Exhibit 10.1

EXECUTION VERSION

 

 

 

 

LOGO [g107195g43s02.jpg]

$250,000,000

CREDIT AGREEMENT

dated as of

December 11, 2015

among

CSW INDUSTRIALS HOLDINGS, INC.

and

THE WHITMORE MANUFACTURING COMPANY

as Borrowers

THE LENDERS PARTY HERETO

JPMORGAN CHASE BANK, N.A.

as Administrative Agent

J.P. MORGAN SECURITIES LLC

and

SUNTRUST ROBINSON HUMPHREY, INC.

as Joint Lead Arrangers and Joint Bookrunners

SUNTRUST BANK

as Syndication Agent

COMERICA BANK

AMEGY BANK, N.A.

as Co-Documentation Agents

 

 

 

--------------------------------------------------------------------------------

TABLE OF CONTENTS

 

         Page  

ARTICLE I Definitions

     1   

Section 1.01.

 

Defined Terms

     1   

Section 1.02.

 

Classification of Loans and Borrowings

     30   

Section 1.03.

 

Terms Generally

     30   

Section 1.04.

 

Accounting Terms; GAAP

     30   

Section 1.05.

 

Pro Forma Adjustments for Acquisitions and Dispositions.

     31   

Section 1.06.

 

Status of Obligations

     31   

ARTICLE II The Credits

     31   

Section 2.01.

 

Commitments

     31   

Section 2.02.

 

Loans and Borrowings

     31   

Section 2.03.

 

Requests for Borrowings

     32   

Section 2.04.

 

Swingline Loans

     33   

Section 2.05.

 

Letters of Credit

     34   

Section 2.06.

 

Funding of Borrowings

     39   

Section 2.07.

 

Interest Elections

     39   

Section 2.08.

 

Termination and Reduction of Commitments; Increase in Revolving Commitments

     41   

Section 2.09.

 

Repayment and Amortization of Loans; Evidence of Debt

     42   

Section 2.10.

 

Prepayment of Loans

     43   

Section 2.11.

 

Fees

     44   

Section 2.12.

 

Interest

     45   

Section 2.13.

 

Alternate Rate of Interest

     46   

Section 2.14.

 

Increased Costs

     46   

Section 2.15.

 

Break Funding Payments

     48   

Section 2.16.

 

Taxes

     48   

Section 2.17.

 

Payments Generally; Allocation of Proceeds; Sharing of Set-offs

     52   

Section 2.18.

 

Mitigation Obligations; Replacement of Lenders

     54   

Section 2.19.

 

Defaulting Lenders

     55   

Section 2.20.

 

Returned Payments

     56   

Section 2.21.

 

Extension Offers

     57   

ARTICLE III Representations and Warranties

     58   

Section 3.01.

 

Organization; Powers

     58   

Section 3.02.

 

Authorization; Enforceability

     58   

Section 3.03.

 

Governmental Approvals; No Conflicts

     58   

Section 3.04.

 

Financial Condition; No Material Adverse Change

     59   

Section 3.05.

 

Properties, Etc

     60   

Section 3.06.

 

Litigation and Environmental Matters

     60   

Section 3.07.

 

Compliance with Laws and Agreements; No Default

     61   

Section 3.08.

 

Investment Company Status

     61   

Section 3.09.

 

Taxes

     61   

Section 3.10.

 

Employee Benefit Plans; ERISA

     61   

Section 3.11.

 

ESOP Matters

     62   

Section 3.12.

 

Disclosure

     62   

Section 3.13.

 

Subsidiaries

     62   

Section 3.14.

 

Insurance

     63   

 

i

--------------------------------------------------------------------------------

Section 3.15.

 

Labor Matters

     63   

Section 3.16.

 

Margin Securities

     63   

Section 3.17.

 

Security Interest in Collateral

     63   

Section 3.18.

 

Solvency

     63   

Section 3.19.

 

Common Enterprise

     64   

Section 3.20.

 

Use of Proceeds

     64   

Section 3.21.

 

Anti-Corruption Laws and Sanctions

     64   

Section 3.22.

 

No Burdensome Restrictions

     64   

Section 3.23.

 

Material Agreements

     64   

Section 3.24.

 

Existing Predecessor UCCs

     64   

ARTICLE IV Conditions

     65   

Section 4.01.

 

Effective Date

     65   

Section 4.02.

 

Each Credit Event

     68   

ARTICLE V Affirmative Covenants

     68   

Section 5.01.

 

Financial Statements and Other Information

     68   

Section 5.02.

 

Notices of Material Events

     70   

Section 5.03.

 

Existence; Conduct of Business

     70   

Section 5.04.

 

Payment of Obligations

     70   

Section 5.05.

 

Maintenance and Use of Properties; Notices

     71   

Section 5.06.

 

Insurance

     71   

Section 5.07.

 

Insurance, Condemnation and Casualty Losses

     73   

Section 5.08.

 

Books and Records; Inspection Rights

     73   

Section 5.09.

 

Compliance with Laws and Material Contractual Obligations

     73   

Section 5.10.

 

Use of Proceeds

     74   

Section 5.11.

 

Casualty and Condemnation

     74   

Section 5.12.

 

Additional Collateral; Further Assurances

     74   

Section 5.13.

 

Depository Banks

     75   

Section 5.14.

 

Accuracy of Information

     76   

Section 5.15.

 

Employee Benefit Plans

     76   

Section 5.16.

 

Maintenance of ESOP

     76   

Section 5.17.

 

Post-Closing Matters

     77   

Section 5.21.

 

Existing Predecessor UCCs

     77   

ARTICLE VI Negative Covenants

     77   

Section 6.01.

 

Indebtedness

     77   

Section 6.02.

 

Liens

     79   

Section 6.03.

 

Fundamental Changes

     80   

Section 6.04.

 

Investments, Loans, Advances, Guarantees and Acquisitions

     80   

Section 6.05.

 

Asset Sales

     84   

Section 6.06.

 

Sale and Leaseback Transactions

     85   

Section 6.07.

 

Swap Agreements

     85   

Section 6.08.

 

Restricted Payments; Certain Payments of Indebtedness; Cash Payments Made in
Respect of Plans

     86   

Section 6.09.

 

Transactions with Affiliates

     87   

Section 6.10.

 

Restrictive Agreements

     87   

Section 6.11.

 

Amendment of Material Documents; Subordinated Indebtedness

     88   

Section 6.12.

 

Change in Fiscal Year

     88   

Section 6.13.

 

Governmental Regulations

     88   

Section 6.14.

 

Use of Proceeds

     88   

 

ii

--------------------------------------------------------------------------------

ARTICLE VII Financial Covenants

     88   

Section 7.01.

 

Fixed Charge Coverage Ratio

     89   

Section 7.02.

 

Total Leverage Ratio

     89   

ARTICLE VIII Events of Default

     89   

Section 8.01.

 

Events of Default; Remedies

     89   

Section 8.02.

 

Performance by the Administrative Agent

     92   

ARTICLE IX The Administrative Agent

     92   

Section 9.01.

 

Appointment

     92   

Section 9.02.

 

Rights as a Lender

     92   

Section 9.03.

 

Duties and Obligations

     92   

Section 9.04.

 

Reliance

     93   

Section 9.05.

 

Actions through Sub-Agents

     93   

Section 9.06.

 

Resignation

     93   

Section 9.07.

 

Non-Reliance

     94   

Section 9.08.

 

Other Agency Titles

     95   

Section 9.09.

 

Not Partners or Co-Venturers; Administrative Agent as Representative of the
Secured Parties

     95   

ARTICLE X Miscellaneous

     96   

Section 10.01.

 

Notices

     96   

Section 10.02.

 

Waivers; Amendments

     97   

Section 10.03.

 

Expenses; Indemnity; Damage Waiver

     100   

Section 10.04.

 

Successors and Assigns

     102   

Section 10.05.

 

Survival

     105   

Section 10.06.

 

Counterparts; Integration; Effectiveness; Electronic Execution

     105   

Section 10.07.

 

Severability

     106   

Section 10.08.

 

Right of Setoff

     106   

Section 10.09.

 

Governing Law; Jurisdiction; Consent to Service of Process

     106   

Section 10.10.

 

WAIVER OF JURY TRIAL

     107   

Section 10.11.

 

Headings

     107   

Section 10.12.

 

Confidentiality

     107   

Section 10.13.

 

Several Obligations; Nonreliance; Violation of Law

     108   

Section 10.14.

 

USA PATRIOT Act

     108   

Section 10.15.

 

Disclosure

     108   

Section 10.16.

 

Appointment for Perfection

     108   

Section 10.17.

 

Interest Rate Limitation

     108   

Section 10.18.

 

No Advisory or Fiduciary Responsibility

     109   

Section 10.19.

 

Marketing Consent

     109   

Section 10.20.

 

Joint and Several Obligations

     109   

ARTICLE XI Loan Guaranty

     109   

Section 11.01.

 

Guaranty

     109   

Section 11.02.

 

Guaranty of Payment

     110   

Section 11.03.

 

No Discharge or Diminishment of Loan Guaranty

     110   

Section 11.04.

 

Defenses Waived

     111   

Section 11.05.

 

Rights of Subrogation

     111   

Section 11.06.

 

Reinstatement; Stay of Acceleration

     111   

Section 11.07.

 

Information

     111   

Section 11.08.

 

Termination

     112   

 

iii

--------------------------------------------------------------------------------

Section 11.09.

 

Taxes

     112   

Section 11.10.

 

Maximum Liability

     112   

Section 11.11.

 

Contribution

     112   

Section 11.12.

 

Liability Cumulative

     113   

Section 11.13.

 

Keepwell

     113   

ARTICLE XII The Borrower Representative.

     114   

Section 12.01.

 

Appointment; Nature of Relationship

     114   

Section 12.02.

 

Powers

     114   

Section 12.03.

 

Employment of Agents

     114   

Section 12.04.

 

Notices

     114   

Section 12.05.

 

Successor Borrower Representative

     114   

Section 12.06.

 

Execution of Loan Documents

     114   

Section 12.07.

 

Reporting

     115   

 

iv

--------------------------------------------------------------------------------

SCHEDULES: Commitment Schedule Schedule 3.05    –    Properties, etc. Schedule
3.10    –    Plans Subject to Title IV of ERISA Schedule 3.13    –   
Subsidiaries Schedule 5.17    –    Post-Closing Matters Schedule 6.01    –   
Existing Indebtedness Schedule 6.02    –    Existing Liens Schedule 6.04    –   
Existing Investments Schedule 6.05(m)    –    Real Property To Be Sold Schedule
6.10    –    Existing Restrictions EXHIBITS:    Exhibit A    –    Assignment and
Assumption Exhibit B-1    –    U.S. Tax Compliance Certificate (For Foreign
Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes) Exhibit
B-2    –    U.S. Tax Compliance Certificate (For Foreign Participants That Are
Not Partnerships For U.S. Federal Income Tax Purposes) Exhibit B-3    –    U.S.
Tax Compliance Certificate (For Foreign Participants That Are Partnerships For
U.S. Federal Income Tax Purposes) Exhibit B-4    –    U.S. Tax Compliance
Certificate (For Foreign Lenders That Are Partnerships For U.S. Federal Income
Tax Purposes) Exhibit C    –    Compliance Certificate Exhibit D    –    Joinder
Agreement

 

v

--------------------------------------------------------------------------------

CREDIT AGREEMENT dated as of December 11, 2015 (as it may be amended, restated,
supplemented or otherwise modified from time to time, this “Agreement”), among
CSW INDUSTRIALS HOLDINGS, INC. and THE WHITMORE MANUFACTURING COMPANY, as
Borrowers, the other Loan Parties party hereto, the Lenders party hereto, and
JPMORGAN CHASE BANK, N.A., as Administrative Agent.

The parties hereto agree as follows:

ARTICLE I

Definitions

SECTION 1.01. Defined Terms. As used in this Agreement, the following terms have
the meanings specified below:

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

“Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any
Interest Period or for any ABR Borrowing, an interest rate per annum equal to
(a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory
Reserve Rate.

“Administrative Agent” means JPMorgan Chase Bank, N.A. (and its subsidiaries and
Affiliates), in its capacity as administrative agent for the Lenders hereunder,
and any successor thereto appointed pursuant to Section 9.06.

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

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

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

“Aggregate Revolving Exposure” means, at any time, the aggregate Revolving
Exposure of all the Lenders at such time (with the Swingline Exposure of each
Lender calculated assuming that all of the Lenders have funded their
participations in all Swingline Loans outstanding at such time).

“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective
Rate in effect on such day plus  1⁄2 of 1%, and (c) the Adjusted LIBO Rate for a
one-month Interest Period on such day (or if such day is not a Business Day, the
immediately preceding Business Day) plus 1%, provided that, the Adjusted LIBO
Rate for any day shall be based on the LIBO Rate at approximately 11:00 a.m.
London time on such day, subject to the interest rate floors set forth therein.
Any change in the Alternate Base Rate due to a change in the Prime Rate, the
Federal Funds Effective Rate or the Adjusted LIBO Rate shall be effective from
and including the effective date of such change in the Prime Rate, the Federal
Funds Effective Rate or the Adjusted LIBO Rate, respectively. If the Alternate
Base Rate is being used as an alternate rate of interest pursuant to
Section 2.13 hereof, then the Alternate Base Rate shall be the greater of
clause (a) and (b) above and shall be determined without reference to clause (c)
above.

 

1

--------------------------------------------------------------------------------

“Anti-Corruption Laws” means all laws, rules, and regulations of any
jurisdiction applicable to any Loan Party or any Affiliate of any Loan Party
from time to time concerning or relating to bribery or corruption.

“Applicable Percentage” means, at any time with respect to any Lender, a
percentage equal to a fraction the numerator of which is such Lender’s Revolving
Commitment at such time and the denominator of which is the aggregate Revolving
Commitments at such time (provided that, if the Revolving Commitments have
terminated or expired, the Applicable Percentages shall be determined based upon
such Lender’s share of the Aggregate Revolving Exposure at such time); provided
that, in accordance with Section 2.19, so long as any Lender shall be a
Defaulting Lender, such Defaulting Lender’s Commitment shall be disregarded in
the calculations above.

“Applicable Rate” means, for any day, with respect to any Loan, or with respect
to the commitment fees payable hereunder, as the case may be, the applicable
rate per annum set forth below under the caption “ABR Spread”, “Eurodollar
Spread” or “Commitment Fee Rate”, as the case may be, based upon the Total
Leverage Ratio as of the most recent determination date, provided that until the
delivery to the Administrative Agent, pursuant to Section 5.01, of the Company’s
consolidated financial information for the Company’s first full fiscal quarter
ending after the Effective Date, the “Applicable Rate” shall be the applicable
rates per annum set forth below in Category 4:

 

Total Leverage

Ratio

   Eurodollar
Spread   ABR
Spread   Commitment
Fee Rate

Category 1

³3.00 to 1.00

   2.50%   1.50%   0.40%

Category 2

<3.00 to 1.00 but

³2.50 to 1.00

   2.25%   1.25%   0.35%

Category 3

<2.50 to 1.00 but

³2.00 to 1.00

   2.00%   1.00%   0.30%

Category 4

<2.00 to 1.00 but

³1.50 to 1.00

   1.75%   0.75%   0.25%

Category 5

<1.50 to 1.00 but

³1.00 to 1.00

   1.50%   0.50%   0.20%

Category 6

<1.00 to 1.00

   1.25%   0.25%   0.15%

For purposes of the foregoing, (a) the Applicable Rate shall be determined as of
the end of each fiscal quarter of the Company, based upon the Company’s annual
or quarterly consolidated financial statements delivered pursuant to
Section 5.01 and (b) each change in the Applicable Rate resulting from a change
in the Total Leverage Ratio shall be effective during the period commencing on
and including the date of delivery to the Administrative Agent of such
consolidated financial statements indicating such change and ending on the date
immediately preceding the effective date of the next such change, provided that
at the option of the Administrative Agent or at the request of the Required
Lenders, if the Borrowers fail to

 

2

--------------------------------------------------------------------------------

deliver the annual or quarterly consolidated financial statements required to be
delivered by it pursuant to Section 5.01, the Total Leverage Ratio shall be
deemed to be in Category 1 during the period from the expiration of the time for
delivery thereof until such consolidated financial statements are delivered.

If at any time the Administrative Agent reasonably determines that the financial
statements upon which the Applicable Rate was determined were incorrect (whether
based on a restatement, fraud or otherwise), the Borrowers shall be required to
retroactively pay any additional amount that the Borrowers would have been
required to pay if such financial statements had been accurate at the time they
were delivered.

Notwithstanding the foregoing, the Applicable Rate in respect of any Class of
additional Revolving Commitments or Extended Revolving Commitments and any
Extended Revolving Loans made pursuant to any Extended Revolving Commitments
shall be the applicable percentages per annum set forth in the relevant
Extension Offer.

“Approved Fund” has the meaning assigned to the term in Section 10.04(b).

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

“Availability” means, at any time, an amount equal to (a) the aggregate
Revolving Commitments and minus (b) the Aggregate Revolving Exposure
(calculated, with respect to any Defaulting Lender, as if such Defaulting Lender
had funded its Applicable Percentage of all outstanding Borrowings).

“Availability Period” means the period from and including the Effective Date to
but excluding the Revolving Credit Maturity Date.

“Banking Services” means each and any of the following bank services provided to
any Loan Party by any Lender or any Affiliate of a Lender: (a) credit cards for
commercial customers (including, without limitation, “commercial credit cards”
and purchasing cards), (b) stored value cards, (c) merchant processing services
and (d) treasury management services (including, without limitation, controlled
disbursement, automated clearinghouse transactions, return items, any direct
debit scheme or arrangement, overdrafts and interstate depository network
services).

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

“Bankruptcy Event” means, with respect to any Person, when such Person becomes
the subject of a bankruptcy or insolvency proceeding, or has had a receiver,
conservator, trustee, administrator, custodian, assignee for the benefit of
creditors or similar Person charged with the reorganization or liquidation of
its business appointed for it, or, in the good faith determination of the
Administrative Agent, has taken any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any such proceeding or appointment,
provided that a Bankruptcy Event shall not result solely by virtue of any
ownership interest, or the acquisition of any ownership interest, in such Person
by a Governmental Authority or instrumentality thereof, unless such ownership
interest results in or provides such Person with immunity from the jurisdiction
of courts within the U.S. or from the enforcement of judgments or writs of
attachment on its assets or permits such Person (or such Governmental Authority
or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or
agreements made by such Person.

 

3

--------------------------------------------------------------------------------

“Beneficial Owner” means, with respect to any U.S. federal withholding Tax, the
beneficial owner, for U.S. federal income tax purposes, to whom such Tax
relates.

“Board” means the Board of Governors of the Federal Reserve System of the U.S.

“Borrower” or “Borrowers” means, individually or collectively, the CSW Borrower
and the Whitmore Borrower.

“Borrower Representative” has the meaning assigned to such term in
Section 12.01.

“Borrowing” means (a) Revolving Loans of the same Type, made, converted or
continued on the same date and, in the case of Eurodollar Loans, as to which a
single Interest Period is in effect and (b) a Swingline Loan.

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

“Burdensome Restrictions” means any consensual encumbrance or restriction of the
type described in clause (a) or (b) of Section 6.10.

“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed; provided that, when used in connection with a Eurodollar Loan,
the term “Business Day” shall also exclude any day on which banks are not open
for general business in London.

“Capital Expenditures” means, without duplication, any expenditure for any
purchase or other acquisition of any asset that would be classified as a fixed
or capital asset on a consolidated balance sheet of the Company and its
Subsidiaries prepared in accordance with GAAP, excluding (i) reinvestments of
proceeds of events of the types described (A) in clause (b) of the definition of
“Prepayment Event” and (B) in clause (m) of Section 6.05 (including payments in
respect of notes received in connection therewith in accordance with
Section 6.04(n)) and (ii) capitalized interest.

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

“Cash Collateralize” means to pledge and deposit with or deliver to the
Administrative Agent, for the benefit of the Administrative Agent, Issuing Bank
or any Swingline Lender (as applicable) and the Lenders, as collateral for
Letters of Credit, Obligations in respect of Swingline Loans, or obligations of
Lenders to fund participations in respect of either thereof (as the context may
require), cash or deposit account balances or, if the Issuing Bank or Swingline
Lenders benefitting from such collateral shall agree in their sole discretion,
other credit support, in each case pursuant to documentation in form and
substance satisfactory to (a) the Administrative Agent and (b) the Issuing Bank
or the Swingline Lenders (as applicable). “Cash Collateral” shall have a meaning
correlative to the foregoing and shall include the proceeds of such cash
collateral and other credit support.

 

4

--------------------------------------------------------------------------------

“Change in Control” means the occurrence of any one or more of the following
events or occurrences:

(a) an event or series of events by which: (i) any “person” or “group” (as such
terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, 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 the “beneficial
owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of
1934, 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,
whether such right is exercisable immediately or only after the passage of time
(such right, an “option right”)), directly or indirectly, of 25% or more of the
equity securities of the Company entitled to vote for members of the board of
directors or equivalent governing body of the Company 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 (ii) a majority of the seats
(other than vacant seats) on the board of directors or other equivalent
governing body of the Company are occupied, at any time, by Persons who were not
(A) directors of the Company on the date of this Agreement or (B) nominated or
appointed by the board of directors or other equivalent governing body of the
Company; or

(b) the Company shall cease to own, directly or indirectly, free and clear of
all Liens or other encumbrances 100% of the outstanding voting Equity Interests
of the CSW Borrower and its other Subsidiaries on a fully diluted basis;
provided, however, that no sale of 100% of the outstanding Equity Interests in
any Subsidiary (other than CSW Borrower and/or the Whitmore Borrower) shall be
considered to be a Change in Control if the sale would be a disposition
permitted by Section 6.05.

“Change in Law” means the occurrence after the date of this Agreement (or, with
respect to any Lender, such later date on which such Lender becomes a party to
this Agreement) of any of the following: (a) the adoption or taking effect of
any law, rule, regulation or treaty, (b) any change in any law, rule, regulation
or treaty or in the administration, interpretation or application thereof by any
Governmental Authority or (c) compliance by any Lender or the Issuing Bank (or,
for purposes of Section 2.14(b), by any lending office of such Lender or by such
Lender’s or the Issuing Bank’s holding company, if any) with any request,
guideline, requirement or directive (whether or not having the force of law) of
any Governmental Authority made or issued after the date of this Agreement;
provided that, notwithstanding anything herein to the contrary, (x) the
Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests,
rules, guidelines, requirements or directives thereunder or issued in connection
therewith or in the implementation thereof, and (y) all requests, rules,
guidelines, requirements or directives promulgated by the Bank for International
Settlements, the Basel Committee on Banking Supervision (or any successor or
similar authority) or the U.S. or foreign regulatory authorities, in each case
pursuant to Basel III, shall in each case be deemed to be a “Change in Law”,
regardless of the date enacted, adopted, issued or implemented.

“Charges” has the meaning assigned to such term in Section 10.17.

“Chase” means JPMorgan Chase Bank, N.A., a national banking association, in its
individual capacity, and its successors.

“Class”, when used in reference to (a) any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are Revolving Loans or
Swingline Loans, (b) any Commitment, refers to whether such Commitment is a
Revolving Commitment or Extended Revolving Commitments that are designated as an
additional Class of Commitments, and (c) any Lender, refers to whether such
Lender has a Loan or Commitment of a particular Class.

 

5

--------------------------------------------------------------------------------

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

“Collateral” means any and all property covered by the Collateral Documents and
any and all other property of any Loan Party now existing or hereafter acquired,
that may at any time be, become or intended to be, subject to a security
interest or Lien in favor of the Administrative Agent, on behalf of itself and
the Lenders and other Secured Parties, to secure the Secured Obligations,
including without limitation, pledges by the Loan Parties of Equity Interests in
the Borrowers and the Subsidiaries to the extent contemplated by
Section 5.12(b).

“Collateral Access Agreement” has the meaning assigned to such term in the
Security Agreement.

“Collateral Documents” means, collectively, the Security Agreement and any other
agreements, instruments and documents executed in connection with this Agreement
that are intended to create, perfect or evidence Liens to secure all or any part
of the Secured Obligations, including, without limitation, all other security
agreements, intellectual property security agreements, pledge agreements,
mortgages, deposit account control agreements or other control agreements,
collateral assignments, deeds of trust, pledges or other similar agreements and
financing statements whether theretofore, now or hereafter executed by any Loan
Party or any Subsidiary and delivered to the Administrative Agent.

“Commitment” means, with respect to each Lender, the sum of such Lender’s
Revolving Commitment and, if applicable, Extended Revolving Commitment. The
initial amount of each Lender’s Commitment is set forth on the Commitment
Schedule, or in the Assignment and Assumption pursuant to which such Lender
shall have assumed its Commitment, as applicable.

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

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et
seq.), as amended from time to time, and any successor statute.

“Communications” has the meaning assigned to such term in Section 10.01(d).

“Company” means CSW Industrials, Inc., a Delaware corporation, the sole
stockholder of the CSW Borrower.

“Compliance Certificate” means a certificate substantially in the form of
Exhibit C, with such changes, or in such other form, as agreed to by the
Administrative Agent.

“Connection Income Taxes” means Other Connection Taxes that are imposed on or
measured by net income (however denominated) or that are franchise Taxes or
branch profits Taxes.

“Consolidated Net Income” means, for any period and any Person (a “Subject
Person”), such Subject Person’s consolidated net income (or loss) determined in
accordance with GAAP, but excluding any extraordinary, nonrecurring,
nonoperating or noncash gains or losses, including or in addition, the
following:

(a) the income (or loss) of any Person (other than a subsidiary) in which the
Subject Person or a subsidiary has an ownership interest; provided, however,
that (i) Consolidated Net Income shall include amounts in respect of the income
of such when actually received in cash by the Subject Person or

 

6

--------------------------------------------------------------------------------

such subsidiary in the form of dividends or similar distributions and
(ii) Consolidated Net Income shall be reduced by the aggregate amount of all
investments, regardless of the form thereof, made by the Subject Person or any
of its subsidiaries in such Person for the purpose of funding any deficit or
loss of such Person;

(b) the income of any subsidiary to the extent the payment of such income in the
form of a distribution or repayment of any Indebtedness to the Subject Person or
a subsidiary is not permitted, whether on account of any restriction in by-laws,
articles of incorporation or similar governing document, any agreement or any
law, statute, judgment, decree or governmental order, rule or regulation
applicable to such subsidiary;

(c) any gains or losses accrued on foreign currency receivables or on foreign
currency payables of the Subject Person or a subsidiary organized under the laws
of the U.S. which are not realized in a cash transaction;

(d) the income or loss of any foreign subsidiary or of any foreign Person (other
than a subsidiary) in which the Subject Person or subsidiary has an ownership
interest to the extent that the equivalent dollar amount of the income contains
increases or decreases due to the fluctuation of a foreign currency exchange
rate after the Effective Date;

(e) the income or loss of any Person acquired by the Subject Person or a
subsidiary for any period prior to the date of such acquisition; and

(f) the income from any sale of assets in which the accounting basis of such
assets had been the book value of any Person acquired by the Subject Person or a
subsidiary prior to the date such Person became a subsidiary or was merged into
or consolidated with the Subject Person or a subsidiary.

“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto.

“Credit Exposure” means, as to any Lender at any time, such Lender’s Revolving
Exposure at such time.

“Credit Party” means the Administrative Agent, the Issuing Bank, the Swingline
Lender or any other Lender.

“CSW Borrower” means CSW Industrials Holdings, Inc., a Delaware corporation.

“Debtor Relief Laws” means the Bankruptcy Code of the United States of America,
and all other liquidation, conservatorship, bankruptcy, debtor assignment for
the benefit of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States or other
applicable jurisdictions from time to time in effect.

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

“Defaulting Lender” means any Lender that (a) has failed, within two Business
Days of the date required to be funded or paid, to (i) fund any portion of its
Loans, (ii) fund any portion of its participations in Letters of Credit or
Swingline Loans or (iii) pay over to any Credit Party any other amount required
to be paid by it hereunder, unless, in the case of clause (i) above, such Lender
notifies

 

7

--------------------------------------------------------------------------------

the Administrative Agent in writing that such failure is the result of such
Lender’s good faith determination that a condition precedent to funding
(specifically identified and including the particular default, if any) has not
been satisfied, (b) has notified any Borrower or any Credit Party in writing, or
has made a public statement to the effect, that it does not intend or expect to
comply with any of its funding obligations under this Agreement (unless such
writing or public statement indicates that such position is based on such
Lender’s good faith determination that a condition precedent (specifically
identified and including the particular default, if any) to funding a Loan under
this Agreement cannot be satisfied) or generally under other agreements in which
it commits to extend credit, (c) has failed, within three Business Days after
request by a Credit Party, acting in good faith, to provide a certification in
writing from an authorized officer of such Lender that it will comply with its
obligations (and is financially able to meet such obligations) to fund
prospective Loans and participations in then outstanding Letters of Credit and
Swingline Loans under this Agreement, provided that such Lender shall cease to
be a Defaulting Lender pursuant to this clause (c) upon such Credit Party’s
receipt of such certification in form and substance satisfactory to it and the
Administrative Agent, or (d) has become the subject of a Bankruptcy Event.

“Disqualified Equity Interests” means any Equity Interest which, by its terms
(or by the terms of any security or other Equity Interests into which it is
convertible or for which it is exchangeable), or upon the happening of any event
or condition (a) matures or is mandatorily redeemable (other than solely for
Qualified Equity Interests), pursuant to a sinking fund obligation or otherwise
(except as a result of a change of control or asset sale so long as any rights
of the holders thereof upon the occurrence of a change of control or asset sale
event shall be subject to the prior repayment in full of the Loans and all other
Obligations under the Loan Documents that are accrued and payable and the
termination of the Commitments and all outstanding Letters of Credit), (b) is
redeemable at the option of the holder thereof (other than solely for Qualified
Equity Interests), in whole or in part, (c) provides for the scheduled payments
of dividends in cash, or (d) is or becomes convertible into or exchangeable for
Indebtedness or any other Equity Interests that would constitute Disqualified
Equity Interests, in each case, prior to the date that is 91 days after the
Latest Maturity Date.

“Disregarded Domestic Person” means any Domestic Subsidiary that is treated as a
disregarded person for U.S. federal income tax purposes and substantially all of
the assets of which consist of the equity interests of one or more Foreign
Subsidiaries.

“Domestic Subsidiary” means any Subsidiary that is organized under the laws of
any political subdivision of the U.S.

“Document” has the meaning assigned to such term in the Security Agreement.

“dollars” or “$” refers to lawful money of the U.S.

“EBITDA” means, for any period, the total of the following, calculated without
duplication for the Company and its Subsidiaries on a consolidated basis for
such period:

(a) Consolidated Net Income; plus

(b) any provision for (or less any benefit from) income or franchise Taxes
included in determining Consolidated Net Income; plus

(c) interest expense (including the interest portion of Capital Lease
Obligations and amounts charged as expense to Swap Agreement Obligations)
deducted in determining Consolidated Net Income; plus

 

8

--------------------------------------------------------------------------------

(d) amortization and depreciation expense deducted in determining Consolidated
Net Income; plus

(e) management fees deducted in determining Consolidated Net Income; plus

(f) ESOP contributions deducted in determining Consolidated Net Income; plus

(g) LIFO adjustments deducted in determining Consolidated Net Income; plus

(h) losses on the disposition of assets deducted in determining Consolidated Net
Income; plus

(i) integration expenses actually incurred in connection with the Strathmore
Acquisition and acquisitions permitted by Section 6.04 and deducted in
determining Consolidated Net Income; provided that (x) integration expenses
actually incurred in connection with the Strathmore Acquisition are added-back
within two years of the Effective Date and (y) integration expenses actually
incurred in connection with any acquisition permitted by Section 6.04 are
added-back within two years of the date of such acquisition; plus

(j) any extraordinary one-time non-cash expenses or losses deducted in
determining Consolidated Net Income; plus

(k) non-cash expenses, charges or write-offs and non-cash impairment charges
(including non-cash expenses, charges or write-offs of goodwill and forgiveness
of Indebtedness and non-cash losses from investments recorded using the equity
method) deducted in determining Consolidated Net Income; plus

(l) any non-cash compensation expense, including non-cash expense related to any
stock options, profit interests or phantom units deducted in determining
Consolidated Net Income; plus

(m) fees and expenses in connection with the Strathmore Acquisition and
acquisitions permitted by Section 6.04 that were deducted in determining
Consolidated Net Income; plus

(n) the sum of

(i) amortization or write-off of debt discount and debt issuance costs, and
commissions, discounts and other fees and charges associated with Indebtedness
(including the Loans), plus

(ii) fees and expenses in connection with the SpinOff (including restructuring
transactions in preparation therefor), dispositions of subsidiaries or lines of
business, debt and equity issuances, amendments or waivers to debt facilities
and early extinguishment of debt (including the Loan Documents) that are (or at
the relevant time were) permitted hereunder, whether or not consummated,

minus the sum of

(1) any gains on the disposition of assets included in determining Consolidated
Net Income; plus

 

9

--------------------------------------------------------------------------------

(2) any extraordinary non-cash income or gains included in determining
Consolidated Net Income.

When determining EBITDA for the Company and its Subsidiaries, (x) any EBITDA
attributable to any Foreign Subsidiary shall be excluded to the extent it
exceeds 20% of the aggregate amount of EBITDA for the Company and the
Subsidiaries and (y) the aggregate amount included in the calculation of EBITDA
pursuant to clauses (e), (i), (m) and (n) shall not exceed 10% of the aggregate
amount of EBITDA for the Company and the Subsidiaries (calculated before giving
effect to clauses (e), (i), (m) and (n)).

“ECP” means an “eligible contract participant” as defined in Section 1(a)(18) of
the Commodity Exchange Act or any regulations promulgated thereunder and the
applicable rules issued by the Commodity Futures Trading Commission and/or the
SEC.

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

“Electronic Signature” means an electronic sound, symbol, or process attached
to, or associated with, a contract or other record and adopted by a Person with
the intent to sign, authenticate or accept such contract or record.

“Electronic System” means any electronic system, including e-mail, e-fax,
Intralinks®, ClearPar®, Debt Domain, Syndtrak, and any other Internet or
extranet-based site, whether such electronic system is owned, operated or hosted
by the Administrative Agent and the Issuing Bank and any of its respective
Related Parties or any other Person, providing for access to data protected by
passcodes or other security system.

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

“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Company or any Subsidiary directly or
indirectly resulting from or based upon (a) any violation of any Environmental
Law, (b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) any exposure to any Hazardous
Materials, (d) the Release or threatened Release of any Hazardous Materials into
the environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing; provided, however, that “Environmental Liability” does not include
any liability relating to any product warranty or product liability claims.

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

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

 

10

--------------------------------------------------------------------------------

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

“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of
ERISA or the regulations issued thereunder, with respect to a Plan (other than
an event for which the 30 day notice period is waived); (b) the failure of any
Plan or Multiemployer Plan to satisfy the “minimum funding standard” (as defined
in Sections 412, 430 and 431 of the Code or Sections 302, 303 or 304 of ERISA),
whether or not waived; (c) the filing pursuant to Section 412(c) of the Code or
Section 302(c) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (d) the incurrence by the Company, any
Borrower or any ERISA Affiliate of any liability under Title IV of ERISA with
respect to the termination of any Plan; (e) the receipt by the Company, any
Borrower or any ERISA Affiliate from the PBGC of any notice relating to an
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan; (f) the incurrence by the Company, any Borrower or any ERISA Affiliate
of any liability with respect to the withdrawal or partial withdrawal of the
Company, any Borrower or any ERISA Affiliate from any Plan or Multiemployer
Plan; (g) the receipt by the Company, any Borrower or any ERISA Affiliate of any
notice concerning a determination that a Multiemployer Plan is, or is expected
to be, insolvent or in reorganization, within the meaning of Title IV of ERISA;
(h) the determination that any Plan is considered an at-risk plan within the
meaning of Section 430 of the Code or Section 303 of ERISA or the imposition of
any lien on the Company, any Borrower or ERISA Affiliate thereunder; or (i) the
determination that any Multiemployer Plan is in endangered or critical status
within the meaning of Section 432 of the Code or Section 305 of ERISA.

“ESOP” means the CSW Industrials, Inc. Employee Stock Ownership Plan (as revised
and restated effective October 15, 2015) and the trust established thereunder,
as each may be amended from time to time, including any successor thereto that,
in each case, is intended to qualify as an “employee stock ownership plan” under
Section 4975(e)(7) of the Code.

“Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, bear interest at a rate
determined by reference to the Adjusted LIBO Rate.

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

“Excluded Swap Obligation” means, with respect to any Guarantor, any Swap
Obligation if, and to the extent that, all or a portion of the Guarantee of such
Guarantor of, or the grant by such Guarantor of a security interest to secure,
such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the
Commodity Exchange Act or any rule, regulation or order of the Commodity Futures
Trading Commission (or the application or official interpretation of any
thereof) by virtue of such Guarantor’s failure for any reason to constitute an
ECP at the time the Guarantee of such Guarantor or the grant of such security
interest becomes or would become effective with respect to such Swap Obligation.
If a Swap Obligation arises under a master agreement governing more than one
swap, such exclusion shall apply only to the portion of such Swap Obligation
that is attributable to swaps for which such Guarantee or security interest is
or becomes illegal.

“Excluded Taxes” means any of the following Taxes imposed on or with respect to
a Recipient or required to be withheld or deducted from a payment to a
Recipient: (a) Taxes imposed on or measured by net income (however denominated),
franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result
of such Recipient being organized under the laws of, or having its principal
office or, in the case of any Lender, its applicable lending office located in,
the jurisdiction imposing such Tax (or any

 

11

--------------------------------------------------------------------------------

political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in
the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable
to or for the account of such Lender with respect to an applicable interest in a
Loan, Letter of Credit or Commitment pursuant to a law in effect on the date on
which (i) such Lender acquires such interest in the Loan, Letter of Credit or
Commitment (other than pursuant to an assignment request by the Borrowers under
Section 2.18(b)) or (ii) such Lender changes its lending office, except in each
case to the extent that, pursuant to Section 2.16, amounts with respect to such
Taxes were payable either to such Lender’s assignor immediately before such
Lender acquired the applicable interest in a Loan, Letter of Credit or
Commitment or to such Lender immediately before it changed its lending office,
(c) Taxes attributable to such Recipient’s failure to comply with
Section 2.16(f) and (d) any U.S. federal withholding Taxes imposed under FATCA.

“Existing Predecessor UCCs” shall mean (i) that certain UCC-1 No. 20113759415
filed on September 30, 2011 with the Delaware Secretary of State naming
Strathmore Holdings, LLC as debtor and General Electric Capital Corporation as
secured party, (ii) that certain UCC-1 No. 20113768317 filed on September 30,
2011 with the Delaware Secretary of State naming Strathmore Holdings, LLC as
debtor and Deutsche Bank AG, New York Branch as secured party, (iii) that
certain UCC-1 No. 20113768382 filed on September 30, 2011 with the Delaware
Secretary of State naming Strathmore Holdings, LLC as debtor and Deutsche Bank
AG, New York Branch as secured party and (iv) that certain UCC-1 No. 20121149022
filed on March 26, 2012 with the Delaware Secretary of State naming Strathmore
Holdings, LLC as debtor and General Electric Capital Corporation as secured
party.

“Existing RectorSeal Credit Agreement” means that Credit Agreement, dated
July 27, 2011, among RectorSeal, as borrower, and JPMorgan Chase Bank, N.A., as
lender, and including any additional amendments, modifications, replacements,
extensions, renewals and replacements of such credit agreement.

“Existing Whitmore Credit Agreement” means that Credit Agreement, dated as of
April 27, 2015, among the Whitmore Borrower, as borrower, the lenders party
thereto, and JPMorgan Chase Bank, N.A., as administrative agent, and including
any additional amendments, modifications, replacements, extensions, renewals and
replacements of such credit agreement.

“Extended Revolving Commitment” means Revolving Commitments the maturity of
which shall have been extended pursuant to Section 2.21.

“Extended Revolving Loans” means any Revolving Loans made pursuant to the
Extended Revolving Commitments.

“Extension” has the meaning set forth in Section 2.21(a).

“Extension Amendment” means an amendment to this Agreement (which may, at the
option of the Administrative Agent and the Borrowers, be in the form of an
amendment and restatement of this Agreement) among the Borrowers and the other
Loan Parties, the applicable extending Lenders, the Administrative Agent and, to
the extent required by Section 2.21, the Issuing Bank and/or the Swingline
Lender implementing an Extension in accordance with Section 2.21.

“Extension Offer” has the meaning set forth in Section 2.21.

“FATCA” means Sections 1471 through 1474 of the Code as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), any current or future
regulations or official interpretations thereof and any agreement entered into
pursuant to Section 1471(b)(1) of the Code.

