or otherwise, and all common-law rights relating to the foregoing, (ii) the right to obtain all reissues, extensions or renewals of the foregoing, (iii) all trademark licenses for the grant by or to any Grantor of any right to use any trademark, and (iv) all of the goodwill of the business connected with the use of, and symbolized by the items described in, clauses (i) and (ii), and to the extent applicable clause (iii); and

(c) all products and proceeds of the foregoing, and rights associated therewith, including, without limitation, licenses, royalties income, payments, claims, damages and proceeds of infringement suits, any claim by Grantors against third parties for past, present or future (i) infringement or dilution of any patent, trademark, or patent or trademark registrations or licenses referred to herein, the patent or trademark registrations issued with respect to the patent or trademark applications referred to herein and the trademarks licensed under any trademark license, or (ii) injury to the goodwill associated with any patent, trademark, patent or trademark registration, or patent or trademark licensed under any patent or trademark license.

This Patent and Trademark Security Agreement constitutes an amendment to, and a complete restatement of, the Patent and Trademark Security Agreement dated as of March 31, 2008, between the Borrower and certain Secured Parties (as defined therein and herein referred to as the “Original Secured Parties”). All right, title and interest of the Original Secured Parties in and to the Patent and Trademark Collateral was assigned by the Original Secured Parties to the Administrative Agent and certain other Lenders and/or Affiliates of the Administrative Agent pursuant to the Nonrecourse Assignment Agreement (Syndicated Facility) dated March 17, 2010.

This security interest is granted in conjunction with the security interests granted to Secured Parties pursuant to the Pledge and Security Agreement. Grantors hereby acknowledge and affirm that the rights and remedies of Secured Parties with respect to the security interest in the Patent and Trademark Collateral made and granted hereby are more fully set forth in the Pledge and Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein.

[Signatures on following page]

-2-

IN WITNESS WHEREOF, each of the parties hereto has caused this Patent and Trademark Security Agreement to be duly executed and delivered by its authorized officer as of the date first above written.

GRANTORS:
FLOTEK INDUSTRIES, INC.
By	/s/ John Chisholm
	John Chisholm
	President
TELEDRIFT COMPANY FLOTEK PAYMASTER, INC. MATERIAL TRANSLOGISTICS, INC. PETROVALVE, INC. TURBECO, INC. USA PETROVALVE, INC. FLOTEK INTERNATIONAL, INC. PADKO INTERNATIONAL INCORPORATED FLOTEK ECUADOR MANAGEMENT, LLC FLOTEK ECUADOR INVESTMENTS, LLC

By	/s/ John Chisholm
	John Chisholm
	President
CESI CHEMICAL, INC. CESI MANUFACTURING, LLC SOONER ENERGY SERVICES, LLC

By	/s/ John Chisholm
	John Chisholm
	Chief Executive Officer
FLOTEK INDUSTRIES FZE

By	/s/ John Chisholm
	John Chisholm
	President

Signature Page to Amended and Restated Patent and Trademark Security Agreement

SCHEDULE I

TO

PATENT AND TRADEMARK SECURITY AGREEMENT

Item A. Patent Collateral

Issued Patents

Country	Serial No.	Filing Date	Inventor(s)	Title
USA	6,533,034	3/18/2003	Troy Barger	Centralized Stop Collar for Floating Centralizer
USA	5,829,952	11/3/1998	Darrel W. Shadden	Check Valve with Reversible Valve Ball and Seat
Canada	2,017,405	2/21/1995		Ball and Seat-Type Valve for Downhole Rod Pump
Canada	2,478,433	12/8/2009	John T. Pursley, David L. Holcomb and Glenn S. Penny	Composition and Process for Well Cleaning
Venezuela	52500	10/7/1994		Ball and Seat-Type Valve for Downhole Rod Pump
USA	6,761,215	7/13/2004	James Eric Morrison and Guy Morrison, III	Downhole Separator Method
China (Peoples Republic)	ZL03824239.7	7/18/2007		Downhole Separator and Method
Eurasian Patent Organization	007040	8/18/2006		Downhole Separator and Method

Schedule I to Amended and Restated Patent and Trademark Security Agreement

Country	Serial No.	Filing Date	Inventor(s)	Title
USA	7,122,509	10/17/2006	John Todd Sanner, Glenn S. Penny and Roger Padgham	High Temperature Foamer Formulations for Downhole Injection
USA	7,544,639	6/9/2009	John T. Pursley, David L. Holcomb and Glenn S. Penny	Composition and Process for the Treatment of Hydrogen Sulfide
USA	7,380,606	6/3/2008	John T. Pursley, David L. Holcomb and Glenn S. Penny	Composition and Process for Well Cleaning
Australia	2003278716	1/8/2009		Downhole Separator and Method

Pending Patent Applications

Country	Serial No.	Filing Date	Inventor(s)	Title
Patent Cooperation Treaty	PCTUS9602445	2/23/1996		Improved Valve Plunger for a Ball and Seat-Type Check Valve
Canada	2,497,929	8/20/2003		Downhole Separator and Method

Schedule I to Amended and Restated Patent and Trademark Security Agreement

Country	Serial No.	Filing Date	Inventor(s)	Title
Patent Cooperation Treaty/European Patent Office	03716227.8	2/28/2003	John T. Pursley, David L. Holcomb and Glenn S. Penny	Composition and Process for Well Cleaning
Patent Cooperation Treaty/Norwegian National	2004 4148	2/28/2003	John T. Pursley, David L. Holcomb and Glenn S. Penny	Composition and Process for Well Cleaning
USA	339,248 Abandoned	1/25/2006	Michael M. Brezinski	Method of Treating a Subterranean Formation in the Presence of Ferric Ions and/or Sulfide Ions
USA	518,648	9/11/2006	Manoj Gopalan and Stephen B. Poe	Measurement While Drilling Apparatus and Method of Using the Same
Patent Cooperation Treaty	Publication No. WO/2007/033126	9/12/2006		Measurement While Drilling Apparatus and Method of Using the Same
USA	Application No. 12/156,201	5/30/2008		Process for Well Cleaning
USA	Application No. 12/268,408	11/10/2008		Drag-Reducing Copolymer Compositions
USA	Application No. 61/174,617	5/1/2009		Low Friction Centralizer

Schedule I to Amended and Restated Patent and Trademark Security Agreement

Country	Serial No.	Filing Date	Inventor(s)	Title
USA	Application No. 12/618,535 Priority No. 61/114,125	11/13/2009		Water-in-Oil Microemulsions for Oilfield Applications

Patent Applications in Preparation

NONE.

Item B. Trademark Collateral

Trademarks

Country	Trademark	Registration No.	Issue Date
USA	STIMLUBE	3,620,715	5/12/2009

Trademark Applications in Preparation

Country	Trademark
USA	FLOTEK
USA	PETROVALVE
USA	CESI
USA	“OPEN CIRCLE” SYMBOL

Schedule I to Amended and Restated Patent and Trademark Security Agreement

EX-10.10

Exhibit 10.10

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT, dated as of March 31, 2010 (this “Agreement”), is made by and among Flotek Industries, Inc., a Delaware corporation, with headquarters located at 2930 W. Sam Houston Parkway North, Suite 300, Houston, Texas 77043 (the “Company”), and the investors named on the signature pages hereto (the “Investors”).

RECITALS:

A. Pursuant to the Amended and Restated Credit Agreement dated as of the date hereof (the “Credit Agreement”) by and among the Company, as Borrower, the Investors, as Lenders, and Whitebox Advisors LLC, as Administrative Agent, the Company has agreed, upon the terms and subject to the conditions of the Credit Agreement, to issue to the Investors shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), as a commitment fee (the “Commitment Shares”).

B. Pursuant to the Credit Agreement, the Company may, subject to the terms and conditions of the Credit Agreement, be required to issues to the Investors shares of Common Stock as repayment of the principal of the Notes (the “Payment Shares”).

C. In order to induce the Investors to execute and deliver the Credit Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended (the “Securities Act”) and applicable state securities laws with respect to the Common Shares (as hereinafter defined).

In consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Investors hereby agree as follows:

ARTICLE I

DEFINITIONS

Capitalized terms used and not otherwise defined herein have the respective meanings given them set forth in the Credit Agreement. In addition, as used in this Agreement, the following terms have the following meanings:

1.1 “Commitment Share Registration Period” means the period between the date of the Credit Agreement and the earlier of (i) the date on which all of the Commitment Shares have been sold under a Registration Statement, or (ii) the date on which all of the Commitment Shares (in the opinion of the Investors’ counsel) may be immediately sold without registration and without restriction (including without limitation as to volume by each holder thereof) as to the number of the Commitment Shares to be sold, pursuant to Rule 144 or otherwise.

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

1.3 “FINRA” means the Financial Industry Regulatory Authority, Inc.

1.4 “Investors” means the investors named on the signature pages hereto and any of their transferees or assignees who agree to become bound by the provisions of this Agreement in accordance with Article IX hereof.

1.5 “National Securities Exchange” means any national securities exchange under Section 12(b) of the Exchange Act.

1.6 “OTC Bulletin Board” means the OTC Bulletin Board service of broker-dealers admitted the membership in FINRA and their associated person.

1.7 “Payment Share Registration Period” means the period between the date of the issuance of any Payment Shares and the earlier of (i) the date on which all of such Payment Shares have been sold under a Registration Statement, or (ii) the date on which all of such Payment Shares (in the opinion of the Investors’ counsel) may be immediately sold without registration and without restriction (including without limitation as to volume by each holder thereof) as to the number of such Payment Shares to be sold, pursuant to Rule 144 or otherwise.

1.8 “Registrable Securities” Commitment Shares and the Payments Shares.

1.9 “Registration Period” means the Commitment Registration Period or a Payment Registration Period, as the case may be.

1.10 “Registration Statement” means a Registration Statement of the Company filed under the Securities Act.

1.11 “Required Filing Date” means the Commitment Required Filing Date (as defined below) or a Payment Required Filing Date (as defined below), as the case may be.

1.11 The terms “register,” “registered,” and “registration” refer to a registration effected by preparing and filing a Registration Statement or statements in compliance with the Securities Act and pursuant to Rule 415 and the declaration or ordering of effectiveness of such Registration Statement by the SEC.

1.12 “Rule 415” means Rule 415 under the Securities Act, or any successor Rule providing for offering securities on a continuous basis, and applicable rules and regulations thereunder.

1.13 “SEC” means the United States Securities and Exchange Commission.

ARTICLE II

REGISTRATION

2.1 Mandatory Registration.

(a) The Company will file with the SEC a Registration Statement on Form S-3 registering the Commitment Shares and no securities other than additional securities held by Investors for resale within 30 days after the date of the Credit Agreement (the “Commitment

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Required Filing Date”). If Form S-3 is not available at that time, then the Company will file a Registration Statement on such form as is then available to effect a registration of the Commitment Shares by such date, subject to the consent of the Investors, which consent will not be unreasonably withheld.

(b) The Company will file with the SEC a Registration Statement on Form S-3 registering the Payment Shares and no securities other than additional securities held by Investors for resale within 30 days after the date of each issuance of Payment Shares (each such date a “Payment Required Filing Date”). If Form S-3 is not available at that time, then the Company will file a Registration Statement on such form as is then available to effect a registration of the Payment Shares by such date, subject to the consent of the Investors, which consent will not be unreasonably withheld.

(c) To the extent allowable under the Securities Act and the rules promulgated thereunder (including Rule 416 under the Securities Act), each Registration Statement will include the Registrable Securities covered by such Registration Statement and such indeterminate number of additional shares of Common Stock as may become issuable to prevent dilution resulting from stock splits, stock dividends or similar transactions.

(d) Notwithstanding anything to the contrary contained in this Agreement, but subject to the payment of the Late Payments pursuant to Section 2.4 hereof, if the staff of the SEC (the “Staff”) or the SEC seeks to characterize any offering pursuant to a Registration Statement filed pursuant to this Agreement as constituting an offering of securities by or on behalf of the Company, or in any other manner, such that the Staff or the SEC do not permit such Registration Statement to become effective and used for resales in a manner that does not constitute such an offering and that permits the continuous resale at the market by the Investors participating therein (or as otherwise may be acceptable to each Investor) without being named therein as “underwriters,” then the Company shall reduce the amount of Registrable Securities to be included in such Registration Statement by all Investors to such amount as the Staff and the SEC will permit for such Registration Statement to become effective without such Investors being so named. In making such reduction, the Company shall reduce the amount of Registrable Securities to be included by all Investors on a pro rata basis (based upon the number of Registrable Securities otherwise required to be included for each Investor) unless the inclusion of Registrable Securities by a particular Investor or a particular set of Investors are resulting in the Staff or the SEC’s “by or on behalf of the Company” offering position, in which event the Registrable Securities held by such Investor or set of Investors shall be the only Registrable Securities subject to reduction (and if by a set of Investors on a pro rata basis by such Investors or on such other basis as would result in the exclusion of the least amount of Registrable Securities by all such Investors). In addition, if the Staff or the SEC requires any Investor seeking to sell Registrable Securities under a Registration Statement filed pursuant to this Agreement to be specifically identified as an “underwriter” in order to permit such Registration Statement to become effective, and such Investor does not consent to being so named in such Registration Statement, then, in each such case, the Company shall reduce the total amount of Registrable Securities to be registered on behalf of such Investor, to such amount as the Staff or the SEC will permit without requiring such identification. In the event of any reduction in Registrable Securities pursuant to this paragraph, an affected Investor shall have the right to require, upon

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delivery of a written request to the Company signed by such Investor, the Company to file a Registration Statement within 30 days of such request (subject to any restrictions imposed by Rule 415 or required by the Staff or the SEC) for resale of Registrable Securities by such Investor in a manner reasonably acceptable to such Investor, and the Company shall following such request cause to be and keep effective such Registration Statement in the same manner as otherwise contemplated in this Agreement for Registration Statements hereunder, in each case until such time as: (i) all Registrable Securities held by such Investor have been registered and sold pursuant to an effective Registration Statement in a manner acceptable to such Investor, or (ii) the Registrable Securities may be immediately sold without registration and without restriction (including without limitation as to manner of sale volume by each holder thereof) as to the number of Registrable Securities to be sold, pursuant to Rule 144 or otherwise (it being understood that the special demand right under this sentence may be exercised by an Investor multiple times and with respect to limited amounts of Registrable Securities in order to permit the resale thereof by such Investor as contemplated above).