 

12

--------------------------------------------------------------------------------

“Federal Funds Effective Rate” means, for any day, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for
such day for such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it; provided, that, if
the Federal Funds Effective Rate shall be less than zero, such rate shall be
deemed to be zero from purposes of this Agreement.

“Fee Letter” means the fee letter, dated November 3, 2015, by and among the CSW
Borrower, JPMorgan Chase Bank, N.A., and J.P. Morgan Securities LLC.

“Financial Officer” means the chief financial officer, principal accounting
officer, treasurer or controller of the Company, the CSW Borrower or the
Whitmore Borrower, as applicable.

“Financial Statements” has the meaning assigned to such term in Section 5.01.

“Fixed Charges” means for any period, the sum of the following for the Company
and the Subsidiaries calculated on a consolidated basis without duplication for
such period: (a) the aggregate amount of cash interest, including cash payments
in the nature of interest under Capital Lease Obligations; and (b) the aggregate
amount of regularly scheduled payments of principal of Indebtedness paid or
payable.

“Fixed Charge Coverage Ratio” means for any period, the ratio of (a) EBITDA for
such period minus, for the Company and the Subsidiaries calculated on a
consolidated basis without duplication for such period, the sum of
(i) Non-Financed Capital Expenditures, (ii) any provision for (or less any
benefit from) income or franchise Taxes payable in cash included in determining
Consolidated Net Income, (iii) all cash dividends and other cash distributions
made by the Company on account of Equity Interests (including Restricted
Payments made pursuant to Sections 6.08(c), 6.08(l) and 6.08(m)) and
(iv) Restricted Payments made pursuant to Sections 6.08(j) to (b) Fixed Charges
for such period.

“Foreign Lender” means a Lender that is not a U.S. Person.

“Foreign Subsidiary” means each Subsidiary which is organized under the laws of
a jurisdiction other than the U.S. or any state or commonwealth thereof.

“Funded Debt” means, without duplication, the sum of the following as calculated
for the Company and the Subsidiaries on a consolidated basis in accordance with
GAAP: (a) all obligations for borrowed money (including, without limitation, all
borrowings in connection with any real estate of the Company and the
Subsidiaries); (b) all obligations evidenced by bonds, debentures, notes or
similar instruments; (c) all obligations upon which interest charges are
customarily paid prior to a breach or default of such obligations; (d) all
obligations under conditional sale or other title retention agreements relating
to property acquired by such Person; (e) all obligations in respect of the
deferred purchase price of property or services (excluding current accounts
payable incurred in the ordinary course of business); (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed (provided that the amount of such Indebtedness included in “Funded
Debt”, to the extent such Indebtedness was not otherwise assumed, shall not
exceed the fair market value of the property of such Person secured by such
Lien); (g) all Guarantees; and (h) all Capital Lease Obligations; provided that,
in each case “Funded Debt” shall exclude earn-outs permitted to exist under the
terms of this Agreement.

 

13

--------------------------------------------------------------------------------

“Funding Account” has the meaning assigned to such term in Section 4.01(h).

“GAAP” means generally accepted accounting principles in the U.S.

“Governmental Authority” means the government of the U.S., any other nation or
any political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

“Guarantee” of or by any Person (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation (including any
obligations under an operating lease) of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any
obligation of the guarantor, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation or to purchase (or to advance or supply funds for the purchase
of) any security for the payment thereof, (b) to purchase or lease property,
securities or services for the purpose of assuring the owner of such
Indebtedness or other obligation (including any obligations under an operating
lease) of the payment thereof, (c) to maintain working capital, equity capital
or any other financial statement condition or liquidity of the primary obligor
so as to enable the primary obligor to pay such Indebtedness or other obligation
or (d) as an account party in respect of any letter of credit or letter of
guaranty issued to support such Indebtedness or obligation; provided that the
term Guarantee shall not include endorsements for collection or deposit in the
ordinary course of business. The amount of any Guarantee shall be equal to the
amount of the obligation so guaranteed of supported (or, if less, the maximum
amount so guaranteed or supported) or if not a fixed or determinable amount, the
amount thereof determined in accordance with GAAP. The term “Guarantee” as a
verb has a corresponding meaning.

“Guaranteed Obligations” has the meaning assigned to such term in Section 11.01.

“Guarantors” means all Loan Guarantors and all non-Loan Parties who have
delivered an Obligation Guaranty, and the term “Guarantor” means each or any one
of them individually. As of the Effective Date, the Guarantors are the Company,
the Borrowers, Strathmore Holdings, Strathmore Employee Holdings, LLC,
Strathmore Longview Property, LLC, Strathmore Properties Holdings, LLC,
Strathmore Acworth Property, LLC, Balco, Inc., RectorSeal, Jet-Lube, Inc.,
CapStar Holdings Corporation, Whitmore’s Field Services, LLC, 549 Rockwall, LLC,
Smoke Guard, Inc., Smoke Guard California, Inc., Strathmore Cutten Road
Property, LLC, Sierra Lubricants, and Jet-Lube Exports, Inc.

“Hazardous Materials” means: (a) any substance, material, or waste that is
included within the definitions of “hazardous substances,” “hazardous
materials,” “hazardous waste,” “toxic substances,” “toxic materials,” “toxic
waste,” or words of similar import in any Environmental Law; (b) those
substances listed as hazardous substances by the United States Department of
Transportation (or any successor agency) (49 C.F.R. 172.101 and amendments
thereto) or by the Environmental Protection Agency (or any successor agency) (40
C.F.R. Part 302 and amendments thereto); and (c) any substance, material, or
waste that is petroleum, petroleum-related, or a petroleum by-product, asbestos
or asbestos-containing material, polychlorinated biphenyls, flammable,
explosive, radioactive, freon gas, radon, or a pesticide, herbicide, or any
other agricultural chemical.

“Headquarters Loan” means the loan and all other obligations evidenced by the
Headquarters Loan Agreement and the Headquarters Loan Documents, and all
extensions, renewals, replacements, substitutions and refinancings thereof.

 

14

--------------------------------------------------------------------------------

“Headquarters Loan Agreement” means that First Amended and Restated Credit
Agreement, dated as of April 27, 2015, among the Whitmore Borrower, as borrower,
the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative
agent, as amended and restated as of the date hereof, and including any
additional amendments, modifications, replacements, extensions, renewals and
replacements of such credit agreement.

“Headquarters Loan Documents” means “Loan Documents” as that term is defined in
the Headquarters Loan Agreement.

“Headquarters Real Property” means the Real Property located at 930 Whitmore and
1250 Justin Road, Rockwall, TX.

“Headquarters Transactions” means the execution, delivery and performance by the
Whitmore Borrower and the other Loan Parties of the Headquarters Loan Agreement
and the other Headquarters Loan Documents, the borrowing of loans and other
credit extensions thereunder and the use of the proceeds thereof.

“Impacted Interest Period” has the meaning assigned to such term in the
definition of “LIBO Rate”.

“Indebtedness” of any Person means, without duplication, (a) all obligations of
such Person for borrowed money, (b) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments, (c) all obligations of such
Person upon which interest charges are customarily paid (excluding obligations
for which interest charges only arise following a breach or a default), (d) all
obligations of such Person under conditional sale or other title retention
agreements relating to property acquired by such Person, (e) all obligations of
such Person in respect of the deferred purchase price of property or services
(other than trade accounts payable in the ordinary course of business and not
past due for more than sixty (60) days after the date on which such trade
account was created), (f) all Indebtedness of others secured by (or for which
the holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien on property owned or acquired by such Person, whether
or not the Indebtedness secured thereby has been assumed (provided that the
amount of such debt included in “Indebtedness”, to the extent such debt was not
otherwise assumed, shall not exceed the fair market value of the property of
such Person secured by such Lien), (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such Person,
(i) all obligations, contingent or otherwise, of such Person as an account party
in respect of letters of credit and letters of guaranty, (j) all obligations,
contingent or otherwise, of such Person in respect of bankers’ acceptances,
(k) all obligations of such Person in respect of mandatory redemption or
mandatory dividend rights on Disqualified Equity Interests but excluding
dividends payable solely in Qualified Equity Interests; (l) all obligations of
such Person, contingent or otherwise, for the payment of money under any
earn-out or similar agreement entered into with the seller of a target of an
acquisition or any other similar arrangements providing for the deferred payment
of the purchase price for an acquisition permitted hereby or an acquisition
consummated prior to the date hereof, (m) obligations under any liquidated
earn-out, (n) any other Off-Balance Sheet Liability, and (o) obligations,
whether absolute or contingent and howsoever and whensoever created, arising,
evidenced or acquired (including all renewals, extensions and modifications
thereof and substitutions therefor), under (i) any and all Swap Agreements, and
(ii) any and all cancellations, buy backs, reversals, terminations or
assignments of any Swap Agreement transaction. The Indebtedness of any Person
shall include the Indebtedness of any other entity (including any partnership in
which such Person is a general partner) to the extent such Person is liable
therefor as a result of such Person’s ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor. The amount of the
obligations of the Company or any Subsidiary in respect of any Swap Agreement
shall, at any time of determination and for all purposes under this Agreement,
be

 

15

--------------------------------------------------------------------------------

the maximum aggregate amount (giving effect to any netting agreements) that the
Company or such Subsidiary would be required to pay if such Swap Agreement were
terminated at such time giving effect to current market conditions
notwithstanding any contrary treatment in accordance with GAAP. For the
avoidance of doubt, any obligation in respect of or relating to any employee
benefit plan (including any Plan or the ESOP) is not considered to be
Indebtedness for purposes of this Agreement.

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or
with respect to any payment made by or on account of any obligation of any Loan
Party under any Loan Document and (b) to the extent not otherwise described in
the foregoing clause (a), Other Taxes.

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

“Ineligible Institution” has the meaning assigned to such term in
Section 10.04(b).

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

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

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

“Interest Period” means with respect to any Eurodollar Borrowing, the period
commencing on the date of such Eurodollar Borrowing and ending on the
numerically corresponding day in the calendar month that is one, two, three, six
or, if available to all applicable Lenders, twelve months thereafter, as the
Borrower Representative may elect; provided that (i) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (ii) any Interest Period
that commences on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the last calendar month of
such Interest Period) shall end on the last Business Day of the last calendar
month of such Interest Period. For purposes hereof, the date of a Borrowing
initially shall be the date on which such Borrowing is made and thereafter, in
the case of a Revolving Borrowing, shall be the effective date of the most
recent conversion or continuation of such Borrowing.

“Interpolated Rate” means, at any time, for any Interest Period, the rate per
annum (rounded the same number of decimal places as the LIBO Screen Rate)
determined by the Administrative Agent (which determination shall be conclusive
and binding absent manifest error) to be equal to the rate that results from
interpolating on a linear basis between: (a) the LIBO Screen Rate for the
longest period (for which the LIBO Screen Rate is available) that is shorter
than the Impacted Interest Period and (b) the LIBO Screen Rate for the shortest
period (for which the LIBO Screen Rate is available) that exceeds the Impacted
Interest Period, in each case, at such time.

“IRS” means the United States Internal Revenue Service.

 

16

--------------------------------------------------------------------------------

“Issuing Bank” means (a) Chase, in its capacity as the issuer of Letters of
Credit hereunder, and (b) any other Revolving Lender from time to time
designated by the CSW Borrower as an Issuing Bank, with the consent of such
Revolving Lender and the Administrative Agent, in which case the term “Issuing
Bank” shall mean Chase and each such Revolving Lender, individually or
collectively as the context shall require, and their successors in such capacity
as provided in Section 2.05(i). The Issuing Bank may, in its discretion, arrange
for one or more Letters of Credit to be issued by its Affiliates, in which case
the term “Issuing Bank” shall include any such Affiliate with respect to Letters
of Credit issued by such Affiliate (it being agreed that such Issuing Bank
shall, or shall cause such Affiliate to, comply with the requirements of
Section 2.05 with respect to such Letters of Credit). At any time that there is
more than one Issuing Bank, all singular references to the Issuing Bank shall
mean any Issuing Bank, either Issuing Bank, each Issuing Bank, the Issuing Bank
that has issued the applicable Letter of Credit, or both (or all) Issuing Banks,
as the context may require.

“Joinder Agreement” means a Joinder Agreement in substantially the form of
Exhibit D.

“Latest Maturity Date” means, at any date of determination, the latest maturity
date that is applicable to any Loan or Commitment hereunder at such time,
including the latest maturity date of any then existing Revolving Commitment or
Extended Revolving Commitment, in each case as extended in accordance with this
Agreement from time to time.

“LC Collateral Account” has the meaning assigned to such term in
Section 2.05(j).

“LC Disbursement” means any payment made by an Issuing Bank pursuant to a Letter
of Credit.

“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of
all standby Letters of Credit outstanding at such time plus (b) the aggregate
amount of all LC Disbursements relating to standby Letters of Credit that have
not yet been reimbursed by or on behalf of the Borrowers at such time. The LC
Exposure of any Revolving Lender at any time shall be its Applicable Percentage
of the aggregate LC Exposure at such time.

“Lenders” means the Persons listed on the Commitment Schedule and any other
Person that shall have become a Lender hereunder pursuant to Section 2.08, an
Assignment and Assumption or an amendment to this Agreement, other than any such
Person that ceases to be a Lender hereunder pursuant to an Assignment and
Assumption or an amendment to this Agreement. Unless the context otherwise
requires, the term “Lenders” includes the Swingline Lender and the Issuing Bank.

“Letters of Credit” means standby letters of credit issued pursuant to this
Agreement, and the term “Letter of Credit” means any one of them or each of them
singularly, as the context may require.

“LIBO Rate” means, with respect to any Eurodollar Borrowing for any applicable
Interest Period or for any ABR Borrowing, the London interbank offered rate as
administered by ICE Benchmark Administration (or any other Person that takes
over the administration of such rate for dollars) for a period equal in length
to such Interest Period as displayed on pages LIBOR01 or LIBOR02 of the Reuters
screen that displays such rate or, in the event such rate does not appear on a
Reuters page or screen, on any successor or substitute page on such screen that
displays such rate, or on the appropriate page of such other information service
that publishes such rate from time to time as shall be selected by the
Administrative Agent in its reasonable discretion (in each case, the “LIBO
Screen Rate”) at approximately 11:00 a.m., London time, two (2) Business Days
prior to the commencement of such Interest Period; provided that, (x) if the
LIBO Screen Rate shall be less than zero, such rate shall be deemed to be zero
for the purposes of this Agreement and (y) if the LIBO Screen Rate shall not be
available at such time for a period equal in length to such Interest Period (an
“Impacted Interest Period”),

 

17

--------------------------------------------------------------------------------

then the LIBO Rate shall be the Interpolated Rate at such time, subject to
Section 2.13 in the event that the Administrative Agent shall conclude that it
shall not be possible to determine such Interpolated Rate (which conclusion
shall be conclusive and binding absent manifest error); provided, further, that,
if any Interpolated Rate shall be less than zero, such rate shall be deemed to
be zero for purposes of this Agreement. Notwithstanding the above, to the extent
that “LIBO Rate” or “Adjusted LIBO Rate” is used in connection with an ABR
Borrowing, such rate shall be determined as modified by the definition of
Alternate Base Rate.

“LIBO Screen Rate” has the meaning assigned to such term in the definition of
“LIBO Rate”.

“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of
such asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.

“Loan Documents” means, collectively, this Agreement, each promissory note
issued pursuant to this Agreement, each Letter of Credit application, each
Collateral Document, each Collateral Access Agreement, the Loan Guaranty, each
Obligation Guaranty, and each other agreement, instrument, document and
certificate identified in Section 4.01 executed and delivered to, or in favor
of, the Administrative Agent or any Lender and including each other loan
agreement, note, guarantee, subordination agreement, financing statement,
pledge, power of attorney, consent, assignment, contract, notice, fee letter,
letter of credit agreement, instrument and certificate, whether heretofore, now
or hereafter executed by or on behalf of any Loan Party, or any employee of any
Loan Party, and delivered to the Administrative Agent or any Lender in
connection with this Agreement or the transactions contemplated hereby. Any
reference in this Agreement or any other Loan Document to a Loan Document shall
include all appendices, exhibits or schedules thereto, and all amendments,
restatements, supplements or other modifications thereto, and shall refer to
this Agreement or such Loan Document as the same may be in effect at any and all
times such reference becomes operative.

“Loan Guarantor” means the Company, the Borrowers and each of the other direct
and indirect material Domestic Subsidiaries of the Company. On the Effective
Date, the Subsidiaries of the Company that are Loan Guarantors are Strathmore
Holdings, Strathmore Employee Holdings, LLC, Strathmore Longview Property, LLC,
Strathmore Properties Holdings, LLC, Strathmore Acworth Property, LLC, Balco,
Inc., RectorSeal, Jet-Lube, Inc., CapStar Holdings Corporation, Whitmore’s Field
Services, LLC, 549 Rockwall, LLC, Smoke Guard, Inc., Smoke Guard California,
Inc., Strathmore Cutten Road Property, LLC, Sierra Lubricants, and Jet-Lube
Exports, Inc.

“Loan Guaranty” means Article XI of this Agreement.

“Loan Parties” means, collectively, the Borrowers and the Loan Guarantors, and
any other Person who becomes a party to this Agreement pursuant to a Joinder
Agreement, and their successors and assigns, and the term “Loan Party” shall
mean any one of them or all of them individually, as the context may require.

“Loans” means the loans and advances made by the Lenders pursuant to this
Agreement, including Swingline Loans.

“Material Adverse Effect” means a material adverse effect on (a) the business,
assets, operations, or financial condition of the Company and its Subsidiaries
taken as a whole, (b) the ability of any Loan

 

18

--------------------------------------------------------------------------------

Party to perform any of its material obligations under the Loan Documents to
which it is a party, (c) a material portion of the Collateral, or the
Administrative Agent’s Liens (on behalf of itself and the other Secured Parties)
on a material portion of the Collateral or the priority of such Liens, or
(d) the material rights of or remedies available to the Administrative Agent,
the Issuing Bank or the Lenders under any of the Loan Documents.

“Material Indebtedness” means Indebtedness (other than the Obligations under the
Loan Documents), or obligations in respect of one or more Swap Agreements, of
any one or more of the Loan Parties in an aggregate principal amount exceeding
$7,500,000. For purposes of determining Material Indebtedness, the “principal
amount” of the obligations of any Loan Parties in respect of any Swap Agreement
at any time shall be the maximum aggregate amount (giving effect to any netting
agreements) that such Loan Party would be required to pay if such Swap Agreement
were terminated at such time.

“Maximum Rate” has the meaning assigned to such term in Section 10.17.

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

“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3)
of ERISA with respect to which the Company, any Borrower or any ERISA Affiliate
may have any liability.

“Net Proceeds” means, with respect to any applicable event, (a) the cash
proceeds received in respect of such event including (i) any cash received in
respect of any non-cash proceeds (including any cash payments received by way of
deferred payment of principal pursuant to a note or installment receivable or
purchase price adjustment receivable or otherwise, but excluding any interest
payments), but only as and when received, (ii) in the case of a casualty,
insurance proceeds and (iii) in the case of a condemnation or similar event,
condemnation awards and similar payments, minus (b) the sum of (i) all
reasonable fees and out-of-pocket expenses paid to third parties (other than
Affiliates) in connection with such event, (ii) in the case of a sale, transfer
or other disposition of an asset (including pursuant to a sale and leaseback
transaction or a casualty or a condemnation or similar proceeding), the amount
of all payments required to be made as a result of such event to repay
Indebtedness (other than Loans) secured by such asset or otherwise subject to
mandatory prepayment as a result of such event and (iii) the amount of all Taxes
paid (or reasonably estimated to be payable) and the amount of any reserves
established to fund contingent liabilities reasonably estimated to be payable,
in each case during the year that such event occurred or the next succeeding
year and that are directly attributable to such event (as determined reasonably
and in good faith by a Financial Officer of the CSW Borrower).

“Non-Consenting Lender” has the meaning assigned to such term in
Section 10.02(d).

“Non-Financed Capital Expenditures” means Capital Expenditures of the Company
and its Subsidiaries that were paid for in cash and not financed with the
proceeds of Indebtedness (other than Revolving Loans).

“Obligated Party” has the meaning assigned to such term in Section 11.02.

“Obligation Guaranty” means any Guarantee of all or any portion of the Secured
Obligations executed and delivered to the Administrative Agent for the benefit
of the Secured Parties by any other guarantor who is not a Loan Party.

“Obligations” means all unpaid principal of and accrued and unpaid interest on
the Loans, all LC Exposure, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations and indebtedness (including
interest and fees accruing during the pendency of any bankruptcy,

 

19

--------------------------------------------------------------------------------

insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), obligations and liabilities of any of
the Loan Parties and their Subsidiaries to any of the Lenders, the
Administrative Agent, the Issuing Bank or any indemnified party, individually or
collectively, existing on the Effective Date or arising thereafter, direct or
indirect, joint or several, absolute or contingent, matured or unmatured,
liquidated or unliquidated, secured or unsecured, arising by contract, operation
of law or otherwise, arising or incurred under this Agreement or any of the
other Loan Documents or in respect of any of the Loans made or reimbursement or
other obligations incurred or any of the Letters of Credit or other instruments
at any time evidencing any thereof.

“OFAC” means the Office of Foreign Assets Control of the United States
Department of the Treasury.

“Off-Balance Sheet Liability” of a Person means (a) any repurchase obligation or
liability of such Person with respect to accounts or notes receivable sold by
such Person, (b) any indebtedness, liability or obligation under any so-called
“synthetic lease” transaction entered into by such Person, or (c) any
indebtedness, liability or obligation arising with respect to any other
transaction which is the functional equivalent of or takes the place of
borrowing but which does not constitute a liability on the balance sheet of such
Person (other than operating leases).

“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as
a result of a present or former connection between such Recipient and the
jurisdiction imposing such Taxes (other than a connection arising from such
Recipient having (i) executed, delivered, become a party to, performed its
obligations under, received payments under, received or perfected a security
interest under, engaged in any other transaction pursuant to, or enforced, any
Loan Document), or (ii) sold or assigned an interest in any Loan, Letter of
Credit, Commitment or Loan Document.

“Other Taxes” means all present or future stamp, court or documentary,
intangible, recording, filing or similar Taxes that arise from any payment made
under, from the execution, delivery, performance, enforcement or registration
of, from the receipt or perfection of a security interest under, or otherwise
with respect to, any Loan Document, except any such Taxes that are Other
Connection Taxes imposed with respect to an assignment (other than an assignment
made pursuant to Section 2.18).

“Parent” means, with respect to any Lender, any Person as to which such Lender
is, directly or indirectly, a subsidiary.

“Participant” has the meaning assigned to such term in Section 10.04(c).

“Participant Register” has the meaning assigned to such term in
Section 10.04(c).

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

“Permitted Encumbrances” means:

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

(b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other
like Liens imposed by law, arising in the ordinary course of business and
securing obligations that are not overdue by more than thirty (30) days or are
being contested in compliance with Section 5.04;

 

20

--------------------------------------------------------------------------------

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

(d) deposits to secure the performance of tenders, bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, government contracts,
performance bonds and return-of-money bonds, insurance premiums other
obligations of a like nature, in each case in the ordinary course of business;

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

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

(g) operating leases or subleases entered into in the ordinary course of
business and easements or rights of way granted to others, that do not secure
any monetary obligations and do not materially detract from the value of the
affected property or materially interfere with the ordinary conduct of business
of the Company, any Borrower or any Subsidiary;

(h) Liens arising from Uniform Commercial Code financing statements filed with
respect to operating leases that are permitted by this Agreement and not
capitalized, and that do not secure any monetary obligations;

(i) any interest or title (and any Lien affecting the interest or title) of
(i) a lessor or sublessor under any lease or sublease to be mortgaged as
security hereunder permitted by this Agreement, (ii) any underlying lessor of
such a lease or sublease (e.g., an underlying ground or operating lease or prime
lease), and (iii) a grantor or licensor of any easements and rights of way to be
mortgaged as security hereunder or otherwise permitted by this Agreement, in
each case that do not secure any monetary obligations and do not materially
detract from the value of the affected property or materially interfere with the
ordinary conduct of business of the Company, any Borrower or any Subsidiary;

(j) Liens of collecting banks under the UCC on items in the course of collection
and statutory Liens and customary rights of set-off of banks and Liens attaching
to commodity trading accounts or other brokerage accounts incurred in the
ordinary course of business and not for speculative purposes; and

(k) (i) Liens (A) on advances of cash or Permitted Investments in favor of the
seller of any property to be acquired in an acquisition or investment permitted
by Section 6.04 to be applied against the purchase price for such acquisition or
investment and (B) consisting of an agreement to dispose of any property in a
disposition permitted by Section 6.05, in each case, solely to the extent such
acquisition, investment or disposition, as the case may be, would have been
permitted on the date of the creation of such Lien, and (ii) earnest money
deposits of cash or Permitted Investments by a Loan Party or any of its
Subsidiaries in connection with any letter of intent or purchase agreement
permitted by the terms of this Agreement;

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

 

21

--------------------------------------------------------------------------------

“Permitted Investments” means:

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

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

(c) investments in certificates of deposit, bankers’ acceptances and demand or
time deposits maturing within 180 days from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts issued
or offered by, any domestic office of any commercial bank organized under the
laws of the U.S. or any state thereof which has a combined capital and surplus
and undivided profits of not less than $500,000,000;

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

(e) money market funds that (i) comply with the criteria set forth in Securities
and Exchange Commission Rule 2a-7 under the Investment Company Act of 1940,
(ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets of
at least $5,000,000,000.

“Permitted Reorganization” means (a) the Company’s contribution of the Equity
Interests in Balco, Inc., CapStar Holdings Corporation and RectorSeal to the CSW
Borrower, (b) RectorSeal’s distribution of the Equity Interests in the Whitmore
Borrower, Jet-Lube, Inc. and Smoke Guard, Inc. to the CSW Borrower, (c) the
Whitmore Borrower’s (i) contribution of the Equity Interests in Strathmore
Acworth Property, LLC, Strathmore Employee Holdings, LLC, Strathmore Longview
Property, LLC and Strathmore Properties Holdings, LLC to Strathmore Holdings and
(ii) distribution of the Equity Interests in Strathmore Holdings to the CSW
Borrower (occurring immediately following the action described in clause
(c)(i)), so long as each of the following conditions has been satisfied:

(i) at the time of the consummation of such contributions and distributions and
immediately after giving effect thereto, no Default shall have occurred and be
continuing or would result therefrom;

(ii) immediately prior to, or concurrently with such contributions and
distributions, the Administrative Agent (or its counsel) shall have received, in
each case on terms and conditions, and subject to documentation in form and
substance reasonably satisfactory to the Administrative Agent (A) certified
copies of each charter, articles or certificate of organization or incorporation
and bylaws or operating, management or partnership agreement, or other
organizational or governing documents that are being amended and/or restated in
connection with such contributions and distributions, (B) an amendment to the
Security Agreements executed by the Company, the CSW Borrower, RectorSeal,
Strathmore Holdings and the Whitmore Borrower revising the Schedules thereto to
reflect the Equity Interests owned by such Loan Parties after the consummation
of such contributions and distributions, and such other certificates, documents,
instruments and agreements relating thereto as the Administrative Agent shall
reasonably request in connection therewith, and (C) replacement certificates (to
the extent such Equity Interests are certificated) representing the Equity
Interests of (i) the Whitmore Borrower contributed by

 

22

--------------------------------------------------------------------------------

RectorSeal to the CSW Borrower, (ii) Balco, Inc., (iii) CapStar Holdings
Corporation, (iv) RectorSeal, (v) Smoke Guard, Inc., (vi) Jet-Lube, Inc.,
(vii) Strathmore Holdings, (viii) Strathmore Acworth Property, LLC,
(ix) Strathmore Employee Holdings, LLC, (x) Strathmore Longview Property, LLC
and (xi) Strathmore Properties Holdings, LLC, in each case, together with an
undated stock power for each such certificate executed in blank by a duly
authorized officer of the pledgor thereof; and

(iii) the Borrower Representative shall provide the Administrative Agent at
least five Business Days prior to the consummation of such contributions and
distributions, (A) written notice of the date of the proposed consummation of
such contributions and distributions, (B) a new Schedule 3.13(a) which shall be
satisfactory to the Administrative Agent and (C) a certificate signed by a
Financial Officer of the CSW Borrower certifying: (1) that after giving effect
to such contributions and distributions, all representations and warranties
contained in the Loan Documents will be true and correct in all material
respects on and as of the date of the consummation of such contributions and
distributions with the same force and effect as if such representations and
warranties had been made on and as of such date, except to the extent that such
representations and warranties relate specifically to an earlier date and
provided that any such representations and warranties subject to a materiality
qualifier must be true and correct in all respects on and as of the date of the
consummation of such contributions and distributions, except to the extent that
such representations and warranties relate specifically to an earlier date and
(2) that no Default exists or will result from the consummation of such
contributions and distributions.

“Permitted Reorganization Effective Date” means the date on which each of the
conditions set forth in clauses (i) – (iii) of the definition of Permitted
Reorganization shall have been satisfied and the Permitted Reorganization is
consummated in accordance with the terms of this Agreement.

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

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

“Platform” means Debt Domain, Intralinks, Syndtrak or a substantially similar
electronic transmission system.

“Prepayment Event” means:

(a) any sale, transfer or other disposition (including pursuant to a sale and
leaseback transaction) of any property or asset of any Loan Party or any
Subsidiary after the Effective Date, other than dispositions permitted by
Section 6.05 (except permitted sales of Equity Interests under Section 6.05(o),
which such sales of Equity Interests will result in a “Prepayment Event”); or

(b) any casualty or other insured damage to, or any taking under power of
eminent domain or by condemnation or similar proceeding of, any property or
asset of any Loan Party or any Subsidiary with a fair value immediately prior to
such event (as determined in good faith by such Loan Party or Subsidiary) equal
to or greater than $2,500,000; or

 

23

--------------------------------------------------------------------------------

(c) the incurrence by any Loan Party or any Subsidiary of any Indebtedness after
the Effective Date, other than Indebtedness permitted under Section 6.01.

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

“Pro Forma Basis” means, with respect to compliance with any test or covenant
hereunder for an applicable period of measurement, compliance with such test or
covenant after giving effect to (a) any acquisition of an entity or business
that is (or, subject to the satisfaction of such test or covenant would be)
permitted under Sections 6.04(l) or (m) (and any related incurrence, repayment
or assumption of Indebtedness), (b) the making of any Restricted Payment that is
(or, subject to the satisfaction of such test or covenant would be) permitted
under Sections 6.08(c) and (d), or (c) any increase in the Revolving Commitments
that is (or, subject to the satisfaction of such test or covenant would be)
permitted under Section 2.08(f) (including, in each case, (i) pro forma
adjustments arising out of events which are directly attributable to such
acquisition, the making of such Restricted Payment or incurrence of such
Indebtedness, are factually supportable and are reasonably expected to have a
continuing impact, in each case as determined on a basis consistent with Article
11 of Regulation S-X of the Securities Act of 1933, as amended, as interpreted
by the SEC and (ii) such other adjustments as are otherwise acceptable to the
Administrative Agent in its reasonable discretion, and as certified by a
Financial Officer of the CSW Borrower), using, for purposes of determining such
compliance, the historical financial statements of all entities or assets so
acquired and the consolidated financial statements of Company and its
Subsidiaries, which shall be reformulated as if (x) such acquisitions have been
consummated at the beginning during the period (and any other Indebtedness or
other liabilities incurred or repaid in connection with such acquisitions, had
been incurred or repaid at the beginning of such period), (y) such Restricted
Payments had been made at the beginning of such period and (z) such increase in
the Revolving Commitments had been consummated at the beginning of such period
(and assuming that (1) any Loan incurred bears interest during any portion of
the applicable measurement period prior to the relevant transaction at the
weighted average of the interest rates applicable to outstanding Loans incurred
during such period and (2) any other Indebtedness incurred bears interest during
any portion of the applicable measurement period prior to the relevant
transaction at the rate which is or would be in effect with respect to such
Indebtedness incurred during such period).

“Pro Forma Compliance” means, at any date of determination, that the Company
shall be in compliance on a pro forma basis with each of the financial covenants
set forth in Article VII as of the last day of the most recent four (4) fiscal
quarter period for which financial statements are then required to have been
delivered or are otherwise available (computed on the basis of (a) balance sheet
amounts as of such date and (b) income statement amounts for such four
(4) fiscal quarter period and calculated on a Pro Forma Basis in respect of the
event giving rise to such determination)

“Projections” means those projections delivered to the Administrative Agent by
or on behalf of the Company prior to the Effective Date.

“Public-Sider” means a Lender whose representatives may trade in securities of
the Company or its controlling person or any of its Subsidiaries while in
possession of the financial statements provided by, or on behalf of, any Loan
Party under the terms of this Agreement.

“Qualified ECP Guarantor” means, in respect of any Swap Obligation, each Loan
Party that has total assets exceeding $10,000,000 at the time the relevant Loan
Guaranty or grant of the relevant security interest becomes or would become
effective with respect to such Swap Obligation or such other person as
constitutes an “eligible contract participant” under the Commodity Exchange Act
or any regulations promulgated thereunder and can cause another person to
qualify as an “eligible contract participant” at such time by entering into a
keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

 

24

--------------------------------------------------------------------------------

“Qualified Equity Interests” means any Equity Interests that are not
Disqualified Equity Interests.

“Real Property” means all real property that was, is now or may hereafter be
owned, occupied or otherwise controlled by any Loan Party or Subsidiary pursuant
to any contract of sale, lease or other conveyance of any legal interest in any
real property to any Loan Party or Subsidiary.

“Recipient” means, as applicable, (a) the Administrative Agent, (b) any Lender
and (c) any Issuing Bank, or any combination thereof (as the context requires).

“RectorSeal” means The RectorSeal Corporation, a Delaware corporation.

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

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

“Release” means any releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, migrating, disposing, or
dumping of any substance into the environment.

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

“Required Lenders” means, at any time, two or more Lenders (other than
Defaulting Lenders) having Credit Exposure and unused Commitments representing
more than 50% of the sum of the Aggregate Credit Exposure and unused Commitments
at such time; provided that, for purposes of declaring the Loans to be due and
payable pursuant to Article VIII, and for all purposes after the Loans become
due and payable pursuant to Article VIII or the Commitments expire or terminate,
then, as to each Lender, clause (a) of the definition of Swingline Exposure
shall only be applicable for purposes of determining its Revolving Exposure to
the extent such Lender shall have funded its participation in the outstanding
Swingline Loans.

“Requirement of Law” means, with respect to any Person, (a) the charter,
articles or certificate of organization or incorporation and bylaws or
operating, management or partnership agreement, or other organizational or
governing documents of such Person and (b) any statute, law (including common
law), treaty, rule, regulation, code, ordinance, order, decree, writ, judgment,
injunction or determination of any arbitrator or court or other Governmental
Authority (including Environmental Laws), in each case applicable to or binding
upon such Person or any of its property or to which such Person or any of its
property is subject.

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

 

25

--------------------------------------------------------------------------------

option, warrant or other right to acquire any such Equity Interests, (ii) any
fee, charge, payment or distribution (including any sinking fund or other
similar deposit) of any kind to any Affiliate (other than to a Loan Party) in
respect of any advisory, management or consulting agreement or in respect of any
monitoring, oversight, transaction or similar fees and (iii) any earnout payment
or seller finance payment. For the avoidance of doubt, contributions to and
distributions from the ESOP, a Plan or any other employee benefit plan do not
constitute Restricted Payments.

“Revolving Commitment” means, with respect to each Lender, the commitment, if
any, of such Lender to make Revolving Loans and to acquire participations in
Letters of Credit and Swingline Loans hereunder, expressed as an amount
representing the maximum aggregate permitted amount of such Lender’s Revolving
Exposure hereunder, as such commitment may be reduced or increased from time to
time pursuant to (a) Section 2.08 and (b) assignments by or to such Lender
pursuant to Section 10.04. The initial amount of each Lender’s Revolving
Commitment is set forth on the Commitment Schedule, or in the Assignment and
Assumption pursuant to which such Lender shall have assumed its Revolving
Commitment, as applicable. The initial aggregate amount of the Lenders’
Revolving Commitments is $250,000,000.

“Revolving Credit Maturity Date” means December 11, 2020 (if the same is a
Business Day, or if not then the immediately next succeeding Business Day) or
any earlier date on which the Revolving Commitments are reduced to zero or
otherwise terminated pursuant to the terms hereof, (and, with respect to any
Extended Revolving Commitment, the maturity date applicable to such Extended
Revolving Commitment in accordance with the terms hereof if the same is a
Business Day, or if not then the immediately next succeeding Business Day, or
any earlier date on which such Extended Revolving Commitment is reduced to zero
or otherwise terminated pursuant to the terms hereof).

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

“Revolving Lender” means, as of any date of determination, a Lender with a
Revolving Commitment or, if the Revolving Commitments have terminated or
expired, a Lender with Revolving Exposure.

“Revolving Loan” means a Loan made pursuant to Section 2.01.

“S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial
Services LLC business.

“Sale and Leaseback Transaction” has the meaning assigned to such term in
Section 6.06.

“Sanctioned Country” means, at any time, a country, region or territory that is
the subject or target of any Sanctions (on the Effective Date, Crimea, Cuba,
Iran, North Korea, Sudan and Syria).

“Sanctioned Person” means, at any time, (a) any Person listed in any
Sanctions-related list of designated Persons maintained by OFAC, or the U.S.
Department of State or by the United Nations Security Council, the European
Union or any European Union member state, (b) any Person operating, organized or
resident in a Sanctioned Country or (c) any Person owned or controlled by any
such Person or Persons described in the foregoing clauses (a) or (b).

“Sanctions” means all economic or financial sanctions or trade embargoes
imposed, administered or enforced from time to time by (a) the U.S. government,
including those administered by OFAC or the U.S. Department of State, or (b) the
United Nations Security Council, the European Union, any European Union member
state or Her Majesty’s Treasury of the United Kingdom.

 

26

--------------------------------------------------------------------------------

“SEC” means the Securities and Exchange Commission of the U.S.

“Secured Obligations” means all Obligations, together with all (i) Banking
Services Obligations and (ii) Swap Agreement Obligations owing to one or more
Lenders or their respective Affiliates; provided, however, that the definition
of “Secured Obligations” shall not create any guarantee by any Guarantor of (or
grant of security interest by any Guarantor to support, as applicable) any
Excluded Swap Obligations of such Guarantor for purposes of determining any
obligations of any Guarantor.

“Secured Parties” means (a) the Administrative Agent, (b) the Lenders, (c) the
Issuing Bank, (d) each provider of Banking Services, to the extent the Banking
Services Obligations in respect thereof constitute Secured Obligations, (e) each
counterparty to any Swap Agreement, to the extent the obligations thereunder
constitute Secured Obligations, (f) the beneficiaries of each indemnification
obligation undertaken by any Loan Party under any Loan Document, and (g) the
successors and assigns of each of the foregoing.

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

“SpinOff” means the transaction in which the Equity Interests of certain of the
Guarantors were contributed to the Company, and the Equity Interests of the
Company were subsequently distributed by Capital Southwest Corporation to its
shareholders.

“Statement” has the meaning assigned to such term in Section 2.17(g).

“Strathmore Acquisition” means the acquisition whereby the Whitmore Borrower
purchased substantially all of the assets of Strathmore Products, Inc.

“Strathmore Holdings” means Strathmore Holdings, LLC, a Delaware limited
liability company.

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) established by the Board
to which the Administrative Agent is subject with respect to the Adjusted LIBO
Rate, for eurocurrency funding (currently referred to as “Eurocurrency
Liabilities” in Regulation D of the Board). Such reserve percentages shall
include those imposed pursuant to such Regulation D of the Board. Eurodollar
Loans shall be deemed to constitute eurocurrency funding and to be subject to
such reserve requirements without benefit of or credit for proration, exemptions
or offsets that may be available from time to time to any Lender under such
Regulation D of the Board or any comparable regulation. The Statutory Reserve
Rate shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage.

“Subordinated Indebtedness” of a Person means any Indebtedness of such Person,
the payment and performance of which is fully subordinated to the payment and
performance of the Secured

 

27

--------------------------------------------------------------------------------

Obligations on terms and conditions, and pursuant to documentation, in each case
reasonably satisfactory to the Administrative Agent; provided that, in no event
shall any such Subordinated Indebtedness (a) be secured or benefit from any Lien
on the assets of any Loan Party or Subsidiary, (b) mature, require any principal
payment, contain any mandatory redemption provision, prepayment provision or any
other term or provision that would provide for the payment or return of any
principal of such Subordinated Indebtedness (or a sinking fund or any other
similar arrangement) prior to a date that is 91 days after the Latest Maturity
Date, (c) be guaranteed by or benefit from any other assurance from any Loan
Party or Subsidiary or (d) contain terms and conditions that are, taken as a
whole, more restrictive in any manner than those set forth in this Agreement and
the other Loan Documents; provided that all-in cash pricing on Subordinated
Indebtedness may be up to 8.00% per annum higher than the all-in pricing on the
Loans.