2.2 Effectiveness of the Registration Statement.

(a) The Company will use its best efforts to cause each Registration Statement contemplated by Section 2.1 to be declared effective by the SEC as soon as practicable after filing, and in any event no later than the 120th day after the Required Filing Date (the “Required Effective Date”). If the SEC takes the position that under Rule 415 of the Securities Act, the amount of Registrable Securities needs to be reduced to clear the SEC review, the Investors shall agree to reduce their Registrable Securities to be registered pro rata to meet the SEC requirement with the understanding the Company shall promptly file another Registration Statement to register the Registrable Securities not registered at a time when such Registration Statement is allowed.

(b) The Company’s best efforts will include, but not be limited to, promptly responding to all comments received from the staff of the SEC. If the Company receives notification from the SEC that a Registration Statement will receive no action or review from the SEC, then the Company will cause such Registration Statement to become effective as soon as practicable after such SEC notification.

(c) Once a Registration Statement is declared effective by the SEC, the Company will cause such Registration Statement to remain effective throughout the applicable Registration Period, in each case except as permitted under Section 3.1.

2.3 Payments by the Company. If (i) at any time after effectiveness of a Registration Statement, sales cannot be made thereunder during the applicable Registration Period for any reason (including any suspension of the use of a Registration Statement under Section 3.6 hereof) for a period of more than 10 consecutive business days, or 30 days in the aggregate, during any 12-month period or (ii) the Common Stock is not listed on a National Securities Exchange or included for quotation on the OTC Bulletin Board for more than an aggregate of 10 business days in any 12-month period, then the Company will thereafter make a payment (by wire transfer or check) to each Investor as partial compensation for such delay. The amount of the payment made to each Investor will be equal to 0.5% of the Outstanding Principal Amount (as hereinafter

4

defined) for the each month that sales cannot be made under the effective Registration Statement or the Common Stock is not listed on a National Securities Exchange or included for quotation on the OTC Bulletin Board continuing through the date that sales can be made under the effective Registration Statement or the Common Stock is listed on a National Securities Exchange or included for quotation on the OTC Bulletin Board. The term “Outstanding Principal Amount” for purposes of computing the amount of payment to be made to an Investor under Section 2.3 and Section 2.4 shall mean the sum of (x) the number of such Commitment Shares held by such Investor multiplied by the closing market price of the Common Stock on the principal National Securities Exchange on which the Common Stock is traded as of, or if the Common Stock is not so traded, the last trading price of the Common Stock on the OTC Bulletin Board on or prior to, the date on which such Commitment Shares were issued, and (y) for each issuance of Payment Shares, the number of such Payment Shares held by such Investor multiplied by the closing market price of the Common Stock on the principal National Securities Exchange on which the Common Stock is traded, or the OTC Bulletin Board, as of the date on which such Payment Shares were issued. Such payments will be prorated on a daily basis for partial months and will be paid to each Investor by wire transfer or check within five business days following the end of each month.

2.4 Effect of Late Filing or Effectiveness. If (a) the Company fails to file any Registration Statement by the time required by Section 2.1 (a “Filing Failure”); (b) any Registration Statement required pursuant to Section 2.1 above has not been declared effective by the Required Effective Date for any reason, including, without limitation, by reason of the inability of the Company to utilize a particular registration statement form that would provide for a shorter time to effectiveness, the failure by the Company to file its reports required under the Exchange Act or the Company’s failure to fulfill its obligations under Section 2.1(a) and Section 2.2(b) (an “Effectiveness Failure”), then the Company shall pay to each Investor, for each day of such Filing Failure or Effectiveness Failure, an amount equal to the product of (i) such Investor’s Outstanding Principal Amount and (ii) the quotient obtained by dividing 6% by 360 (the “Late Payments”). The Late Payments will be paid to the Investors by wire transfer or check within five business days after the earlier of (i) the end of each month following the Required Filing Date or Required Effective Date or (ii) the effective date of the applicable Registration Statement. Nothing herein limits any Investor’s right to pursue actual damages for the Company’s failure to file a Registration Statement on or prior to the Required Filing Date or to have it declared effective by the SEC on or prior to the Required Effective Date in accordance with the terms of this Agreement.

2.5 Piggyback Registrations.

(a) If, at any time prior to the expiration of a Registration Period, a Registration Statement is not effective with respect to all of the Registrable Securities and the Company decides to register any of its securities for its own account or for the account of others, then the Company will promptly give the Investors written notice thereof and will use its best efforts to include in such registration all or any part of the Registrable Securities requested by such Investors to be included therein (excluding any Registrable Securities previously included in a Registration Statement). This requirement does not apply to Company registrations on Form S-4 or S-8 or their equivalents relating to equity securities to be issued solely in connection with

5

an acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans. Each Investor must give its request for registration under this paragraph to the Company in writing within 15 days after receipt from the Company of notice of such pending registration. If the registration for which the Company gives notice is a public offering involving an underwriting, the Company will so advise the Investors as part of the above-described written notice. In that event, if the managing underwriter(s) of the public offering impose a limitation (which may be a complete exclusion) on the number of shares of Common Stock that may be included in a Registration Statement because, in such underwriter(s)’ judgment, such limitation would be necessary to effect an orderly public distribution or reduce the number of securities which could be sold by the Company, then the Company will be obligated to include only such limited portion, if any, of the Registrable Securities with respect to which such Investors have requested inclusion hereunder. Any exclusion of Registrable Securities will be made pro rata among all holders of the Company’s securities seeking to include shares of Common Stock in proportion to the number of shares of Common Stock sought to be included by those holders. However, the Company will not exclude any Registrable Securities unless the Company has first excluded all outstanding securities the holders of which are not entitled by right to inclusion of securities in such Registration Statement or are not entitled pro rata inclusion with the Registrable Securities. If any Investor or other person does not agree to the terms of such underwriting or otherwise fails to comply with the terms of this Agreement, such Investor or other person shall be excluded therefrom upon written notice from the Company or underwriter. Any Registrable Securities or other securities excluded or withdrawn from such underwriting shall be withdrawn from such registration.

(b) No right to registration of Registrable Securities under this Section 2.5 limits in any way the registration required under Section 2.1 above. The obligations of the Company under this Section 2.5 expire upon the earliest of (i) the effectiveness of a Registration Statement filed pursuant to Section 2.1 above with respect to the Registrable Securities or the respective portion thereof, (ii) after the Company has afforded the opportunity for the Investors to exercise registration rights under this Section 2.5 for two registrations (provided, however, that any Investor that has had any Registrable Securities excluded from any Registration Statement in accordance with this Section 2.5 may include in any additional Registration Statement filed by the Company the Registrable Securities so excluded), or (iii) expiration of the Registration Period.

(c) The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 2.5 prior to the effectiveness of such registration whether or not any Investor has elected to include securities in such registration. The expenses of such withdrawn registration shall be borne by the Company.

2.6 Eligibility to use Form S-1 or S-3. The Company represents and warrants that it meets the requirements for the use of Form S-1 or S-3 for registration of the resale by the Investors of the Registrable Securities. The Company will file all reports required to be filed by the Company with the SEC in a timely manner so as to preserve its eligibility for the use of Form S-1 or S-3.

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ARTICLE III

ADDITIONAL OBLIGATIONS OF THE COMPANY

3.1 Continued Effectiveness of Registration Statements. The Company will keep each Registration Statement covering the Registrable Securities effective under Rule 415 at all times during the applicable Registration Period. In the event that the number of shares available under a Registration Statement filed pursuant to this Agreement is insufficient to cover all of the Registrable Securities, the Company will (if permitted) amend such Registration Statement or file a new Registration Statement (on the short form available therefor, if applicable), or both, so as to cover all of the Registrable Securities. The Company will file such amendment or new Registration Statement as soon as practicable, but in no event later than 20 business days after the necessity therefor arises (based upon the market price of the Common Stock and other relevant factors on which the Company reasonably elects to rely). The Company will use its best efforts to cause such amendment or new Registration Statement to become effective as soon as is practicable after the filing thereof, but in no event later than 90 days after the date on which the Company reasonably first determines (or reasonably should have determined) the need therefor.

3.2 Accuracy of Registration Statement. Any Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) filed by the Company covering Registrable Securities will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading. The Company will promptly prepare and file with the SEC such amendments (including post-effective amendments) and supplements to each Registration Statement and the prospectus used in connection with such Registration Statement as may be necessary to permit sales pursuant to such Registration Statement at all times during the Registration Period, and, during such period, will comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities of the Company covered by such Registration Statement until the termination of such Registration Period, or if earlier, until such time as all of such Registrable Securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in such Registration Statement.

3.3 Furnishing Documentation. The Company will furnish to each Investor whose Registrable Securities are included in a Registration Statement, and to its legal counsel, (a) promptly after each document is prepared and publicly distributed, filed with the SEC or received by the Company, one copy of any Registration Statement filed pursuant to this Agreement and any amendments thereto, each preliminary prospectus and final prospectus and each amendment or supplement thereto; and, in the case of a Registration Statement filed under Section 2.1 above, each letter written by or on behalf of the Company to the SEC and each item of correspondence from, or order issued by, the SEC or the staff of the SEC, in each case relating to such Registration Statement (other than any portion of any item thereof which contains information for which the Company has sought confidential treatment); and (b) a number of copies of a prospectus, including a preliminary prospectus (if any), and all amendments and supplements thereto, and such other documents as the Investor may reasonably request in order to facilitate the disposition of the Registrable Securities owned by the Investor. The Company will promptly notify in writing each Investor whose Registrable Securities are included in any Registration Statement of the effectiveness of such Registration Statement and any post-effective amendment.

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3.4 Additional Obligations. The Company will use its best efforts to (a) register and qualify the Registrable Securities covered by a Registration Statement under such other securities or blue sky laws of such jurisdictions as each Investor who holds (or has the right to hold) Registrable Securities being offered reasonably requests, (b) prepare and file in those jurisdictions any amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain their effectiveness during the Registration Period, (c) take any other actions necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (d) take any other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions. Notwithstanding the foregoing, the Company is not required, in connection such obligations, to (i) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3.4, (ii) subject itself to general taxation in any such jurisdiction, (iii) file a general consent to service of process in any such jurisdiction, (iv) provide any undertakings that cause material expense or burden to the Company, or (v) make any change in its charter or bylaws, which in each case the Board of Directors of the Company determines to be contrary to the best interests of the Company and its stockholders.

3.5 Underwritten Offerings. If the Investors who hold a majority in interest of the Registrable Securities being offered in an offering pursuant to a Registration Statement or any amendment or supplement thereto under this Agreement select underwriters reasonably acceptable to the Company for such offering, the Company will enter into and perform its obligations under an underwriting agreement in usual and customary form including, without limitation, customary indemnification and contribution obligations, with the managing underwriter of such offering, but the Company will not be obligated to pay any fees or expenses of such underwriters related to the offering.

3.6 Suspension of Registration.

(a) The Company will notify (by telephone and also by facsimile and reputable overnight courier) each Investor who holds Registrable Securities being sold pursuant to a Registration Statement of the happening of any event of which the Company has knowledge as a result of which the prospectus included in a Registration Statement as then in effect includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company will make such notification as promptly as practicable after the Company becomes aware of the event (but in no event will the Company disclose to any Investor any of the facts or circumstances regarding the event), will promptly (but in no event more than ten business days) prepare a supplement or amendment to such Registration Statement to correct such untrue statement or omission, and will deliver a number of copies of such supplement or amendment to each Investor as such Investor may reasonably request. The Company will use its best efforts to keep the length of any such suspension to as short a period as is practicable given the then existing circumstances and may so defer or suspend the use of a Registration Statement no more than two times in any 18-month period, and provided, further,

8

that, after deferring or suspending the use of a Registration Statement, the Company may not again defer or suspend the use of such Registration Statement until a period of thirty days has elapsed after resumption of the use of such Registration Statement. Notwithstanding anything to the contrary contained herein or in the Exchange Agreement, if the use of a Registration Statement is suspended by the Company, the Company will promptly give notice of the suspension to all Investors whose securities are covered by such Registration Statement, and will promptly notify each such Investor as soon as the use of such Registration Statement may be resumed. Notwithstanding anything to the contrary contained herein or in the Credit Agreement, the Company will cause the Transfer Agent to deliver unlegended shares of Common Stock to a transferee of an Investor in connection with any sale of Registrable Securities with respect to which such Investor has entered into a contract for sale prior to receipt of notice of such suspension and for which such Investor has not yet settled unless, in the opinion of Company’s legal counsel, such delivery without legends would be in violation of applicable securities laws and/or otherwise subject the Company to liability.

(b) Notwithstanding anything to the contrary herein (but subject to the last sentence of this Section 3.6(b)), at any time after the Effective Date of the applicable Registration Statement, the Company may delay the disclosure of material, non-public information concerning the Company or any of its Subsidiaries the disclosure of which at the time is not, in the good faith opinion of the Board of Directors of the Company, in the best interest of the Company and, in the opinion of counsel to the Company, otherwise required (a “Grace Period”); provided, that the Company shall promptly (i) notify the Investors in writing of the existence of material, non-public information giving rise to a Grace Period (provided that in each notice the Company will not disclose the content of such material, non-public information to the Investors) and the date on which the Grace Period will begin, and (ii) notify the Investors in writing of the date on which the Grace Period ends; and, provided further, that no Grace Period shall exceed ten (10) consecutive days and during any three hundred sixty five (365) day period such Grace Periods shall not exceed an aggregate of thirty (30) days and the first day of any Grace Period must be at least five (5) Trading Days after the last day of any prior Grace Period; provided, that no Grace Period may exist during the first sixty (60) Business Days after the Effective Date of the applicable Registration Statement. For purposes of determining the length of a Grace Period above, the Grace Period shall begin on and include the date the Investors receive the notice referred to in clause (i) and shall end on and include the later of the date the Investors receive the notice referred to in clause (ii) and the date referred to in such notice. The provisions of Section 3.6(a) hereof shall not be applicable during any Grace Period. Upon expiration of the Grace Period, the Company shall again be bound by Section 3.6(a) with respect to the information giving rise thereto unless such material, nonpublic information is no longer applicable.