“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) 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, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent.

“Subsidiary” means any direct or indirect subsidiary of the Company, a Borrower
or a Loan Party, as applicable (it being understood that the phrase Subsidiaries
of the Company includes both Borrowers).

“Swap Agreement” means any agreement with respect to any swap, forward, spot,
future, credit default or derivative transaction or option or similar agreement
involving, or settled by reference to, one or more rates, currencies,
commodities, equity or debt instruments or securities, or economic, financial or
pricing indices or measures of economic, financial or pricing risk or value or
any similar transaction or any combination of these transactions; provided that
no phantom stock or similar plan providing for payments only on account of
services provided by current or former directors, officers, employees or
consultants of the Company, the Borrowers or their Subsidiaries shall be a Swap
Agreement.

“Swap Agreement Obligations” means any and all obligations of the Loan Parties
and their Subsidiaries, whether absolute or contingent and howsoever and
whensoever created, arising, evidenced or acquired (including all renewals,
extensions and modifications thereof and substitutions therefor), under (a) any
Swap Agreement permitted hereunder with a Lender or an Affiliate of a Lender,
and (b) any cancellations, buy backs, reversals, terminations or assignments of
any Swap Agreement transaction permitted hereunder with a Lender or an Affiliate
of a Lender.

“Swap Obligation” means, with respect to any Guarantor, any obligation to pay or
perform under any agreement, contract or transaction that constitutes a “swap”
within the meaning of section 1a(47) of the Commodity Exchange Act or any rules
or regulations promulgated thereunder.

“Swingline Exposure” means, at any time, the aggregate principal amount of all
Swingline Loans outstanding at such time. The Swingline Exposure of any
Revolving Lender at any time shall be the sum of (a) its Applicable Percentage
of the total Swingline Exposure at such time other than with respect to any
Swingline Loans made by such Revolving Lender in its capacity as the Swingline
Lender and (b) the principal amount of all Swingline Loans made by such
Revolving Lender in its capacity as the Swingline Lender outstanding at such
time (less the amount of participations funded by the other Lenders in such
Swingline Loans).

 

28

--------------------------------------------------------------------------------

“Swingline Lender” means Chase, in its capacity as lender of Swingline Loans
hereunder. Any consent required of the Administrative Agent or the Issuing Bank
shall be deemed to be required of the Swingline Lender and any consent given by
Chase in its capacity as Administrative Agent or Issuing Bank shall be deemed
given by Chase in its capacity as Swingline Lender as well.

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

“Target” has the meaning assigned to such term in Section 6.04(l)(iii).

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

“Total Leverage Ratio” means on any date of determination for the Company and
the Subsidiaries on a consolidated basis, the ratio of (a) Funded Debt on such
date of determination to (b) EBITDA calculated for the four fiscal quarter
period most recently ended.

“Transactions” means the execution, delivery and performance by the Borrowers
and the other Loan Parties of this Agreement and the other Loan Documents, the
borrowing of Loans and other credit extensions, the use of the proceeds thereof
and the issuance of Letters of Credit hereunder.

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

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

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

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

“U.S. Person” means a “United States person” within the meaning of
Section 7701(a)(30) of the Code.

“USA PATRIOT Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001.

“U.S. Tax Compliance Certificate” has the meaning assigned to such term in
Section 2.16(f)(ii)(B)(3).

“Whitmore Borrower” means The Whitmore Manufacturing Company, a Delaware
corporation and a Subsidiary of the CSW Borrower.

“Whitmore Borrower Sublimit” means $35,000,000. The Whitmore Borrower Sublimit
is a part of, and not in addition to, the Revolving Commitment.

 

29

--------------------------------------------------------------------------------

SECTION 1.02. Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving
Loan”) or by Type (e.g., a “Eurodollar Loan”) or by Class and Type (e.g., a
“Eurodollar Revolving Loan”). Borrowings also may be classified and referred to
by Class (e.g., a “Revolving Borrowing”) or by Type (e.g., a “Eurodollar
Borrowing”) or by Class and Type (e.g., a “Eurodollar Revolving Borrowing”).

SECTION 1.03. Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include”, “includes” and “including” shall
be deemed to be followed by the phrase “without limitation”. The word “law”
shall be construed as referring to all statutes, rules, regulations, codes and
other laws (including official rulings and interpretations thereunder having the
force of law or with which affected Persons customarily comply) and all
judgments, orders and decrees of all Governmental Authorities. The word “will”
shall be construed to have the same meaning and effect as the word “shall”.
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
restated, supplemented or otherwise modified (subject to any restrictions on
such amendments, restatements, supplements or modifications set forth herein),
(b) any definition of or reference to any statute, rule or regulation shall be
construed as referring thereto as from time to time amended, supplemented or
otherwise modified (including by succession of comparable successor laws),
(c) any reference herein to any Person shall be construed to include such
Person’s successors and assigns (subject to any restrictions on assignments set
forth herein) and, in the case of any Governmental Authority, any other
Governmental Authority that shall have succeeded to any or all functions
thereof, (d) 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, (e) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement, (f) any reference in
any definition to the phrase “at any time” or “for any period” shall refer to
the same time or period for all calculations or determinations within such
definition, and (g) the words “asset” and “property” shall be construed to have
the same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract rights.

SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if after
the date hereof there occurs any change in GAAP or in the application thereof on
the operation of any provision hereof and Borrower Representative notifies the
Administrative Agent that the Borrowers request an amendment to any provision
hereof to eliminate the effect of such change in GAAP or in the application
thereof (or if the Administrative Agent notifies the Borrower Representative
that the Required Lenders request an amendment to any provision hereof for such
purpose), regardless of whether any such notice is given before or after such
change in GAAP or in the application thereof, then such provision shall be
interpreted on the basis of GAAP as in effect and applied immediately before
such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith. Notwithstanding any
other provision contained herein, all terms of an accounting or financial nature
used herein shall be construed, and all computations of amounts and ratios
referred to herein shall be made (i) without giving effect to any election under
Financial Accounting Standards Board Accounting Standards Codification 825-10-25
(or any other Accounting Standards Codification or Financial Accounting Standard
having a similar result or effect) to value any Indebtedness or other
liabilities of the Company or any Subsidiary at “fair value”, as defined therein
and (ii) without giving effect to any treatment of Indebtedness in respect of
convertible debt instruments under Financial Accounting Standards Board
Accounting Standards Codification 470-20 (or any other Accounting Standards
Codification or Financial Accounting Standard having a similar result or effect)
to value any such Indebtedness in a reduced or bifurcated manner as described
therein, and such Indebtedness shall at all times be valued at the full stated
principal amount thereof.

 

30

--------------------------------------------------------------------------------

SECTION 1.05. Pro Forma Adjustments for Acquisitions and Dispositions. To the
extent the Company, a Borrower or any Subsidiary makes any acquisition permitted
pursuant to Section 6.04 or disposition of assets outside the ordinary course of
business during the period of four fiscal quarters of the Company most recently
ended, the Total Leverage Ratio and the Fixed Charge Coverage Ratio shall be
calculated after giving pro forma effect thereto (including pro forma
adjustments arising out of events which are directly attributable to the
acquisition or the disposition of assets, are factually supportable and are
reasonably expected to have a continuing impact, in each case as determined on a
basis consistent with Article 11 of Regulation S-X of the Securities Act of
1933, as amended, as interpreted by the SEC or that are otherwise acceptable to
the Administrative Agent in its reasonable discretion, and as certified by a
Financial Officer of the CSW Borrower), as if such acquisition or such
disposition (and any related incurrence, repayment or assumption of Indebtedness
and Funded Debt) had occurred in the first day of such four-quarter period;
provided that the interest rate for any such Funded Debt incurred or assumed in
connection with such acquisition shall have an implied rate of interest
determined by utilizing the rate which is or would be in effect with respect to
such Funded Debt as at the relevant date of determination.

SECTION 1.06. Status of Obligations. In the event that any Borrower or any other
Loan Party shall at any time issue or have outstanding any Subordinated
Indebtedness, the Company or such Borrower shall take or cause such other Loan
Party to take all such actions as shall be necessary to cause the Secured
Obligations to constitute senior indebtedness (however denominated) in respect
of such Subordinated Indebtedness and to enable the Administrative Agent and the
Lenders to have and exercise any payment blockage or other remedies available or
potentially available to holders of senior indebtedness under the terms of such
Subordinated Indebtedness. Without limiting the foregoing, the Secured
Obligations are hereby designated as “senior indebtedness” and as “designated
senior indebtedness” and words of similar import under and in respect of any
indenture or other agreement or instrument under which such Subordinated
Indebtedness is outstanding and are further given all such other designations as
shall be required under the terms of any such Subordinated Indebtedness in order
that the Lenders may have and exercise any payment blockage or other remedies
available or potentially available to holders of senior indebtedness under the
terms of such Subordinated Indebtedness.

ARTICLE II

The Credits

SECTION 2.01. Commitments. Subject to the terms and conditions set forth herein,
each Lender severally (and not jointly) agrees to make revolving loans in
dollars to the Borrowers from time to time during the Availability Period in an
aggregate principal amount that will not result (after giving effect to any
application of proceeds of such Borrowing pursuant to Section 2.09) in (i) such
Lender’s Revolving Exposure exceeding such Lender’s Revolving Commitment or
(ii) the Aggregate Revolving Exposure exceeding the aggregate Revolving
Commitments; provided, that the aggregate outstanding principal amount of all
Revolving Loans made to the Whitmore Borrower shall not at any time exceed the
Whitmore Borrower Sublimit. Within the foregoing limits and subject to the terms
and conditions set forth herein, the Borrowers may borrow, prepay and reborrow
Revolving Loans.

SECTION 2.02. Loans and Borrowings.

(a) Each Loan (other than a Swingline Loan) shall be made as part of a Borrowing
consisting of Loans of the same Class and Type made by the Lenders ratably in
accordance with their respective Commitments of the applicable Class. The
failure of any Lender to make any Loan required to be

 

31

--------------------------------------------------------------------------------

made by it shall not relieve any other Lender of its obligations hereunder;
provided that the Commitments of the Lenders are several and no Lender shall be
responsible for any other Lender’s failure to make Loans as required. Any
Swingline Loan shall be made in accordance with the procedures set forth in
Section 2.04.

(b) Subject to Section 2.13, each Revolving Borrowing shall be comprised
entirely of ABR Loans or Eurodollar Loans as the Borrower Representative may
request in accordance herewith. Each Swingline Loan shall be an ABR Loan. Each
Lender at its option may make any Eurodollar Loan by causing any domestic or
foreign branch or Affiliate of such Lender to make such Loan (and in the case of
an Affiliate, the provisions of Sections 2.13, 2.14, 2.15 and 2.16 shall apply
to such Affiliate to the same extent as to such Lender); provided that any
exercise of such option shall not affect the obligation of the Borrowers to
repay such Loan in accordance with the terms of this Agreement.

(c) At the commencement of each Interest Period for any Eurodollar Revolving
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $100,000 and not less than $500,000. At the time that each ABR
Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that
is an integral multiple of $50,000 and not less than $250,000; provided that an
ABR Revolving Borrowing may be in an aggregate amount that is equal to the
entire unused balance of the total Revolving Commitments or that is required to
finance the reimbursement of an LC Disbursement as contemplated by
Section 2.05(e). Each Swingline Loan shall be in an amount that is an integral
multiple of $50,000 and not less than $250,000. Borrowings of more than one Type
and Class may be outstanding at the same time; provided that there shall not at
any time be more than a total of six Eurodollar Borrowings outstanding.

(d) Notwithstanding any other provision of this Agreement, the Borrowers shall
not be entitled to request, or to elect to convert or continue, any Borrowing if
the Interest Period requested with respect thereto would end after the Revolving
Credit Maturity Date.

SECTION 2.03. Requests for Borrowings. To request a Borrowing, the Borrower
Representative shall notify the Administrative Agent of such request either in
writing (delivered by hand or fax) in a form approved by the Administrative
Agent and signed by the Borrower Representative or by telephone (a) in the case
of a Eurodollar Borrowing, not later than 11:00 a.m., Dallas, Texas time, three
Business Days before the date of the proposed Borrowing; provided, however, that
in the case of the initial borrowing on the Effective Day, such notice may be
provided not later than 3:00 p.m., Dallas, Texas time, two Business Days before
the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not
later than 11:00 a.m., Dallas, Texas time, one Business Day before the date of
the proposed Borrowing; provided that any such notice of an ABR Revolving
Borrowing to finance the reimbursement of an LC Disbursement as contemplated by
Section 2.05(e) may be given not later than 10:00 a.m., Dallas, Texas time, on
the date of the proposed Borrowing. Each such telephonic Borrowing Request shall
be irrevocable and shall be confirmed promptly by hand delivery or fax to the
Administrative Agent of a written Borrowing Request in a form approved by the
Administrative Agent and signed by the Borrower Representative. Each such
telephonic and written Borrowing Request shall specify the following information
in compliance with Section 2.01:

(i) the Class of Borrowing, the aggregate amount of the requested Borrowing, and
a breakdown of the separate wires comprising such Borrowing;

(ii) the name of the applicable Borrower(s) and the amount of each Borrowing for
the applicable Borrower;

(iii) the date of such Borrowing, which shall be a Business Day;

 

32

--------------------------------------------------------------------------------

(iv) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;
and

(v) in the case of a Eurodollar Borrowing, the initial Interest Period to be
applicable thereto, which shall be a period contemplated by the definition of
the term “Interest Period.”

If no election as to the Type of Revolving Borrowing is specified, then the
requested Revolving Borrowing shall be an ABR Borrowing. If no Interest Period
is specified with respect to any requested Eurodollar Revolving Borrowing, then
the applicable Borrower(s) shall be deemed to have selected an Interest Period
of one month’s duration. Promptly following receipt of a Borrowing Request in
accordance with this Section, the Administrative Agent shall advise each Lender
of the details thereof and of the amount of such Lender’s Loan to be made as
part of the requested Borrowing.

SECTION 2.04. Swingline Loans.

(a) Subject to the terms and conditions set forth herein, from time to time
during the Availability Period, the Swingline Lender agrees to make Swingline
Loans to the CSW Borrower, in an aggregate principal amount at any time
outstanding that will not result in (i) the aggregate principal amount of
outstanding Swingline Loans exceeding $10,000,000, (ii) the Swingline Lender’s
Revolving Exposure exceeding its Revolving Commitment or (iii) the Aggregate
Revolving Exposures exceeding the aggregate Revolving Commitments; provided that
the Swingline Lender shall not be required to make a Swingline Loan to refinance
an outstanding Swingline Loan. Within the foregoing limits and subject to the
terms and conditions set forth herein, the CSW Borrower may borrow, prepay and
reborrow Swingline Loans. To request a Swingline Loan, the CSW Borrower shall
notify the Administrative Agent of such request by telephone (confirmed by fax),
not later than 12:00 p.m., Dallas, Texas time, on the day of a proposed
Swingline Loan. Each such notice shall be irrevocable and shall specify the
requested date (which shall be a Business Day) and amount of the requested
Swingline Loan. The Administrative Agent will promptly advise the Swingline
Lender of any such notice received from the CSW Borrower. The Swingline Lender
shall make each Swingline Loan available to the CSW Borrower by means of a
credit to the Funding Account(s) (or, in the case of a Swingline Loan made to
finance the reimbursement of an LC Disbursement as provided in Section 2.05(e),
by remittance to the Issuing Bank, and in the case of repayment of another Loan
or fees or expenses as provided by Section 2.17(c), by remittance to the
Administrative Agent to be distributed to the Lenders) by 2:00 p.m., Dallas,
Texas time, on the requested date of such Swingline Loan.

(b) The Swingline Lender may by written notice given to the Administrative Agent
require the Revolving Lenders to acquire participations on such Business Day in
all or a portion of the Swingline Loans outstanding. Such notice shall specify
the aggregate amount of Swingline Loans in which the Revolving Lenders will
participate. Promptly upon receipt of such notice, the Administrative Agent will
give notice thereof to each Revolving Lender, specifying in such notice such
Lender’s Applicable Percentage of such Swingline Loan or Loans. Each Revolving
Lender hereby absolutely and unconditionally agrees, promptly upon such notice
from the Administrative Agent (and in any event, if such notice is received by
11:00 a.m., Dallas, Texas time, on a Business Day no later than 4:00 p.m.
Dallas, Texas time on such Business Day and if received after 11:00 a.m., Dallas
time, “on a Business Day” shall mean no later than 9:00 a.m. Dallas, Texas time
on the immediately succeeding Business Day), to pay to the Administrative Agent,
for the account of the Swingline Lender, such Lender’s Applicable Percentage of
such Swingline Loan or Loans. Each Revolving Lender acknowledges and agrees that
its obligation to acquire participations in Swingline Loans pursuant to this
paragraph is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or reduction or

 

33

--------------------------------------------------------------------------------

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

SECTION 2.05. Letters of Credit.

(a) General. Subject to the terms and conditions set forth herein, the CSW
Borrower may request the issuance of standby Letters of Credit denominated in
dollars as the applicant thereof for the support of the obligations of the CSW
Borrower or any Subsidiary thereof, in a form reasonably acceptable to the
Administrative Agent and the Issuing Bank, at any time and from time to time
during the Availability Period. In the event of any inconsistency between the
terms and conditions of this Agreement and the terms and conditions of any form
of letter of credit application or other agreement submitted by the CSW Borrower
to, or entered into by the CSW Borrower with, the Issuing Bank relating to any
Letter of Credit, the terms and conditions of this Agreement shall control. The
CSW Borrower unconditionally and irrevocably agrees that, in connection with any
Letter of Credit issued for the support of any Subsidiary’s obligations as
provided in the first sentence of this paragraph, the CSW Borrower will be fully
responsible for the reimbursement of LC Disbursements in accordance with the
terms hereof, the payment of interest thereon and the payment of fees due under
Section 2.11(b) to the same extent as if it were the sole account party in
respect of such Letter of Credit (the CSW Borrower hereby irrevocably waiving
any defenses that might otherwise be available to it as a guarantor or surety of
the obligations of such Subsidiary that is an account party in respect of any
such Letter of Credit). Notwithstanding anything herein to the contrary, the
Issuing Bank shall have no obligation hereunder to issue, and shall not issue,
any Letter of Credit (i) the proceeds of which would be made available to any
Person (A) to fund any activity or business of or with any Sanctioned Person, or
in any country or territory that, at the time of such funding, is the subject of
any Sanctions or (B) in any manner that would result in a violation of any
Sanctions by any party to this Agreement, (ii) if any order, judgment or decree
of any Governmental Authority or arbitrator shall by its terms purport to enjoin
or restrain the Issuing Bank from issuing such Letter of Credit, or any
Requirement of Law relating to the Issuing Bank or any request or directive
(whether or not having the force of law) from any Governmental Authority with
jurisdiction over the Issuing Bank shall prohibit, or request that the Issuing
Bank refrain from, the issuance of letters of credit generally or such Letter of
Credit in particular or shall impose upon the Issuing Bank with respect to such
Letter of Credit any restriction, reserve or capital requirement (for which the
Issuing Bank is not otherwise compensated hereunder) not in effect on the
Effective Date, or shall impose upon the Issuing Bank any unreimbursed loss,
cost or expense which was not applicable on the Effective Date and which the

 

34

--------------------------------------------------------------------------------

Issuing Bank in good faith deems material to it, or (iii) if the issuance of
such Letter of Credit would violate one or more policies of the Issuing Bank
applicable to letters of credit generally; provided that, notwithstanding
anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and
Consumer Protection Act and all requests, rules, guidelines, requirements or
directives thereunder or issued in connection therewith or in the implementation
thereof, and (y) all requests, rules, guidelines, requirements or directives
promulgated by the Bank for International Settlements, the Basel Committee on
Banking Supervision (or any successor or similar authority) or the United States
or foreign regulatory authorities, in each case pursuant to Basel III, shall in
each case be deemed not to be in effect on the Effective Date for purposes of
clause (ii) above, regardless of the date enacted, adopted, issued or
implemented.

(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To
request the issuance of a Letter of Credit (or the amendment, renewal or
extension of an outstanding Letter of Credit), the CSW Borrower shall hand
deliver or fax (or transmit by electronic communication, if arrangements for
doing so have been approved by the Issuing Bank) to the Issuing Bank and the
Administrative Agent (reasonably in advance of the requested date of issuance,
amendment, renewal or extension, but in any event no less than three Business
Days) a notice requesting the issuance of a Letter of Credit, or identifying the
Letter of Credit to be amended, renewed or extended, and specifying the date of
issuance, amendment, renewal or extension (which shall be a Business Day), the
date on which such Letter of Credit is to expire (which shall comply with
paragraph (c) of this Section), the amount of such Letter of Credit, the name
and address of the beneficiary thereof, and such other information as shall be
necessary to prepare, amend, renew or extend such Letter of Credit. If requested
by the Issuing Bank, the CSW Borrower also shall submit a letter of credit
application on the Issuing Bank’s standard form in connection with any request
for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or
extended only if (and upon issuance, amendment, renewal or extension of each
Letter of Credit the CSW Borrower shall be deemed to represent and warrant
that), after giving effect to such issuance, amendment, renewal or extension
(i) the LC Exposure shall not exceed $10,000,000, (ii) no Lender’s Revolving
Exposure shall exceed its Revolving Commitment and (iii) the Aggregate Revolving
Exposure shall not exceed the aggregate Revolving Commitments. Notwithstanding
the foregoing or anything to the contrary contained herein, no Issuing Bank
shall be obligated to issue or modify any Letter of Credit if, immediately after
giving effect thereto, the outstanding LC Exposure in respect of all Letters of
Credit issued by such Person and its Affiliates would exceed such Issuing Bank’s
Issuing Bank Sublimit. Without limiting the foregoing and without affecting the
limitations contained herein, it is understood and agreed that the CSW Borrower
may from time to time request that an Issuing Bank issue Letters of Credit in
excess of its individual Issuing Bank Sublimit in effect at the time of such
request, and each Issuing Bank agrees to consider any such request in good
faith. Any Letter of Credit so issued by an Issuing Bank in excess of its
individual Issuing Bank Sublimit then in effect shall nonetheless constitute a
Letter of Credit for all purposes of the Credit Agreement, and shall not affect
the Issuing Bank Sublimit of any other Issuing Bank, subject to the limitations
on the aggregate LC Exposure set forth in clause (i) of this Section 2.05(b).

(c) Expiration Date. Each Letter of Credit shall expire (or be subject to
termination or non-renewal by notice from the Issuing Bank to the beneficiary
thereof) at or prior to the close of business on the earlier of (i) the date one
year after the date of the issuance of such Letter of Credit (or, in the case of
any renewal or extension thereof, including, without limitation, any automatic
renewal provision, one year after such renewal or extension) and (ii) the date
that is five Business Days prior to the Revolving Credit Maturity Date. At the
request of the CSW Borrower, the Issuing Bank may, in its sole discretion, renew
any Letter of Credit with a one-year term for additional one-year periods not to
extend past the date specified in the foregoing clause (ii).

 

35

--------------------------------------------------------------------------------

(d) Participations. By the issuance of a Letter of Credit (or an amendment to a
Letter of Credit increasing the amount thereof) and without any further action
on the part of the Issuing Bank or the Revolving Lenders, the Issuing Bank
hereby grants to each Revolving Lender, and each Revolving Lender hereby
acquires from the Issuing Bank, a participation in such Letter of Credit equal
to such Lender’s Applicable Percentage of the aggregate amount available to be
drawn under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to
pay to the Administrative Agent, for the account of the Issuing Bank, such
Lender’s Applicable Percentage of each LC Disbursement made by the Issuing Bank
and not reimbursed by the Borrowers on the date due as provided in paragraph (e)
of this Section, or of any reimbursement payment required to be refunded to the
Borrowers for any reason. Each Revolving Lender acknowledges and agrees that its
obligation to acquire participations pursuant to this paragraph in respect of
Letters of Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.

(e) Reimbursement. If the Issuing Bank shall make any LC Disbursement in respect
of a Letter of Credit, the Borrowers shall reimburse such LC Disbursement by
paying to the Administrative Agent an amount equal to such LC Disbursement not
later than 12:00 p.m., Dallas, Texas time, on (i) the Business Day that the
Borrower Representative receives notice of such LC Disbursement, if such notice
is received prior to 10:00 a.m., Dallas, Texas time, on the day of receipt, or
(ii) the Business Day immediately following the day that the Borrower
Representative receives such notice, if such notice is received after
10:00 a.m., Dallas, Texas time, on the day of receipt; provided that, the
Borrower Representative may, subject to the conditions to borrowing set forth
herein, request in accordance with Section 2.03 or 2.04 that such payment be
financed with an ABR Revolving Borrowing or Swingline Loan in an equivalent
amount and, to the extent so financed, the Borrowers’ obligation to make such
payment shall be discharged and replaced by the resulting ABR Revolving
Borrowing or Swingline Loan. If the Borrowers fail to make such payment when
due, the Administrative Agent shall notify each Revolving Lender of the
applicable LC Disbursement, the payment then due from the Borrowers in respect
thereof, and such Lender’s Applicable Percentage thereof. Promptly following
receipt of such notice, each Revolving Lender shall pay to the Administrative
Agent its Applicable Percentage of the payment then due from the Borrowers, in
the same manner as provided in Section 2.06 with respect to Loans made by such
Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment
obligations of the Revolving Lenders), and the Administrative Agent shall
promptly pay to the Issuing Bank the amounts so received by it from the
Revolving Lenders. Promptly following receipt by the Administrative Agent of any
payment from the Borrowers pursuant to this paragraph, the Administrative Agent
shall distribute such payment to the Issuing Bank or, to the extent that
Revolving Lenders have made payments pursuant to this paragraph to reimburse the
Issuing Bank, then to such Lenders and the Issuing Bank, as their interests may
appear. Any payment made by a Revolving Lender pursuant to this paragraph to
reimburse the Issuing Bank for any LC Disbursement (other than the funding of
ABR Revolving Loans or a Swingline Loan as contemplated above) shall not
constitute a Loan and shall not relieve the Borrowers of their obligation to
reimburse such LC Disbursement.

(f) Obligations Absolute. The Borrowers’ joint and several obligation to
reimburse LC Disbursements as provided in paragraph (e) of this Section shall be
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement under any and all circumstances
whatsoever and irrespective of (i) any lack of validity or enforceability of any
Letter of Credit or this Agreement, or any term or provision therein or herein,
(ii) any draft or other document presented under a Letter of Credit proving to
be forged, fraudulent or invalid in any respect or any statement therein being
untrue or inaccurate in any respect, (iii) any payment by the Issuing

 

36

--------------------------------------------------------------------------------

Bank under a Letter of Credit against presentation of a draft or other document
that does not comply with the terms of such Letter of Credit, or (iv) any other
event or circumstance whatsoever, whether or not similar to any of the
foregoing, that might, but for the provisions of this Section, constitute a
legal or equitable discharge of, or provide a right of setoff against, the
Borrowers’ obligations hereunder. None of the Administrative Agent, the
Revolving Lenders or the Issuing Bank, or any of their Related Parties, shall
have any liability or responsibility by reason of or in connection with the
issuance or transfer of any Letter of Credit, or any payment or failure to make
any payment thereunder (irrespective of any of the circumstances referred to in
the preceding sentence), or any error, omission, interruption, loss or delay in
transmission or delivery of any draft, notice or other communication under or
relating to any Letter of Credit (including any document required to make a
drawing thereunder), any error in interpretation of technical terms or any
consequence arising from causes beyond the control of the Issuing Bank; provided
that the foregoing shall not be construed to excuse the Issuing Bank from
liability to the Borrowers to the extent of any direct damages (as opposed to
special, indirect, consequential or punitive damages, claims in respect of which
are hereby waived by the Borrowers to the extent permitted by applicable law)
suffered by any Borrower that are caused by the Issuing Bank’s failure to
exercise care when determining whether drafts and other documents presented
under a Letter of Credit comply with the terms thereof. The parties hereto
expressly agree that, in the absence of gross negligence, bad faith or willful
misconduct on the part of the Issuing Bank (as finally determined by a court of
competent jurisdiction), the Issuing Bank shall be deemed to have exercised care
in each such determination. In furtherance of the foregoing and without limiting
the generality thereof, the parties agree that, with respect to documents
presented which appear on their face to be in substantial compliance with the
terms of a Letter of Credit, the Issuing Bank may, in its sole discretion,
either accept and make payment upon such documents without responsibility for
further investigation, regardless of any notice or information to the contrary,
or refuse to accept and make payment upon such documents if such documents are
not in strict compliance with the terms of such Letter of Credit.

(g) Disbursement Procedures. The Issuing Bank shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall promptly notify the
Administrative Agent and the CSW Borrower by telephone (confirmed by fax or
email if arrangements for doing so have been approved by the Issuing Bank) of
such demand for payment and whether the Issuing Bank has made or will make an LC
Disbursement thereunder; provided that any failure to give or delay in giving
such notice shall not relieve the Borrowers of their obligation to reimburse the
Issuing Bank and the Revolving Lenders with respect to any such LC Disbursement.

(h) Interim Interest. If the Issuing Bank shall make any LC Disbursement, then,
unless the Borrowers shall reimburse such LC Disbursement in full on the date
such LC Disbursement is made, the unpaid amount thereof shall bear interest, for
each day from and including the date such LC Disbursement is made to but
excluding the date that the Borrowers reimburse such LC Disbursement, at the
rate per annum then applicable to ABR Revolving Loans and such interest shall be
due and payable on the date when such reimbursement is due; provided that, if
the Borrowers fail to reimburse such LC Disbursement when due pursuant to
paragraph (e) of this Section, then Section 2.12(c) shall apply. Interest
accrued pursuant to this paragraph shall be for the account of the Issuing Bank,
except that interest accrued on and after the date of payment by any Revolving
Lender pursuant to paragraph (e) of this Section to reimburse the Issuing Bank
shall be for the account of such Lender to the extent of such payment.

(i) Replacement of the Issuing Bank. The Issuing Bank may be replaced at any
time by written agreement among the CSW Borrower, the Administrative Agent, the
replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent
shall notify the Revolving Lenders of any

 

37

--------------------------------------------------------------------------------

such replacement of the Issuing Bank. At the time any such replacement shall
become effective, the Borrowers shall pay all unpaid fees accrued for the
account of the replaced Issuing Bank pursuant to Section 2.11(b). From and after
the effective date of any such replacement, (i) the successor Issuing Bank shall
have all the rights and obligations of the Issuing Bank under this Agreement
with respect to Letters of Credit to be issued thereafter and (ii) references
herein to the term “Issuing Bank” shall be deemed to refer to such successor or
to any previous Issuing Bank, or to such successor and all previous Issuing
Banks, as the context shall require. After the replacement of an Issuing Bank
hereunder, the replaced Issuing Bank shall remain a party hereto and shall
continue to have all the rights and obligations of an Issuing Bank under this
Agreement with respect to Letters of Credit then outstanding and issued by it
prior to such replacement, but shall not be required to issue additional Letters
of Credit.

(j) Cash Collateralization. If any Event of Default exists, on the Business Day
that the Borrower Representative receives notice from the Administrative Agent
or the Required Lenders (or, if the maturity of the Loans has been accelerated,
Revolving Lenders with LC Exposure representing greater than 50% of the
aggregate LC Exposure) demanding the deposit of Cash Collateral pursuant to this
paragraph, the Borrowers shall deposit in an account with the Administrative
Agent, in the name of the Administrative Agent and for the benefit of the
Revolving Lenders (the “LC Collateral Account”), an amount in cash equal to 105%
of the LC Exposure as of such date plus accrued and unpaid interest thereon;
provided that the obligation to deposit such Cash Collateral shall become
effective immediately, and such deposit shall become immediately due and
payable, without demand or other notice of any kind, upon the occurrence of any
Event of Default with respect to any Borrower described in clause (h) or (i) of
Section 8.01. The Borrowers also shall deposit Cash Collateral in accordance
with this paragraph as and to the extent required by Section 2.10(b) or 2.19.
Each such deposit shall be held by the Administrative Agent as collateral for
the payment and performance of the Secured Obligations. The Administrative Agent
shall have exclusive dominion and control, including the exclusive right of
withdrawal, over the LC Collateral Account and the Borrowers hereby grant the
Administrative Agent a security interest in the LC Collateral Account and all
moneys or other assets on deposit therein or credited thereto. Other than any
interest earned on the investment of such deposits, which investments shall be
made at the option and sole discretion of the Administrative Agent and at the
Borrowers’ risk and expense, such deposits shall not bear interest. Interest or
profits, if any, on such investments shall accumulate in such account. Moneys in
such account shall be applied by the Administrative Agent to reimburse the
Issuing Bank for LC Disbursements for which it has not been reimbursed and, to
the extent not so applied, shall be held for the satisfaction of the
reimbursement obligations of the Borrowers for the LC Exposure at such time or,
if the maturity of the Loans has been accelerated (but subject to the consent of
Revolving Lenders with LC Exposure representing greater than 50% of the
aggregate LC Exposure), be applied to satisfy other Secured Obligations. If the
Borrowers are required to provide an amount of Cash Collateral hereunder as a
result of the occurrence of an Event of Default, such amount (to the extent not
applied as aforesaid) shall be returned to the Borrowers within three Business
Days after all such Events of Default have been cured or waived as confirmed in
writing by the Administrative Agent.

(k) Issuing Bank Reports to the Administrative Agent. Unless otherwise agreed by
the Administrative Agent, each Issuing Bank shall, in addition to its
notification obligations set forth elsewhere in this Section, report in writing
to the Administrative Agent (i) periodic activity (for such period or recurrent
periods as shall be requested by the Administrative Agent) in respect of Letters
of Credit issued by such Issuing Bank, including all issuances, extensions,
amendments and renewals, all expirations and cancelations and all disbursements
and reimbursements, (ii) reasonably prior to the time that such Issuing Bank
issues, amends, renews or extends any Letter of Credit, the date of such
issuance, amendment, renewal or extension, and the stated amount of the Letters
of Credit issued, amended, renewed or extended by it and outstanding after
giving effect to such issuance, amendment,

 

38

--------------------------------------------------------------------------------

renewal or extension (and whether the amounts thereof shall have changed),
(iii) on each Business Day on which such Issuing Bank makes any LC Disbursement,
the date and amount of such LC Disbursement, (iv) on any Business Day on which a
Borrower fails to reimburse an LC Disbursement required to be reimbursed to such
Issuing Bank on such day, the date of such failure and the amount of such LC
Disbursement, and (v) on any other Business Day, such other information as the
Administrative Agent shall reasonably request as to the Letters of Credit issued
by such Issuing Bank.

(l) LC Exposure Determination. For all purposes of this Agreement, the amount of
a Letter of Credit that, by its terms or the terms of any document related
thereto, provides for one or more automatic increases in the stated amount
thereof shall be deemed to be the maximum stated amount of such Letter of Credit
after giving effect to all such increases, whether or not such maximum stated
amount is in effect at the time of determination.

SECTION 2.06. Funding of Borrowings.

(a) Each Lender shall make each Loan to be made by such Lender hereunder on the
proposed date thereof by wire transfer of immediately available funds by
12:00 p.m., Dallas, Texas time, to the account of the Administrative Agent most
recently designated by it for such purpose by notice to the Lenders in an amount
equal to such Lender’s Applicable Percentage; provided that Swingline Loans
shall be made as provided in Section 2.04. The Administrative Agent will make
such Loans available to the Borrower Representative by promptly crediting the
amounts so received, in like funds, to the Funding Account(s); provided that ABR
Revolving Loans made to finance the reimbursement of an LC Disbursement as
provided in Section 2.05(e) shall be remitted by the Administrative Agent to the
Issuing Bank.

(b) Unless the Administrative Agent shall have received notice from a Lender
prior to the proposed date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender’s share of such Borrowing, the
Administrative Agent may assume that such Lender has made such share available
on such date in accordance with paragraph (a) of this Section and may, in
reliance upon such assumption, make available to the applicable Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender and the Borrowers severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount with interest thereon, for
each day from and including the date such amount is made available to the
applicable Borrower to but excluding the date of payment to the Administrative
Agent, at (i) in the case of such Lender, the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation or (ii) in the case of the
Borrowers, the interest rate applicable to ABR Revolving Loans. If such Lender
pays such amount to the Administrative Agent, then such amount shall constitute
such Lender’s Loan included in such Borrowing.

SECTION 2.07. Interest Elections.

(a) Each Borrowing initially shall be of the Type specified in the applicable
Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an
initial Interest Period as specified in such Borrowing Request. Thereafter, the
Borrower Representative may elect to convert such Borrowing to a different Type
or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may
elect Interest Periods therefor, all as provided in this Section. The Borrower
Representative may elect different options with respect to different portions of
the affected Borrowing, in which case each such portion shall be allocated
ratably among the Lenders holding the Loans comprising such Borrowing, and the
Loans comprising each such portion shall be considered a separate Borrowing.
This Section shall not apply to Swingline Borrowings, which may not be converted
or continued.

 

39

--------------------------------------------------------------------------------

(b) To make an election pursuant to this Section, the Borrower Representative
shall notify the Administrative Agent of such election by telephone by the time
that a Borrowing Request would be required under Section 2.03 if the Borrowers
were requesting a Borrowing of the Type resulting from such election to be made
on the effective date of such election. Each such telephonic Interest Election
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
fax, to the Administrative Agent of a written Interest Election Request in a
form approved by the Administrative Agent and signed by the Borrower
Representative.

(c) Each telephonic and written Interest Election Request shall specify the
following information in compliance with Section 2.02:

(i) the name of the applicable Borrower and the Borrowing to which such Interest
Election Request applies and, if different options are being elected with
respect to different portions thereof, the portions thereof to be allocated to
each resulting Borrowing (in which case the information to be specified pursuant
to clauses (iii) and (iv) of this Section 2.07(c) shall be specified for each
resulting Borrowing);

(ii) the effective date of the election made pursuant to such Interest Election
Request, which shall be a Business Day;

(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing; and

(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period
to be applicable thereto after giving effect to such election, which shall be a
period contemplated by the definition of the term “Interest Period”.

If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrowers shall be deemed to have
selected an Interest Period of one month’s duration.

(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the applicable Class of the
details thereof and of such Lender’s portion of each resulting Borrowing.

(e) If the Borrower Representative fails to deliver a timely Interest Election
Request with respect to a Eurodollar Borrowing prior to the end of the Interest
Period applicable thereto, then, unless such Borrowing is repaid as provided
herein, at the end of such Interest Period such Borrowing shall be converted to
an ABR Borrowing.

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

 

40

--------------------------------------------------------------------------------

scheduled repayment date plus the aggregate principal amount of outstanding ABR
Borrowings of such Class would be less than the aggregate principal amount of
Loans of such Class required to be repaid on such scheduled repayment date.

SECTION 2.08. Termination and Reduction of Commitments; Increase in Revolving
Commitments.

(a) Unless previously terminated, all the Revolving Commitments shall terminate
on the Revolving Credit Maturity Date. The Extended Revolving Commitments shall
terminate on the respective maturity dates applicable thereto.

(b) The Borrowers may at any time terminate the Revolving Commitments upon
(i) the payment in full of all outstanding Revolving Loans and LC Disbursements,
together with accrued and unpaid interest thereon, (ii) the cancellation and
return of all outstanding Letters of Credit (or alternatively, with respect to
each such Letter of Credit, the furnishing to the Administrative Agent of a cash
deposit (or at the discretion of the Administrative Agent a backup standby
letter of credit satisfactory to the Administrative Agent and the Issuing Bank)
in an amount equal to 105% of the LC Exposure as of such date), (iii) the
payment in full of the accrued and unpaid fees, and (iv) the payment in full of
all reimbursable expenses and other Obligations together with accrued and unpaid
interest thereon.

(c) The Borrowers may from time to time reduce the Revolving Commitments;
provided that (i) each reduction of the Revolving Commitments shall be in an
amount that is an integral multiple of $500,000 and not less than $1,000,000 and
(ii) the Borrowers shall not terminate or reduce the Revolving Commitments if,
after giving effect to any concurrent prepayment of the Revolving Loans in
accordance with Section 2.10, the Aggregate Revolving Exposure would exceed the
aggregate Revolving Commitments.

(d) The Borrower Representative shall notify the Administrative Agent of any
election to terminate or reduce the Revolving Commitments under paragraph (b) or
(c) of this Section at least three (3) Business Days prior to the effective date
of such termination or reduction, specifying such election and the effective
date thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrower Representative pursuant to this Section shall be irrevocable; provided
that a notice of termination of the Revolving Commitments delivered by the
Borrower Representative may state that such notice is conditioned upon the
effectiveness of other credit facilities, in which case such notice may be
revoked by the Borrower Representative (by notice to the Administrative Agent on
or prior to the specified effective date) if such condition is not satisfied.
Any termination or reduction of the Revolving Commitments shall be permanent.
Each reduction of the Commitments shall be made ratably among the Lenders in
accordance with their respective Revolving Commitments.