(c) Subject to the Company’s rights under Section 3.1, the Company will use its best efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement and, if such an order is issued, will use its best efforts to obtain the withdrawal of such order at the earliest possible time and will promptly notify each Investor that holds Registrable Securities being sold (or, in the event of an underwritten offering, the managing underwriters) of the issuance of such order and the resolution thereof.

9

3.7 Review by the Investors. The Company will permit each Investor’s legal counsel to review each Registration Statement and all amendments and supplements thereto (as well as all requests for acceleration or effectiveness thereof) a reasonable period of time prior to their filing with the SEC, and will not file any document in a form to which such counsel reasonably objects unless such counsel fails to notify the Company of his or her objection within 3 business days after receipt of the proposed Registration Statement, and unless otherwise required by law in the opinion of the Company’s counsel. The sections of any such Registration Statement including information with respect to the Investors, the Investors’ beneficial ownership of securities of the Company or the Investors’ intended method of disposition of Registrable Securities must conform to the information provided to the Company by each of the Investors.

3.8 Information. The Company will make generally available to its security holders as soon as practicable, but not later than 90 days after the close of the period covered thereby, an earnings statement (in a form complying with the provisions of Rule 158 under the Securities Act) covering a 12-month period beginning not later than the first day of the Company’s fiscal quarter next following the effective date of a Registration Statement.

3.9 Comfort Letter; Legal Opinion. If the Investors request an underwritten offering in accordance with Section 3.5 above, then, at the request of the underwriters for the offering, on the date that Registrable Securities are delivered to the underwriters for sale in connection with a Registration Statement, the Company will furnish to the Investors and the underwriters (i) a letter, dated such date, from the Company’s independent certified public accountants, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters; and (ii) an opinion, dated such date, from counsel representing the Company for purposes of such Registration Statement, in form and substance as is customarily given in an underwritten public offering, addressed to the underwriters and Investors.

3.10 Due Diligence; Confidentiality.

(a) The Company will make available for inspection by any Investor whose Registrable Securities are being sold pursuant to a Registration Statement, any underwriter participating in any disposition pursuant to such Registration Statement, and any attorney or accountant retained by any such Investor or underwriter (collectively, the “Inspectors”), all pertinent financial and other records, pertinent corporate documents and properties of the Company (collectively, the “Records”), as each Inspector reasonably deems necessary to enable the Inspector to exercise its due diligence responsibility in connection with or related to the contemplated offering. The Company will cause its officers, directors and employees to supply all information that any Inspector may reasonably request for purposes of performing such due diligence.

(b) Each Inspector will hold in confidence, and will not make any disclosure (except to an Investor) of, any Records or other information that the Company determines in good faith to be confidential, and of which determination the Inspectors are so notified, unless (i) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in any Registration Statement, (ii) the release of such Records is ordered pursuant to a subpoena or

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other order from a court or government body of competent jurisdiction, (iii) the information in such Records has been made generally available to the public other than by disclosure in violation of this or any other agreement (to the knowledge of the relevant Inspector), (iv) the Records or other information was developed independently by an Inspector without breach of this Agreement, (v) the information was known to the Inspector before receipt of such information from the Company, or (vi) the information was disclosed to the Inspector by a third party not under an obligation of confidentiality. The Company is not required to disclose any confidential information in the Records to any Inspector unless and until such Inspector has entered into a confidentiality agreement (in form and substance satisfactory to the Company) with the Company with respect thereto, substantially in the form of this Section 3.10. Each Investor will, upon learning that disclosure of Records containing confidential information is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company and allow the Company, at the Company’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, the Records deemed confidential. Nothing herein will be deemed to limit the Investor’s ability to sell Registrable Securities in a manner that is otherwise consistent with applicable laws and regulations.

(c) The Company will hold in confidence, and will not make any disclosure of, information concerning an Investor provided to the Company under this Agreement unless (i) disclosure of such information is necessary to comply with federal or state securities laws, or any exchange listing or similar rules and regulations, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement, (iii) the release of such information is ordered pursuant to a subpoena or other order from a court or governmental body of competent jurisdiction, (iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any other agreement or (v) such Investor consents to the form and content of any such disclosure. If the Company learns that disclosure of such information concerning an Investor is sought in or by a court or governmental body of competent jurisdiction or through other means, the Company will give prompt notice to such Investor prior to making such disclosure and allow such Investor, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.

3.11 Listing. The Company will (i) cause all of the Common Shares covered by each Registration Statement to be listed on each National Securities Exchange on the Common Stock is then listed, if any, if the listing of such Common Shares is then permitted under the rules of such exchange, or (ii) to the extent the Common Stock is not then listed on a National Securities Exchange, secure the quotation of all of the Common Shares covered by each Registration Statement on the OTC Bulletin Board and, without limiting the generality of the foregoing, arrange for at least two market makers, meeting the applicable FINRA requirements, to display two-sided markets for the Common Stock.

3.12 Transfer Agent; Registrar. The Company will provide a transfer agent and registrar, which may be a single entity, for the Registrable Securities not later than the effective date of each Registration Statement.

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3.13 Share Certificates. The Company will cooperate with the Investors who hold Registrable Securities being sold and with the managing underwriter(s), if any, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing Registrable Securities to be offered pursuant to a Registration Statement and will enable such certificates to be in such denominations or amounts as the case may be, and registered in such names as the Investors or the managing underwriter(s), if any, may reasonably request.

3.14 Plan of Distribution. Subject to Section 3.17 hereof, at the request of an Investor holding an interest of the Registrable Securities registered pursuant to a Registration Statement, the Company will promptly prepare and file with the SEC such amendments (including post-effective amendments) and supplements to a Registration Statement, and the prospectus used in connection with a Registration Statement, as may be necessary in order to change the plan of distribution set forth in such Registration Statement.

3.15 Securities Laws Compliance. The Company will comply with all applicable laws related to any Registration Statement relating to the sale of Registrable Securities and to offering and sale of securities and with all applicable rules and regulations of governmental authorities in connection therewith (including, without limitation, the Securities Act, the Exchange Act and the rules and regulations promulgated by the SEC).

3.16 Further Assurances. The Company will take all other reasonable actions as any Investor or the underwriters, if any, may reasonably request to expedite and facilitate disposition by such Investor of the Registrable Securities pursuant to a Registration Statement.

3.17 No Additional Selling Securityholders. The Company will not, and will not agree to, allow the holders of any securities of the Company to include any of their securities in any Registration Statement under Section 2.1 hereof, or any amendment or supplement thereto under Section 3.2 hereof, without the consent of all of the holders of the Registrable Securities.

ARTICLE IV

OBLIGATIONS OF THE INVESTORS

4.1 Investor Information. As a condition to the obligations of the Company to complete any registration pursuant to this Agreement with respect to the Registrable Securities of each Investor, such Investor will furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it as is reasonably required by the Company to effect the registration of the Registrable Securities. At least 10 business days prior to the first anticipated filing date of a Registration Statement for any registration under this Agreement, the Company will notify each Investor of the information the Company requires from that Investor if the Investor elects to have any of its Registrable Securities included in such Registration Statement. If, within three business days prior to the filing date, the Company has not received the requested information from an Investor, then the Company may file such Registration Statement without including Registrable Securities of that Investor. Any and all information provided by the Investor pursuant to this Section 4.1 shall be true, accurate, correct and complete in all material respects.