(e) The Borrowers shall have the right to increase the Revolving Commitments by
obtaining additional Revolving Commitments, either from one or more of the
Lenders or another lending institution, provided that (i) any such request for
an increase shall be in an integral multiple of $5,000,000 and not less than of
$10,000,000, (ii) the Borrowers shall not make more than three such requests
during the term of this Agreement, (iii) after giving effect thereto, the
aggregate additional Commitments pursuant to this Section 2.08(e) do not exceed
$50,000,000, (iv) the Administrative Agent, the Swingline Lender and the Issuing
Bank have approved the identity of any such new Lender, such approvals not to be
unreasonably withheld, (v) any such new Lender assumes all of the rights and
obligations of a “Lender” hereunder, and (vi) the procedure described in
Section 2.08(f) have been satisfied. Nothing contained in this Section 2.08
shall constitute, or otherwise be deemed to be, a commitment on the part of any
Lender to increase its Commitment hereunder at any time.

 

41

--------------------------------------------------------------------------------

(f) Any amendment hereto for such an increase or addition shall be in form and
substance reasonably satisfactory to the Administrative Agent and shall only
require the written signatures of the Administrative Agent, the Borrowers and
each Lender being added or increasing its Commitment, subject only to the
approval of all Lenders if any such increase or addition would cause the
Revolving Commitments to exceed $300,000,000. As a condition precedent to such
an increase or addition, the Borrowers shall deliver to the Administrative Agent
(i) a certificate of each Loan Party signed by an authorized officer of such
Loan Party (A) certifying and attaching the resolutions adopted by such Loan
Party approving or consenting to such increase, and (B) in the case of the
Borrowers and the other Loan Parties, certifying that, before and after giving
effect to such increase or addition, (1) the representations and warranties
contained in Article III and the other Loan Documents are true and correct in
all material respects, except to the extent that such representations and
warranties (x) are already qualified by materiality in which case they are true
and correct in all respects and (y) specifically refer to an earlier date, in
which case they are true and correct as of such earlier date, (2) no Default
exists and (3) the Company is in Pro Forma Compliance (provided that, for
purposes of this clause (3), the amount of any increase in the Revolving
Commitments shall be deemed to be fully drawn in determining Pro Forma
Compliance) and (ii) legal opinions and documents consistent with those
delivered on the Effective Date, to the extent requested by the Administrative
Agent.

(g) On the effective date of any such increase or addition, (i) any Lender
increasing (or, in the case of any newly added Lender, adding) its Revolving
Commitment shall make available to the Administrative Agent such amounts in
immediately available funds as the Administrative Agent shall determine, for the
benefit of the other Lenders, as being required in order to cause, after giving
effect to such increase or addition and the use of such amounts to make payments
to such other Lenders, each Lender’s portion of the outstanding Revolving Loans
of all the Lenders to equal its revised Applicable Percentage of such
outstanding Revolving Loans, and the Administrative Agent shall make such other
adjustments among the Lenders with respect to the Revolving Loans then
outstanding and amounts of principal, interest, commitment fees and other
amounts paid or payable with respect thereto as shall be necessary, in the
opinion of the Administrative Agent, in order to effect such reallocation and
(ii) the Borrowers shall be deemed to have repaid and reborrowed all outstanding
Revolving Loans as of the date of any increase (or addition) in the Revolving
Commitments (with such reborrowing to consist of the Types of Revolving Loans,
with related Interest Periods if applicable, specified in a notice delivered by
the Borrower Representative, in accordance with the requirements of
Section 2.03). The deemed payments made pursuant to clause (ii) of the
immediately preceding sentence shall be accompanied by payment of all accrued
interest on the amount prepaid and, in respect of each Eurodollar Loan, shall be
subject to indemnification by the Borrowers pursuant to the provisions of
Section 2.15 if the deemed payment occurs other than on the last day of the
related Interest Periods. Within a reasonable time after the effective date of
any increase or addition, the Administrative Agent shall, and is hereby
authorized and directed to, revise the Commitment Schedule to reflect such
increase or addition and shall distribute such revised Commitment Schedule to
each of the Lenders and the Borrower Representative, whereupon such revised
Commitment Schedule shall replace the old Commitment Schedule and become part of
this Agreement.

SECTION 2.09. Repayment and Amortization of Loans; Evidence of Debt.

(a) The Borrowers hereby unconditionally promise to pay (i) to the
Administrative Agent for the account of each Revolving Lender the then unpaid
principal amount of each Revolving Loan on the Revolving Credit Maturity Date,
and (ii) to the Swingline Lender the then unpaid principal amount of each
Swingline Loan on the earlier of the Revolving Credit Maturity Date and the
fifth Business

 

42

--------------------------------------------------------------------------------

Day after such Swingline Loan is made; provided that on each date that a
Revolving Loan is made, the Borrowers shall repay all Swingline Loans then
outstanding and the proceeds of any such Revolving Loan shall be applied by the
Administrative Agent to repay any Swingline Loans outstanding.

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

(c) The Administrative Agent shall maintain accounts in which it shall record
(i) the amount of each Loan made hereunder, the Class and Type thereof and the
Interest Period applicable thereto, if any, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrowers to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender’s share thereof.

(d) The entries made in the accounts maintained pursuant to paragraph (c) of
this Section shall be prima facie evidence of the existence and amounts of the
obligations recorded therein; provided that the failure of any Lender or the
Administrative Agent to maintain such accounts or any error therein shall not in
any manner affect the obligation of the Borrowers to repay the Loans in
accordance with the terms of this Agreement.

(e) Any Lender may request that Loans made by it be evidenced by a promissory
note. In such event, the Borrowers shall prepare, execute and deliver to such
Lender a promissory note payable to the order of such Lender (or, if requested
by such Lender, to such Lender and its registered assigns) and in a form
approved by the Administrative Agent. Thereafter, the Loans evidenced by such
promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 10.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).

SECTION 2.10. Prepayment of Loans.

(a) The Borrowers shall have the right at any time and from time to time to
prepay any Borrowing in whole or in part, subject to prior notice in accordance
with paragraph (e) of this Section and, if applicable, payment of any break
funding expenses under Section 2.15.

(b) In the event and on such occasion that the Aggregate Revolving Exposure
exceeds the aggregate Revolving Commitments, the Borrowers shall prepay the
Revolving Loans, the LC Exposure and/or Swingline Loans (or, if no such
Borrowings are outstanding, deposit Cash Collateral in the LC Collateral Account
in an aggregate amount equal to such excess, in accordance with
Section 2.05(j)).

(c) In the event and on each occasion that any Net Proceeds are received by or
on behalf of any Loan Party or any Subsidiary in respect of any Prepayment
Event, the Borrowers shall, promptly (but in any event within three (3) Business
Days) after such Net Proceeds are received by any Loan Party or Subsidiary,
prepay the Obligations and Cash Collateralize the LC Exposure as set forth in
Section 2.10(d) below in an aggregate amount equal to 100% of such Net Proceeds,
provided that, in the case of any event described in clause (a) or (b) of the
definition of the term “Prepayment Event”, if the Borrower Representative shall
deliver to the Administrative Agent a certificate of a Financial Officer of the
CSW Borrower to the effect that the Loan Parties intend to apply the Net
Proceeds from such event (or a portion thereof specified in such certificate),
within 180 days after receipt of such Net

 

43

--------------------------------------------------------------------------------

Proceeds, to acquire (or replace or rebuild) Real Property, equipment or other
tangible assets (excluding inventory) to be used in the business of the Loan
Parties, and certifying that no Default has occurred and is continuing, then no
prepayment shall be required pursuant to this paragraph in respect of the Net
Proceeds specified in such certificate, provided that to the extent of any such
Net Proceeds that have not been so applied by the end of such 180 day period, a
prepayment shall be required at such time in an amount equal to such Net
Proceeds that have not been so applied; provided further that the none of the
Loan Parties shall be permitted to make elections to use Net Proceeds to acquire
(or replace or rebuild) Real Property, equipment or other tangible assets
(excluding inventory) with respect to Net Proceeds in any fiscal year of the
Company in an aggregate amount in excess of $10,000,000.

(d) All prepayments required to be made pursuant to Section 2.10(c) shall be
applied, first to prepay the Revolving Loans (including Swingline Loans) with a
corresponding reduction in the Revolving Commitments if such prepayment is
(x) made as a result of any event described in clause (b) of the definition of
the term “Prepayment Event” and (y) equal to or in excess of $10,000,000 and
second to Cash Collateralize outstanding LC Exposure.

(e) The Borrower Representative shall notify the Administrative Agent (and, in
the case of prepayment of a Swingline Loan, the Swingline Lender) by telephone
(confirmed by fax) of any prepayment under the preceding clauses of this
Section: (i) in the case of prepayment of a Eurodollar Borrowing, not later than
11:00 a.m., Dallas, Texas time, three (3) Business Days before the date of
prepayment, (ii) in the case of prepayment of an ABR Borrowing, not later than
11:00 a.m., Dallas, Texas time, one (1) Business Day before the date of
prepayment or (iii) in the case of prepayment of a Swingline Loan, not later
than 12:00 p.m., Dallas, Texas time, on the date of prepayment. Each such notice
shall be irrevocable and shall specify the prepayment date and the principal
amount of each Borrowing or portion thereof to be prepaid; provided that if a
notice of prepayment is given in connection with a conditional notice of
termination of the Revolving Commitments as contemplated by Section 2.08, then
such notice of prepayment may be revoked if such notice of termination is
revoked in accordance with Section 2.08. Promptly following receipt of any such
notice, the Administrative Agent shall advise the Lenders of the contents
thereof. Each partial prepayment of any Revolving Borrowing shall be in an
amount that would be permitted in the case of an advance of a Borrowing of the
same Type as provided in Section 2.02, except as necessary to apply fully the
required amount of a mandatory prepayment. Each prepayment of a Borrowing shall
be applied ratably to the Loans included in the prepaid Borrowing. Prepayments
shall be accompanied by (i) accrued interest to the extent required by
Section 2.12 and (ii) break funding payments pursuant to Section 2.15.

SECTION 2.11. Fees.

(a) The Borrowers agree to pay to the Administrative Agent a commitment fee for
the account of each Revolving Lender, which shall accrue at the Applicable Rate
on the daily amount of the undrawn portion of the Revolving Commitment of such
Lender during the period from and including the Effective Date to but excluding
the date on which the Lenders’ Revolving Commitments terminate; it being
understood that the LC Exposure of a Lender shall be included and the Swingline
Exposure of a Lender shall be excluded in the drawn portion of the Revolving
Commitment of such Lender for purposes of calculating the commitment fee.
Accrued commitment fees shall be payable in arrears on the last day of March,
June, September and December of each year and on the date on which the Revolving
Commitments terminate, commencing on the first such date to occur after the date
hereof. All commitment fees shall be computed on the basis of a year of 360 days
and shall be payable for the actual number of days elapsed (including the first
day but excluding the last day).

 

44

--------------------------------------------------------------------------------

(b) The Borrowers agree to pay (i) to the Administrative Agent for the account
of each Revolving Lender a participation fee with respect to its participations
in Letters of Credit, which shall accrue at the same Applicable Rate used to
determine the interest rate applicable to Eurodollar Revolving Loans on the
daily amount of such Lender’s LC Exposure (excluding any portion thereof
attributable to unreimbursed LC Disbursements) during the period from and
including the Effective Date to but excluding the later of the date on which
such Lender’s Revolving Commitment terminates and the date on which such Lender
ceases to have any LC Exposure, and (ii) to the Issuing Bank a fronting fee,
which shall accrue at the rate of 0.125% per annum on the daily amount of the LC
Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) during the period from and including the Effective Date to but
excluding the later of the date of termination of the Commitments and the date
on which there ceases to be any LC Exposure, as well as the Issuing Bank’s
standard fees and commissions with respect to the issuance, amendment,
cancellation, negotiation, transfer, presentment, renewal or extension of any
Letter of Credit or processing of drawings thereunder. Participation fees and
fronting fees accrued through and including the last day of March, June,
September and December of each year shall be payable on the third Business Day
following such last day, commencing on the first such date to occur after the
Effective Date; provided that all such fees shall be payable on the date on
which the Revolving Commitments terminate and any such fees accruing after the
date on which the Revolving Commitments terminate shall be payable on demand.
Any other fees payable to the Issuing Bank pursuant to this paragraph shall be
payable within ten (10) days after demand. All participation fees and fronting
fees shall be computed on the basis of a year of 360 days and shall be payable
for the actual number of days elapsed (including the first day but excluding the
last day).

(c) The Borrowers agree to pay to the Administrative Agent, for its own account,
fees payable in the amounts and at the times separately agreed upon between the
Borrowers and the Administrative Agent.

(d) All fees payable hereunder shall be paid on the dates due, in immediately
available funds, to the Administrative Agent (or to the Issuing Bank, in the
case of fees payable to it) for distribution, in the case of commitment fees and
participation fees, to the Lenders entitled thereto. Fees paid shall not be
refundable under any circumstances.

SECTION 2.12. Interest.

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

(b) The Loans comprising each Eurodollar Borrowing shall bear interest at the
sum of the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus the Applicable Rate.

(c) Notwithstanding the foregoing, during the occurrence and continuance of an
Event of Default, the Administrative Agent or the Required Lenders may, at their
option, by notice to the Borrower Representative (which notice may be revoked at
the option of the Required Lenders notwithstanding any provision of
Section 10.02 requiring the consent of “each Lender affected thereby” for
reductions in interest rates), declare that (i) all Loans shall bear interest at
2% plus the rate otherwise applicable to such Loans as provided in the preceding
paragraphs of this Section or (ii) in the case of any other amount outstanding
hereunder, such amount shall accrue at 2% plus the rate applicable to such fee
or other obligation as provided hereunder; provided that, and notwithstanding
the foregoing, if any principal or interest on any Loan or any fee or other
amount payable by the Borrowers hereunder is not paid when due, whether at
stated maturity, upon acceleration or otherwise, such overdue amount shall bear
interest, after as well as before judgment, at a rate per annum equal to

 

45

--------------------------------------------------------------------------------

(i) in case of overdue principal of any Loan, 2% plus the rate otherwise
applicable to such Loans as provided in the preceding paragraphs of this Section
or (ii) in the case of any other amount outstanding hereunder, such amount shall
accrue at 2% plus the rate applicable to such fee or other obligation as
provided hereunder.

(d) Accrued interest on each Loan (for ABR Loans, accrued through the last day
of the prior calendar month) shall be payable in arrears on each Interest
Payment Date for such Loan and, in the case of Revolving Loans, upon termination
of the Revolving Commitments; provided that (i) interest accrued pursuant to
paragraph (c) of this Section shall be payable on demand, (ii) in the event of
any repayment or prepayment of any Loan (other than a prepayment of an ABR
Revolving Loan prior to the end of the Availability Period), accrued interest on
the principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment and (iii) in the event of any conversion of any
Eurodollar Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion.

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

SECTION 2.13. Alternate Rate of Interest. If prior to the commencement of any
Interest Period for a Eurodollar Borrowing:

(a) the Administrative Agent determines (which determination shall be conclusive
and binding absent manifest error) that adequate and reasonable means do not
exist for ascertaining (including, without limitation, by means of an
Interpolated Rate) the Adjusted LIBO Rate or the LIBO Rate, as applicable, for
such Interest Period; or

(b) the Administrative Agent is advised by the Required Lenders that the
Adjusted LIBO Rate or the LIBO Rate, as applicable, for the applicable Interest
Period will not adequately and fairly reflect the cost to such Lenders (or
Lender) of making or maintaining their Loans included in such Borrowing for such
Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower
Representative and the Lenders by electronic communication as provided in
Section 10.01 as promptly as practicable thereafter and, until the
Administrative Agent notifies the Borrower Representative and the Lenders that
the circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective,
and any such Eurodollar Borrowing shall be converted to an ABR Borrowing on the
last day of the then current Interest Period applicable thereto, and (ii) if any
Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made
as an ABR Borrowing.

SECTION 2.14. Increased Costs. (a) If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit, liquidity or
similar requirement (including any compulsory loan requirement, insurance charge
or other assessment) against assets of, deposits with or for the account of, or
credit extended by, any Lender (except any such reserve requirement reflected in
the Adjusted LIBO Rate) or the Issuing Bank; or

 

46

--------------------------------------------------------------------------------

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

(iii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes,
(B) Taxes described in clauses (b) through (d) of the definition of Excluded
Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of
credit, commitments, or other obligations, or its deposits, reserves, other
liabilities or capital attributable thereto;

and the result of any of the foregoing shall be to increase the cost to such
Lender or such other Recipient of making, continuing, converting into or
maintaining any Loan (or of maintaining its obligation to make any such Loan) or
to increase the cost to such Lender, the Issuing Bank or such other Recipient of
participating in, issuing or maintaining any Letter of Credit or to reduce the
amount of any sum received or receivable by such Lender, the Issuing Bank or
such other Recipient hereunder (whether of principal, interest or otherwise),
then the Borrowers will pay to such Lender, the Issuing Bank or such other
Recipient, as the case may be, such additional amount or amounts as will
compensate such Lender, the Issuing Bank or such other Recipient, as the case
may be, for such additional costs incurred or reduction suffered.

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

(c) A certificate of a Lender or the Issuing Bank setting forth the amount or
amounts necessary to compensate such Lender or the Issuing Bank or its holding
company, as the case may be, as specified in paragraph (a) or (b) of this
Section shall be delivered to the Borrower Representative and shall be
conclusive absent manifest error. The Borrowers shall pay such Lender or the
Issuing Bank, as the case may be, the amount shown as due on any such
certificate within ten (10) Business Days after receipt thereof.

(d) Failure or delay on the part of any Lender or the Issuing Bank to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender’s or the Issuing Bank’s right to demand such compensation; provided that
the Borrowers shall not be required to compensate a Lender or the Issuing Bank
pursuant to this Section for any increased costs or reductions incurred more
than 270 days prior to the date that such Lender or the Issuing Bank, as the
case may be, notifies the Borrower Representative of the Change in Law giving
rise to such increased costs or reductions and of such Lender’s or the Issuing
Bank’s intention to claim compensation therefor; provided further that, if the
Change in Law giving rise to such increased costs or reductions is retroactive,
then the 270-day period referred to above shall be extended to include the
period of retroactive effect thereof.

 

47

--------------------------------------------------------------------------------

SECTION 2.15. Break Funding Payments. In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default or as a
result of any prepayment pursuant to Section 2.10), (b) the conversion of any
Eurodollar Loan other than on the last day of the Interest Period applicable
thereto, (c) the failure to borrow, convert, continue or prepay any Eurodollar
Loan on the date specified in any notice delivered pursuant hereto (regardless
of whether such notice may be revoked under Section 2.08(d) and is revoked in
accordance therewith), or (d) the assignment of any Eurodollar Loan other than
on the last day of the Interest Period applicable thereto as a result of a
request by the Borrower Representative pursuant to Section 2.18 or
Section 10.02(d), then, in any such event, the Borrowers shall compensate each
Lender for the loss, cost and expense attributable to such event. In the case of
a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to
include an amount determined by such Lender to be the excess, if any, of (i) the
amount of interest which would have accrued on the principal amount of such
Eurodollar Loan had such event not occurred, at the Adjusted LIBO Rate that
would have been applicable to such Eurodollar Loan, for the period from the date
of such event to the last day of the then current Interest Period therefor (or,
in the case of a failure to borrow, convert or continue, for the period that
would have been the Interest Period for such Eurodollar Loan), over (ii) the
amount of interest which would accrue on such principal amount for such period
at the interest rate which such Lender would bid were it to bid, at the
commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the eurodollar market. A certificate of any Lender
setting forth any amount or amounts that such Lender is entitled to receive
pursuant to this Section shall be delivered to the Borrower Representative and
shall be conclusive absent manifest error. The Borrowers shall pay such Lender
the amount shown as due on any such certificate within ten (10) Business Days
after receipt thereof.

SECTION 2.16. Taxes.

(a) Withholding Taxes; Gross-Up; Payments Free of Taxes. Any and all payments by
or on account of any obligation of any Loan Party under any Loan Document shall
be made without deduction or withholding for any Taxes, except as required by
applicable law. If any applicable law (as determined in the good faith
discretion of an applicable withholding agent) requires the deduction or
withholding of any Tax from any such payment by a withholding agent, then the
applicable withholding agent shall be entitled to make such deduction or
withholding and shall timely pay the full amount deducted or withheld to the
relevant Governmental Authority in accordance with applicable law and, if such
Tax is an Indemnified Tax, then the sum payable by the applicable Loan Party
shall be increased as necessary so that after such deduction or withholding has
been made (including such deductions and withholdings applicable to additional
sums payable under this Section 2.16), the applicable Recipient receives an
amount equal to the sum it would have received had no such deduction or
withholding been made.

(b) Payment of Other Taxes by Loan Parties. The Loan Parties shall timely pay to
the relevant Governmental Authority in accordance with applicable law, or at the
option of the Administrative Agent timely reimburse it for the payment of, any
Other Taxes.

(c) Evidence of Payment. As soon as practicable after any payment of Taxes by
any Loan Party to a Governmental Authority pursuant to this Section 2.16, such
Loan Party shall deliver to the Administrative Agent the original or a certified
copy of a receipt issued by such Governmental Authority evidencing such payment,
a copy of the return reporting such payment, or other evidence of such payment
reasonably satisfactory to the Administrative Agent.

(d) Indemnification by the Loan Parties. The Loan Parties shall jointly and
severally indemnify each Recipient, within ten (10) Business Days after demand
therefor, for the full amount of

 

48

--------------------------------------------------------------------------------

any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or
attributable to amounts payable under this Section) payable or paid by such
Recipient or required to be withheld or deducted from a payment to such
Recipient and any reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to the Borrower Representative by a
Lender (with a copy to the Administrative Agent), or by the Administrative Agent
on its own behalf or on behalf of a Lender, shall be conclusive absent manifest
error.

(e) Indemnification by the Lenders. Each Lender shall severally indemnify the
Administrative Agent, within ten (10) Business Days after demand therefor, for
(i) any Indemnified Taxes attributable to such Lender (but only to the extent
that the Administrative Agent has not been indemnified by a Loan Party for such
Indemnified Taxes and without limiting the obligation of the Loan Parties to do
so), (ii) any Taxes attributable to such Lender’s failure to comply with the
provisions of Section 10.04(c) relating to the maintenance of a Participant
Register and (iii) any Excluded Taxes attributable to such Lender, in each case,
that are payable or paid by the Administrative Agent in connection with any Loan
Document, and any reasonable expenses arising therefrom or with respect thereto,
whether or not such Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority. A certificate as to the amount of such payment
or liability delivered to any Lender by the Administrative Agent shall be
conclusive absent manifest error. Each Lender hereby authorizes the
Administrative Agent to set off and apply any and all amounts at any time owing
to such Lender under any Loan Document or otherwise payable by the
Administrative Agent to such Lender from any other source against any amount due
to the Administrative Agent under this paragraph (e).

(f) Status of Lenders.

(i) Any Lender that is entitled to an exemption from or reduction of withholding
Tax with respect to payments made under any Loan Document shall deliver to the
Borrower Representative and the Administrative Agent, at the time or times
reasonably requested by the Borrower Representative or the Administrative Agent,
such properly completed and executed documentation reasonably requested by the
Borrower Representative or the Administrative Agent as will permit such payments
to be made without withholding or at a reduced rate of withholding. In addition,
any Lender, if reasonably requested by the Borrower Representative or the
Administrative Agent, shall deliver such other documentation prescribed by
applicable law or reasonably requested by the Borrower Representative or the
Administrative Agent as will enable the Borrower Representative or the
Administrative Agent to determine whether or not such Lender is subject to
backup withholding or information reporting requirements. Notwithstanding
anything to the contrary in the preceding two sentences, the completion,
execution and submission of such documentation (other than such documentation
set forth in Section 2.16(f)(ii)(A), (ii)(B) and (ii)(D) below) shall not be
required if in the Lender’s reasonable judgment such completion, execution or
submission would subject such Lender to any material unreimbursed cost or
expense or would materially prejudice the legal or commercial position of such
Lender.

(ii) Without limiting the generality of the foregoing, in the event that any
Borrower is a U.S. Person,

(A) any Lender that is a U.S. Person shall deliver to the Borrower
Representative and the Administrative Agent on or prior to the date on which
such Lender becomes a Lender under this Agreement (and from time to time
thereafter upon

 

49

--------------------------------------------------------------------------------

the reasonable request of the Borrower Representative or the Administrative
Agent), executed originals of IRS Form W-9 certifying that such Lender is exempt
from U.S. federal backup withholding tax;

(B) any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to the Borrower Representative and the Administrative Agent (in such
number of copies as shall be requested by the recipient) on or prior to the date
on which such Foreign Lender becomes a Lender under this Agreement (and from
time to time thereafter upon the reasonable request of the Borrower
Representative or the Administrative Agent), whichever of the following is
applicable:

(1) in the case of a Foreign Lender claiming the benefits of an income tax
treaty to which the U.S. is a party (x) with respect to payments of interest
under any Loan Document, executed originals of IRS Form W-8BEN establishing an
exemption from, or reduction of, U.S. federal withholding Tax pursuant to the
“interest” article of such tax treaty and (y) with respect to any other
applicable payments under any Loan Document, IRS Form W-8BEN establishing an
exemption from, or reduction of, U.S. federal withholding Tax pursuant to the
“business profits” or “other income” article of such tax treaty;

(2) in the case of a Foreign Lender claiming that its extension of credit will
generate U.S. effectively connected income, executed originals of IRS Form
W-8ECI;

(3) in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under Section 881(c) of the Code, (x) a certificate
substantially in the form of Exhibit B-1 to the effect that such Foreign Lender
is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10
percent shareholder” of a Borrower within the meaning of Section 881(c)(3)(B) of
the Code, or a “controlled foreign corporation” described in
Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and
(y) executed originals of IRS Form W-8BEN; or

(4) to the extent a Foreign Lender is not the Beneficial Owner, executed
originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, a
U.S. Tax Compliance Certificate substantially in the form of Exhibit B-2 or
Exhibit B-3, IRS Form W-9, and/or other certification documents from each
Beneficial Owner, as applicable; provided that if the Foreign Lender is a
partnership and one or more direct or indirect partners of such Foreign Lender
are claiming the portfolio interest exemption, such Foreign Lender may provide a
U.S. Tax Compliance Certificate substantially in the form of Exhibit B-4 on
behalf of each such direct and indirect partner;

(C) any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to the Borrower Representative and the Administrative Agent (in such
number of copies as shall be requested by the recipient) on or prior to the date
on which such Foreign Lender becomes a Lender under this Agreement (and from
time to time thereafter upon the reasonable request of the Borrower
Representative or the Administrative Agent), executed originals of any other
form prescribed by applicable law as a basis for claiming exemption from or a
reduction in U.S. federal withholding Tax, duly completed, together with such
supplementary documentation as may be prescribed by applicable law to permit the
Borrower Representative or the Administrative Agent to determine the withholding
or deduction required to be made; and

 

50

--------------------------------------------------------------------------------

(D) if a payment made to a Lender under any Loan Document would be subject to
U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to
comply with the applicable reporting requirements of FATCA (including those
contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender
shall deliver to the Borrower Representative and the Administrative Agent at the
time or times prescribed by law and at such time or times reasonably requested
by the Borrower Representative or the Administrative Agent such documentation
prescribed by applicable law (including as prescribed by
Section 1471(b)(3)(C)(i) of the Code) and such additional documentation
reasonably requested by the Borrower Representative or the Administrative Agent
as may be necessary for the Borrower Representative and the Administrative Agent
to comply with their obligations under FATCA and to determine that such Lender
has complied with such Lender’s obligations under FATCA or to determine the
amount to deduct and withhold from such payment. Solely for purposes of this
clause (D), “FATCA” shall include any amendments made to FATCA after the date of
this Agreement. For purposes of determining withholding Taxes imposed under
FATCA, from and after the Effective Date, the Borrowers and the Administrative
Agent shall treat (and the Lenders hereby authorize the Administrative Agent to
treat) this Agreement as not qualifying as a “grandfathered obligation” within
the meaning of Treasury Regulation Section 1.1471-2(b)(2)(i).

Each Lender agrees that if any form or certification it previously delivered
expires or becomes obsolete or inaccurate in any respect, it shall update such
form or certification or promptly notify the Borrower Representative and the
Administrative Agent in writing of its legal inability to do so.

(g) Treatment of Certain Refunds. If any party determines, in its sole
discretion exercised in good faith, that it has received a refund of any Taxes
as to which it has been indemnified pursuant to this Section 2.16 (including by
the payment of additional amounts pursuant to this Section 2.16), it shall pay
to the indemnifying party an amount equal to such refund (but only to the extent
of indemnity payments made under this Section 2.16 with respect to the Taxes
giving rise to such refund), net of all out-of-pocket expenses (including Taxes)
of such indemnified party and without interest (other than any interest paid by
the relevant Governmental Authority with respect to such refund). Such
indemnifying party, upon the request of such indemnified party, shall repay to
such indemnified party the amount paid over pursuant to this paragraph (g) (plus
any penalties, interest or other charges imposed by the relevant Governmental
Authority) in the event that such indemnified party is required to repay such
refund to such Governmental Authority. Notwithstanding anything to the contrary
in this paragraph (g), in no event will the indemnified party be required to pay
any amount to an indemnifying party pursuant to this paragraph (g) the payment
of which would place the indemnified party in a less favorable net after-Tax
position than the indemnified party would have been in if the Tax subject to
indemnification and giving rise to such refund had not been deducted, withheld
or otherwise imposed and the indemnification payments or additional amounts
giving rise to such refund had never been paid. This paragraph (g) shall not be
construed to require any indemnified party to make available its Tax returns (or
any other information relating to its Taxes that it deems confidential) to the
indemnifying party or any other Person.

(h) Survival. Each party’s obligations under this Section 2.16 shall survive the
resignation or replacement of the Administrative Agent or any assignment of
rights by, or the replacement of, a Lender, the termination of the Commitments
and the repayment, satisfaction or discharge of all obligations under any Loan
Document.

 

51

--------------------------------------------------------------------------------

(i) Defined Terms. For purposes of this Section 2.16, the term “Lender” includes
any Issuing Bank and the term “applicable law” includes FATCA.

SECTION 2.17. Payments Generally; Allocation of Proceeds; Sharing of Set-offs.

(a) The Borrowers shall make each payment required to be made by it hereunder
(whether of principal, interest, fees or reimbursement of LC Disbursements, or
of amounts payable under Sections 2.14, 2.15 or 2.16, or otherwise) prior to
12:00 p.m., Dallas, Texas time, on the date when due, in immediately available
funds, without set-off or counterclaim. Any amounts received after such time on
any date may, in the discretion of the Administrative Agent, be deemed to have
been received on the next succeeding Business Day for purposes of calculating
interest thereon. All such payments shall be made to the Administrative Agent
pursuant to payment instructions provided by the Administrative Agent, except
payments to be made directly to the Issuing Bank or Swingline Lender as
expressly provided herein and except that payments pursuant to Sections 2.14,
2.15, 2.16 and 10.03 shall be made directly to the Persons entitled thereto. The
Administrative Agent shall distribute any such payments received by it for the
account of any other Person to the appropriate recipient promptly following
receipt thereof. If any payment hereunder shall be due on a day that is not a
Business Day, the date for payment shall be extended to the next succeeding
Business Day, and, in the case of any payment accruing interest, interest
thereon shall be payable for the period of such extension. All payments
hereunder shall be made in dollars.

(b) Any proceeds of Collateral received by the Administrative Agent (i) not
constituting either (A) a specific payment of principal, interest, fees or other
sum payable under the Loan Documents (which shall be applied as specified by the
Borrowers), or (B) a mandatory prepayment (which shall be applied in accordance
with Section 2.10) or (ii) after an Event of Default has occurred and is
continuing and the Administrative Agent so elects or the Required Lenders so
direct, shall be applied ratably first, to pay any fees, indemnities, or expense
reimbursements including amounts then due to the Administrative Agent, the
Swingline Lender and the Issuing Bank from the Borrowers (other than in
connection with Banking Services Obligations or Swap Agreement Obligations),
second, to pay any fees or expense reimbursements then due to the Lenders from
the Borrowers (other than in connection with Banking Services Obligations or
Swap Agreement Obligations), third, to pay interest then due and payable on the
Loans ratably, fourth, to prepay principal on the Loans and unreimbursed LC
Disbursements and to pay any amounts owing with respect to Swap Agreement
Obligations up to and including the amount most recently provided to the
Administrative Agent pursuant to Section 2.20, ratably, fifth, to pay an amount
to the Administrative Agent equal to one hundred five percent (105%) of the
aggregate LC Exposure, to be held as Cash Collateral for such Obligations,
sixth, to the payment of any amounts owing in respect of Banking Services
Obligations up to and including the amount most recently provided to the
Administrative Agent pursuant to Section 2.20, and seventh, to the payment of
any other Secured Obligation due to the Administrative Agent or any Lender from
the Borrowers or any other Loan Party. Notwithstanding anything to the contrary
contained in this Agreement, unless so directed by the Borrower Representative,
or unless a Default is in existence, neither the Administrative Agent nor any
Lender shall apply any payment which it receives to any Eurodollar Loan of a
Class, except (i) on the expiration date of the Interest Period applicable
thereto, or (ii) in the event, and only to the extent, that there are no
outstanding ABR Loans of the same Class and, in any such event, the Borrowers
shall pay the break funding payment required in accordance with Section 2.15.
The Administrative Agent and the Lenders shall have the continuing and exclusive
right to apply and reverse and reapply any and all such proceeds and payments to
any portion of the Secured Obligations.

Notwithstanding the foregoing, Secured Obligations arising under Banking
Services Obligations or Swap Agreement Obligations shall be excluded from the
application described above and paid in

 

52

--------------------------------------------------------------------------------

clause seventh if the Administrative Agent has not received written notice
thereof, together with such supporting documentation as the Administrative Agent
may have reasonably requested from the applicable provider of such Banking
Services or Swap Agreements.

(c) At the election of the Administrative Agent after and during the
continuation of an Event of Default, all payments of principal, interest, LC
Disbursements, fees, premiums, reimbursable expenses (including, without
limitation, all reimbursement for fees, costs and expenses pursuant to
Section 10.03), and other sums payable under the Loan Documents, may be paid
from the proceeds of Borrowings made hereunder, whether made following a request
by the Borrower Representative pursuant to Section 2.03 or 2.04 or a deemed
request as provided in this Section or may be deducted from any deposit account
of the Borrowers maintained with the Administrative Agent. The Borrowers hereby
irrevocably authorize (i) the Administrative Agent to make a Borrowing for the
purpose of paying each payment of principal, interest and fees as it becomes due
hereunder or any other amount due under the Loan Documents and agree that all
such amounts charged shall constitute Loans (including Swingline Loans), and
that all such Borrowings shall be deemed to have been requested pursuant to
Sections 2.03 or 2.04, as applicable, and (ii) the Administrative Agent to
charge any deposit account of any Borrower maintained with the Administrative
Agent for each payment of principal, interest and fees as it becomes due
hereunder or any other amount due under the Loan Documents.

(d) If, except as otherwise expressly provided herein, any Lender shall, by
exercising any right of set-off or counterclaim or otherwise, obtain payment in
respect of any principal of or interest on any of its Loans or participations in
LC Disbursements resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its Loans and participations in LC
Disbursements and Swingline Loans and accrued interest thereon than the
proportion received by any other similarly situated Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Loans and participations in LC Disbursements and Swingline
Loans of other Lenders to the extent necessary so that the benefit of all such
payments shall be shared by all such Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective Loans
and participations in LC Disbursements and Swingline Loans; provided that (i) if
any such participations are purchased and all or any portion of the payment
giving rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any
payment made by the Borrowers pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment or sale of a participation in any of its Loans or participations
in LC Disbursements and Swingline Loans to any assignee or participant, other
than to the Borrowers or any Subsidiary or Affiliate thereof (as to which the
provisions of this paragraph shall apply). Each Borrower consents to the
foregoing and agrees, to the extent it may effectively do so under applicable
law, that any Lender acquiring a participation pursuant to the foregoing
arrangements may exercise against such Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of such Borrower in the amount of such participation.

(e) Unless the Administrative Agent shall have received notice from the Borrower
Representative prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders or the Issuing Bank
hereunder that the Borrowers will not make such payment, the Administrative
Agent may assume that the Borrowers have made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to the
Lenders or the Issuing Bank, as the case may be, the amount due. In such event,
if the Borrowers have not in fact made such payment, then each of the Lenders or
the Issuing Bank, as the case may be, severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender or

 

53

--------------------------------------------------------------------------------

Issuing Bank with interest thereon, for each day from and including the date
such amount is distributed to it to but excluding the date of payment to the
Administrative Agent, at the greater of the Federal Funds Effective Rate and a
rate determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation.

(f) If any Lender shall fail to make any payment required to be made by it
pursuant to Section 2.04, 2.05(d) or (e), 2.06(b), 2.17(e) or 10.03(c), then the
Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), (i) apply any amounts thereafter received by the
Administrative Agent for the account of such Lender, for the benefit of the
Administrative Agent, the Swingline Lender or the Issuing Bank to satisfy such
Lender’s obligations under such Sections until all such unsatisfied obligations
are fully paid and/or (ii) hold any such amounts in a segregated account as Cash
Collateral for, and application to, any future funding obligations of such
Lender under such Sections. Application of amounts pursuant to clauses (f)(i)
and (f)(ii) of this Section 2.17 shall be made in such order as may be
determined by the Administrative Agent in its discretion.

(g) The Administrative Agent may from time to time provide the Borrowers with
account statements or invoices with respect to any of the Secured Obligations
(the “Statements”). The Administrative Agent is under no duty or obligation to
provide Statements, which, if provided, will be solely for the Borrowers’
convenience. Statements may contain estimates of the amounts owed during the
relevant billing period, whether of principal, interest, fees or other Secured
Obligations. If the Borrowers pay the full amount indicated on a Statement on or
before the due date indicated on such Statement, the Borrowers shall not be in
default of payment with respect to the billing period indicated on such
Statement; provided, that acceptance by the Administrative Agent, on behalf of
the Lenders, of any payment that is less than the total amount actually due at
that time (including but not limited to any past due amounts) shall not
constitute a waiver of the Administrative Agent’s or the Lenders’ right to
receive payment in full at another time.

SECTION 2.18. Mitigation Obligations; Replacement of Lenders.

(a) If any Lender requests compensation under Section 2.14, or if the Borrowers
are required to pay any Indemnified Taxes or additional amounts to any Lender or
any Governmental Authority for the account of any Lender pursuant to
Section 2.16, then such Lender shall use reasonable efforts to designate a
different lending office for funding or booking its Loans hereunder or to assign
its rights and obligations hereunder to another of its offices, branches or
affiliates, if, in the judgment of such Lender, such designation or assignment
(i) would eliminate or reduce amounts payable pursuant to Sections 2.14 or 2.16,
as the case may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender. The Borrowers hereby agree to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.

(b) If any Lender requests compensation under Section 2.14, or if the Borrowers
are required to pay any Indemnified Taxes or additional amounts to any Lender or
any Governmental Authority for the account of any Lender pursuant to
Section 2.16, or if any Lender becomes a Defaulting Lender, then the Borrowers
may, at their sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 10.04), all its interests, rights (other than its existing rights to
payments pursuant to Sections 2.14 or 2.16) and obligations under this Agreement
and other Loan Documents to an assignee that shall assume such obligations
(which assignee may be another Lender, if a Lender accepts such assignment);
provided that (i) the Borrowers shall have received the prior written consent of
the Administrative Agent (and in circumstances where its consent

 

54

--------------------------------------------------------------------------------

would be required under Section 10.04, the Issuing Bank and the Swingline
Lender), which consent shall not unreasonably be withheld, (ii) such Lender
shall have received payment of an amount equal to the outstanding principal of
its Loans and funded participations in LC Disbursements and Swingline Loans,
accrued interest thereon, accrued fees and all other amounts payable to it
hereunder, from the assignee (to the extent of such outstanding principal and
accrued interest and fees) or the Borrowers (in the case of all other amounts)
and (iii) in the case of any such assignment resulting from a claim for
compensation under Section 2.14 or payments required to be made pursuant to
Section 2.16, such assignment will result in a reduction in such compensation or
payments. A Lender shall not be required to make any such assignment and
delegation if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling the Borrowers to require such assignment
and delegation cease to apply.

SECTION 2.19. Defaulting Lenders.