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4.2 Further Assurances. Each Investor will cooperate with the Company, as reasonably requested by the Company, in connection with the preparation and filing of any Registration Statement hereunder, unless such Investor has notified the Company in writing of such Investor’s election to exclude all of such Investor’s Registrable Securities from such Registration Statement.

4.3 Suspension of Sales. Upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3.6, each Investor will immediately discontinue disposition of Registrable Securities pursuant to the applicable Registration Statement covering such Registrable Securities until (i) it receives copies of a supplemented or amended prospectus contemplated by Section 3.6 or (ii) the Company advises the Investor that a suspension of sales under Section 3.6 has terminated. If so directed by the Company, each Investor will deliver to the Company (at the expense of the Company) or destroy (and deliver to the Company a certificate of destruction) all copies in the Investor’s possession (other than a limited number of file copies) of the prospectus covering such Registrable Securities that is current at the time of receipt of such notice.

4.4 Underwritten Offerings.

(a) If Investors holding a majority in interest of the Registrable Securities being registered (with the approval of a majority in interest of the Investors) elect to engage the services of an underwriter, each Investor will enter into and perform such Investor’s obligations under an underwriting agreement, in usual and customary form, including, without limitation, customary indemnification and contribution obligations, with the managing underwriter of such offering, and will take such other actions as are reasonably required in order to expedite or facilitate the disposition of the Registrable Securities, unless such Investor has notified the Company in writing of such Investor’s election to exclude all of its Registrable Securities from such Registration Statement.

(b) Without limiting any Investor’s rights under Section 2.1 hereof, no Investor may participate in any underwritten distribution hereunder unless such Investor (i) agrees to sell such Investor’s Registrable Securities on the basis provided in any underwriting arrangements approved by the Investors entitled hereunder to approve such arrangements, (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements, and (iii) agrees to pay its pro rata share of all underwriting discounts and commissions and other fees and expenses of investment bankers and any manager or managers of such underwriting, and legal expenses of the underwriter, applicable with respect to its Registrable Securities, in each case to the extent not payable by the Company under the terms of this Agreement.

ARTICLE V

EXPENSES OF REGISTRATION

The Company will bear all reasonable expenses, other than underwriting discounts and commissions, incurred in connection with registrations, filings or qualifications pursuant to

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Articles II and III of this Agreement, including, without limitation, all registration, listing and qualifications fees, printers and accounting fees, the fees and disbursements of counsel for the Company, and the reasonable fees and disbursements of each Investor’s legal counsel to review each Registration Statement and all amendments and supplements thereto pursuant to Section 3.7 hereof.

ARTICLE VI

INDEMNIFICATION

In the event that any Registrable Securities are included in a Registration Statement under this Agreement:

6.1 To the extent permitted by law, the Company will indemnify and hold harmless each Investor that holds such Registrable Securities, any underwriter (as defined in the Securities Act) for the Investors, any directors, officers or advisors of such Investor or such underwriter and any person who controls such Investor or such underwriter within the meaning of the Securities Act or the Exchange Act (each, an “Indemnified Person”) against any losses, claims, damages, expenses or liabilities (joint or several) (collectively, and together with actions, proceedings or inquiries by any regulatory or self-regulatory organization, whether commenced or threatened in respect thereof, “Claims”) to which any of them become subject under the Securities Act, the Exchange Act or otherwise, insofar as such Claims arise out of or are based upon any of the following statements, omissions or violations in a Registration Statement filed pursuant to this Agreement, any post-effective amendment thereof or any prospectus included therein: (a) any untrue statement or alleged untrue statement of a material fact contained in such Registration Statement or any post-effective amendment thereof or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, (b) any untrue statement or alleged untrue statement of a material fact contained in the prospectus (as it may be amended or supplemented) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading, or (c) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any other law, including without limitation any state securities law or any rule or regulation thereunder (the matters in the foregoing clauses (a) through (c) being, collectively, “Violations”). The Company will reimburse the Investors and each such underwriter or controlling person and each such other Indemnified Person, promptly as such expenses are incurred and are due and payable, for any legal fees or other reasonable expenses incurred by them in connection with investigating or defending any Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6.1 (i) does not apply to Claims arising out of or based upon a Violation that occurs in reliance upon and in conformity with information furnished in writing to the Company by an Indemnified Person expressly for use in connection with the preparation of a Registration Statement or any such amendment thereof or supplement thereto, if such prospectus was timely made available by the Company pursuant to Section 3.3 hereof; and (ii) does not apply to amounts paid in settlement of any Claim if such settlement is made without the prior written consent of the Company, which consent will not be unreasonably withheld. This indemnity obligation will remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Persons and will survive the transfer of the Registrable Securities by the Investors under Article IX of this Agreement.

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6.2 In connection with any Registration Statement in which an Investor is participating, each such Investor will indemnify and hold harmless, to the same extent and in the same manner set forth in Section 6.1 above, the Company, each of its directors, each of its officers who signs such Registration Statement, each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act, and any other shareholder selling securities pursuant to such Registration Statement and any of its directors and officers and any person who controls such shareholder within the meaning of the Securities Act or the Exchange Act (each an “Indemnified Person”) against any Claim to which any of them may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such Claim arises out of or is based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished to the Company by such Investor expressly for use in connection with such Registration Statement. Subject to the restrictions set forth in Section 6.3, such Investor will promptly reimburse the Company and each such other Indemnified Person, any legal or other expenses (promptly as such expenses are incurred and due and payable) reasonably incurred by them in connection with investigating or defending any such Claim. However, the indemnity agreement contained in this Section 6.2 does not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of such Investor, which consent will not be unreasonably withheld, and no Investor will be liable under this Agreement (including this Section 6.2 and Article VII) for the amount of any Claim that exceeds the net proceeds actually received by such Investor as a result of the sale of Registrable Securities pursuant to such Registration Statement. This indemnity will remain in full force and effect regardless of any investigation made by or on behalf of an Indemnified Party and will survive the transfer of the Registrable Securities by the Investors under Article IX of this Agreement.

6.3 Promptly after receipt by an Indemnified Person under this Article VI of notice of the commencement of any action (including any governmental action), such Indemnified Person will, if a Claim in respect thereof is to be made against any indemnifying party under this Article VI, deliver to the indemnifying party a written notice of the commencement thereof. The indemnifying party may participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly given notice, assume control of the defense thereof with counsel mutually satisfactory to the indemnifying parties and the Indemnified Person. In that case, the indemnifying party will diligently pursue such defense. If, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of the Indemnified Person and the indemnifying party would be inappropriate due to actual or potential conflicts of interest between the Indemnified Person and any other party represented by such counsel in such proceeding or the actual or potential defendants in, or targets of, any such action including the Indemnified Person, and such Indemnified Person reasonably determines that there may be legal defenses available to such Indemnified Person that are different from or in addition to those available to the indemnifying party, then the Indemnified Person is entitled to assume such defense and may retain its own counsel, with the fees and expenses to be paid by the indemnifying party (subject to the restrictions on settlement under Section 6.1 or Section 6.2, as applicable). The failure to deliver written notice to the

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indemnifying party within a reasonable time of the commencement of any such action does not relieve an indemnifying party of any liability to an Indemnified Person under this Article VI, except to the extent that the indemnifying party is prejudiced in its ability to defend such action. The indemnification required by this Article VI will be made by periodic payments of the amount thereof during the course of the investigation or defense, as such expense, loss, damage or liability is incurred and is due and payable. Each Indemnified Person shall furnish such information regarding itself or the claim in question as an Indemnifying Person may reasonably request in writing and shall be reasonably required in connection with the defense of such claim and litigation resulting therefrom.