Notwithstanding any provision of this Agreement to the contrary, if any Lender
becomes a Defaulting Lender, then the following provisions shall apply for so
long as such Lender is a Defaulting Lender:

(a) fees shall cease to accrue on the unfunded portion of the Revolving
Commitment of such Defaulting Lender pursuant to Section 2.11(a);

(b) such Defaulting Lender shall not have the right to vote on any issue on
which voting is required (other than to the extent expressly provided in
Section 10.02(b)) and the Commitment and Revolving Exposure of such Defaulting
Lender shall not be included in determining whether the Required Lenders have
taken or may take any action hereunder or under any other Loan Document;
provided that, except as otherwise provided in Section 10.02, this clause (b)
shall not apply to the vote of a Defaulting Lender in the case of an amendment,
waiver or other modification requiring the consent of such Lender or each Lender
directly affected thereby;

(c) if any Swingline Exposure or LC Exposure exists at the time such Lender
becomes a Defaulting Lender then:

(i) all or any part of the Swingline Exposure and LC Exposure of such Defaulting
Lender (other than the portion of such Swingline Exposure referred to in
clause (b) of the definition of such term) shall be reallocated among the
non-Defaulting Lenders in accordance with their respective Applicable
Percentages but only (x) to the extent that the conditions set forth in
Section 4.02 are satisfied at the time of such reallocation (and, unless any
Borrower shall have otherwise notified the Administrative Agent at such time,
the Borrowers shall be deemed to have represented and warranted that such
conditions are satisfied at such time) and (y) to the extent that such
reallocation does not, as to any non-Defaulting Lender, cause such
non-Defaulting Lender’s Revolving Exposures to exceed its Revolving Commitments;

(ii) if the reallocation described in clause (i) of this Section 2.19(c) cannot,
or can only partially, be effected, the Borrowers shall within one (1) Business
Day following notice by the Administrative Agent (x) first, prepay such
Swingline Exposure and (y) second, Cash Collateralize, for the benefit of the
Issuing Bank, the Borrowers’ obligations corresponding to such Defaulting
Lender’s LC Exposure (after giving effect to any partial reallocation pursuant
to clause (i) of this Section 2.19(c)) in accordance with the procedures set
forth in Section 2.05(j) for so long as such LC Exposure is outstanding;

(iii) if the Borrowers Cash Collateralize any portion of such Defaulting
Lender’s LC Exposure pursuant to clause (ii) of this Section 2.19(c), the
Borrowers shall not be required to pay any fees to such Defaulting Lender
pursuant to Section 2.11(b) with respect to such Defaulting Lender’s LC Exposure
during the period such Defaulting Lender’s LC Exposure is Cash Collateralized;

 

55

--------------------------------------------------------------------------------

(iv) if the LC Exposure of the non-Defaulting Lenders is reallocated pursuant to
clause (i) of this Section 2.19(c), then the fees payable to the Lenders
pursuant to Sections 2.11(a) and 2.11(b) shall be adjusted in accordance with
such non-Defaulting Lenders’ Applicable Percentages; and

(v) if all or any portion of such Defaulting Lender’s LC Exposure is neither
reallocated nor Cash Collateralized pursuant to clause (i) or (ii) of this
Section 2.19(c), then, without prejudice to any rights or remedies of the
Issuing Bank or any other Lender hereunder, all letter of credit fees payable
under Section 2.11(b) with respect to such Defaulting Lender’s LC Exposure shall
be payable to the Issuing Bank until and to the extent that such LC Exposure is
reallocated and/or Cash Collateralized; and

(d) so long as such Lender is a Defaulting Lender, the Swingline Lender shall
not be required to fund any Swingline Loan and the Issuing Bank shall not be
required to issue, amend, renew, extend or increase any Letter of Credit, unless
it is satisfied that the related exposure and such Defaulting Lender’s then
outstanding LC Exposure will be 100% covered by the Commitments of the
non-Defaulting Lenders and/or Cash Collateral will be provided by the Borrowers
in accordance with Section 2.19(c), and Swingline Exposure related to any such
newly made Swingline Loan or newly issued or increased Letter of Credit shall be
allocated among non-Defaulting Lenders in a manner consistent with
Section 2.19(c)(i) (and such Defaulting Lender shall not participate therein).

If (i) a Bankruptcy Event with respect to the Parent of any Lender shall occur
following the date hereof and for so long as such event shall continue or
(ii) the Swingline Lender or the Issuing Bank has a good faith belief that any
Lender has defaulted in fulfilling its obligations under one or more other
agreements in which such Lender commits to extend credit, the Swingline Lender
shall not be required to fund any Swingline Loan and the Issuing Bank shall not
be required to issue, amend or increase any Letter of Credit, unless the
Swingline Lender or the Issuing Bank, as the case may be, shall have entered
into arrangements with the Borrowers or such Lender, satisfactory to the
Swingline Lender or the Issuing Bank, as the case may be, to defease any risk to
it in respect of such Lender hereunder.

In the event that each of the Administrative Agent, the CSW Borrower, the
Swingline Lender and the Issuing Bank agrees that a Defaulting Lender has
adequately remedied all matters that caused such Lender to be a Defaulting
Lender, then the Swingline Exposure and LC Exposure of the Lenders shall be
readjusted to reflect the inclusion of such Lender’s Revolving Commitment and on
the date of such readjustment such Lender shall purchase at par such of the
Loans of the other Lenders (other than Swingline Loans) as the Administrative
Agent shall determine may be necessary in order for such Lender to hold such
Loans in accordance with its Applicable Percentage.

SECTION 2.20. Returned Payments. If, after receipt of any payment which is
applied to the payment of all or any part of the Obligations (including a
payment effected through exercise of a right of setoff), the Administrative
Agent or any Lender is for any reason compelled to surrender such payment or
proceeds to any Person because such payment or application of proceeds is
invalidated, declared fraudulent, set aside, determined to be void or voidable
as a preference, impermissible setoff, or a diversion of trust funds, or for any
other reason (including pursuant to any settlement entered into by the
Administrative Agent or such Lender in its discretion), then the Obligations or
part thereof intended to be satisfied shall be revived and continued and this
Agreement shall continue in full force as if such payment or proceeds had not
been received by the Administrative Agent or such Lender. The provisions

 

56

--------------------------------------------------------------------------------

of this Section 2.20 shall be and remain effective notwithstanding any contrary
action which may have been taken by the Administrative Agent or any Lender in
reliance upon such payment or application of proceeds. The provisions of this
Section 2.20 shall survive the termination of this Agreement.

SECTION 2.21. Extension Offers.

(a) The Borrower Representative may, by written notice to the Administrative
Agent from time to time, request an extension (each, an “Extension”) of the
maturity date of Revolving Commitments (but specifically not including Swingline
Loans) to the extended maturity date specified in such notice. Such notice shall
(i) set forth the amount of the Revolving Commitments that will be subject to
the Extension, provided that no Class of Extended Revolving Commitments shall be
in an amount less than the lesser of (A) 75% of the then outstanding Revolving
Commitments or (B) $10,000,000 (each amount in clause (i) of this
Section 2.21(a), the “Minimum Tranche Amount”), unless such Minimum Tranche
Amount is waived by the Administrative Agent and (ii) set forth the date on
which such Extension is requested to become effective (which shall be not less
than ten (10) Business Days nor more than sixty (60) days after the date of such
Extension notice (or such longer or shorter periods as the Administrative Agent
shall agree in its sole discretion)). Each Lender of the applicable Class shall
be offered (an “Extension Offer”) an opportunity to participate in such
Extension on a pro rata basis and on the same terms and conditions as each other
Lender of such Class pursuant to procedures established by, or reasonably
acceptable to, the Administrative Agent and the Borrowers. If the aggregate
principal amount of Revolving Commitments in respect of which Lenders shall have
accepted the relevant Extension Offer shall exceed the maximum aggregate
principal amount of Revolving Commitments subject to the Extension Offer as set
forth in the Extension notice, then the Revolving Commitments of Lenders of the
applicable Class shall be extended ratably up to such maximum amount based on
the respective principal amounts with respect to which such Lenders have
accepted such Extension Offer.

(b) The following shall be conditions precedent to the effectiveness of any
Extension: (i) no Default shall have occurred and be continuing immediately
prior to and immediately after giving effect to such Extension, (ii) the
representations and warranties set forth in Article III and in each other Loan
Document shall be deemed to be made and shall be true and correct in all
material respects on and as of the effective date of such Extension, (iii) the
Issuing Bank and the Swingline Lender shall have consented to any Extension of
the Revolving Commitments, to the extent that such Extension provides for the
issuance or extension of Letters of Credit or making of Swingline Loans at any
time during the extended period and (iv) the terms of such Extended Revolving
Commitments shall comply with paragraph (c) of this Section.

(c) The terms of each Extension shall be determined by the Borrowers and the
applicable extending Lenders and set forth in an Extension Amendment; provided
that (i) the final maturity date of any Extended Revolving Commitment shall be
no earlier than the Revolving Credit Maturity Date, (ii) there shall be no
scheduled amortization of the loans or reductions of commitments under any
Extended Revolving Commitments, (iii) the Extended Revolving Loans will rank
pari passu in right of payment and with respect to security with the existing
Revolving Loans and the borrowers and guarantors of the Extended Revolving
Commitments shall be the same as the Borrowers and Guarantors with respect to
the existing Revolving Loans, (iv) the interest rate margin, rate floors, fees,
original issue discount and premium applicable to any Extended Revolving
Commitment (and the Extended Revolving Loans thereunder) shall be determined by
the Borrowers and the applicable extending Lenders, (v)(A) the Extended
Revolving Loans may participate on a pro rata or less than pro rata (but not
greater than pro rata) basis in voluntary or mandatory prepayments with the
other Revolving Loans and (B) borrowing and prepayment of Extended Revolving
Loans, or reductions of Extended Revolving Commitments, and participation in
Letters of Credit and Swingline Loans, shall

 

57

--------------------------------------------------------------------------------

be on a pro rata basis with the other Revolving Loans or Revolving Commitments
(other than upon the maturity of the non-extended Revolving Loans and Revolving
Commitments) and (vi) the terms of the Extended Revolving Commitments shall be
substantially identical to the terms set forth herein (except as set forth in
clauses (i) through (v) of this Section 2.21(c)).

(d) In connection with any Extension, the Borrowers, the Administrative Agent
and each applicable extending Lender shall execute and deliver to the
Administrative Agent an Extension Amendment and such other documentation as the
Administrative Agent shall reasonably specify to evidence the Extension. The
Administrative Agent shall promptly notify each Lender as to the effectiveness
of each Extension. Any Extension Amendment may, without the consent of any other
Lender, effect such amendments to this Agreement and the other Loan Documents as
may be necessary or appropriate, in the reasonable opinion of the Administrative
Agent and the Borrowers, to implement the terms of any such Extension, including
any amendments necessary to establish Extended Revolving Commitments as a new
Class or tranche of Revolving Commitments and such other technical amendments as
may be necessary or appropriate in the reasonable opinion of the Administrative
Agent and the Borrowers in connection with the establishment of such new Class
or tranche (including to preserve the pro rata treatment of the extended and
non-extended Classes or tranches and to provide for the reallocation of
Revolving Exposure upon the expiration or termination of the commitments under
any Class or tranche), in each case on terms consistent with this Section.

ARTICLE III

Representations and Warranties

In order to induce the Administrative Agent, the Issuing Bank and the Lenders to
enter into this Agreement and to make Loans and issue Letters of Credit
hereunder, each Loan Party represents and warrants to the Administrative Agent,
the Issuing Bank and the Lenders that (and where applicable, agrees):

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

SECTION 3.02. Authorization; Enforceability. The Transactions to be entered into
by each Loan Party are within such Loan Party’s corporate powers and have been
duly authorized by all necessary corporate and, if required, Equity Interest
holder action. Each Loan Document to which any Loan Party is to be a party, when
executed and delivered by such Loan Party, will constitute, a legal, valid and
binding obligation of such Loan Party, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors’ rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.

SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions (a) do not
require any consent or approval of, registration or filing with, or any other
action by, any Governmental Authority, except such as have been obtained or made
and are in full force and effect and except filings necessary to perfect Liens
created under the Loan Documents, (b) will not materially violate any material
applicable law or regulation or the charter, partnership agreement, limited
liability company agreement, operating agreement, by-laws or other
organizational documents of any Loan Party or any

 

58

--------------------------------------------------------------------------------

Subsidiary or any material order of any Governmental Authority, (c) will not
materially violate or result in a material default under any indenture, material
agreement or other material instrument binding upon any Loan Party or any
Subsidiary or the assets of any Loan Party or any Subsidiary, or give rise to a
right thereunder to require any material payment to be made by any Loan Party or
any Subsidiary, and (d) will not result in the creation or imposition of any
Lien on any asset of any Loan Party or any Subsidiary, except Liens created
under the Loan Documents.

SECTION 3.04. Financial Condition; No Material Adverse Change.

(a) Financial Statements Delivered. The Company has heretofore furnished to the
Lenders its consolidated balance sheet and statements of income, stockholders
equity and comprehensive income and cash flows (i) as of and for the fiscal year
ended March 31, 2015, reported on by independent public accountants, and (ii) as
of and for the fiscal quarter and the portion of the fiscal year ended
September 30, 2015. Such financial statements present fairly, in all material
respects, the financial position and results of operations and cash flows of the
Company and its consolidated Subsidiaries as of such dates and for such periods
in accordance with GAAP, subject to year-end audit adjustments and the absence
of footnotes in the case of the statements referred to in clause (ii) of this
Section 3.04(a).

(b) Pro Forma Balance Sheet. The Company has heretofore furnished to the Lenders
its pro forma consolidated balance sheet as of June 30, 2015, prepared giving
effect to the Transactions and the Headquarters Transactions as if the
Transactions and the Headquarters Transactions had occurred on such date. Such
pro forma consolidated balance sheet (i) has been prepared in good faith based
on the assumptions believed by the Company to be reasonable, (ii) is based on
the best information available to the Company after due inquiry,
(iii) accurately reflects all adjustments necessary to give effect to the
Transactions and the Headquarters Transactions and (iv) presents fairly, in all
material respects, the pro forma financial position of the Company and its
consolidated Subsidiaries as of June 30, 2015 as if the Transactions and the
Headquarters Transactions had occurred on such date it being recognized by the
Lenders that actual results may vary.

(c) Material Contingent Liabilities. Except as disclosed in the financial
statements referred to in Sections 3.04(a) and (b) or the notes thereto, after
giving effect to the Transactions and the Headquarters Transactions, none of the
Company or its Subsidiaries has any contingent liabilities, unusual long-term
commitments or unrealized losses that in the aggregate could reasonably be
expected to have a Material Adverse Effect.

(d) Projections. The Company has heretofore furnished to the Lenders its
forecasted consolidated and consolidating: (i) balance sheets; (ii) profit and
loss statements; and (iii) cash flow statements as of or for with respect to the
five-year period ending March 31, 2020. Such balance sheets; profit and loss
statements; and cash flow statements have been prepared by the Company in light
of the business of the Company and its consolidated Subsidiaries, the
Transactions and the Headquarters Transactions and represent as of the date
thereof the good faith estimate of the Company and its senior management of the
future financial performance of the Company and its consolidated Subsidiaries,
after giving pro forma effect to the Transactions and the Headquarters
Transactions (it being understood that such projections may vary from actual
results and such variances may be material).

(e) No Material Adverse Change. Since March 31, 2015, there has been no material
adverse change in the business, assets, operations or financial condition, of
the Company and its Subsidiaries, taken as a whole.

 

59

--------------------------------------------------------------------------------

SECTION 3.05. Properties, Etc.

(a) Title. Each of the Loan Parties and each Subsidiary has good title to, or
valid leasehold interests in, all its real and personal property material to its
business (including the Real Property), except for minor defects in title that
do not materially interfere with its ability to conduct its business as
currently conducted or to utilize such properties for their intended purposes
and are permitted by Section 6.02 hereto. No Loan Party owns or leases any real
property other than the Real Property described on Schedule 3.05 hereto. The
only real property owned by the Loan Parties for investment purposes is
identified as such on Schedule 3.05 hereto.

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

(c) Real Property. As of the Effective Date, none of the Loan Parties nor any
Subsidiary has received notice of, or has actual knowledge of, any pending or
contemplated condemnation proceeding affecting any Real Property or any sale or
disposition thereof in lieu of condemnation.

(d) License and Permits. Each Loan Party and each Subsidiary possesses all
licenses, permits, accreditations, eligibilities, certifications, franchises or
rights thereto necessary to conduct its business substantially as now conducted
and is not in violation of any valid rights of others with respect to any of the
foregoing, except for such non-possession or violation of rights that could
reasonably be expected to result in a Material Adverse Effect.

SECTION 3.06. Litigation and Environmental Matters. There are no actions, suits
or proceedings by or before any arbitrator or Governmental Authority pending
against or, to the knowledge of any Loan Party, threatened against or affecting
any Loan Party or any Subsidiary (i) as to which there is a reasonable
possibility of an adverse determination and that, if adversely determined, could
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect or (ii) that challenge the validity, enforceability or
effectiveness of any of the Loan Documents or the Transactions. Except as could
not reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect, neither any Loan Party nor any Subsidiary: (i) has
failed to comply with any Environmental Law or to obtain, maintain or comply
with any permit, license or other approval required under any Environmental Law,
(ii) has become subject to any Environmental Liability, (iii) has received
notice of any claim with respect to any Environmental Liability, (iv) knows of
any basis for any Environmental Liability, nor (v) is subject to any existing,
pending or threatened governmental investigation pertaining to the Real
Property, or to any remedial obligation or lien under or in connection with any
Environmental Law. On the Effective Date, except as to matters, or as to matters
which in the aggregate could not reasonably be expected to exceed $2,000,000 in
claims or liability, no Loan Party has any actual knowledge or notice of the
presence or release of Hazardous Materials in, on or around any part of the Real
Property or the soil, groundwater or soil vapor on or under the Real Property,
or the migration of any Hazardous Material, from or to any other property in the
vicinity of the Real Property in violation of Environmental Law. After the
Effective Date, except as could not reasonably be expected, individually or in
the aggregate, to result in a Material Adverse Effect, neither any Loan Party
nor any Subsidiary has any actual knowledge or notice of the presence or release
of Hazardous Materials in, on or around any part of the Real Property or the
soil, groundwater or soil vapor on or under the Real Property, or the migration
of any Hazardous Material, from or to any other property in the vicinity of the
Real Property in violation of Environmental Law.

 

60

--------------------------------------------------------------------------------

SECTION 3.07. Compliance with Laws and Agreements; No Default. Each Loan Party
and each Subsidiary is in compliance with all laws, regulations and orders of
any Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. No Default exists.

SECTION 3.08. Investment Company Status. Neither any Loan Party nor any
Subsidiary is an “investment company” as defined in, or subject to regulation
under, the Investment Company Act of 1940.

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

SECTION 3.10. Employee Benefit Plans; ERISA. Each employee benefit plan
sponsored by a Loan Party or in which the employees of a Loan Party participate
(including each Plan and the ESOP), which is intended to be qualified under
Section 401(a) of the Code has received a current favorable determination letter
or opinion letter from the IRS and complies in form and in operation, with the
requirements of Section 401(a) of the Code, the relevant provisions of ERISA,
and any other applicable laws, rules, and regulations, except where the failure
to do so could not reasonably be expected to subject the applicable Plan, trust
or any Loan Party to liability in excess of $1,500,000 under the Code, ERISA or
any other applicable laws, rules, and regulations. Each such employee benefit
plan (including each Plan) has been duly established in accordance with, and
under, applicable law, and the trust under each Plan is a tax-exempt trust under
Section 501(a) of the Code. Except as disclosed on Schedule 3.10, neither any
Loan Party nor any ERISA Affiliate is now (nor have any such entities, within
the last six years been) a participating or contributing employer in any
Multiemployer Plan, “defined benefit plan” (as defined in Section 3 (35) of
ERISA), “multiple employer welfare arrangement” (as defined in Section 3 (40) of
ERISA), or an employee benefit plan that is subject to Title IV or Section 302
of ERISA or Section 412 or 4971 of the Code. As of the date of this Agreement,
the Borrower Representative has made available to the Lenders and the
Administrative Agent a copy of the most recent actuarial report for any Plan
which includes such Plan’s funded status determined in accordance with the
requirements of ASC 715 of GAAP. Each Plan is in compliance with Section 436 of
the Code and there is no security in place provided thereunder by a Loan Party
or any ERISA Affiliate. Except as disclosed on Schedule 3.10, neither any Loan
Party nor any ERISA Affiliate has any liability with respect to the withdrawal
or partial withdrawal of the Company, any Borrower or any ERISA Affiliate from
any Multiemployer Plan. Neither any Loan Party, nor any trustee, administrator,
party in interest, disqualified person, or fiduciary of any employee benefit
plan sponsored by a Loan Party or in which the employees of a Loan Party
participate (including any Plan and the ESOP), has engaged in a non-exempt
“prohibited transaction,” as that term is defined in Section 4975 of the Code or
Section 406 of ERISA, which could directly or indirectly subject the applicable
Plan, trust or any Loan Party to liability in excess of $1,500,000 under the
Code or ERISA. As of the Effective Date, no Loan Party has any material
obligation to provide post-employment healthcare coverage to any current or
former employee other than continuation coverage mandated under Section 601 et.
seq. of ERISA, Section 4980B of the Code, or similar state laws. After the
Effective Date, no Loan Party has any material obligation to provide
post-employment healthcare coverage to any current or former employee other than
continuation coverage mandated under Section 601 et. seq. of ERISA,
Section 4980B of the Code, or similar state laws, which could reasonably be
expected to result in an Material Adverse Effect. Except as disclosed on
Schedule 3.10, no ERISA Event has occurred in the six years preceding the
Effective Date and no Loan Party is aware of any

 

61

--------------------------------------------------------------------------------

circumstance or event which could reasonably be expected to result in an ERISA
Event. After the Effective Date, no ERISA Event has occurred and no Loan Party
is aware of any circumstances or event which could reasonably be expected to
result in an ERISA Event, which in either case could reasonably be expected to
result in a Material Adverse Effect.

SECTION 3.11. ESOP Matters. The ESOP is an “employee stock ownership plan”
within the meaning of Section 4975(e)(7) of the Code and fully satisfies in form
and operation, all relevant provisions of the Code, including the requirements
of Section 409 of the Code, except where the failure to do so could not
reasonably be expected to subject the ESOP or any Loan Party to liability in
excess of $1,500,000 under the Code, ERISA or any other applicable laws, rules,
and regulations. The ESOP has been duly established in accordance with, and
under, applicable law, and the ESOP trust is a tax-exempt trust under
Section 501(a) of the Code. The securities of the Company held by the ESOP will
be employer securities that are readily tradable on an established securities
market within the meaning of Section 409(l)(1) of the Code.

SECTION 3.12. Disclosure. The Loan Parties have disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which any Loan
Party or any Subsidiary is subject, and all other matters known to any of them,
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect. None of the reports, financial statements,
certificates or other information furnished by or on behalf of any Loan Party or
any Subsidiary to the Administrative Agent or any Lender in connection with the
negotiation of this Agreement or any other Loan Document or delivered hereunder
or thereunder (as modified or supplemented by other information so furnished)
contains 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; provided that, with respect to
projected financial information, the Loan Parties represent only that such
information was prepared in good faith based upon assumptions believed to be
reasonable at the time.

SECTION 3.13. Subsidiaries.

(a) As of the Effective Date, the Company has no Subsidiaries other than those
listed on Schedule 3.13 hereto. Schedule 3.13 sets forth, as of the Effective
Date, the jurisdiction of incorporation or organization of each such Subsidiary,
the percentage of the Company’s ownership of the outstanding Equity Interests of
each Subsidiary directly owned by the Company, the percentage of each
Subsidiary’s ownership of the outstanding Equity Interests of each other
Subsidiary and the authorized, issued and outstanding Equity Interests of the
Company and each Subsidiary.

(b) As of the Permitted Reorganization Effective Date, the Company has no
Subsidiaries other than those listed on Schedule 3.13(a) hereto.
Schedule 3.13(a) sets forth, as of the Permitted Reorganization Effective Date,
the jurisdiction of incorporation or organization of each such Subsidiary, the
percentage of the Company’s ownership of the outstanding Equity Interests of
each Subsidiary directly owned by the Company, the percentage of each
Subsidiary’s ownership of the outstanding Equity Interests of each other
Subsidiary and the authorized, issued and outstanding Equity Interests of the
Company and each Subsidiary.

(c) All of the outstanding capital stock of the Company and each Subsidiary has
been validly issued, is fully paid, and is nonassessable. Except as permitted to
be issued or created pursuant to the terms hereof or as reflected on
Schedule 3.13 (or Schedule 3.13(a) after the Permitted Reorganization Effective
Date), there are no outstanding subscriptions, options, warrants, calls, or
rights (including preemptive rights) to acquire, and no outstanding securities
or instruments convertible into any Equity Interests of the Company, any
Borrower or any Subsidiary. The Company directly or indirectly, owns 100% of the
issued and outstanding Equity Interests of the CSW Borrower, the Whitmore
Borrower and each of the other Subsidiaries.

 

62

--------------------------------------------------------------------------------

SECTION 3.14. Insurance. Each Loan Party and each Subsidiary maintains with
financially sound and reputable insurers, insurance with respect to its
properties and business against such casualties and contingencies and in such
amounts as are required by Section 5.06 hereto and as are otherwise usually
carried by businesses engaged in similar activities as the Loan Parties and
their Subsidiaries and located in similar geographic areas in which the Loan
Parties and their Subsidiaries operate.

SECTION 3.15. Labor Matters. As of the Effective Date, there are no strikes,
lockouts or slowdowns against any Loan Party or any Subsidiary pending or, to
the knowledge of any Loan Party, threatened. After the Effective Date, there are
no strikes, lockouts or slowdowns against any Loan Party or any Subsidiary
pending or, to the knowledge of any Loan Party, threatened, that could
reasonably be expected to result in a Material Adverse Effect. The hours worked
by and payments made to employees of the Loan Parties and their Subsidiaries
have not been in violation of the Fair Labor Standards Act or any other
applicable federal, state, local or foreign law dealing with such matters except
where failure to comply could not reasonably be expected to result in a Material
Adverse Effect. As of the Effective Date, all material payments due from any
Loan Party or any Subsidiary, or for which any claim may be made against any
Loan Party or any Subsidiary, on account of wages and employee health and
welfare insurance and other benefits, have been paid or accrued as a liability
on the books of such Loan Party or such Subsidiary. After the Effective Date,
all payments due from any Loan Party or any Subsidiary, or for which any claim
may be made against any Loan Party or any Subsidiary, on account of wages and
employee health and welfare insurance and other benefits, have been paid or
accrued as a liability on the books of such Loan Party or such Subsidiary except
where the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.

SECTION 3.16. Margin Securities. Neither any Loan Party nor any Subsidiary is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulations U or X of the Board of Governors of the Federal
Reserve System), and no part of the proceeds of any Loan will be used to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying margin stock.

SECTION 3.17. Security Interest in Collateral. The provisions of the Collateral
Documents create legal and valid Liens on all the Collateral in favor of the
Administrative Agent, for the benefit of the Administrative Agent and the
Secured Parties, and such Liens constitute perfected and continuing Liens on the
Collateral, securing the Obligations, enforceable against the applicable Loan
Party and all third parties, and having priority over all other Liens on the
Collateral except in the case of (a) Permitted Encumbrances, to the extent any
such Permitted Encumbrances would have priority over the Liens in favor of the
Administrative Agent pursuant to any applicable law, (b) Liens perfected only by
possession to the extent the Administrative Agent has not obtained or does not
maintain possession of such Collateral and (c) Liens permitted under
Section 6.02.

SECTION 3.18. Solvency. Immediately after the consummation of the Transactions
and the Headquarters Transactions to occur on the Effective Date, (i) the fair
value of the assets of each Loan Party, at a fair valuation, will exceed its
debts and liabilities, subordinated, contingent or otherwise; (ii) the present
fair saleable value of the property of each Loan Party will be greater than the
amount that will be required to pay the probable liability of its debts and
other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; (iii) each Loan Party will be
able to pay its debts and liabilities, subordinated, contingent or otherwise, as
such debts and liabilities become absolute and matured; and (iv) no Loan Party
will have unreasonably small capital with which to

 

63

--------------------------------------------------------------------------------

conduct the business in which it is engaged as such business is conducted as of
the Effective Date and is proposed to be conducted after the Effective Date. As
used in this Section 3.18, the term “fair value” means the amount at which the
applicable assets would change hands between a willing buyer and a willing
seller within a reasonable time, each having reasonable knowledge of the
relevant facts, neither being under any compulsion to act, with equity to both
and “present fair saleable value” means the amount that may be realized if the
applicable company’s aggregate assets are sold with reasonable promptness in an
arm’s length transaction under present conditions for the sale of a comparable
business enterprises.

SECTION 3.19. Common Enterprise. The successful operation and condition of each
of the Loan Parties is dependent on the continued successful performance of the
functions of the group of the Loan Parties as a whole and the successful
operation of each of the Loan Parties is dependent on the successful performance
and operation of each other Loan Party. Each Loan Party expects to derive
benefit (and its board of directors or other governing body has determined that
it may reasonably be expected to derive benefit), directly and indirectly, from
(i) successful operations of each of the other Loan Parties and (ii) the credit
extended by the Lenders to the Borrowers hereunder, both in their separate
capacities and as members of the group of companies. Each Loan Party has
determined that execution, delivery, and performance of this Agreement and any
other Loan Documents to be executed by such Loan Party is within its purpose, in
furtherance of its direct and/or indirect business interests, will be of direct
and/or indirect benefit to such Loan Party, and is in its best interest.

SECTION 3.20. Use of Proceeds. The proceeds of the Loans have been and will be
used in compliance with Section 5.10.

SECTION 3.21. Anti-Corruption Laws and Sanctions. Each Loan Party has
implemented and maintains in effect policies and procedures designed to ensure
compliance by such Loan Party, its Subsidiaries and their respective directors,
officers, employees and agents with Anti-Corruption Laws and applicable
Sanctions, and such Loan Party, its Subsidiaries and their respective officers
and employees and to the knowledge of such Loan Party, its directors and agents,
are in compliance with Anti-Corruption Laws and applicable Sanctions in all
material respects and are not knowingly engaged in any activity that would
reasonably be expected to result in any Loan Party being designated as a
Sanctioned Person. None of (a) any Loan Party, any Subsidiary or any of their
respective directors, officers or employees, or (b) to the knowledge of any such
Loan Party, or any Subsidiary, any agent of such Loan Party or any Subsidiary
that will act in any capacity in connection with or benefit from the credit
facility established hereby, is a Sanctioned Person. No Borrowing or Letter of
Credit, use of proceeds or other transaction contemplated by this Agreement will
violate any Anti-Corruption Law or applicable Sanctions.

SECTION 3.22. No Burdensome Restrictions. No Loan Party is subject to any
Burdensome Restrictions except Burdensome Restrictions permitted under
Section 6.10.

SECTION 3.23. Material Agreements. Neither any Loan Party nor any Subsidiary is
in default in the performance, observance or fulfillment of any of the material
obligations, covenants or conditions contained in (i) any agreement or
instrument evidencing or governing Funded Debt or (ii) any other agreement to
which it is a party, except, in the case of this clause (ii), to the extent that
such default could not reasonably be expected to result in a Material Adverse
Effect.

SECTION 3.24. Existing Predecessor UCCs. The Existing Predecessor UCCs were
filed on an entity named “Strathmore Holdings, Inc.” and/or “Strathmore
Holdings, LLC” in 2011 and 2012. According to the records of the Delaware
Secretary of State, “Strathmore Holdings, LLC” was merged with and into BJ’s
Wholesale Club, Inc. on July 13, 2012. The certificate of formation for
Strathmore

 

64

--------------------------------------------------------------------------------

Holdings, the Guarantor under the Loan Documents, was filed on March 30, 2015.
Strathmore Holdings owed no Indebtedness to General Electric Capital Corporation
or Deutsche Bank AG, New York Branch, at the time the Existing Predecessor UCCs
were filed by General Electric Capital Corporation or Deutsche Bank AG, New York
Branch, as applicable, and owes no Indebtedness to such creditors at the current
time.

ARTICLE IV

Conditions

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

(a) Credit Agreement and Loan Documents. The Administrative Agent (or its
counsel) shall have received, in each case on terms and conditions, and subject
to documentation in form and substance satisfactory to the Administrative Agent
(i) from each party hereto either (A) a counterpart of this Agreement signed on
behalf of such party or (B) written evidence satisfactory to the Administrative
Agent (which may include fax or other electronic transmission of a signed
signature page of this Agreement) that such party has signed a counterpart of
this Agreement and (ii) duly executed copies of the Loan Documents and such
other certificates, documents, instruments and agreements as the Administrative
Agent shall reasonably request in connection with the transactions contemplated
by this Agreement and the other Loan Documents, including any promissory notes
requested by a Lender pursuant to Section 2.09 payable to the order of each such
requesting Lender and a written opinion of the Loan Parties’ counsel, addressed
to the Administrative Agent, the Issuing Bank, the Swingline Lender and the
Lenders in form and substance reasonably satisfactory to the Administrative
Agent.

(b) Financial Statements and Projections. The Lenders shall have received
satisfactory (i) audited consolidated financial statements of the Company and
its consolidated Subsidiaries for the fiscal years ending March 31, 2014 and
March 31, 2015; provided, that for the fiscal year ending March 31, 2015, the
Borrowers may furnish in lieu of the above described audited financial
statements the combined financial statements of the Company included in the Form
10 filed with the SEC in connection with the SpinOff, (ii) unaudited interim
consolidated financial statements of the Company for each fiscal quarter ended
after the date of the latest applicable financial statements delivered pursuant
to clause (i) of this paragraph and more than 45 days prior to the date hereof,
and such financial statements shall not, in the reasonable judgment of the
Administrative Agent, reflect any material adverse change in the consolidated
financial condition of the Company, as reflected in the audited, consolidated
financial statements described in clause (i) of this paragraph and
(iii) projected balance sheet, income statement and cash flow statement of the
Company for the period beginning April 1, 2015 and ending March 31, 2020.

(c) Closing Certificates; Certified Certificate of Incorporation; Good Standing
Certificates. The Administrative Agent (or its counsel) shall have received, in
each case on terms and conditions, and subject to documentation in form and
substance satisfactory to the Administrative Agent (i) a certificate of each
Loan Party, dated the Effective Date and executed by its respective Secretary or
Assistant Secretary, which shall (A) certify the resolutions of its Board of
Directors, members or other body authorizing the execution, delivery and
performance of the Loan Documents to which it is a party, (B) identify by name
and title and bear the signatures of the officers of such Loan Party authorized
to sign the Loan Documents to which it is a party and, in the case of each of
the Company, the CSW Borrower and the Whitmore Borrower, its Financial Officers,
and (C) contain appropriate attachments, including the charter, articles or
certificate of organization or incorporation of each Loan Party certified

 

65

--------------------------------------------------------------------------------

by the relevant authority of the jurisdiction of organization of such Loan Party
and a true and correct copy of its bylaws or operating, management or
partnership agreement, or other organizational or governing documents, and
(ii) a good standing certificate for each Loan Party from its jurisdiction of
organization.

(d) No Default Certificate. The Administrative Agent (or its counsel) shall have
received, on terms and conditions, and subject to documentation in form and
substance satisfactory to the Administrative Agent, signed by a Financial
Officer of the CSW Borrower, dated as of the Effective Date, a certificate of
such Financial Officer (i) stating that no Default has occurred and is
continuing, (ii) stating that the representations and warranties contained in
the Loan Documents are true and correct as of such date, and (iii) certifying as
to any other factual matters as may be reasonably requested by the
Administrative Agent.

(e) Fees. The Lenders and the Administrative Agent shall have received all fees
required to be paid under the Fee Letter, and all other fees and expenses
required to be reimbursed for which invoices have been presented (including the
reasonable fees and expenses of legal counsel), on or before the Effective Date.

(f) Lien Searches. The Administrative Agent shall have received the results of a
recent lien search in the jurisdiction of organization of each Loan Party and
each jurisdiction where assets of the Loan Parties are located, and such search
shall reveal no Liens on any of the assets of the Loan Parties except for liens
permitted by Section 6.02 or discharged on or prior to the Effective Date
pursuant to payoff letters or other documentation reasonably satisfactory to the
Administrative Agent.

(g) Payoff Letter; Headquarters Loan. The Administrative Agent (or its counsel)
shall have received, in each case on terms and conditions, and subject to
documentation in form and substance reasonably satisfactory to the
Administrative Agent (i) payoff letters for all existing Indebtedness required
to be repaid on or prior to the Effective Date, including, but not limited to,
the Existing Whitmore Credit Agreement and the Existing RectorSeal Credit
Agreement, and which confirm that all Liens upon any of the property of the Loan
Parties constituting Collateral will be terminated concurrently with such
payment and all letters of credit issued or guaranteed as part of such
Indebtedness shall have been Cash Collateralized or supported by a Letter of
Credit and (ii) evidence that the Whitmore Borrower has entered into an
amendment to the Headquarters Loan Agreement concurrently with the Effective
Date.

(h) Funding Account. The Administrative Agent shall have received a notice
setting forth the deposit account of the Borrower Representative (the “Funding
Account”) to which the Administrative Agent is authorized by the Borrowers to
transfer the proceeds of any Borrowings requested or authorized pursuant to this
Agreement.

(i) Solvency. The Administrative Agent (or its counsel) shall have received a
solvency certificate signed by a Financial Officer of the CSW Borrower dated the
Effective Date giving effect to the Transactions and the Headquarters
Transactions in form and substance reasonably satisfactory to the Administrative
Agent.

(j) Pledged Equity Interests; Stock Powers; Pledged Notes. The Administrative
Agent shall have received (i) the certificates representing the Equity Interests
pledged pursuant to the Security Agreement, together with an undated stock power
for each such certificate executed in blank by a duly authorized officer of the
pledgor thereof, and (ii) each promissory note (if any) pledged to the
Administrative Agent pursuant to the Security Agreement endorsed (without
recourse) in blank (or accompanied by an executed transfer form in blank) by the
pledgor thereof.

 

66

--------------------------------------------------------------------------------

(k) Filings, Registrations and Recordings. Each document (including any Uniform
Commercial Code financing statement) required by the Collateral Documents or
under law or reasonably requested by the Administrative Agent to be filed,
registered or recorded in order to create in favor of the Administrative Agent,
for the benefit of the Secured Parties, a perfected Lien on the Collateral
described therein, prior and superior in right to any other Person (other than
with respect to Liens expressly permitted by Section 6.02), shall be in proper
form for filing, registration or recordation.

(l) Collateral Access and Control Agreements. The Administrative Agent shall
have received each Collateral Access Agreement required to be provided pursuant
to the Security Agreement.

(m) Governmental and Third Party Approvals. All governmental and third party
approvals necessary in connection with the financing contemplated hereby and the
continuing operations of the Loan Parties and their subsidiaries (including
shareholder approvals, if any) shall have been obtained on reasonably
satisfactory terms and 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 that would restrain, prevent or otherwise impose
materially adverse conditions any of the transactions contemplated hereby.

(n) No Injunction or Restraining Order; Litigation. No injunction or temporary
restraining order exists which, in the judgment of the Administrative Agent,
would prohibit the making of the Loans.

(o) Insurance. The Administrative Agent shall have received evidence of
insurance coverage in form, scope, and substance reasonably satisfactory to the
Administrative Agent and otherwise in compliance with the terms of the Loan
Documents.

(p) Legal and Regulatory Due Diligence. The Administrative Agent and its counsel
shall have completed all legal and regulatory due diligence, the results of
which shall be satisfactory to Administrative Agent in its sole discretion

(q) USA PATRIOT Act, Etc. The Administrative Agent and Lenders shall have
received all documentation and other information required by bank regulatory
authorities under applicable “know your customer” and anti-money laundering
rules and regulations, including USA PATRIOT Act, and a properly completed and
signed IRS Form W-8 or W-9, as applicable, for each Loan Party.

(r) Other Documents. The Administrative Agent shall have received such other
documents as the Administrative Agent, the Issuing Bank, any Lender or their
respective counsel may have reasonably requested, other than those items to be
delivered post-closing in accordance with Section 5.17.

The Administrative Agent shall notify the Borrowers, the Lenders and the Issuing
Bank of the Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans and
of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 10.02) at or prior to 2:00 p.m., Dallas, Texas time, on
December 31, 2015 (and, in the event such conditions are not so satisfied or
waived, the Commitments shall terminate at such time).

 

67

--------------------------------------------------------------------------------

SECTION 4.02. Each Credit Event. The obligation of each Lender to make a Loan on
the occasion of any Borrowing, and of the Issuing Bank to issue, amend, renew or
extend any Letter of Credit, is subject to the satisfaction of the following
conditions:

(a) The representations and warranties of the Loan Parties set forth in the Loan
Documents shall be true and correct in all material respects with the same
effect as though made on and as of the date of such Borrowing or the date of
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable (it being understood and agreed that any representation or warranty
which by its terms is made as of a specified date shall be required to be true
and correct in all material respects only as of such specified date, and that
any representation or warranty which is subject to any materiality qualifier
shall be required to be true and correct in all respects).