ARTICLE VII

CONTRIBUTION

To the extent that any indemnification provided for herein is prohibited or limited by law, the indemnifying party will make the maximum contribution with respect to any amounts for which it would otherwise be liable under Article VI to the fullest extent permitted by law. However, (a) no contribution will be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Article VI, (b) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any seller of Registrable Securities who was not guilty of such fraudulent misrepresentation, and (c) contribution (together with any indemnification or other obligations under this Agreement) by any seller of Registrable Securities will be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities.

ARTICLE VIII

EXCHANGE ACT REPORTING

In order to make available to the Investors the benefits of Rule 144 or any similar rule or regulation of the SEC that may at any time permit the Investors to sell securities of the Company to the public without registration, the Company will:

(a) File with the SEC in a timely manner, and make and keep available, all reports and other documents required of the Company under the Securities Act and the Exchange Act so long as the Company remains subject to such requirements and the filing and availability of such reports and other documents is required for the applicable provisions of Rule 144; and

(b) Furnish to each Investor who so requests, so long as such Investor holds 2010 Convertible senior Notes or Registrable Securities, promptly upon the Investor’s request, (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents filed by the Company with the SEC and (iii) such other information as may be reasonably requested to permit the Investors to sell such securities pursuant to Rule 144 without registration.

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ARTICLE IX

ASSIGNMENT OF REGISTRATION RIGHTS

The rights of the Investors hereunder, including the right to have the Company register Registrable Securities pursuant to this Agreement, will be automatically assigned by the Investors to transferees or assignees of all or any portion of the Investors rights under the Credit Agreement, or interests in the Registrable Securities, but only if (a) the Investor agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment, (b) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being transferred or assigned, (c) after such transfer or assignment, the further disposition of such securities by the transferee or assignee is restricted under the Securities Act and applicable state securities laws, (d) at or before the time the Company received the written notice contemplated by clause (b) of this sentence, the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein, (e) such transfer is made in accordance with the applicable requirements of the Credit Agreement, and (f) the transferee is an “accredited investor” as that term is defined in Rule 501 under the Exchange Act. Any transferee or assignee of an Investor under this Article IX shall be deemed an “Investor” for all purposes of this Agreement, and shall be entitled to all rights of, and subject to all obligations (including indemnification obligations) of, an Investor hereunder; provided, however, that such a transferee will not be eligible to be named in a Registrations Statement or an amendment thereto until such transferee has completed a Questionnaire of Selling Securityholders in the form of Exhibit A and delivered it to the Company.

ARTICLE X

AMENDMENT OF REGISTRATION RIGHTS

This Agreement may be amended and the obligations hereunder may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written consent of the Company and each Investor (but not including any Investor who is not affected by such amendment or waiver). Any amendment or waiver effected in accordance with this Article X is binding upon each Investor (and each future holder of all such Registrable Securities) and the Company. Notwithstanding the foregoing, no amendment or waiver will retroactively affect any Investor without its consent, or will prospectively adversely affect any Investor who no longer owns any 2010 Convertible Senior Notes or Registrable Securities without its consent. Neither Article VI nor Article VII hereof may be amended or waived in a manner adverse to an Investor without its consent.

ARTICLE XI

MISCELLANEOUS

11.1 Conflicting Instructions. A person or entity is deemed to be a holder of Registrable Securities whenever such person or entity owns of record such Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more persons or entities with respect to the same Registrable Securities, the Company will act upon the basis of instructions, notice or election received from the registered owner of such Registrable Securities.

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11.2 Notices. Any notices required or permitted to be given under the terms of this Agreement will be given and deemed received as set forth in Section 9.9 of the Credit Agreement.

11.3 Waiver. Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, does not operate as a waiver thereof.

11.4 Governing Law; Dispute Resolution. This Agreement will be governed by and interpreted in accordance with the laws of the State of Minnesota without regard to the principles of conflict of laws. All disputes, differences, controversies and claims arising out of or relating to this Agreement shall be resolved in accordance with Section 9.13 of the Exchange Agreement.

11.5 Severability. If any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision will be deemed modified in order to conform to such statute or rule of law. Any provision hereof that may prove invalid or unenforceable under any law will not affect the validity or enforceability of any other provision hereof.

11.6 Entire Agreement. This Agreement and the Credit Agreement (including all schedules and exhibits thereto) (the “Transaction Documents”) constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein or therein. This Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof.

11.7 Successors and Assigns. Subject to the requirements of Article IX hereof, this Agreement inures to the benefit of and is binding upon the successors and assigns of each of the parties hereto. Notwithstanding anything to the contrary herein, including, without limitation, Article IX, the rights of an Investor hereunder are assignable to and exercisable by a bona fide pledgee of the Registrable Securities in connection with an Investor’s margin or brokerage accounts.

11.8 Use of Pronouns. All pronouns refer to the masculine, feminine or neuter, singular or plural, as the context may require.

11.9 Headings. The headings of this Agreement are for convenience of reference only, are not part of this Agreement and do not affect its interpretation.

11.10 Counterparts. This Agreement may be executed in two or more counterparts, each of which is deemed an original but all of which constitute one and the same agreement. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission, and facsimile signatures are binding on the parties hereto.

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11.11 Further Assurances. Each party will do and perform, or cause to be done and performed, all such further acts and things, and will execute and deliver all other agreements, certificates, instruments and documents, as another party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

11.12 Consents. All consents and other determinations to be made by the Investors pursuant to this Agreement will be made by the Investors holding a majority in interest of the then-outstanding Registrable Securities, determined as if all 2010 Convertible Senior Notes then outstanding had been converted into or exercised for Registrable Securities.

11.13 No Strict Construction. The language used in this Agreement is deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

11.14 No Third-Party Beneficiaries. Other than as specifically provided herein, this Agreement is intended to inure to the benefit of the parties hereto only, and no other party shall have any rights, express or implied, by reason of this Agreement.

11.15 Saturdays, Sundays, Holidays, Etc. If the last or appointed day for the taking of any action required or permitted hereby shall be a Saturday, Sunday, a nationally recognized holiday, or a state holiday in the State of Minnesota, then such action may be taken on the next succeeding business day.

11.16 Independent Nature of Investors’ Obligations and Rights. The obligations of each Investor under any of the Transaction Documents are several and not joint with the obligations of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor under any Transaction Document. Nothing contained herein or in any Transaction Document, and no action taken by any Investor pursuant thereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Document. Each Investor shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Investor to be joined as an additional party in any proceeding for such purpose. The Company has elected to provide all Investors with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by the Investors.

[signature pages follow]

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IN WITNESS WHEREOF, the undersigned Investors and the Company have caused this Agreement to be duly executed as of the date first above written.