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

(c) After giving effect to any Borrowing or the issuance, amendment, renewal or
extension of any Letter of Credit, Availability shall not be less than zero.

(d) No event shall have occurred and no condition shall exist which has or could
be reasonably expected to have a Material Adverse Effect.

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

Notwithstanding the failure to satisfy the conditions precedent set forth in
this Section, unless otherwise directed by the Required Lenders, the
Administrative Agent may, but shall have no obligation to, continue to make
Loans and an Issuing Bank may, but shall have no obligation to, issue, amend,
renew or extend, or cause to be issued, amended, renewed or extended, any Letter
of Credit for the ratable account and risk of Lenders from time to time if the
Administrative Agent believes that making such Loans or issuing, amending,
renewing or extending, or causing the issuance, amendment, renewal or extension
of, any such Letter of Credit is in the best interests of the Lenders.

ARTICLE V

Affirmative Covenants

Until the Commitments shall have expired or been terminated and the principal of
and interest on each Loan and all fees payable hereunder shall have been paid in
full and all Letters of Credit shall have expired or terminated (in each case
without any pending draw) or been Cash Collateralized, and all LC Disbursements
shall have been reimbursed, each Loan Party executing this Agreement covenants
and agrees, jointly and severally with all of the other Loan Parties, with the
Lenders that:

SECTION 5.01. Financial Statements and Other Information. The Borrowers will
furnish to the Administrative Agent and each Lender:

(a) Annual Audit. Within 120 days after the end of each fiscal year of the
Company, beginning with the fiscal year ending March 31, 2016, its audited
consolidated balance sheets and related statements of income, shareholders’
equity and comprehensive income and cash flows as of the end of and for such
year, setting forth, if applicable, in each case in comparative form the figures
for

 

68

--------------------------------------------------------------------------------

the previous fiscal year, all reported on by independent public accountants
reasonably acceptable to Administrative Agent (Grant Thornton being deemed
acceptable) (without a “going concern” or like qualification or exception and
without any qualification or exception as to the scope of such audit) to the
effect that such consolidated financial statements present fairly in all
material respects the financial condition and results of operations of the
Company and the Subsidiaries on a consolidated and unaudited consolidating basis
in accordance with GAAP consistently applied; and

(b) Quarterly Financial Statements. Within 45 days after the end of each fiscal
quarter of each fiscal year of the Company, its consolidated balance sheets and
related statements of income, shareholder’s equity and comprehensive income and
cash flows as of the end of and for such fiscal quarter and the then elapsed
portion of the fiscal year, setting forth, to the extent applicable, in each
case in comparative form the figures for the corresponding period or periods of
(or, in the case of the balance sheets, as of the end of) the previous fiscal
year, all certified by a Financial Officer of the CSW Borrower as presenting
fairly in all material respects the financial condition and results of
operations of the Company and the Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes; and

(c) Compliance Certificate. Concurrently with any delivery of financial
statements under clause (a) or (b) of this Section 5.01, a certificate in
substantially the form of Exhibit C hereto of a Financial Officer of the CSW
Borrower: (i) certifying as to whether a Default has occurred and, if a Default
has occurred, specifying the details thereof and any action taken or proposed to
be taken with respect thereto, (ii) setting forth reasonably detailed
calculations of the financial covenants set forth in Article VII, (iii) stating
whether any change in GAAP or in the application thereof has occurred since the
date of the Company’s financial statements first delivered hereunder and, if any
such change has occurred, specifying the effect of such change on the financial
statements accompanying such certificate, and (iv) attaching certificates of
insurance or other evidence acceptable to the Administrative Agent that the
insurance required by Section 5.06 is in effect, and;

(d) Employee Benefit Plan Audited Financial Statements. Within 10 days after the
annual report on Form 5500 has been filed for each plan year of the ESOP, each
Plan and each other employee benefit plan sponsored or maintained by any Loan
Party or any Subsidiary for which certified financial statements are required to
be maintained, the audited financial statements of each such plan prepared and
presented in accordance with GAAP; and

(e) Budget. No later than 30 days after the commencement of each fiscal year of
the Company, a detailed consolidated budget for such fiscal year (including a
projected consolidated balance sheet and related statements of projected
operations and cash flow as of the end of and for such fiscal year and setting
forth the assumptions used for purposes of preparing such budget) and, promptly
when available, any significant revisions of such budget; and

(f) Public Reports. Promptly after the same become publicly available, copies of
all periodic and other reports, proxy statements and other materials filed by
any Loan Party or any Subsidiary with the Securities and Exchange Commission, or
any Governmental Authority succeeding to any or all of the functions of said
Commission, or with any national securities exchange; and

(g) Additional Information. Promptly following any request therefor, such other
information regarding any Loan Party or any Subsidiary or compliance with the
terms of any Loan Document, as the Administrative Agent or any Lender may
reasonably request.

The Company represents and warrants that it, its controlling Person and any
Subsidiary, in each case, if any, either (i) has no registered or publicly
traded securities outstanding, or (ii) files its financial

 

69

--------------------------------------------------------------------------------

statements with the SEC and/or makes its financial statements available to
potential holders of its 144A securities, if any, and, accordingly, the Company
hereby (i) authorizes the Administrative Agent to make the financial statements
to be provided under Section 5.01(a) and (b) above (collectively or
individually, as the context requires, the “Financial Statements”), along with
this Agreement, any executed amendments thereto, the Loan Guaranty, each
Obligation Guaranty and the Collateral Documents, available to Public-Siders and
(ii) agree that at the time such Financial Statements are provided hereunder,
they shall already have been made available to holders of its securities. The
Company will not request that any other material be posted to Public-Siders
without expressly representing and warranting to the Administrative Agent in
writing that such materials do not constitute material non-public information
within the meaning of the federal securities laws or that the Company has no
outstanding publicly traded securities, including 144A securities (nor will the
Company be required to post or make available to Public-Siders materials that
constitute material non-public information within the meaning of the federal
securities laws at any time that the Company has any outstanding publicly traded
securities, including 144A securities). In no event shall the Administrative
Agent post compliance certificates or budgets to Public-Siders.

SECTION 5.02. Notices of Material Events. The Borrowers will furnish to the
Administrative Agent and each Lender prompt (but in any event within any time
period that may be specified below) written notice of the following:

(a) Default. The occurrence of any Default;

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

(c) Notice of Casualty, etc. As soon as possible and in any event within 5 days
after the occurrence thereof, written notice of any of the events described in
Section 5.11;

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

Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer of the CSW Borrower setting forth the details of the event
or development requiring such notice and any action taken or proposed to be
taken with respect thereto.

SECTION 5.03. Existence; Conduct of Business. Each Loan Party will, and will
cause each Subsidiary (except, with respect to Subsidiaries, as otherwise
provided with under Section 6.03) to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges, franchises, patents,
copyrights, trademarks and trade names material to the conduct of its business.

SECTION 5.04. Payment of Obligations. Each Loan Party will, and will cause each
Subsidiary to, pay its Funded Debt and other material obligations, including Tax
liabilities, before the same shall become delinquent or in default, except where
(a) the validity or amount thereof is being contested in good faith by
appropriate proceedings, (b) such Loan Party or such Subsidiary has set aside on
its books adequate reserves with respect thereto in accordance with GAAP,
(c) such contest effectively suspends collection of the contested obligation and
the enforcement of any Lien securing such obligation, and (d) the failure to
make payment pending such contest could not reasonably be expected to result in
a Material Adverse Effect.

 

70

--------------------------------------------------------------------------------

SECTION 5.05. Maintenance and Use of Properties; Notices.

(a) Each Loan Party will, and will cause each Subsidiary to, keep and maintain
all property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted.

(b) Except as could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect, neither any Loan Party nor any
Subsidiary will use or knowingly permit any third party to use, generate,
manufacture, produce, store, or release, on, under or at the Real Property, or
transfer to or from the Real Property, any Hazardous Material, except in
compliance with all Environmental Laws, and each Loan Party and each Subsidiary
shall otherwise comply, at its sole expense and responsibility, with all
Environmental Laws, provided that if any such occurrence shall nevertheless
happen, the Loan Parties shall promptly remedy such condition at their sole
expense and responsibility, provided, further, that nothing herein shall
prohibit any Loan Party from undertaking appropriate proceedings against any
third party that may be responsible for such condition. The Loan Parties shall
promptly notify the Administrative Agent in writing if any officer of any Loan
Party learns of the occurrence of any material violation of any Environmental
Law on or affecting or otherwise in respect of the Real Property.

(c) The Borrower Representative will furnish to the Administrative Agent prompt
(but in any event within fifteen (15) days) written notice of the execution by
any Loan Party of any agreement granting any Person any right of first refusal,
option or other contractual right to purchase any owned Real Property or any
material interest therein.

SECTION 5.06. Insurance.

(a) Required Coverage. Each Loan Party will, and will cause each Subsidiary to,
maintain insurance coverage with financially sound and reputable insurers in
such amounts and covering such risks as are usually carried by companies engaged
in similar businesses and owning similar properties in the same general areas in
which such Loan Party or such Subsidiary operates. Without limiting the
foregoing, each Loan Party agrees that it will, and will cause each Subsidiary
to, obtain when the nature of its business requires it or when the
Administrative Agent shall otherwise reasonably request, and will thereafter
continuously maintain the following described policies of insurance:

(i) Commercial General Liability. Comprehensive General Liability Insurance on
ACORD form 25 with limits of not less than $2,000,000 per occurrence combined
single limit and $2,000,000 in the aggregate for the policy period, or in
whatever higher amounts as may be reasonably required by Administrative Agent
from time to time by notice to the Borrower Representative, and extended to
cover: (A) Blanket Contractual Liability assumed by any Loan Party or Subsidiary
with defense provided in addition to policy limits for indemnities of the named
insured, (B) Independent Contractors Liability providing coverage in connection
with such portion of the work which is subcontracted, (C) Broad Form Property
Damage Liability, (D) Products & Completed Operations form coverage, such
coverage to apply for two years following completion of construction, (E) waiver
of subrogation against all parties named additional insured, (F) severability of
interest provision, and (G) Personal Injury & Advertisers Liability.

(ii) Automobile Liability. Automobile Liability including coverage on owned,
hired and non-owned automobiles and other vehicles, with Bodily Injury and
Property Damage limits of not less than $1,000,000 per occurrence combined
single limit, with a waiver of subrogation against all parties named as
additional insured.

 

71

--------------------------------------------------------------------------------

(iii) Workers’ Compensation and Employer’s Liability. Workers’ Compensation and
Employer’s Liability Insurance in accordance with applicable laws. The policy
limit under the Employer’s Liability Insurance section shall not be less than
$1,000,000 for any one accident.

(iv) Umbrella/Excess Liability. Umbrella/Excess Liability in excess of
Commercial General Liability, Automobile Liability and Employers’ Liability
coverages which is at least as broad as these underlying policies with a limit
of liability of $10,000,000.

(v) Casualty. All-Risk Property (Special Cause of Loss) Insurance on the
improvements and equipment included in the Collateral in an amount not less than
$50,000,000. This policy must also list Administrative Agent as mortgagee and
loss payee.

(vi) Other Insurance. Such other insurance as Administrative Agent may require,
which may include, without limitation, errors and omissions insurance, business
interruption insurance, with respect to the contractors, architects and
engineers, rent abatement and/or business loss.

(b) Forms of Policies. All insurance policies shall (i) be issued by an
insurance company licensed to do business in Texas having a rating of “A-” VIII
or better by A.M. Best Co., in Best’s Rating Guide, (ii) name “JPMorgan Chase
Bank, National Association, as Administrative Agent” as additional insured on
all liability insurance and as mortgagee and loss payee on all All-Risk Property
insurance, (iii) be endorsed to show that each Loan Party’s and each
Subsidiary’s insurance shall be primary and all insurance carried by
Administrative Agent is strictly excess and secondary and shall not contribute
with any Loan Party’s or any Subsidiary’s insurance, (iv) provide that
Administrative Agent is to receive notice prior to non-renewal or cancellation,
(v) be evidenced by a certificate of insurance to be provided to Administrative
Agent along with a copy of the policy for All-Risk Property coverage,
(vi) include either policy or binder numbers on the Accord form, and
(vii) otherwise be in form and amounts reasonably acceptable to Administrative
Agent.

(c) Evidence of Insurance; Payment of Premiums. The Borrower Representative
shall deliver to Administrative Agent, at least five (5) days before the
expiration of an existing policy, evidence acceptable to Administrative Agent of
the continuation of the coverage of the expiring policy. If Administrative Agent
has not received satisfactory evidence of such continuation of coverage in the
time frame herein specified, Administrative Agent shall have the right, but not
the obligation, after prior notice to the Borrower Representative, to purchase
such insurance for Administrative Agent’s and the Lenders’ interest only. Any
amounts so disbursed by Administrative Agent pursuant to this Section 5.06(c)
shall be repaid by the Loan Parties within ten (10) Business Days after written
demand therefor. Nothing contained in this Section 5.06(c) shall require
Administrative Agent to incur any expense or take any action hereunder, and
inaction by Administrative Agent shall never be considered a waiver of any right
accruing to Administrative Agent on account on this Section 5.06(c). The payment
by Administrative Agent of any insurance premium for insurance which any Loan
Party or any Subsidiary is obligated to provide hereunder but which
Administrative Agent believes has not been paid, shall be conclusive between the
parties as to the legality and amounts so paid. Each Loan Party agrees to pay,
and to cause each Subsidiary to pay, all premiums on such insurance as they
become due, and will not permit any condition to exist on or with respect to the
Real Property which would (x) invalidate any material portion or (y) wholly
invalidate any insurance thereon.

(d) Collateral Protection. Unless the Borrower Representative provides
Administrative Agent with evidence satisfactory to Administrative Agent of the
insurance coverage required by this Agreement, Administrative Agent may purchase
insurance at the Loan Parties’ expense to protect

 

72

--------------------------------------------------------------------------------

Administrative Agent’s and the Lenders’ interest in the Collateral. This
insurance may, but need not, protect the Loan Parties’ interest in the
Collateral. The coverages that Administrative Agent purchases may not pay any
claim that a Loan Party makes or any claim that is made against a Loan Party in
connection with the Collateral. The Loan Parties may later cancel any insurance
purchased by Administrative Agent, but only after providing Administrative Agent
with evidence satisfactory to Administrative Agent that the Loan Parties have
obtained insurance as required by this Agreement. If Administrative Agent
purchases insurance for the Collateral, the Loan Parties will be responsible for
the costs of that insurance, including any charges imposed by Administrative
Agent in connection with the placement of insurance, until the effective date of
the cancellation or expiration of such insurance. The costs of the insurance
may, at Administrative Agent’s discretion, be added to the Loan Parties’ total
principal obligation owing to Administrative Agent and the Lenders, and in any
event shall be secured by the Liens on the Collateral created by the Loan
Documents. It is understood and agreed that the costs of insurance obtained by
Administrative Agent may be more than the costs of insurance the Loan Parties
may be able to obtain on their own.

(e) No Liability; Assignment. Administrative Agent shall not by the fact of
approving, disapproving, accepting, preventing, obtaining or failing to obtain
any such insurance, incur any liability for the form or legal sufficiency of
insurance contracts, solvency of insurers, or payment of losses, and each Loan
Party hereby expressly assumes full responsibility therefor and all liability,
if any, thereunder. Each Loan Party hereby absolutely assigns and transfers to
Administrative Agent for the benefit of the Lenders all of such Loan Party’s
right, title and interest in and to any unearned premiums paid on policies and
any claims thereunder and Administrative Agent and/or the Lenders shall have the
right, but not the obligation, to assign any then existing claims under the same
to any purchaser of the Real Property at any foreclosure sale; provided,
however, that so long as no Default exists, each Loan Party shall have the right
under a license granted hereby, and Administrative Agent hereby grants to each
Loan Party a license, to exercise rights under said policies and in and to said
premiums subject to the provisions of this Agreement. Said license shall be
revoked automatically when a Default exists.

SECTION 5.07. Insurance, Condemnation and Casualty Losses. The payment of any
insurance proceeds, condemnation awards or other compensation payable in respect
of any damage to or destruction or taking of any portion of any of the
Collateral may be negotiated with the applicable payor by the Loan Parties if no
Event of Default exists. If an Event of Default exists, the Administrative Agent
shall have the sole right to negotiate the amounts payable with respect to any
loss or taking of any of the Collateral.

SECTION 5.08. Books and Records; Inspection Rights. Each Loan Party will, and
will cause each Subsidiary to, keep proper books of record and account in which
full, true and correct entries are made of all transactions in relation to its
business and activities. Each Loan Party will, and will cause each Subsidiary
to, permit any representatives designated by the Administrative Agent, upon
reasonable prior notice, to visit and inspect its properties, to examine and
make extracts from its books and records, and to discuss its affairs, finances
and condition with its officers and, if reasonably requested by the
Administrative Agent, its independent accountants, all at such reasonable times
and as often as reasonably requested. During the continuance of an Event of
Default, each Loan Party will, and will cause each Subsidiary to, permit any
representatives designated by any Lender, upon reasonable prior notice, to visit
and inspect its properties, to examine and make extracts from its books and
records.

SECTION 5.09. Compliance with Laws and Material Contractual Obligations. Each
Loan Party will, and will cause each of Subsidiary to, comply with all laws,
rules, regulations and orders of any Governmental Authority applicable to it or
its property, and perform in all material respects its obligations under
material agreements to which it is a party, except, in each case, where the
failure to do

 

73

--------------------------------------------------------------------------------

so, individually or in the aggregate, could not reasonably be expected to result
in a Material Adverse Effect. Each Loan Party will maintain in effect and
enforce policies and procedures designed to ensure compliance by such Loan
Party, its Subsidiaries and their respective directors, officers, employees and
agents with Anti-Corruption Laws and applicable Sanctions.

SECTION 5.10. Use of Proceeds.

(a) The proceeds of the Revolving Loans will be used for payment of fees and
expenses payable in connection with the Transactions (other than upfront fees),
acquisitions permitted pursuant to the terms of Sections 6.04(l) and (m), for
other working capital and other general corporate purposes of the Borrowers and
the Subsidiaries of the Borrowers and to refinance the Existing Whitmore Credit
Agreement and the Existing RectorSeal Credit Agreement. No part of the proceeds
of any Loan and no Letter of Credit will be used, whether directly or
indirectly, for any purpose that entails a violation of any of the Regulations
of the Board, including Regulations T, U and X. Letters of Credit will be issued
only to support transactions of the Loan Parties and their Subsidiaries entered
into in the ordinary course of business.

(b) The Borrowers will not request any Borrowing or Letter of Credit, and no
Borrower shall use, and each Borrower shall procure that its Subsidiaries and
its or their respective directors, officers, employees and agents shall not use,
the proceeds of any Borrowing or Letter of Credit (a) in furtherance of an
offer, payment, promise to pay, or authorization of the payment or giving of
money, or anything else of value, to any Person in violation of any
Anti-Corruption Laws, (b) for the purpose of funding, financing or facilitating
any activities, business or transaction of or with any Sanctioned Person, or in
any Sanctioned Country, or (c) in any manner that would result in the violation
of any Sanctions applicable to any party hereto.

SECTION 5.11. Casualty and Condemnation. The Borrower Representative (a) will
furnish to the Administrative Agent and the Lenders prompt written notice of any
casualty or other insured damage to any material portion of the Collateral or
the commencement of any action or proceeding for the taking of any material
portion of the Collateral or interest therein under power of eminent domain or
by condemnation or similar proceeding and (b) will ensure that the Net Proceeds
of any such event (whether in the form of insurance proceeds, condemnation
awards or otherwise) are collected and applied in accordance with the applicable
provisions of this Agreement and the Collateral Documents.

SECTION 5.12. Additional Collateral; Further Assurances.

(a) New Subsidiaries. Subject to applicable Requirements of Law set forth in
clause (b) of that definition, each Loan Party will cause each of its Domestic
Subsidiaries formed or acquired after the date of this Agreement to become a
Loan Party by executing a Joinder Agreement. Upon execution and delivery
thereof, each such Person (i) shall automatically become a Loan Guarantor
hereunder and thereupon shall have all of the rights, benefits, duties, and
obligations in such capacity under the Loan Documents and (ii) will grant Liens
to the Administrative Agent, for the benefit of the Administrative Agent and the
other Secured Parties, in any property of such Loan Party of the type which
constitutes Collateral, including certain parcels of Real Property located in
the U.S.; provided, however, (i) any Domestic Subsidiary that becomes a Loan
Party and owns Equity Interests in a Disregarded Domestic Person will only be
required to pledge its Equity Interests in any Disregarded Domestic Person in
accordance with Section 5.12(b) and (ii) any Disregarded Domestic Person that
becomes a Loan Party will only be required to pledge its Equity Interests in any
Foreign Subsidiary in which it owns Equity Interests in accordance with
Section 5.12(b).

 

74

--------------------------------------------------------------------------------

(b) Equity Interests of Subsidiaries. Each Loan Party will cause (i) 100% of the
issued and outstanding Equity Interests of each of its Domestic Subsidiaries
(other than Disregarded Domestic Persons), (ii) 65% of the issued and
outstanding Equity Interests in each Disregarded Domestic Person and (iii) 65%
of the issued and outstanding Equity Interests entitled to vote (within the
meaning of Treas. Reg. Section 1.956-2(c)(2)) and 100% of the issued and
outstanding Equity Interests not entitled to vote (within the meaning of Treas.
Reg. Section 1.956-2(c)(2)) in each Foreign Subsidiary directly owned by such
Loan Party to be subject at all times to a first priority, perfected Lien in
favor of the Administrative Agent for the benefit of the Administrative Agent
and the other Secured Parties, pursuant to the terms and conditions of the Loan
Documents or other Collateral Documents as the Administrative Agent shall
reasonably request.

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

(d) Acquisition of Material Assets. If any material assets (including any assets
acquired in an acquisition permitted hereby) are acquired by any Loan Party
after the Effective Date (excluding (i) assets constituting Collateral under the
Collateral Documents that become subject to the Lien of the Collateral Documents
upon acquisition thereof, (ii) assets excluded from the Collateral under the
Collateral Documents and (iii) any interests in Real Property, other than
fixtures, landlord waivers, other collateral access agreements, subordinations,
bailee or other warehouse waivers, consents and other waivers not granting a
Lien in the Real Property), the Borrower Representative will notify the
Administrative Agent thereof, and, if requested by the Administrative Agent,
cause such assets to be subjected to a Lien securing the Obligations and will
take, and cause each applicable Loan Party or Subsidiary to take, such actions
as shall be necessary or reasonably requested by the Administrative Agent to
grant, perfect and protect such Liens, including actions described in
paragraph (a) of this Section and deliver such other documentation as the
Administrative Agent may reasonably request in connection with the foregoing,
including, without limitation, appropriate UCC-1 financing statements,
landlord’s waivers, certified resolutions and other organizational and
authorizing documents of such Loan Party, favorable opinions of counsel to such
Person (which shall cover, among other things, the legality, validity, binding
effect and enforceability of the Collateral Documents referred to above and the
perfection of the Administrative Agent’s Liens thereunder), all in form, content
and scope reasonably satisfactory to the Administrative Agent.

SECTION 5.13. Depository Banks. To provide additional security for the
Obligations, each Loan Party and each Subsidiary will maintain all of their
primary depository, lockbox and operating accounts at a Lender; provided that
(a) the payroll bank account and the flexible spending bank account of the
Borrowers and the Subsidiaries of the Borrowers and other accounts used
exclusively for payroll, payroll taxes and other wage and benefit payments may
be located at American National Bank of Texas or at a Lender or an Affiliate of
a Lender, and (b) accounts may be opened with a financial institution other than
a Lender at any location where a Lender does not have a branch that is
reasonably convenient to such Loan Party and such Loan Party has a reasonable
business need to maintain an account or accounts at such location; provided
further, subject to the immediately preceding proviso, that each Loan

 

75

--------------------------------------------------------------------------------

Party and each Subsidiary shall have up to six months after the Effective Date
or after the date of the acquisition of any primary depository, lockbox and
operating accounts that are located at an entity that is not a Lender to move
such primary depository, lockbox or operating accounts of Subsidiaries to
accounts at a Lender to comply with this Section 5.13, provided further that, if
a Loan Party has any primary depository, lockbox or operating accounts at a
financial institution that was a Lender at the time such accounts were opened,
such Loan Party will have up to six months to move any such primary depository,
lockbox or operating accounts of such Loan Party to accounts at a Lender.

SECTION 5.14. Accuracy of Information. The Loan Parties will ensure, and will
cause the Subsidiaries to ensure, that any information, including financial
statements or other documents, furnished to the Administrative Agent or the
Lenders in connection with this Agreement or any other Loan Document or any
amendment or modification hereof or thereof or waiver hereunder or thereunder
contains no 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, and the furnishing of such
information shall be deemed to be a representation and warranty by the Borrowers
on the date thereof as to the matters specified in this Section 5.14.

SECTION 5.15. Employee Benefit Plans. Each Loan Party will, and will cause each
Subsidiary to, maintain each employee benefit plan as to which it may have any
liability, in material compliance with all applicable rules, regulations and
other laws, except where the failure to so comply could not reasonably be
expected to subject the applicable employee benefit plan, trust or any Loan
Party to any liability in excess of $1,500,000. The Borrower Representative will
provide the Administrative Agent and the Lenders with written notice promptly
upon (and in no event later than ten (10) Business Days after) the occurrence of
any of the following: (a) the institution of steps by any Loan Party or any
Subsidiary to withdraw from, or the institution of any steps to terminate, any
employee benefit plan as to which it could reasonably be expected to have
liability (including the ESOP, any Plan and any Multiemployer Plan) in excess of
$1,500,000; (b) any ERISA Event or any material non-exempt prohibited
transaction or Code violation that has occurred or been alleged in writing to
have occurred with respect to any employee benefit plan (including the ESOP, any
Plan and any Multiemployer Plan) with respect to which any Loan Party or any
Subsidiary could reasonably be expected to have any liability or obligation in
excess of $1,500,000; (c) the initiation of any investigation or review by the
IRS or the Department of Labor or any other Governmental Authority as to whether
a material non-exempt prohibited transaction or Code violation might have
occurred with respect to any employee benefit plan (including the ESOP, any Plan
and any Multiemployer Plan) with respect to which any Loan Party or any
Subsidiary could reasonably be expected to have liability in excess of
$1,500,000; (d) receipt by any Loan Party or any Subsidiary of notice of any
audit, investigation, litigation or inquiry by the Department of Labor or the
IRS relating to the ESOP, any Plan, any Multiemployer Plan or any other employee
benefit plan sponsored or maintained by any Loan Party or any Subsidiary or with
respect to which any Loan Party or any Subsidiary could reasonably be expected
to have any liability in excess of $1,500,000, including copies of such notice
and copies of all subsequent material correspondence relating thereto; and
(e) any event which would give rise to (i) the loss of the tax qualification of
the ESOP, any Plan, any Multiemployer Plan or any other employee benefit plan
sponsored or maintained by any Loan Party or any Subsidiary, or with respect to
which any Loan Party or Subsidiary could reasonably be expected to have any
liability or obligation, which is intended to be tax qualified under
Section 401(a) of the Code, or the tax-exempt status of the trust established
under any such plan, or (ii) the loss of the ESOP’s status as an employee stock
ownership plan under Section 4975(e)(7) of the Code, in each case which could
reasonably be expected to result in liability or obligation in excess of
$1,500,000.

SECTION 5.16. Maintenance of ESOP. Each Loan Party will, and will cause each
Subsidiary to, take any and all action necessary to: (a) maintain the ESOP as an
“employee stock ownership plan”

 

76

--------------------------------------------------------------------------------

within the meaning of Section 4975(e)(7) of the Code, and to materially satisfy
in form and operation all relevant provisions of the Code, including the
provisions of Section 409 of the Code; (b) maintain the qualified status of the
ESOP under Section 401(a) of the Code, and the tax-exempt status of the ESOP
trust under Section 501(a) of the Code; and (c) ensure that the employer
securities held under the ESOP are “employer securities” within the meaning of
Section 409(l) of the Code.

SECTION 5.17. Post-Closing Matters. Each Loan Party will execute and deliver the
documents and complete the tasks set forth on Schedule 5.17, in each case within
the time limits specified therefor on such Schedule.

SECTION 5.18. Existing Predecessor UCCs. The Loan Parties shall use commercially
reasonable efforts to have the Existing Predecessor UCCs terminated (unless the
Loan Parties shall have taken other actions reasonably acceptable to the
Administrative Agent to ensure that the Existing Predecessor UCCs are not
effective as to Strathmore Holdings).

ARTICLE VI

Negative Covenants

Until the Commitments shall have expired or been terminated and the principal of
and interest on each Loan and all fees, expenses and other amounts payable under
any Loan Document shall have been paid in full and all Letters of Credit shall
have expired or terminated (in each case without any pending draw) or been Cash
Collateralized, and all LC Disbursements shall have been reimbursed, each Loan
Party executing this Agreement covenants and agrees, jointly and severally with
all of the other Loan Parties, with the Lenders that:

SECTION 6.01. Indebtedness. No Loan Party will, nor will it permit any
Subsidiary to, create, incur, assume or permit to exist any Indebtedness,
except:

(a) Indebtedness created under the Loan Documents and the Secured Obligations;

(b) Indebtedness existing on the date hereof and set forth in Schedule 6.01 and
any extensions, renewals and replacements of any such Indebtedness that do not
increase the outstanding principal amount thereof or result in an earlier
maturity date or decreased weighted average life thereof;

(c) Indebtedness of

(i) any Subsidiary that is not a Loan Party to a Loan Party, provided that
(A) any Equity Interests held by a Loan Party in any such Subsidiary shall be
pledged pursuant to the Collateral Documents (subject to the limitations
applicable to Equity Interests in a Foreign Subsidiary referred to in
Section 5.12) and (B) the aggregate amount of investments made by Loan Parties
in, and loans and advances made by Loan Parties to, and Guarantees made by Loan
Parties of Indebtedness of, Subsidiaries that are not Loan Parties (excluding
all intercompany loans and investments listed on Schedule 6.01 and
Schedule 6.04, respectively) shall not exceed $5,000,000 during any fiscal year
of the Company (in each case determined without regard to any write-downs or
write-offs),

(ii) any Subsidiary that is not a Loan Party to another Subsidiary that is not a
Loan Party,

 

77

--------------------------------------------------------------------------------

(iii) any Loan Party to another Loan Party, and

(iv) any Loan Party to a Subsidiary that is not a Loan Party, provided that
(A) such Indebtedness shall be Subordinated Indebtedness and (B) the sum of the
amount of all such Indebtedness under this clause (c)(iv) plus, without
duplication, the amount of Guarantees outstanding under clause (d)(iv) of this
Section 6.01 shall not exceed $1,500,000 in the aggregate outstanding at any
time;

(d) Guarantees of Indebtedness of

(i) any Subsidiary that is not a Loan Party by a Loan Party, subject to the
limitations set forth in clause (c)(i) preceding,

(ii) any Subsidiary that is not a Loan Party by another Subsidiary that is not a
Loan Party,

(iii) any Loan Party by another Loan Party, and

(iv) any Loan Party by a Subsidiary that is not a Loan Party, provided that
(A) such Guarantee shall constitute Subordinated Indebtedness and (B) the sum of
the amount of all such Guarantees under this clause (d)(iv) plus, without
duplication, the amount of Indebtedness outstanding under clause (c)(iv) of this
Section 6.01 shall not exceed $1,500,000 in the aggregate outstanding at any
time;

(e) Indebtedness of the Company, any Borrower or any Subsidiary that is
(i) incurred to finance the acquisition, construction or improvement of any
fixed or capital assets, including Capital Lease Obligations and any
Indebtedness assumed in connection with the acquisition of any such assets or
secured by a Lien on any such assets prior to the acquisition thereof, or
(ii) purchase money Indebtedness, and, in each case, extensions, renewals and
replacements of any such Indebtedness that do not increase the outstanding
principal amount thereof or result in an earlier maturity date or decreased
weighted average life thereof; provided that (A) such Indebtedness is incurred
prior to or within 90 days after such acquisition or the completion of such
construction or improvement and (B) the principal amount of Indebtedness
permitted by this clause (e) in the aggregate for the Company and its
Subsidiaries shall not exceed $5,000,000 at any time outstanding;

(f) Indebtedness of the Loan Parties arising in connection with Swap Agreements
permitted by Section 6.07;

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

(h) unsecured Indebtedness in respect of insurance premiums, performance bonds,
bid bonds, appeal bonds, bankers acceptances, surety bonds or other similar
obligations arising in the ordinary course of business, and any refinancings
thereof, in each case to the extent not provided to secure repayment of other
Indebtedness;

(i) unsecured Indebtedness representing deferred compensation to directors,
officers, members of management or employees of the Loan Parties or the
Subsidiaries incurred in the ordinary course of business in connection with any
acquisitions permitted under the terms of Section 6.04, provided that, the
amount of Indebtedness permitted by this clause (i) in the aggregate for the
Company and its Subsidiaries shall not exceed $1,000,000 at any time
outstanding;

 

78

--------------------------------------------------------------------------------

(j) unsecured Indebtedness consisting of notes to future, present or former
directors, officers, members of management or employees or consultants of the
Loan Parties or the Subsidiaries or their respective estates, heirs, family
members, spouses or former spouses to finance the purchase or redemption of
Equity Interests of the Company, provided that, the amount of Indebtedness
permitted by this clause (j) in the aggregate for the Company and its
Subsidiaries shall not exceed $500,000 at any time outstanding;

(k) Indebtedness arising from judgments or decrees that do not constitute Events
of Default;

(l) Indebtedness consisting of earnouts relating to the Strathmore Acquisition
and acquisitions permitted by Section 6.04(l) or (m) in an aggregate amount not
to exceed $25,000,000 at any time outstanding;

(m) Indebtedness incurred in connection with the Headquarters Loan and any other
obligations arising under or in connection with the Headquarters Loan Agreement
or the Headquarters Loan Documents;

(n) unsecured Subordinated Indebtedness of the Borrowers not exceeding
$50,000,000 in the aggregate at any time outstanding; and

(o) other unsecured Indebtedness of the Loan Parties not exceeding $10,000,000
in the aggregate at any time outstanding.

SECTION 6.02. Liens. No Loan Party will, nor will it permit any Subsidiary to,
create, incur, assume or permit to exist any Lien on any property or asset now
owned or hereafter acquired by it, or assign or sell any income or revenues
(including accounts receivable) or rights in respect of any thereof, except:

(a) Liens created under the Loan Documents;

(b) Permitted Encumbrances;

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

(d) any Lien existing on any property or asset prior to the acquisition thereof
by the Company or any Subsidiary (so long as such property was acquired after
the Effective Date); provided that (i) such Lien is not created in contemplation
of or in connection with such acquisition, (ii) such Lien shall not apply to any
other property or assets of the Loan Party and (iii) such Lien shall secure only
those obligations which it secures on the date of such acquisition and
extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof;

(e) Liens on fixed or capital assets acquired, constructed or improved by the
Company or any Subsidiary; provided that (i) such Liens secure Indebtedness
permitted by clause (e) of Section 6.01, (ii) such Liens and the Indebtedness
secured thereby are incurred prior to or within 90 days after such

 

79

--------------------------------------------------------------------------------

acquisition or the completion of such construction or improvement, (iii) the
Indebtedness secured thereby does not exceed 100% of the cost of acquiring,
constructing or improving such fixed or capital assets and (iv) such Liens shall
not apply to any other property or assets of the Company or any Subsidiary;

(f) Liens on (i) the Headquarters Real Property and (ii) the building,
improvements and other assets located on or at the Headquarters Real Property
securing obligations created under the Headquarters Loan Documents, but
specifically excluding Liens on personal property that constitute Collateral
under this Agreement, including, but not limited to, office equipment, counters,
lifts, mechanical equipment or storage tanks, and a crane on craneways, so long
as the holder of such Lien referred to in the foregoing (i) and (ii) is subject
to a Collateral Access Agreement granting the Administrative Agent access to any
Collateral on the Headquarters Real Property;

(g) Liens arising out of conditional sale, title retention, consignment or
similar arrangements for the sale of goods entered into by the Loan Parties or
the Subsidiaries in the ordinary course of business and in accordance with past
practices; and

(h) Liens granted by a Subsidiary that is not a Loan Party in favor of a Loan
Party or in respect of Indebtedness owed by such Subsidiary.

SECTION 6.03. Fundamental Changes. No Loan Party will, nor will it permit any
Subsidiary to, merge into or consolidate with any other Person, or permit any
other Person to merge into or consolidate with it, or liquidate or dissolve
except that, if at the time thereof and immediately after giving effect thereto
no Default exists: (a) any Subsidiary may merge into a Borrower in a transaction
in which such Borrower is the surviving entity, (b) any Loan Party (other than a
Borrower) may merge into any other Loan Party in a transaction in which the
surviving entity is a Loan Party, (c) any Borrower may merge into any other
Borrower in a transaction in which the surviving entity is a Borrower, so long
as such surviving entity assumes all obligations of such Borrower under the Loan
Documents and all of the other Secured Obligations, (d) any Subsidiary that is
not a Loan Party may merge into any other Subsidiary that is a Loan Party in
which the surviving entity is a Subsidiary, (e) any Subsidiary may liquidate or
dissolve if the CSW Borrower determines in good faith that such liquidation or
dissolution is in the best interests of the CSW Borrower and is not materially
disadvantageous to the Lenders and, if such Subsidiary is a Loan Party, its
assets are transferred to a Loan Party, and (f) any Loan Party and any
Subsidiary may merge or consolidate with any Person acquired pursuant to an
acquisition permitted under Section 6.04(l) as long (i) as such Loan Party or
such Subsidiary is the surviving entity or (ii) the Person so acquired becomes a
Loan Party prior to or concurrently with such merger or consolidation and
complies with provisions of this Agreement and the other Loan Documents,
including, without limitation, Section 5.12 hereof; provided that any such
merger involving a Person that is not a wholly owned Subsidiary immediately
prior to such merger shall not be permitted unless also permitted by
Section 6.04. No Loan Party will, nor will it permit any Subsidiary to, engage
to any material extent in any business other than businesses of the type
conducted by the Loan Parties and the Subsidiaries on the date of execution of
this Agreement and businesses that are reasonably related thereto.

SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions. No Loan
Party will, nor will it permit any Subsidiary to, form any subsidiary after the
Effective Date, or purchase, hold or acquire (including pursuant to any merger
with any Person that was not a Loan Party and a wholly owned Subsidiary prior to
such merger) any Equity Interests in or evidences of indebtedness or other
securities (including any option, warrant or other right to acquire any of the
foregoing) of, make or permit to exist any loans or advances to, Guarantee any
obligations of, or make or permit to exist any investment or any other interest
in, any other Person, or purchase or otherwise acquire (in one transaction or a
series of transactions) any assets of any other Person constituting a business
unit (whether through purchase of assets, merger or otherwise), except:

(a) Permitted Investments;

 

80

--------------------------------------------------------------------------------

(b) investments in existence on the date hereof and described in Schedule 6.04
and any modifications, replacements, renewals or extensions thereof, provided
that the amount of the original investment permitted pursuant to this clause (b)
is not increased from the amount of such investments on the Effective Date;

(c) investments by the Loan Parties and the Subsidiaries in Equity Interests

(i) in Subsidiaries that are not party to this Agreement and Loan Guarantors,
provided that (A) any such Equity Interests held by a Loan Party shall be
pledged pursuant to the Collateral Documents (subject to the limitations
applicable to Equity Interests in a Foreign Subsidiary referred to in
Section 5.12) and (B) the aggregate amount of investments made by Loan Parties
in, and loans and advances made by Loan Parties to, and Guarantees made by Loan
Parties of Indebtedness of, Subsidiaries that are not Loan Parties (excluding
all intercompany loans and investments listed on Schedule 6.01 and Schedule
6.04, respectively) shall not exceed $1,000,000 during any fiscal year of the
Company (in each case determined without regard to any write-downs or
write-offs), and

(ii) in the Borrowers and the Subsidiaries of the Borrowers that are Loan
Parties;

(d) loans or advances made by any Loan Party to another Loan Party or any
Subsidiary and made by any Subsidiary to a Loan Party or any other Subsidiary;
provided that the amount of such loans and advances made by Loan Parties to
Subsidiaries that are not Loan Parties shall be subject to the limitation set
forth in clause (c)(i) of this Section 6.04;

(e) Guarantees constituting Indebtedness permitted by Section 6.01; provided
that the aggregate principal amount of Indebtedness of Subsidiaries that are not
Loan Parties that is Guaranteed by any Loan Party shall be subject to the
limitation set forth in clause (c)(i) of this Section 6.04;

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

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

(h) Swap Agreements permitted by Section 6.07;

(i) loans and advances made by a Loan Party or a Subsidiary to its officers,
directors, and employees in the ordinary course of business for travel and
entertainment expenses, relocation costs and similar purposes up to a maximum
for all such loans and advances of $750,000 in the aggregate at any one time
outstanding;

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

 

81

--------------------------------------------------------------------------------

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

(l) any Loan Party may purchase, hold or acquire (including pursuant to a
merger) all the Equity Interests in a domestic Person and may purchase or
otherwise acquire (in one transaction or a series of transactions) all or
substantially all of the assets of any other domestic Person or all or
substantially all of the assets of a division or branch of such domestic Person,
if, with respect to each such acquisition:

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

(ii) Total Leverage Ratio. The Total Leverage Ratio is 25 basis points less than
the maximum Total Leverage Ratio permitted under Section 7.02 at the time of
making such acquisition (after giving pro forma effect to such acquisition and
the Borrowings being made in connection therewith, and calculating Funded Debt
as of such date of acquisition);

(iii) Delivery and Notice Requirements. The Borrower Representative shall
provide to Administrative Agent, prior to the consummation of the acquisition,
the following: (A) notice of the acquisition, (B) the most recent financial
statements of the target of the proposed acquisition (the “Target”) that the
Borrower Representative has available, (C) copies of the applicable purchase
agreement and copies of such other documentation and information relating to the
Target and the acquisition as Administrative Agent may reasonably request,
(D) (i) if the total consideration for such purchase, hold or acquisition is
equal to or greater than $25,000,000, projected income and cash flow statements
for the Company and its consolidated Subsidiaries for the period through the
Revolving Credit Maturity Date, prepared on a basis reasonably acceptable to the
Administrative Agent, giving pro forma effect to proposed acquisition and any
Indebtedness incurred in connection therewith and (ii) if the total
consideration for such purchase, hold or acquisition is less than $25,000,000,
projected income and cash flow statements for the Target for a five year period,
prepared on a basis reasonably acceptable to the Administrative Agent and (E) a
certificate signed by a Financial Officer of the CSW Borrower certifying:
(1) that the Company and its consolidated Subsidiaries shall be in Pro Forma
Compliance, (2) that after giving effect to the acquisition in question, all
representations and warranties contained in the Loan Documents will be true and
correct in all material respects on and as of the date of the closing of the
acquisition with the same force and effect as if such representations and
warranties had been made on and as of such date, except to the extent that such
representations and warranties relate specifically to an earlier date and
provided that any such representations and warranties subject to a materiality
qualifier must be true and correct in all respects on and as of the date of the
closing of the acquisition, except to the extent that such representations and
warranties relate specifically to an earlier date; (3) that no Default exists or
will result from the acquisition; and (4) to the Company’s calculation of its
compliance with clause (ii) of this clause (l);

(iv) Line of Business. The Target is involved in (A) a type of business that is
conducted by the Loan Parties and the Subsidiaries or is reasonably related
thereto, or (B) a business acceptable to the Administrative Agent in its
reasonable discretion;

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

(vi) Joinder of Subsidiary. The Loan Parties shall have complied with their
obligations under Section 5.12 as of the date of the proposed acquisition; and

 

82

--------------------------------------------------------------------------------

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

(m) any Loan Party may purchase, hold or acquire (including pursuant to a
merger) all the Equity Interests in a foreign Person and may purchase or
otherwise acquire (in one transaction or a series of transactions) all or
substantially all of the assets of any other foreign Person or all or
substantially all of the assets of a division or branch of such foreign Person;
provided, that (x) all such foreign acquisitions made by the Loan Parties during
the term of this Agreement may not exceed $25,000,000 in the aggregate and
(y) with respect to each such foreign acquisition:

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

(ii) Total Leverage Ratio. The Total Leverage Ratio is 25 basis points less than
the maximum Total Leverage Ratio permitted under Section 7.02 at the time of
making such acquisition (after giving pro forma effect to such acquisition and
the Borrowings being made in connection therewith, and calculating Funded Debt
as of such date of acquisition);

(iii) Delivery and Notice Requirements. The Borrower Representative shall
provide to Administrative Agent, prior to the consummation of the acquisition,
the following: (A) notice of the acquisition, (B) the most recent financial
statements of the Target that the Borrower Representative has available,
(C) copies of the applicable purchase agreement and copies of such other
documentation and information relating to the Target and the acquisition as
Administrative Agent may reasonably request, (D) projected income and cash flow
statements for the Target for a five year period, prepared on a basis reasonably
acceptable to the Administrative Agent and (E) a certificate signed by a
Financial Officer of the CSW Borrower certifying: (1) that the Company shall be
in Pro Forma Compliance, (2) that after giving effect to the acquisition in
question, all representations and warranties contained in the Loan Documents
will be true and correct in all material respects on and as of the date of the
closing of the acquisition with the same force and effect as if such
representations and warranties had been made on and as of such date, except to
the extent that such representations and warranties relate specifically to an
earlier date and provided that any such representations and warranties subject
to a materiality qualifier must be true and correct in all respects on and as of
the date of the closing of the acquisition, except to the extent that such
representations and warranties relate specifically to an earlier date; (3) that
no Default exists or will result from the acquisition; and (4) to the Company’s
calculation of its compliance with clause (ii) of this clause (m);

(iv) Line of Business. The Target is involved in (A) a type of business that is
conducted by the Loan Parties and the Subsidiaries or is reasonably related
thereto, or (B) a business acceptable to the Administrative Agent in its
reasonable discretion;

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

(vi) Joinder of Subsidiary. The Loan Parties shall have complied with their
obligations under Section 5.12 (if any) as of the date of the proposed
acquisition;

 

83

--------------------------------------------------------------------------------

(n) promissory notes issued to the Loan Parties or any Subsidiaries by the
purchasers of assets sold in accordance with Section 6.05, provided that (i) the
aggregate face amount of all promissory notes issued in connection with assets
sold pursuant to Section 6.05(m) shall not exceed $4,000,000 in the aggregate at
any time outstanding and (ii) the aggregate face amount of all promissory notes
issued in connection with all other assets sold in accordance with Section 6.05
shall not exceed $250,000 in the aggregate at any time outstanding;

(o) the Loan Parties and any Subsidiaries may (i) acquire and hold obligations
of future, present or former directors, officers, members of management,
employees or consultants of the Loan Parties or any Subsidiaries or their
respective estates, heirs, family members, spouses or former spouses in
connection with such Person’s acquisition of Equity Interests of the Company,
provided that, the amount of such investments permitted by this clause (o) in
the aggregate for the Loan Parties and any Subsidiaries shall not exceed
$500,000 at any time and (ii) redeem or repurchase Equity Interests of the
Company to the extent permitted by Section 6.08(l);

(p) investments of any Person existing at the time such Person becomes a
Subsidiary of the Company or consolidates or merges with the Company or any of
its Subsidiaries (including in connection with an acquisition permitted under
clauses (l) or (m) hereof) so long as such investments were not made in
contemplation of such Person becoming a Subsidiary or of such merger; and

(q) the capitalization or forgiveness of any Indebtedness owed to a Loan Party
or any of its Subsidiaries by any Loan Party.

SECTION 6.05. Asset Sales. No Loan Party will, nor will it permit any Subsidiary
to, sell, transfer, lease or otherwise dispose of any asset, including any
Equity Interest owned by it, nor will the Company and the Borrowers permit any
Subsidiary to issue any additional Equity Interest in such Subsidiary, except:

(a) sales of inventory in the ordinary course of business;

(b) sales, transfers and dispositions of used or surplus equipment (including
owned or leased vehicles) in the ordinary course of business;

(c) sales, transfers and dispositions of Permitted Investments in the ordinary
course of business and the use of cash in a manner not prohibited under this
Agreement;

(d) the licensing or sublicensing of intellectual property in the ordinary
course of business;

(e) the lapse, abandonment or other disposition of intellectual property that
is, in the reasonable and good faith judgment of a Loan Party, no longer
economically practicable or commercially desirable to maintain, or useful in the
conduct of business of the Loan Parties or any of the Subsidiaries;

(f) the leasing or subleasing of property to third parties in the ordinary
course of business;

(g) sales, forgiveness or discounting on a non-recourse basis and in the
ordinary course of business, of past due accounts in connection with the
collection or compromise thereof, or the settlement of delinquent accounts or in
connection with the bankruptcy or reorganization of suppliers of customers;

 

84

--------------------------------------------------------------------------------

(h) dispositions resulting from casualty events, provided that the Net Proceeds
thereof are applied in accordance with the provisions of Section 2.10;

(i) cancellations of any intercompany Indebtedness owing by any Loan Party to
any other Loan Party or any of their Subsidiaries;

(j) any surrender or waiver of contractual rights or claims in the ordinary
course of business or as deemed reasonably necessary by a Loan Party or a
Subsidiary in connection with the settlement of litigation with a non-Affiliate;

(k) issuances of directors’ qualifying shares in respect of any Foreign
Subsidiary to the extent required by applicable law;

(l) sales, transfers and dispositions of assets specifically provided for in
Sections 6.04, 6.06 and 6.08 (other than Section 6.08(k));

(m) the sales of the Real Property identified on Schedule 6.05(m);

(n) sales, transfers and other dispositions of assets (other than Equity
Interests in a Subsidiary) that are not permitted by any other clause of this
Section 6.05; provided that the aggregate fair market value of all assets sold,
transferred or otherwise disposed of in reliance upon this clause (n) shall not
exceed $1,000,000 during any fiscal year of the Company; provided further that
all sales, transfers, leases and other dispositions permitted by this clause (n)
(other than those solely among the Loan Parties) shall be made for fair value
and at least 80% cash consideration;

(o) sales, transfers and other dispositions of all, but not less than all, of
the Equity Interests in Balco, Inc., Smoke Guard, Inc., and their wholly owned
Subsidiaries; provided that all sales, transfers, leases and other dispositions
permitted by this clause (o) (other than those solely among the Loan Parties)
shall be made for fair value and at least 80% cash consideration;

(p) the sale, transfer, lease or other disposition of the Headquarters Real
Property in accordance with the terms of the Headquarters Loan Agreement; and

(q) the transfer or other disposition of Equity Interests in a Loan Party (other
than the Company) to another Loan Party in connection with the Permitted
Reorganization.

SECTION 6.06. Sale and Leaseback Transactions. No Loan Party will, nor will it
permit any Subsidiary to, enter into any arrangement, directly or indirectly,
whereby it shall sell or transfer any property, real or personal, used or useful
in its business, whether now owned or hereinafter acquired, and thereafter rent
or lease such property or other property that it intends to use for
substantially the same purpose or purposes as the property sold or transferred
(a “Sale and Leaseback Transaction”), except for any such sale of any fixed or
capital assets by the Company or any Subsidiary that is made for cash
consideration in an amount not less than the cost of such fixed or capital asset
and is consummated within 90 days after the Company or such Subsidiary acquires
or completes the construction of such fixed or capital asset.

SECTION 6.07. Swap Agreements. No Loan Party will, nor will it permit any
Subsidiary to, enter into any Swap Agreement, except that the Loan Parties may
enter into (a) Swap Agreements entered into to hedge or mitigate risks to which
the Company or any Subsidiary has actual exposure (other than those in respect
of Equity Interests of the Company or any Subsidiary), and (b) Swap Agreements
entered into in order to effectively cap, collar or exchange interest rates
(from fixed to floating rates, from one floating rate to another floating rate
or otherwise) with respect to any interest–bearing liability or investment of
the Company or any Subsidiary.

 

85

--------------------------------------------------------------------------------

SECTION 6.08. Restricted Payments; Certain Payments of Indebtedness; Cash
Payments Made in Respect of Plans. No Loan Party will, nor will it permit any
Subsidiary to, (1) declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payment, or incur any obligation (contingent or
otherwise) to do so or (2) make or agree to pay or make, directly or indirectly,
any payment or other distribution (whether in cash securities or other property)
of or in respect of principal of or interest on any Indebtedness, or any payment
or other distribution (whether in cash, securities or other property), including
any sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any Indebtedness,
except:

(a) the Company may declare and pay dividends with respect to the Equity
Interests it has issued payable solely in additional Equity Interests;

(b) Subsidiaries of the Company may declare and pay dividends ratably with
respect to their Equity Interests;

(c) the Company may declare and pay cash dividends if (i) no Default then exists
or would result therefrom, (ii) the Total Leverage Ratio is less than 3.00 to
1.00, and (iii) the Borrower Representative provides the Administrative Agent
evidence that after giving effect to such dividends, the Company shall be in
compliance with clause (ii) of this subsection and in Pro Forma Compliance;

(d) payments in respect of or relating to earnouts (other than the earn-out in
connection with the Strathmore Acquisition) and seller financing, if (i) no
Default then exists or would result therefrom, (ii) the Total Leverage Ratio is
less than 3.00 to 1.00 both before and after giving effect to such payment, and
(iii) the Borrower Representative provides the Administrative Agent evidence
that after giving effect thereto, the Company shall be in compliance with
clause (ii) of this subsection and in Pro Forma Compliance;

(e) payments in respect of the earnout permitted hereunder in connection with
the Strathmore Acquisition; provided, that the aggregate payment of earnouts
permitted in connection with the Strathmore Acquisition shall not exceed
$16,500,000;

(f) payments in respect of Indebtedness created under the Loan Documents and
payments with respect to other Secured Obligations;

(g) payments in respect of the Headquarters Loan and other obligations arising
under or in connection with the Headquarters Loan Agreement and the Headquarters
Loan Documents;

(h) payment of regularly scheduled interest and principal payments as and when
due in respect of (A) any Indebtedness permitted under Section 6.01 except
Subordinated Indebtedness, and (B) so long as no Default then exists or would
result therefrom, payments in respect of the Subordinated Indebtedness that are
not prohibited by the subordination provisions of such Subordinated
Indebtedness;

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

(j) payment of secured Indebtedness that becomes due as a result of a sale,
transfer or other disposition (including casualty events) of the property or
assets securing such Indebtedness to the extent such sale, transfer or other
disposition is permitted by the terms of Section 6.05;

 

86

--------------------------------------------------------------------------------

(k) to the extent the same would constitute payments restricted pursuant to this
Section 6.08, the Loan Parties may enter into and consummate the transactions
expressly permitted pursuant to (i) any provision of Section 6.04, Section 6.05
or Section 6.09 (except any payment in respect of Plans) hereof (including the
payment of fees and expenses arising in connection therewith or related thereto)
and (ii) the Permitted Reorganization;

(l) the Company may pay (and the Subsidiaries may make Restricted Payments to
allow the Company to pay) for the redemption or repurchase of Equity Interests
of the Company held by any future, present or former directors, officers,
members of management, employees or consultants of the Loan Parties or any
Subsidiaries or their respective estates, heirs, family members, spouses or
former spouses, provided that such payments under this Section 6.08(l)
(excluding non-cash repurchases of Equity Interests deemed to occur upon
exercise of any options, warrants, or rights, if such repurchased Equity
Interests represent a portion of the exercise price of the Equity Interests in
respect of such options, warrants and rights are exercised) do not exceed
$500,000 in the aggregate in any fiscal year; and

(m) the Company may pay (and the Subsidiaries may make Restricted Payments to
allow the Company to pay) for the redemption or repurchase of Equity Interests
of the Company held in the open market by Persons other than present or former
directors, officers, members of management, employees or consultants of the Loan
Parties or any Subsidiaries or their respective estates, heirs, family members,
spouses or former spouses, if (i) no Default then exists or would result
therefrom, (ii) the Total Leverage Ratio is less than 3.00 to 1.00 both before
and after giving effect to such payment, and (iii) the Borrower Representative
provides the Administrative Agent evidence that after giving effect thereto, the
Company shall be in compliance with clause (ii) of this subsection and in Pro
Forma Compliance.

SECTION 6.09. Transactions with Affiliates. No Loan Party will, nor will it
permit any Subsidiary to, sell, lease or otherwise transfer any property or
assets to, or purchase, lease or otherwise acquire any property or assets from,
or otherwise engage in any other transactions with, any of its Affiliates,
except (a) transactions in the ordinary course of business that are at prices
and on terms and conditions not less favorable such Loan Party or such
Subsidiary than could be obtained on an arm’s-length basis from unrelated third
parties, (b) transactions between or among the Loan Parties not involving any
other Subsidiary or Affiliate, (c) any Restricted Payment permitted by
Section 6.08, (d) transactions expressly permitted by Sections 6.01(i) or (j);
6.03(a), (d) or (e); 6.04(b), (c), (d), (e), (i), (j) or (o); and 6.05(i) and
(e) transactions between or among the Loan Parties and any other Subsidiary
necessary to consummate the Permitted Reorganization. For the avoidance of
doubt, any cash payments made by any Loan Party to any other Loan Party, any
Subsidiary or Affiliate with respect to any Plan, Multiemployer Plan, ESOP or
any other employee benefit plan in which the employees of a Loan Party
participate or with respect to which a Loan Party may otherwise have any
liability, shall be prohibited by this Section 6.09 unless specifically
permitted pursuant to clauses (a) through (d) above.

SECTION 6.10. Restrictive Agreements. No Loan Party will, nor will it permit any
Subsidiary to, directly or indirectly, enter into, incur or permit to exist any
agreement or other arrangement that prohibits, restricts or imposes any
condition upon (a) the ability of such Loan Party or any Subsidiary to create,
incur or permit to exist any Lien for the benefit of the Administrative Agent
and/or any one or more of the Secured Parties, upon any of its property or
assets, or (b) the ability of any Subsidiary to pay dividends or other
distributions with respect to any Equity Interests it has issued or to make or
repay loans or advances to the Company, any Borrower or any other Subsidiary or
to Guarantee Indebtedness of the Company, any Borrower or any other Subsidiary;
provided that (i) the foregoing shall not apply to (A) restrictions and
conditions imposed by law or by any Loan Document, (B) restrictions and
conditions imposed under the Headquarters Loan Agreement or the Headquarters
Loan Documents,

 

87

--------------------------------------------------------------------------------

(C) customary restrictions and conditions contained in agreements relating to
the sale of all or a substantial part of the capital stock or assets of any Loan
Party or Subsidiary pending such sale, provided (1) such restrictions and
conditions apply only to the applicable Loan Parties, Subsidiaries or assets to
be sold and (2) such sale is permitted under this Agreement, and
(D) restrictions and conditions existing on the Effective Date identified on
Schedule 6.10 (but shall apply to any extension or renewal of, or any amendment
or modification expanding the scope of, any such restriction or condition) and
(ii) clause (a) of the foregoing shall not apply to (A) restrictions or
conditions imposed by any agreement relating to secured Indebtedness permitted
by this Agreement if such restrictions or conditions apply only to the property
securing such Indebtedness, and (B) customary provisions in leases, licenses and
contracts restricting the assignment thereof.

SECTION 6.11. Amendment of Material Documents; Subordinated Indebtedness. No
Loan Party will, nor will it permit any Subsidiary to, amend, modify or waive
any of its material rights under its certificate of formation, by-laws,
operating or partnership agreement, or other organizational documents, except
for amendments necessary to consummate the Permitted Reorganization that are not
adverse to the interests of any of the Administrative Agent, the Issuing Banks,
the Swingline Lender and/or any one or more of the Lenders. No Loan Party will,
nor will it permit any Subsidiary to, amend or modify any agreement in respect
of Subordinated Indebtedness, except immaterial amendments (a) not affecting any
of the provisions required pursuant to the definition of Subordinated
Indebtedness, (b) not materially adverse to the interests of any of the
Administrative Agent, the Issuing Bank, the Swingline Lender and/or any one or
more of the Lenders, or (c) otherwise permitted pursuant to the terms of the
subordination provisions of, or applicable to, such Subordinated Indebtedness.

SECTION 6.12. Change in Fiscal Year. No Loan Party will, nor will it permit any
Subsidiary to, change the manner in which either the last day of its fiscal year
or the last days of the first three fiscal quarters of its fiscal year is
calculated.

SECTION 6.13. Governmental Regulations. No Loan Party will, nor will it permit
any Subsidiary to: (a) be or become subject at any time to any law, rule or
regulation, or list of any Governmental Authority (including the U.S. Office of
Foreign Asset Control list) that prohibits or limits the Lenders from making any
advance or extension of credit to the Borrowers or from otherwise conducting
business with the Borrowers, or (b) fail to provide documentary and other
evidence of any Borrower’s identity as may be requested by any Lender at any
time to enable each Lender to verify its identity or to comply with any
applicable laws, rules and regulations, including Section 326 of the USA Patriot
Act of 2001, 31 U.S.C. Section 5318.

SECTION 6.14. Use of Proceeds. No Borrower will request any Borrowing or Letter
of Credit, and no Borrower shall use, and the Company and each Borrower shall
procure that its Subsidiaries and its or their respective directors, officers,
employees and agents shall not use, the proceeds of any Borrowing or Letter of
Credit (A) in furtherance of an offer, payment, promise to pay, or authorization
of the payment or giving of money, or anything else of value, to any Person in
violation of any Anti-Corruption Laws, (B) for the purpose of funding, financing
or facilitating any activities, business or transaction of or with any
Sanctioned Person, or in any Sanctioned Country, or (C) in any manner that would
result in the violation of any Sanctions applicable to any party hereto.

ARTICLE VII

Financial Covenants

Until the Commitments shall have expired or been terminated and the principal of
and interest on each Loan and all fees, expenses and other amounts payable under
any Loan Document shall have been

 

88

--------------------------------------------------------------------------------

paid in full and all Letters of Credit shall have expired or terminated (in each
case without any pending draw) or been Cash Collateralized, and all LC
Disbursements shall have been reimbursed, each Loan Party executing this
Agreement covenants and agrees, jointly and severally with all of the other Loan
Parties, with the Lenders that:

SECTION 7.01. Fixed Charge Coverage Ratio. The Company will not permit the Fixed
Charge Coverage Ratio to be less than 1.25 to 1.00 as of the last day of any
fiscal quarter of the Company for the four-fiscal quarter period then ended.

SECTION 7.02. Total Leverage Ratio. The Company will not permit the Total
Leverage Ratio, as of the last day of any fiscal quarter of the Company, to be
greater than 3.00 to 1.00; provided, that for any period of six consecutive
fiscal quarters commencing on the first day of the fiscal quarter during which
the Company or any of its Subsidiaries consummates any acquisition permitted
pursuant to the terms of Sections 6.04(l) and (m) in excess of (a) $25,000,000
amount of consideration for such acquisition or (b) acquisitions aggregating
$50,000,000 of consideration in any two fiscal quarters, and in each case ending
on the last day of the sixth fiscal quarter following such date, the maximum
permitted Total Leverage Ratio shall be increased to 3.75 to 1.00.

ARTICLE VIII

Events of Default

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

(a) the Borrowers shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise;

(b) the Borrowers shall fail to pay any interest on any Loan or any fee or any
other amount (other than an amount referred to in clause (a) of this
Section 8.01) payable under this Agreement or any other Loan Document, when and
as the same shall become due and payable, and such failure shall continue
unremedied for a period of five (5) Business Days;

(c) any representation, warranty or certification made or deemed made by or on
behalf of any Loan Party or any Subsidiary in or in connection with any Loan
Document or any amendment or modification thereof or waiver thereunder, or in
any report, certificate, financial statement or other document furnished
pursuant to or in connection with any Loan Document or any amendment or
modification thereof or waiver thereunder, shall prove to have been incorrect in
any material respect (except for any representation or warranty that is
qualified by materiality, Material Adverse Effect or similar phrase which shall
prove to be incorrect in any respect) when made or deemed made;

(d) any Loan Party or any Subsidiary shall fail to observe or perform any
covenant, condition or agreement contained in Section 5.01 (other than
clause (d), (e), (f) or (g) of Section 5.01), Section 5.02, Section 5.03 (with
respect to the existence of the Loan Parties or Subsidiaries), Section 5.10,
Section 5.11, Section 5.12 or Section 5.17 or Article VI or Article VII of this
Agreement, or in Article IV of the Security Agreement;

(e) any Loan Party or any Subsidiary shall fail to observe or perform any
covenant, condition or agreement contained in any Loan Document (other than a
breach which constitutes an Event of Default under another Section of this
Section 8.01), and such failure shall continue unremedied for a

 

89

--------------------------------------------------------------------------------

period of thirty (30) days after the earlier of (i) any Loan Party or any
Subsidiary having knowledge of such failure and (ii) notice thereof from the
Administrative Agent to the Borrower Representative (which notice will be given
at the request of any Lender);

(f) any Loan Party or any Subsidiary shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any Material
Indebtedness, when and as the same shall become due and payable (after giving
effect to any applicable cure or grace period);

(g) any event or condition occurs that results in any Material Indebtedness or
the Headquarters Loan becoming due prior to its scheduled maturity or that
enables or permits (with or without the giving of notice, the lapse of time or
both) the holder or holders of any Material Indebtedness, or any trustee or
agent on behalf of any such holder of Indebtedness to cause any Material
Indebtedness to become due, or to require the prepayment, repurchase, redemption
or defeasance thereof, prior to its scheduled maturity; provided that this
clause (g) shall not apply to secured Indebtedness that becomes due as a result
of the voluntary sale, transfer or other disposition of the property or assets
securing such Indebtedness to the extent such sale, transfer or other
disposition is permitted by the terms of Section 6.05;

(h) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed seeking (i) liquidation, reorganization or other relief in
respect of any Loan Party or any Subsidiary, or its debts, or of a substantial
part of its assets, under any Debtor Relief Law or federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect
or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for any Loan Party or any Subsidiary or for a
substantial part of its assets, and, in any such case, such proceeding or
petition shall continue undismissed for 90 days or an order or decree approving
or ordering any of the foregoing shall be entered;

(i) any Loan Party or any Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or other
relief under any Debtor Relief Law or federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect, (ii) consent
to the institution of, or fail to contest in a timely and appropriate manner,
any proceeding or petition described in clause (h) of this Section, (iii) apply
for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official of such Loan Party or Subsidiary,
or for a substantial part of its assets, (iv) file an answer admitting the
material allegations of a petition filed against it in any such proceeding,
(v) make a general assignment for the benefit of creditors or (vi) take any
action for the purpose of effecting any of the foregoing;

(j) any Loan Party or any Subsidiary shall become unable, admit in writing its
inability or fail generally to pay its debts as they become due;

(k) one or more judgments for the payment of money in an aggregate amount in
excess of $1,500,000 shall be rendered against any Loan Party or any Subsidiary
or any combination thereof and the same shall remain undischarged for a period
of sixty (60) consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to attach or
levy upon any assets of any Loan Party or any Subsidiary to enforce any such
judgment;

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

(m) any Lien purported to be created under any Collateral Document shall cease
to be, or shall be asserted by any Loan Party, any Subsidiary, or any of their
Affiliates not to be, a valid and

 

90

--------------------------------------------------------------------------------

perfected Lien on any material Collateral, with the priority required hereby,
except (i) as a result of the sale or other disposition of the applicable
Collateral in a transaction permitted under the Loan Documents or (ii) as a
result of the Administrative Agent’s failure to maintain possession of any stock
certificates, promissory notes or other instruments delivered to it under the
Collateral Documents;

(n) any material provision of any Loan Document shall cease for any reason to be
in full force and effect, or any Collateral Document shall cease to give the
Administrative Agent, for the benefit of the Secured Parties, the Liens
purported to be created thereby (other than with respect to an immaterial
portion of the Collateral and except to the extent resulting from the failure of
the Administrative Agent to maintain possession of Collateral as to which the
Liens thereon are perfected solely by possession or from a sale, transfer or
other disposition of such Collateral permitted hereby or by any Collateral
Document), or any Loan Party or any Subsidiary shall so state in writing;

(o) any Loan Party or any Subsidiary shall suffer any uninsured, un-indemnified
or under insured loss of Collateral in excess of $1,500,000;

(p) a Change in Control shall occur;

(q) any “Event of Default” (as defined in the Headquarters Loan Agreement); or

(r) the Loan Guaranty or any Obligation Guaranty shall fail to remain in full
force or effect or any action shall be taken to discontinue or to assert the
invalidity or unenforceability of the Loan Guaranty or any Obligation Guaranty,
or any Guarantor shall fail to comply with any of the terms or provisions of the
Loan Guaranty or any Obligation Guaranty to which it is a party, or any
Guarantor shall deny that it has any further liability under the Loan Guaranty
or any Obligation Guaranty to which it is a party, or shall give notice to such
effect, including, but not limited to notice of termination delivered pursuant
to Section 11.08 or any notice of termination delivered pursuant to the terms of
any Obligation Guaranty;

then, and in every such event (other than an event with respect to the
Borrowers, another Loan Party or any Subsidiary described in clause (h) or (i)
of this Section), and at any time thereafter during the continuance of such
event, the Administrative Agent may, and at the request of the Required Lenders
shall, by notice to the Borrower Representative, take either or both of the
following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and
(ii) declare the Loans then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of the Borrowers accrued hereunder,
shall become due and payable immediately, without presentment, demand, protest,
notice of intent to accelerate, notice of acceleration or other notice of any
kind, all of which are hereby waived by the Borrowers; and in case of any event
with respect to the Borrowers, another Loan Party or any Subsidiary described in
clause (h) or (i) of this Section, the Commitments shall automatically terminate
and the principal of the Loans then outstanding, together with accrued interest
thereon and all fees and other obligations of the Borrowers accrued hereunder,
shall automatically become due and payable, without presentment, demand,
protest, notice of intent to accelerate, notice of acceleration or other notice
of any kind, all of which are hereby waived by the Borrowers. In addition, if
any Event of Default exists, the Administrative Agent may (and if directed by
the Required Lenders, shall) foreclose or otherwise enforce any Lien granted to
the Administrative Agent, for the benefit of the Secured Parties, to secure
payment and performance of the Obligations in accordance with the terms of the
Loan Documents and exercise any and all rights and remedies afforded by the laws
of the State of New York or any other jurisdiction, by any of the Loan
Documents, by equity, or otherwise.

 

91

--------------------------------------------------------------------------------

SECTION 8.02. Performance by the Administrative Agent. If any Loan Party shall
fail to perform any covenant or agreement in accordance with the terms of the
Loan Documents, the Administrative Agent may, and shall at the direction of the
Required Lenders, after notice to the Borrower Representative, perform or
attempt to perform such covenant or agreement on behalf of the applicable Loan
Party. In such event, the Loan Parties shall, at the request of the
Administrative Agent, promptly pay any amount expended by the Administrative
Agent or the Lenders in connection with such performance or attempted
performance to the Administrative Agent, together with interest thereon at the
interest rate provided for in Section 2.12(c) from and including the date of
such expenditure to but excluding the date such expenditure is paid in full.
Notwithstanding the foregoing, it is expressly agreed that neither the
Administrative Agent nor any Lender shall have any liability or responsibility
for the performance of any obligation of any Loan Party under any Loan Document.

ARTICLE IX

The Administrative Agent

SECTION 9.01. Appointment. Each of the Lenders, on behalf of itself and any of
its Affiliates that are Secured Parties, and the Issuing Bank hereby irrevocably
appoints JPMorgan Chase Bank, National Association as its agent and authorizes
the Administrative Agent to take such actions on its behalf, including execution
of the other Loan Documents, and to exercise such powers as are delegated to the
Administrative Agent by the terms of the Loan Documents, together with such
actions and powers as are reasonably incidental thereto. In addition, to the
extent required under the laws of any jurisdiction other than the U.S., each of
the Lenders and the Issuing Bank hereby grants to the Administrative Agent any
required powers of attorney to execute any Collateral Document governed by the
laws of such jurisdiction on such Lender’s or Issuing Bank’s behalf. The
provisions of this Article are solely for the benefit of the Administrative
Agent and the Lenders (including the Swingline Lender and the Issuing Bank), and
the Loan Parties shall not have rights as a third party beneficiary of any of
such provisions. It is understood and agreed that the use of the term “agent” as
used herein or in any other Loan Documents (or any similar term) with reference
to the Administrative Agent is not intended to connote any fiduciary or other
implied (or express) obligations arising under agency doctrine of any applicable
law. Instead, such term is used as a matter of market custom, and is intended to
create or reflect only an administrative relationship between independent
contracting parties.

SECTION 9.02. Rights as a Lender. The bank serving as the Administrative Agent
hereunder shall have the same rights and powers in its capacity as a Lender as
any other Lender and may exercise the same as though it were not the
Administrative Agent, and such bank and its Affiliates may accept deposits from,
lend money to and generally engage in any kind of business with any Loan Party
or any Subsidiary or any Affiliate thereof as if it were not the Administrative
Agent hereunder.

SECTION 9.03. Duties and Obligations. The Administrative Agent shall not have
any duties or obligations except those expressly set forth in the Loan
Documents. Without limiting the generality of the foregoing, (a) the
Administrative Agent shall not be subject to any fiduciary or other implied
duties, regardless of whether a Default has occurred and is continuing, (b) the
Administrative Agent shall not have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated by the Loan Documents that the Administrative Agent is
required to exercise as directed in writing by the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 10.02), and, (c) except as expressly set
forth in the Loan Documents, the Administrative Agent shall not have any duty to
disclose, and shall not be liable for the failure to disclose, any information
relating to any Loan Party or any Subsidiary that is communicated to or obtained
by the bank serving as Administrative Agent or any of its Affiliates in any
capacity. The Administrative Agent shall not be liable for any action taken or
not

 

92

--------------------------------------------------------------------------------

taken by it with the consent or at the request of the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 10.02) or in the absence of its own gross
negligence or willful misconduct as determined by a final nonappealable judgment
of a court of competent jurisdiction. The Administrative Agent shall be deemed
not to have knowledge of any Default unless and until written notice thereof is
given to the Administrative Agent by the Borrower Representative or a Lender,
and the Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with any Loan Document, (ii) the contents of any certificate,
report or other document delivered hereunder or in connection with any Loan
Document, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth in any Loan Document, (iv) the
validity, enforceability, effectiveness or genuineness of any Loan Document or
any other agreement, instrument or document, (v) the creation, perfection or
priority of Liens on the Collateral or the existence of the Collateral or
(vi) the satisfaction of any condition set forth in Article IV or elsewhere in
any Loan Document, other than to confirm receipt of items expressly required to
be delivered to the Administrative Agent.

SECTION 9.04. Reliance. The Administrative Agent shall be entitled to rely upon,
and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing believed
by it to be genuine and to have been signed or sent by the proper Person. The
Administrative Agent also may rely upon any statement made to it orally or by
telephone and believed by it to be made by the proper Person, and shall not
incur any liability for relying thereon. The Administrative Agent may consult
with legal counsel (who may be counsel for the Borrowers), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.

SECTION 9.05. Actions through Sub-Agents. The Administrative Agent may perform
any and all of its duties and exercise its rights and powers by or through any
one or more sub-agents appointed by the Administrative Agent. The Administrative
Agent and any such sub-agent may perform any and all of its duties and exercise
its rights and powers through their respective Related Parties. The exculpatory
provisions of the preceding paragraphs shall apply to any such sub-agent and to
the Related Parties of the Administrative Agent and any such sub-agent, and
shall apply to their respective activities in connection with the syndication of
the credit facilities provided for herein as well as activities as the
Administrative Agent.

SECTION 9.06. Resignation. Subject to the appointment and acceptance of a
successor Administrative Agent as provided in this paragraph, the Administrative
Agent may resign at any time by notifying the Lenders, the Issuing Bank and the
Borrower Representative. Upon any such resignation, the Required Lenders shall
have the right, in consultation with the Borrowers, to appoint a successor. If
no successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment within thirty (30) days after the retiring
Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may, on behalf of the Lenders and the Issuing Bank, appoint
a successor Administrative Agent which shall be a bank with an office in New
York, New York, or an Affiliate of any such bank. Upon the acceptance of its
appointment as Administrative Agent hereunder by its successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder and under
the other Loan Documents. The fees payable by the Borrowers to a successor
Administrative Agent shall be the same as those payable to its predecessor,
unless otherwise agreed by the Borrowers and such successor. Notwithstanding the
foregoing, in the event no successor Administrative Agent shall have been so
appointed and shall have accepted such appointment within thirty (30) days after
the retiring Administrative Agent gives notice of its intent to resign, the
retiring Administrative Agent may give notice of the effectiveness of its

 

93

--------------------------------------------------------------------------------

resignation to the Lenders, the Issuing Bank and the Borrowers, whereupon, on
the date of effectiveness of such resignation stated in such notice, (a) the
retiring Administrative Agent shall be discharged from its duties and
obligations hereunder and under the other Loan Documents, provided that, solely
for purposes of maintaining any security interest granted to the Administrative
Agent under any Collateral Document for the benefit of the Secured Parties, the
retiring Administrative Agent shall continue to be vested with such security
interest as collateral agent for the benefit of the Secured Parties and, in the
case of any Collateral in the possession of the Administrative Agent, shall
continue to hold such Collateral, in each case until such time as a successor
Administrative Agent is appointed and accepts such appointment in accordance
with this paragraph (it being understood and agreed that the retiring
Administrative Agent shall have no duly or obligation to take any further action
under any Collateral Document, including any action required to maintain the
perfection of any such security interest), and (b) the Required Lenders shall
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent, provided that (i) all payments required to
be made hereunder or under any other Loan Document to the Administrative Agent
for the account of any Person other than the Administrative Agent shall be made
directly to such Person and (ii) all notices and other communications required
or contemplated to be given or made to the Administrative Agent shall also
directly be given or made to each Lender and the Issuing Bank. Following the
effectiveness of the Administrative Agent’s resignation from its capacity as
such, the provisions of this Article, Section 2.16(d) and Section 10.03, as well
as any exculpatory, reimbursement and indemnification provisions set forth in
any other Loan Document, shall continue in effect for the benefit of such
retiring Administrative Agent, its sub-agents and their respective Related
Parties in respect of any actions taken or omitted to be taken by any of them
while it was acting as Administrative Agent and in respect of the matters
referred to in the proviso under clause (a) of this Section 9.06.

SECTION 9.07. Non-Reliance.

(a) Each Lender acknowledges and agrees that the extensions of credit made
hereunder are commercial loans and letters of credit and not investments in a
business enterprise or securities. Each Lender further represents that it is
engaged in making, acquiring or holding commercial loans in the ordinary course
of its business and has, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement as a Lender, and to make, acquire or hold
Loans hereunder. Each Lender shall, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information (which may contain material, non-public information within the
meaning of the U.S. securities laws concerning the Borrowers and their
Affiliates) as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document, any related agreement or any document furnished
hereunder or thereunder and in deciding whether or to the extent to which it
will continue as a Lender or assign or otherwise transfer its rights, interests
and obligations hereunder.

(b) Each Lender hereby agrees that (i) it has requested a copy of each Report
prepared by or on behalf of the Administrative Agent; (ii) the Administrative
Agent (A) makes no representation or warranty, express or implied, as to the
completeness or accuracy of any Report or any of the information contained
therein or any inaccuracy or omission contained in or relating to a Report and
(B) shall not be liable for any information contained in any Report; (iii) the
Reports are not comprehensive audits or examinations, and that any Person
performing any field examination will inspect only specific information
regarding the Loan Parties and will rely significantly upon the Loan Parties’
books and records, as well as on representations of the Loan Parties’ personnel
and that the Administrative Agent undertakes no obligation to update, correct or
supplement the Reports; (iv) it will keep all Reports confidential and strictly
for its internal use, not share the Report with any Loan

 

94

--------------------------------------------------------------------------------

Party or any other Person except as otherwise permitted pursuant to this
Agreement; and (v) without limiting the generality of any other indemnification
provision contained in this Agreement, (A) it will hold the Administrative Agent
and any such other Person preparing a Report harmless from any action the
indemnifying Lender may take or conclusion the indemnifying Lender may reach or
draw from any Report in connection with any extension of credit that the
indemnifying Lender has made or may make to the Borrowers, or the indemnifying
Lender’s participation in, or the indemnifying Lender’s purchase of, a Loan or
Loans; and (B) it will pay and protect, and indemnify, defend, and hold the
Administrative Agent and any such other Person preparing a Report harmless from
and against, the claims, actions, proceedings, damages, costs, expenses, and
other amounts (including reasonable attorneys’ fees) incurred by the
Administrative Agent or any such other Person as the direct or indirect result
of any third parties who might obtain all or part of any Report through the
indemnifying Lender.

SECTION 9.08. Other Agency Titles. No Joint Lead Arranger, Joint Bookrunner,
Syndication Agent or Documentation Agent shall have any right, power,
obligation, liability, responsibility or duty under this Agreement other than
those applicable to all Lenders as such. Without limiting the foregoing, none of
such Lenders shall have or be deemed to have a fiduciary relationship with any
Lender. Each Lender hereby makes the same acknowledgments with respect to the
relevant Lenders in their respective capacities as Joint Lead Arranger, Joint
Bookrunner, Syndication Agent or Documentation Agent, as applicable, as it makes
with respect to the Administrative Agent in the preceding paragraph.

SECTION 9.09. Not Partners or Co-Venturers; Administrative Agent as
Representative of the Secured Parties. (a) The Lenders are not partners or
co-venturers, and no Lender shall be liable for the acts or omissions of, or
(except as otherwise set forth herein in case of the Administrative Agent)
authorized to act for, any other Lender. The Administrative Agent shall have the
exclusive right on behalf of the Lenders to enforce the payment of the principal
of and interest on any Loan after the date such principal or interest has become
due and payable pursuant to the terms of this Agreement.