COMPANY:
FLOTEK INDUSTRIES, INC.
By:	/s/ John Chisholm
	Name: John Chisholm
	Title: President

[Signatures continued on next page]

[Signature Page to Registration Rights Agreement - Credit Agreement]

INVESTORS:
WHITEBOX HEDGED HIGH YIELD PARTNERS, LP
By:	Whitebox Hedged High Yield Advisors, LLC
Its:	General Partner
By:	Whitebox Advisors LLC
Its:	Managing Member
By:	/s/ Mark Strefling
Name:	Mark Strefling
Title:	Chief Legal Officer
IAM MINI-FUND 14 LIMITED
By:	Whitebox Advisors LLC
Its:	Investment Manager
By:	/s/ Mark Strefling
Name:	Mark Strefling
Title:	Chief Legal Officer

[Signature Page to Registration Rights Agreement - Credit Agreement]

PANDORA SELECT PARTNERS, LP
By:	Pandora Select Advisors, LLC
Its:	General Partner
By:	Whitebox Advisors LLC
Its:	Managing Member
By:	/s/ Mark Strefling
Name:	Mark Strefling
Title:	Chief Legal Officer
WHITEBOX SPECIAL OPPORTUNITIES FUND, LP – SERIES B
By:	Whitebox Special Opportunities Advisors, LLC
Its:	General Partner
By:	Whitebox Advisors LLC
Its:	Managing Member
By:	/s/ Mark Strefling
Name:	Mark Strefling
Title:	Chief Legal Officer
WHITEBOX COMBINED PARTNERS, LP
By:	Whitebox Combined Advisors, LLC
Its:	General Partner
By:	Whitebox Advisors LLC
Its:	Managing Member
By:	/s/ Mark Strefling
Name:	Mark Strefling
Title:	Chief Legal Officer

[Signature Page to Registration Rights Agreement]

WHITEBOX CONVERTIBLE ARBITRAGE PARTNERS, LP
By:	Whitebox Convertible Arbitrage Advisors, LLC
Its:	General Partner
By:	Whitebox Advisors LLC
Its:	Managing Member
By:	/s/ Mark Strefling
Name:	Mark Strefling
Title:	Chief Legal Officer

ADDRESS:

c/o Whitebox Advisors, LLC

3033 Excelsior Blvd., Suite 300

Minneapolis, MN 55416

Attention: Jake Mercer

Facsimile: 612-253-6100

(any notice hereunder to this Investor shall include a copy to):

Faegre & Benson LLP

2200 Wells Fargo Center

90 South Seventh Street

Minneapolis, Minnesota 55402

Attn: Michael K. Coddington

Facsimile: 612-766-1600

[Signature Page to Registration Rights Agreement]

ECF VALUE FUND, L.P.
By:	Gates Capital Partners, L.P.
Its:	General Partner
By:	Gates Capital Management, Inc.
Its:	General Partner
By:	/s/ Jeffrey L. Gates
Name:	Jeffrey L. Gates
Title:	President
ECF VALUE FUND II, L.P.
By:	Gates Capital Partners, L.P.
Its:	General Partner
By:	Gates Capital Management, Inc.
Its:	General Partner
By:	/s/ Jeffrey L. Gates
Name:	Jeffrey L. Gates
Title:	President
ECF VALUE FUND INTERNATIONAL LTD.
By:	Gates Capital Management, Inc.
Its:	Investment Advisor
By:	/s/ Jeffrey L. Gates
Name:	Jeffrey L. Gates
Title:	President

[Signature Page to Registration Rights Agreement]

EXHIBIT A

FLOTEK INDUSTRIES, INC.

(the “Company”)

QUESTIONNAIRE TO THE SELLING SECURITYHOLDERS

This Questionnaire is to be completed, signed and faxed or emailed to                     at                     or                     , by the person or entity indicated on the cover of this Questionnaire (the “Selling Securityholder”) whose securities of the Company are being registered pursuant to a Registration Statement on Form S-3. Retain a duplicate copy for your files. If you do not return the Questionnaire by the foregoing deadline, your shares may not be included in the Registration Statement.

If you are uncertain about any of the following questions as they apply to your situation, please supply all relevant facts. Include separate sheets with details if necessary. If you have any questions, please call the Company’s counsel, W. Mark Young, Esquire, at (713) 220-4323.

Please notify me immediately if any of the information disclosed in your answers changes. Please answer all questions. Indicate “none” or “not applicable” when appropriate. Information should be given as of the date of this Questionnaire, even if previously reported to the Company.

IN ANSWERING THESE QUESTIONS, PLEASE REFER TO THE INSTRUCTIONS AT THE BEGINNING OF THIS QUESTIONNAIRE.

Name of Selling Securityholder:

A-1

Instructions and Definitions

The following instructions and definitions are furnished to aid you in preparing your answers to this Questionnaire.

1. For purposes of this Questionnaire the term “Company” means Flotek Industries, Inc.

2. “Beneficial” ownership. Beneficial ownership shall have the meaning ascribed to it in Section 13(d) of the Securities Exchange Act of 1934, as amended. The SEC has taken the position that if you have sole or shared voting power or dispositive power or the ability to acquire either sole or shared voting or dispositive power of a security within 60 days, you are the beneficial owner of that security, even though that security is not registered in your name. Thus, for example, you could be the beneficial owner of securities in a trust or estate of which you are a trustee or executor, or of which you are one of the trustees or executors, or you could be the beneficial owner of securities which you have a right to purchase.

3. The term “affiliate” for purposes of this Questionnaire means any person directly or indirectly controlling, controlled by, or under common control with the Selling Securityholder.

A-2

1. Broker-Dealer Status.

(a) Are you, or are you an affiliate of, a broker-dealer registered under the Securities Exchange Act of 1934?

Yes                                                       No              

If “yes,” please give details below.

(b) Please confirm the following statement: The Company’s equity securities that are being issued to you were acquired in the ordinary course of your business, and at the time the securities were issued to you, you did not have any agreement or understanding, directly or indirectly, with any person to distribute the securities.

Confirmed                      Cannot Confirm              

If “cannot confirm,” please give details below.

2. Relationships with the Company.

(a) Have you held any position or office with the Company, its predecessors or affiliates within the last three years?

Yes                                                       No              

If “yes,” please give details below.

(b) Have you had any other material relationship with the Company, its predecessors or affiliates within the last three years?

Yes                                                       No              

If “yes,” please give details below.

A-3

3. Equity Securities Beneficially Owned By You.

(a) Please state the number and type of equity securities of the Company beneficially owned (please see instructions and definitions on page 2) by you as of the date of this Questionnaire, including securities which are exercisable or convertible into equity securities within 60 days of the date of this Questionnaire.

Class of Security Number of Shares Beneficially Owned

(b) If any natural person or entity other than you holds or shares voting power or dispositive power with respect to the Company’s equity securities listed in response to Question 3(a), please provide the names of the natural persons (including titles) or entities that hold or share such voting power or dispositive power and indicate the number of the Company’s equity securities covered thereby.

(c) With respect to the Company’s equity securities listed in response to Questions 3(a) and 3(b) for which an entity holds or shares voting power or dispositive power, please provide the names of the natural persons (including titles) or entities that control the entity or entities listed in response to Questions 3(a) and 3(b).

(d) Please continue to list the natural persons or entities that control the entities listed in response to Question 3(c) and the entities listed in response to this Question 3(d) until you have listed only natural persons (including titles) that control the applicable entity or entities.

(e) If any person or entity disclaims beneficial ownership of any of the equity securities you have listed in response to Question 3, please so indicate:

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