(b) In its capacity, the Administrative Agent is a “representative” of the
Secured Parties within the meaning of the term “secured party” as defined in the
UCC. Each Lender authorizes the Administrative Agent to enter into each of the
Collateral Documents to which it is a party and to take all action contemplated
by such documents. Each Lender agrees that no Secured Party (other than the
Administrative Agent) shall have the right individually to seek to realize upon
the security granted by any Collateral Document, it being understood and agreed
that such rights and remedies may be exercised solely by the Administrative
Agent for the benefit of the Secured Parties upon the terms of the Collateral
Documents. In the event that any Collateral is hereafter pledged by any Person
as collateral security for the Secured Obligations, the Administrative Agent is
hereby authorized, and hereby granted a power of attorney, to execute and
deliver on behalf of the Secured Parties any Loan Documents necessary or
appropriate to grant and perfect a Lien on such Collateral in favor of the
Administrative Agent on behalf of the Secured Parties.

 

95

--------------------------------------------------------------------------------

ARTICLE X

Miscellaneous

SECTION 10.01. Notices.

(a) Except in the case of notices and other communications expressly permitted
to be given by telephone or Electronic Systems (and subject in each case to
paragraph (b) below), all notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by fax, as follows:

(i) if to any Loan Party, to it in care of the Borrower Representative at:

CSW Industrials Holdings, Inc.

5400 LBJ Freeway

Suite 1300

Dallas, TX 75240

Attention: Kelly Tacke

Telephone: (214) 884-3775

Fax: (972) 233-7362

(ii) if to the Administrative Agent, the Swingline Lender, or the Issuing Bank,
to JPMorgan Chase Bank, N.A. at:

JPMorgan Chase Bank, National Association

2200 Ross Avenue, 8th Floor

Dallas, Texas 75201

Attention: Scott Maggard

Telephone: (214) 965-4068

Fax: (214) 965-2946

Loan and Agency Services Group

10 South Dearborn, Floor L2

Chicago, IL 60603-2300

Attention: Yuvette Owens

Fax: (888) 303-9732

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

All such notices and other communications (i) sent by hand or overnight courier
service, or mailed by certified or registered mail shall be deemed to have been
given when received, (ii) sent by fax shall be deemed to have been given when
sent, provided that if not given during normal business hours for the recipient,
such notice or communication shall be deemed to have been given at the opening
of business on the next Business Day of the recipient, or (iii) delivered
through Electronic Systems to the extent provided in paragraph (b) below shall
be effective as provided in such paragraph.

(b) Notices and other communications to the Lenders hereunder may be delivered
or furnished by Electronic Systems pursuant to procedures approved by the
Administrative Agent; provided that the foregoing shall not apply to notices
pursuant to Article II or to compliance and no Default certificates delivered
pursuant to Section 5.01(c) unless otherwise agreed by the Administrative Agent
and the applicable Lender. Each of the Administrative Agent and the Borrower
Representative (on behalf of the Loan Parties) may, in its discretion, agree to
accept notices and other communications to it hereunder by Electronic Systems
pursuant to procedures approved by it; provided that approval of such procedures
may be limited to particular notices or communications. Unless the
Administrative Agent otherwise proscribes, all such notices and other
communications (i) sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), provided that if not given during the normal business
hours of the recipient, shall be deemed to have been given at the opening of
business on the next Business Day for the recipient, and (ii) posted to an
Internet or intranet website shall be deemed received upon the deemed receipt by
the intended recipient, at its e-mail address as described in the foregoing

 

96

--------------------------------------------------------------------------------

clause (i), of notification that such notice or communication is available and
identifying the website address therefor; provided that, for both clauses (i)
and (ii) of this Section 10.01, if such notice, e-mail or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next Business Day of the recipient.

(c) Any party hereto may change its address, facsimile number or e-mail address
for notices and other communications hereunder by notice to the other parties
hereto. All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt.

(d) Electronic Systems.

(i) Each Loan Party agrees that the Administrative Agent may, but shall not be
obligated to, make Communications (as defined below) available to the Issuing
Bank and the other Lenders by posting the Communications on Debt Domain,
Intralinks, Syndtrak, ClearPar or a substantially similar Electronic System.

(ii) Any Electronic System used by the Administrative Agent is provided “as is”
and “as available.” The Agent Parties (as defined below) do not warrant the
adequacy of such Electronic Systems and expressly disclaim liability for errors
or omissions in the Communications. No warranty of any kind, express, implied or
statutory, including any warranty of merchantability, fitness for a particular
purpose, non-infringement of third-party rights or freedom from viruses or other
code defects, is made by any Agent Party in connection with the Communications
or any Electronic System. In no event shall the Administrative Agent or any of
its Related Parties (collectively, the “Agent Parties”) have any liability to
any Borrower or the other Loan Parties, any Lender, the Issuing Bank or any
other Person or entity for damages of any kind, including direct or indirect,
special, incidental or consequential damages, losses or expenses (whether in
tort, contract or otherwise) arising out of any Borrower’s, any Loan Party’s or
the Administrative Agent’s transmission of communications through an Electronic
System. “Communications” means, collectively, any notice, demand, communication,
information, document or other material provided by or on behalf of any Loan
Party pursuant to any Loan Document or the transactions contemplated therein
which is distributed by the Administrative Agent, any Lender or the Issuing Bank
by means of electronic communications pursuant to this Section, including
through an Electronic System.

SECTION 10.02. Waivers; Amendments.

(a) No failure or delay by the Administrative Agent, the Issuing Bank or any
Lender in exercising any right or power hereunder or under any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Administrative Agent, the Issuing Bank and the Lenders hereunder and under
any other Loan Document are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any provision of any Loan
Document or consent to any departure by any Loan Party therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of this
Section, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. Without limiting the generality of
the foregoing, the making of a Loan or issuance of a Letter of Credit shall not
be construed as a waiver of any Default, regardless of whether the
Administrative Agent, any Lender or the Issuing Bank may have had notice or
knowledge of such Default at the time.

 

97

--------------------------------------------------------------------------------

(b) Neither this Agreement nor any other Loan Document nor any provision hereof
or thereof may be waived, amended or modified except (i) in the case of this
Agreement, pursuant to an agreement or agreements in writing entered into by the
Borrowers and the Required Lenders or (ii) in the case of any other Loan
Document, pursuant to an agreement or agreements in writing entered into by the
Administrative Agent and the Loan Party or Loan Parties that are parties
thereto, with the consent of the Required Lenders; provided that no such
agreement shall (A) increase the Commitment of any Lender without the written
consent of such Lender (including any such Lender that is a Defaulting Lender),
(B) reduce or forgive the principal amount of any Loan or LC Disbursement or
reduce the rate of interest thereon, or reduce or forgive any interest or fees
payable hereunder, without the written consent of each Lender (including any
such Lender that is a Defaulting Lender) directly affected thereby, (C) postpone
any scheduled date of payment of the principal amount of any Loan or LC
Disbursement, or any date for the payment of any interest, fees or other
Obligations payable hereunder, or reduce the amount of, waive or excuse any such
payment (except that only the consent of the Required Lenders shall be required
to eliminate, change, reduce the amount of, or extend the payment date for, any
prepayment required by Section 2.10(c)), or postpone the scheduled date of
expiration of any Commitment, without the written consent of each Lender
(including any such Lender that is a Defaulting Lender) directly affected
thereby, (D) change Section 2.17(b) or (d) in a manner that would alter the
manner in which payments are shared, without the written consent of each Lender
(other than any Defaulting Lender), (E) change any of the provisions of this
Section or the definition of “Required Lenders” or any other provision of any
Loan Document specifying the number or percentage of Lenders (or Lenders of any
Class) required to waive, amend or modify any rights thereunder or make any
determination or grant any consent thereunder, without the written consent of
each Lender (other than any Defaulting Lender) directly affected thereby,
(F) change Section 2.19, without the consent of each Lender (other than any
Defaulting Lender), (G) release any Guarantor from its obligation under its Loan
Guaranty or Obligation Guaranty (except as otherwise permitted herein or in the
other Loan Documents), without the written consent of each Lender (other than
any Defaulting Lender), (H) except as provided in clause (c) of this Section or
in any Collateral Document, release all or substantially all of the Collateral
without the written consent of each Lender (other than any Defaulting Lender) or
(I) except as permitted pursuant to a merger, consolidation, liquidation or
dissolution permitted by Section 6.03, permit any Borrower or any other Loan
Party to assign or otherwise transfer any of their rights or obligations
hereunder without the written consent of each Lender; provided further that no
such agreement shall amend, modify or otherwise affect the rights or duties of
the Administrative Agent, the Swingline Lender or the Issuing Bank hereunder
without the prior written consent of the Administrative Agent, the Swingline
Lender or the Issuing Bank, as the case may be (it being understood that any
amendment to Section 2.18 shall require the consent of the Administrative Agent,
the Swingline Lender and the Issuing Bank). The Administrative Agent may also
amend the Commitment Schedule to reflect assignments entered into pursuant to
Section 10.04. Any amendment, waiver or other modification of this Agreement or
any other Loan Document that by its terms affects the rights or duties under
this Agreement of the Lenders of one or more Classes (but not the Lenders of any
other Class), may be effected by an agreement or agreements in writing entered
into by the Borrowers and the requisite number or percentage in interest of each
affected Class of Lenders that would be required to consent thereto under this
Section if such Class of Lenders were the only Class of Lenders hereunder at the
time.

Notwithstanding the foregoing, (i) the Administrative Agent and the Borrowers,
any Loan Party or Subsidiary, as applicable, may amend, modify or supplement
this Agreement or any other Loan Document to cure or correct administrative
errors or omissions, any ambiguity, omission, defect or inconsistency or to
effect administrative changes, and such amendment shall become effective without
any further consent of any Lender or any other party to such Loan Document,
(ii) the Administrative Agent, the Issuing Bank, the Swingline Lender and the
Borrowers, and each Lender increasing its Revolving Commitment or joining the
loan facility as a new Revolving Lender in connection with an

 

98

--------------------------------------------------------------------------------

increase in the aggregate Revolving Commitments in accordance with the terms of
Sections 2.08(e), (f) and (g), may amend this Agreement and the other Loan
Documents, as applicable, without the consent of any other Lender or Person, in
each case only to effectuate the intent and purpose of Sections 2.08(e), (f) and
(g) and (iii) the Borrowers and the Administrative Agent may enter into
Extension Amendments in accordance with the terms of Section 2.21 without the
consent of any Person except as required by Section 2.21.

(c) The Lenders and the Issuing Bank hereby irrevocably authorize the
Administrative Agent, at its option and in its sole discretion, to release any
Liens granted to the Administrative Agent by the Loan Parties on any Collateral
(i) upon the termination of all of the Commitments, payment and satisfaction in
full in cash of all Secured Obligations (other than Unliquidated Obligations),
and the cash collateralization of all known Unliquidated Obligations in a manner
reasonably satisfactory to each affected Lender, (ii) constituting property
being sold or disposed of if the Loan Party disposing of such property certifies
to the Administrative Agent that the sale or disposition is made in compliance
with the terms of this Agreement (and the Administrative Agent may rely
conclusively on any such certificate, without further inquiry), and to the
extent that the property being sold or disposed of constitutes 100% of the
Equity Interests of a Subsidiary, the Administrative Agent is authorized to
release any Loan Guaranty or Obligation Guaranty provided by such Subsidiary,
(iii) constituting property leased to a Loan Party under a lease which has
expired or been terminated in a transaction permitted under this Agreement, or
(iv) as required to effect any sale or other disposition of such Collateral in
connection with any exercise of remedies of the Administrative Agent and the
Lenders pursuant to Article VIII. Except as provided in the preceding sentence,
the Administrative Agent will not release any Liens on Collateral without the
prior written authorization of the Required Lenders. Any such release shall not
in any manner discharge, affect, or impair the Obligations or any Liens (other
than those expressly being released) upon (or obligations of the Loan Parties in
respect of) all interests retained by the Loan Parties, including the proceeds
of any sale, all of which shall continue to constitute part of the Collateral.
Any execution and delivery by the Administrative Agent of documents in
connection with any such release shall be without recourse to or warranty by the
Administrative Agent.

(d) If, in connection with any proposed amendment, waiver or consent requiring
the consent of “each Lender” or “each Lender affected thereby,” the consent of
the Required Lenders is obtained, but the consent of other necessary Lenders is
not obtained (any such Lender whose consent is necessary but not obtained being
referred to herein as a “Non-Consenting Lender”), then the Borrowers may elect
to replace a Non-Consenting Lender as a Lender party to this Agreement, provided
that, concurrently with such replacement, (i) another bank or other entity which
is reasonably satisfactory to the Borrowers, the Administrative Agent and the
Issuing Bank and is not an Affiliate of the Borrowers shall agree, as of such
date, to purchase for cash the Loans and other Obligations due to the
Non-Consenting Lender pursuant to an Assignment and Assumption and to become a
Lender for all purposes under this Agreement and to assume all obligations of
the Non-Consenting Lender to be terminated as of such date and to comply with
the requirements of clause (b) of Section 10.04, and (ii) the Borrowers shall
pay to such Non-Consenting Lender in same day funds on the day of such
replacement (1) all interest, fees and other amounts then accrued but unpaid to
such Non-Consenting Lender by the Borrowers hereunder to and including the date
of termination, including without limitation payments due to such Non-Consenting
Lender under Sections 2.14 and 2.16, and (2) an amount, if any, equal to the
payment which would have been due to such Lender on the day of such replacement
under Section 2.15 had the Loans of such Non-Consenting Lender been prepaid on
such date rather than sold to the replacement Lender.

 

99

--------------------------------------------------------------------------------

(e) Notwithstanding anything to the contrary herein the Administrative Agent
may, with the consent of the Borrower Representative only, amend, modify or
supplement this Agreement or any of the other Loan Documents to cure any
ambiguity, omission, mistake, defect or inconsistency.

SECTION 10.03. Expenses; Indemnity; Damage Waiver.

(a) The Loan Parties, jointly and severally, shall pay all (i) reasonable and
invoiced out-of-pocket expenses incurred by the Administrative Agent and its
Affiliates, including the reasonable fees, charges and disbursements of counsel
for the Administrative Agent, in connection with the syndication and
distribution (including, without limitation, via the internet or through an
Electronic System) of the credit facilities provided for herein, the preparation
and administration of the Loan Documents and any amendments, modifications or
waivers of the provisions of the Loan Documents (whether or not the transactions
contemplated hereby or thereby shall be consummated), (ii) reasonable and
invoiced out-of-pocket expenses incurred by the Issuing Bank in connection with
the issuance, amendment, renewal or extension of any Letter of Credit or any
demand for payment thereunder and (iii) invoiced out-of-pocket expenses incurred
by the Administrative Agent, the Issuing Bank or any Lender, including the
invoiced fees, charges and disbursements of any counsel for the Administrative
Agent, the Issuing Bank or any Lender, in connection with the enforcement,
collection or protection of its rights in connection with the Loan Documents,
including its rights under this Section, or in connection with the Loans made or
Letters of Credit issued hereunder, including all such invoiced out-of-pocket
expenses incurred during any workout, restructuring or negotiations in respect
of such Loans or Letters of Credit. Expenses being reimbursed by the Loan
Parties under this Section include, without limiting the generality of the
foregoing, fees, invoiced costs and expenses incurred in connection with:

(A) appraisals and insurance reviews;

(B) field examinations and the preparation of Reports based on the fees charged
by a third party retained by the Administrative Agent or the internally
allocated fees for each Person employed by the Administrative Agent with respect
to each field examination;

(C) background checks regarding senior management and/or key investors, as
deemed necessary or appropriate in the sole discretion of the Administrative
Agent;

(D) Taxes, fees and other charges for (i) lien searches and (ii) filing
financing statements and continuations, and other actions to perfect, protect,
and continue the Administrative Agent’s Liens;

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

(F) forwarding loan proceeds, collecting checks and other items of payment, and
establishing and maintaining the accounts and lock boxes, and costs and expenses
of preserving and protecting the Collateral.

All of the foregoing fees, costs and expenses may be charged to the Borrowers as
Revolving Loans or to another deposit account, all as described in
Section 2.17(c).

(b) The Loan Parties, jointly and severally, shall indemnify the Administrative
Agent, the Issuing Bank and each Lender, and each Related Party of any of the
foregoing Persons (each such

 

100

--------------------------------------------------------------------------------

Person being called an “Indemnitee”) against, and hold each Indemnitee harmless
from, any and all losses, claims, damages, penalties, incremental Taxes,
liabilities and related expenses, including the fees, charges and disbursements
of any counsel for any Indemnitee, incurred by or asserted against any
Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of the Loan Documents or any agreement or instrument
contemplated thereby, the performance by the parties hereto of their respective
obligations thereunder or the consummation of the Transactions or any other
transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use
of the proceeds therefrom (including any refusal by the Issuing Bank to honor a
demand for payment under a Letter of Credit if the documents presented in
connection with such demand do not strictly comply with the terms of such Letter
of Credit), (iii) any actual or alleged presence or Release of Hazardous
Materials on or from any property owned or operated by a Loan Party or a
Subsidiary, or any Environmental Liability related in any way to a Loan Party or
a Subsidiary, (iv) the failure of a Loan Party to deliver to the Administrative
Agent the required receipts or other required documentary evidence with respect
to a payment made by such Loan Party for Taxes pursuant to Section 2.16, or
(v) any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether or not such claim, litigation,
investigation or proceeding is brought by any Loan Party or their respective
equity holders, Affiliates, creditors or any other third Person and whether
based on contract, tort or any other theory and regardless of whether any
Indemnitee is a party thereto; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
penalties, liabilities or related expenses are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence, bad faith or willful misconduct of such Indemnitee.
WITHOUT LIMITATION OF THE FOREGOING, IT IS THE INTENTION OF THE BORROWERS AND
THE BORROWERS AGREE THAT THE FOREGOING INDEMNITIES SHALL APPLY TO EACH
INDEMNITEE WITH RESPECT TO LOSSES, CLAIMS, DAMAGES, PENALTIES, LIABILITIES AND
RELATED EXPENSES (INCLUDING, WITHOUT LIMITATION, ALL EXPENSES OF LITIGATION OR
PREPARATION THEREFOR), WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF
THE NEGLIGENCE OF SUCH (AND/OR ANY OTHER) INDEMNITEE. This Section 10.03(b)
shall not apply with respect to Taxes other than any Taxes that represent losses
or damages arising from any non-Tax claim.

(c) To the extent that any Loan Party fails to pay any amount required to be
paid by it to the Administrative Agent (or any sub-agent thereof), the Swingline
Lender or the Issuing Bank (or any Related Party of any of the foregoing) under
paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the
Administrative Agent, the Swingline Lender or the Issuing Bank (or any Related
Party of any of the foregoing), as the case may be, such Lender’s Applicable
Percentage (determined as of the time that the applicable unreimbursed expense
or indemnity payment is sought) of such unpaid amount (it being understood that
the Borrowers’ failure to pay any such amount shall not relieve the Borrowers of
any default in the payment thereof); provided that the unreimbursed expense or
indemnified loss, claim, damage, penalty, liability or related expense, as the
case may be, was incurred by or asserted against the Administrative Agent, the
Swingline Lender or the Issuing Bank in its capacity as such.

(d) To the extent permitted by applicable law, no Loan Party shall assert, and
each Loan Party hereby waives, any claim against any Indemnitee, (i) for any
damages arising from the use by others of information or other materials
obtained through telecommunications, electronic or other information
transmission systems (including the Internet) (other than damages that are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence, bad faith or willful
misconduct of such Indemnitee), or (ii) 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 Loan Document, or any

 

101

--------------------------------------------------------------------------------

agreement or instrument contemplated hereby or thereby, the Transactions, any
Loan or Letter of Credit or the use of the proceeds thereof; provided that,
nothing in this paragraph (d) shall relieve any Loan Party of any obligation it
may have to indemnify an Indemnitee against special, indirect, consequential or
punitive damages asserted against such Indemnitee by a third party.

(e) All amounts due under this Section shall be payable promptly after written
demand therefor.

SECTION 10.04. Successors and Assigns.

(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby (including any Affiliate of the Issuing Bank that issues any
Letter of Credit), except that (i) no Borrower may assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of
each Lender (and any attempted assignment or transfer by a Borrower without such
consent shall be null and void) and (ii) no Lender may assign or otherwise
transfer its rights or obligations hereunder except in accordance with this
Section. Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby (including any Affiliate of the Issuing
Bank that issues any Letter of Credit), Participants (to the extent provided in
paragraph (c) of this Section) and, to the extent expressly contemplated hereby,
the Related Parties of each of the Administrative Agent, the Issuing Bank and
the Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

(b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any
Lender may assign to one or more Persons (other than an Ineligible Institution)
all or a portion of its rights and obligations under this Agreement (including
all or a portion of its Commitment, participations in Letters of Credit and the
Loans at the time owing to it) with the prior written consent (such consent not
to be unreasonably withheld) of:

(A) the Borrower Representative, provided that such consent will not be
unreasonably withheld and the Borrower Representative shall be deemed to have
consented to any such assignment unless it shall object thereto by written
notice to the Administrative Agent within ten (10) Business Days after having
received notice thereof, and provided further that no consent of the Borrower
Representative shall be required for an assignment to a Lender, an Affiliate of
a Lender, an Approved Fund or, if an Event of Default has occurred and is
continuing, any other assignee;

(B) the Administrative Agent;

(C) the Issuing Bank; and

(D) the Swingline Lender.

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

(A) except in the case of an assignment to a Lender, an Affiliate of a Lender,
or an Approved Fund, or an assignment of the entire remaining amount of the
assigning Lender’s Commitment or Loans of any Class, the amount of the
Commitment or Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Assumption with respect to such
assignment is delivered to the Administrative Agent) shall not be less than
$5,000,000 unless each of the Borrower

 

102

--------------------------------------------------------------------------------

Representative and the Administrative Agent otherwise consent, provided that no
such consent of the Borrower Representative shall be required if an Event of
Default has occurred and is continuing;

(B) each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender’s rights and obligations under this Agreement,
provided that this clause shall not be construed to prohibit the assignment of a
proportionate part of all the assigning Lender’s rights and obligations in
respect of one Class of Commitments or Loans;

(C) the parties to each assignment shall execute and deliver to the
Administrative Agent (x) an Assignment and Assumption or (y) to the extent
applicable, an agreement incorporating an Assignment and Assumption by reference
pursuant to a Platform as to which the Administrative Agent and the parties to
the Assignment and Assumption are participants, together with a processing and
recordation fee of $3,500; and

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

For the purposes of this Section 10.04(b), the terms “Approved Fund” and
“Ineligible Institution” have the following meanings:

“Approved Fund” means any Person (other than a natural person) that is engaged
in making, purchasing, holding or investing in bank loans and similar extensions
of credit in the ordinary course of its business and that is administered or
managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an
Affiliate of an entity that administers or manages a Lender.

“Ineligible Institution” means a (a) natural person, (b) Defaulting Lender,
(c) holding company, investment vehicle or trust for, or owned and operated for
the primary benefit of, a natural person or relative(s) thereof; provided that,
such holding company, investment vehicle or trust shall not constitute an
Ineligible Institution if it (i) has not been established for the primary
purpose of acquiring any Loans or Commitments, (ii) is managed by a professional
advisor, who is not such natural person or a relative thereof, having
significant experience in the business of making or purchasing commercial loans,
and (iii) has assets greater than $25,000,000 and a significant part of its
activities consist of making or purchasing commercial loans and similar
extensions of credit in the ordinary course of its business; or (d) Loan Party
or any Affiliate of any Loan Party.

(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv)
of this Section, from and after the effective date specified in each Assignment
and Assumption, the assignee thereunder shall be a party hereto and, to the
extent of the interest assigned by such Assignment and Assumption, have the
rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender’s rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue

 

103

--------------------------------------------------------------------------------

to be entitled to the benefits of Sections 2.14, 2.15, 2.16 and 10.03). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this Section 10.04 shall be treated for purposes of
this Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (c) of this Section.

(iv) The Administrative Agent, acting for this purpose as a non-fiduciary agent
of the Borrowers, shall maintain at one of its offices a copy of each Assignment
and Assumption delivered to it and a register for the recordation of the names
and addresses of the Lenders, and the Commitment of, and principal amount of the
Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof
from time to time (the “Register”). The entries in the Register shall be
conclusive, and the Borrowers, the Administrative Agent, the Issuing Bank and
the Lenders shall treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrowers, the Issuing Bank and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.

(v) Upon its receipt of (x) a duly completed Assignment and Assumption executed
by an assigning Lender and an assignee or (y) to the extent applicable, an
agreement incorporating an Assignment and Assumption by reference pursuant to a
Platform as to which the Administrative Agent and the parties to the Assignment
and Assumption are participants, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section and
any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Assumption
and record the information contained therein in the Register; provided that if
either the assigning Lender or the assignee shall have failed to make any
payment required to be made by it pursuant to Section 2.04, 2.05(d) or (e),
2.06(b), 2.17(d) or 10.03(c), the Administrative Agent shall have no obligation
to accept such Assignment and Assumption and record the information therein in
the Register unless and until such payment shall have been made in full,
together with all accrued interest thereon. No assignment shall be effective for
purposes of this Agreement unless it has been recorded in the Register as
provided in this paragraph.

(c) Any Lender may, without the consent of the Borrowers, the Administrative
Agent, the Swingline Lender or the Issuing Bank, sell participations to one or
more banks or other entities (a “Participant”) other than an Ineligible
Institution in all or a portion of such Lender’s rights and obligations under
this Agreement (including all or a portion of its Commitment and the Loans owing
to it); provided that (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; and (iii) the Borrowers,
the Administrative Agent, the Issuing Bank and the other Lenders shall continue
to deal solely and directly with such Lender in connection with such Lender’s
rights and obligations under this Agreement. Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such agreement or instrument may provide that such Lender will not, without
the consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 10.02(b) that affects such
Participant. The Borrowers agree that each Participant shall be entitled to the
benefits of Sections 2.14, 2.15 and 2.16 (subject to the requirements and
limitations therein, including the requirements under Sections 2.16(f) and
(g) (it being understood that the documentation required under Section 2.16(f)
shall be delivered to the participating Lender and the information and
documentation required under Section 2.16(g) will be delivered to the Borrower
Representative and the Administrative Agent)) to the same extent as if it were a
Lender and had

 

104

--------------------------------------------------------------------------------

acquired its interest by assignment pursuant to paragraph (b) of this Section;
provided that such Participant (A) agrees to be subject to the provisions of
Sections 2.17 and 2.18 as if it were an assignee under paragraph (b) of this
Section; and (B) shall not be entitled to receive any greater payment under
Sections 2.14 or 2.16 with respect to any participation, than its participating
Lender would have been entitled to receive, except to the extent such
entitlement to receive a greater payment results from a Change in Law that
occurs after the Participant acquired the applicable participation.

Each Lender that sells a participation agrees, at the Borrowers’ request and
expense, to use reasonable efforts to cooperate with the Borrowers to effectuate
the provisions of Section 2.18(b) with respect to any Participant. To the extent
permitted by law, each Participant also shall be entitled to the benefits of
Section 10.08 as though it were a Lender, provided such Participant agrees to be
subject to Section 2.17(d) as though it were a Lender. Each Lender that sells a
participation shall, acting solely for this purpose as an agent of the
Borrowers, maintain a register on which it enters the name and address of each
Participant and the principal amounts (and stated interest) of each
Participant’s interest in the Loans or other obligations under this Agreement or
any other Loan Document (the “Participant Register”); provided that no Lender
shall have any obligation to disclose all or any portion of the Participant
Register (including the identity of any Participant or any information relating
to a Participant’s interest in any Commitments, Loans, Letters of Credit or its
other obligations under this Agreement or any other Loan Document) to any Person
except to the extent that such disclosure is necessary to establish that such
Commitment, Loan, Letter of Credit or other obligation is in registered form
under Section 5f.103-1(c) of the United States Treasury Regulations. The entries
in the Participant Register shall be conclusive absent manifest error, and such
Lender shall treat each Person whose name is recorded in the Participant
Register as the owner of such participation for all purposes of this Agreement,
notwithstanding any notice to the contrary. For the avoidance of doubt, the
Administrative Agent (in its capacity as Administrative Agent) shall have no
responsibility for maintaining a Participant Register.

(d) Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement to secure obligations of such
Lender, including without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.

SECTION 10.05. Survival. All covenants, agreements, representations and
warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Administrative Agent, the Issuing
Bank or any Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid or any Letter of Credit is outstanding and
so long as the Commitments have not expired or terminated. The provisions of
Sections 2.14, 2.15, 2.16 and 10.03 and Article IX shall survive and remain in
full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Letters of Credit and the Commitments or the termination of this
Agreement or any other Loan Document or any provision hereof or thereof.

SECTION 10.06. Counterparts; Integration; Effectiveness; Electronic Execution.
(a) This Agreement may be executed in counterparts (and by different parties
hereto on different counterparts),

 

105

--------------------------------------------------------------------------------

each of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement, the other Loan Documents and
any separate letter agreements with respect to fees payable to the
Administrative Agent constitute the entire contract among the parties relating
to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 4.01, this Agreement shall become effective when it shall
have been executed by the Administrative Agent and when the Administrative Agent
shall have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.

(b) Delivery of an executed counterpart of a signature page of this Agreement by
telecopy, emailed pdf. or any other electronic means that reproduces an image of
the actual executed signature page shall be effective as delivery of a manually
executed counterpart of this Agreement. The words “execution,” “signed,”
“signature,” “delivery,” and words of like import in or relating to any document
to be signed in connection with this Agreement and the transactions contemplated
hereby or thereby shall be deemed to include Electronic Signatures, deliveries
or the keeping of records in electronic form, each of which shall be of the same
legal effect, validity or enforceability as a manually executed signature,
physical delivery thereof or the use of a paper-based recordkeeping system, as
the case may be, to the extent and as provided for in any applicable law,
including the Federal Electronic Signatures in Global and National Commerce Act,
the New York State Electronic Signatures and Records Act, or any other similar
state laws based on the Uniform Electronic Transactions Act. THIS WRITTEN
AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

SECTION 10.07. Severability. Any provision of any Loan Document 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 thereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

SECTION 10.08. Right of Setoff. If an Event of Default shall have occurred and
be continuing, each Lender and each of its Affiliates is hereby authorized at
any time and from time to time, to the fullest extent permitted by law, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations at any time owing
by such Lender or Affiliate to or for the credit or the account of any Loan
Party against any of and all the Secured Obligations held by such Lender,
irrespective of whether or not such Lender shall have made any demand under the
Loan Documents and although such obligations may be unmatured. The applicable
Lender shall notify the Borrower Representative and the Administrative Agent of
such set-off or application, provided that any failure to give or any delay in
giving such notice shall not affect the validity of any such set-off or
application under this Section. The rights of each Lender under this Section are
in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.

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

(a) The Loan Documents (other than those containing a contrary express choice of
law provision) shall be governed by and construed in accordance with the
internal laws (and not the law of conflicts) of the State of New York, but
giving effect to federal laws applicable to national banks.

 

106

--------------------------------------------------------------------------------

(b) Each Loan Party hereby irrevocably and unconditionally submits, for itself
and its property, to the exclusive jurisdiction of any U.S. federal or New York
state court sitting in New York, New York in any action or proceeding arising
out of or relating to any Loan Documents, 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 state court or, to the extent
permitted by law, in such federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement or any other Loan Document shall
affect any right that the Administrative Agent, the Issuing Bank or any Lender
may otherwise have to bring any action or proceeding relating to this Agreement
or any other Loan Document against any Loan Party or its properties in the
courts of any jurisdiction.

(c) Each Loan Party hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or any other Loan Document in any
court referred to in paragraph (b) of this 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 10.01. Nothing in this Agreement or
any other Loan Document will affect the right of any party to this Agreement to
serve process in any other manner permitted by law.

SECTION 10.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE OR OTHER AGENT (INCLUDING ANY
ATTORNEY) OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.

SECTION 10.11. Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

SECTION 10.12. Confidentiality. Each of the Administrative Agent, the Issuing
Bank and the Lenders agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (a) to its and its
Affiliates’ directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any Governmental Authority (including any self-regulatory
authority, such as the National Association of Insurance Commissioners), (c) to
the extent required by any Requirement of Law or by any subpoena or similar
legal process, (d) to any other party to this Agreement, other Loan Party and/or
Subsidiary, (e) in connection with the exercise of any remedies hereunder or
under any other Loan Document or any suit, action or proceeding

 

107

--------------------------------------------------------------------------------

relating to this Agreement or any other Loan Document or the enforcement of
rights hereunder or thereunder, (f) subject to an agreement containing
provisions substantially the same as those of this Section, to (x) any assignee
of or Participant in, or any prospective assignee of or Participant in, any of
its rights or obligations under this Agreement or (y) any actual or prospective
counterparty (or its advisors) to any swap or derivative transaction relating to
the Loan Parties and their obligations, (g) with the consent of the Borrower
Representative, (h) to holders of Equity Interests in the Company, (i) to any
Person providing a Guarantee of all or any portion of the Secured Obligations,
or (j) to the extent such Information (x) becomes publicly available other than
as a result of a breach of this Section or (y) becomes available to the
Administrative Agent, the Issuing Bank or any Lender on a non-confidential basis
from a source other than the Borrowers. For the purposes of this Section,
“Information” means all information received from the Borrowers relating to the
Borrowers, the other Loan Parties or their business, other than any such
information that is available to the Administrative Agent, the Issuing Bank or
any Lender on a non-confidential basis prior to disclosure by the Borrowers and
other than information pertaining to this Agreement routinely provided by
arrangers to data service providers, including league table providers, that
serve the lending industry; provided that, in the case of information received
from the Borrowers after the date hereof, such information is clearly identified
at the time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.

SECTION 10.13. Several Obligations; Nonreliance; Violation of Law. The
respective obligations of the Lenders hereunder are several and not joint and
the failure of any Lender to make any Loan or perform any of its obligations
hereunder shall not relieve any other Lender from any of its obligations
hereunder. Each Lender hereby represents that it is not relying on or looking to
any margin stock (as defined in Regulation U of the Board) for the repayment of
the Borrowings provided for herein. Anything contained in this Agreement to the
contrary notwithstanding, neither the Issuing Bank nor any Lender shall be
obligated to extend credit to the Borrowers in violation of any Requirement of
Law.

SECTION 10.14. USA PATRIOT Act. Each Lender that is subject to the requirements
of the USA PATRIOT Act hereby notifies each Loan Party that pursuant to the
requirements of the USA PATRIOT Act, it is required to obtain, verify and record
information that identifies such Loan Party, which information includes the name
and address of such Loan Party and other information that will allow such Lender
to identify such Loan Party in accordance with the USA PATRIOT Act.

SECTION 10.15. Disclosure. Each Loan Party, each Lender and the Issuing Bank
hereby acknowledges and agrees that the Administrative Agent and/or its
Affiliates from time to time may hold investments in, make other loans to or
have other relationships with, any of the Loan Parties and their respective
Affiliates.

SECTION 10.16. Appointment for Perfection. Each Lender hereby appoints each
other Lender as its agent for the purpose of perfecting Liens, for the benefit
of the Administrative Agent and the Secured Parties, in assets which, in
accordance with Article 9 of the UCC or any other applicable law can be
perfected only by possession or control. Should any Lender (other than the
Administrative Agent) obtain possession or control of any such Collateral, such
Lender shall notify the Administrative Agent thereof, and, promptly upon the
Administrative Agent’s request therefor shall deliver such Collateral to the
Administrative Agent or otherwise deal with such Collateral in accordance with
the Administrative Agent’s instructions.

SECTION 10.17. Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with
all fees, charges and other amounts

 

108

--------------------------------------------------------------------------------

which are treated as interest on such Loan under applicable law (collectively
the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which
may be contracted for, charged, taken, received or reserved by the Lender
holding such Loan in accordance with applicable law, the rate of interest
payable in respect of such Loan hereunder, together with all Charges payable in
respect thereof, shall be limited to the Maximum Rate and, to the extent lawful,
the interest and Charges that would have been payable in respect of such Loan
but were not payable as a result of the operation of this Section shall be
cumulated and the interest and Charges payable to such Lender in respect of
other Loans or periods shall be increased (but not above the Maximum Rate
therefor) until such cumulated amount, together with interest thereon at the
Federal Funds Effective Rate to the date of repayment, shall have been received
by such Lender.

SECTION 10.18. No Advisory or Fiduciary Responsibility. In connection with all
aspects of each transaction contemplated hereby (including in connection with
any amendment, waiver or other modification hereof or of any other Loan
Document), the Borrowers acknowledge and agree that: (i) (A) the arranging and
other services regarding this Agreement provided by the Lenders are arm’s-length
commercial transactions between each Borrower and its Affiliates, on the one
hand, and the Lenders and their Affiliates, on the other hand, (B) each Borrower
has consulted its own legal, accounting, regulatory and tax advisors to the
extent it has deemed appropriate, and (C) each Borrower is capable of
evaluating, and understands and accepts, the terms, risks and conditions of the
transactions contemplated hereby and by the other Loan Documents; (ii) (A) each
of the Lenders and their Affiliates is and has been acting solely as a principal
and, except as expressly agreed in writing by the relevant parties, has not
been, is not, and will not be acting as an advisor, agent or fiduciary for the
Borrowers or any of their Affiliates, or any other Person and (B) no Lender or
any of its Affiliates has any obligation to the Borrowers or any of their
Affiliates with respect to the transactions contemplated hereby except, in the
case of a Lender, those obligations expressly set forth herein and in the other
Loan Documents; and (iii) each of the Lenders and their respective Affiliates
may be engaged in a broad range of transactions that involve interests that
differ from those of the Borrowers and their Affiliates, and no Lender or any of
its Affiliates has any obligation to disclose any of such interests to the
Borrowers or their Affiliates. To the fullest extent permitted by law, the
Borrowers hereby waive and release any claims that they may have against each of
the Lenders and their Affiliates with respect to any breach or alleged breach of
agency or fiduciary duty in connection with any aspect of any transaction
contemplated hereby.

SECTION 10.19. Marketing Consent. The Borrowers hereby authorize Chase and its
affiliates (including without limitation JPMorgan Securities LLC) (collectively,
the “Chase Parties”), at their respective sole expense, but without any prior
approval by the Borrowers, to publish such customary tombstones and give such
other customary publicity to this Agreement as each may from time to time
determine in its sole discretion. The foregoing authorization shall remain in
effect unless and until the Borrower Representative notifies Chase in writing
that such authorization is revoked.

SECTION 10.20. Joint and Several Obligations. Notwithstanding anything to the
contrary contained herein or in any other Loan Documents, each Borrower
acknowledges that it and the Guarantors are jointly and severally responsible
(not merely as a surety but also as a co-debtor) for all agreements, covenants,
representations, warranties and obligations contained and set forth in this
Agreement or in any other Loan Document to which the applicable Party is a
party.

ARTICLE XI

Loan Guaranty

SECTION 11.01. Guaranty. Each Loan Guarantor (other than those that have
delivered a separate Obligation Guaranty) hereby agrees that it is jointly and
severally liable for, and, as a primary

 

109

--------------------------------------------------------------------------------

obligor and not merely as surety, absolutely, unconditionally and irrevocably
guarantees to the Secured Parties, the prompt payment when due, whether at
stated maturity, upon acceleration or otherwise, and at all times thereafter, of
the Secured Obligations and all reasonable and invoiced costs and expenses,
including, without limitation, all court costs and reasonable and invoiced
attorneys’ and paralegals’ fees and expenses paid or incurred by the
Administrative Agent, the Issuing Bank and the Lenders in endeavoring to collect
all or any part of the Secured Obligations from, or in prosecuting any action
against, any Borrower, any Loan Guarantor or any other guarantor of all or any
part of the Secured Obligations (such costs and expenses, together with the
Secured Obligations, collectively the “Guaranteed Obligations”; provided,
however, that the definition of “Guaranteed Obligations” shall not create any
guarantee by any Loan Guarantor of (or grant of security interest by any Loan
Guarantor to support, as applicable) any Excluded Swap Obligations of such Loan
Guarantor for purposes of determining any obligations of any Loan Guarantor).
Each Loan Guarantor further agrees that the Guaranteed Obligations may be
extended or renewed in whole or in part without notice to or further assent from
it, and that it remains bound upon its guarantee notwithstanding any such
extension or renewal. All terms of this Loan Guaranty apply to and may be
enforced by or on behalf of any domestic or foreign branch or Affiliate of any
Lender that extended any portion of the Guaranteed Obligations.

SECTION 11.02. Guaranty of Payment. This Loan Guaranty is a guaranty of payment
and not of collection. Each Loan Guarantor waives any right to require the
Administrative Agent, the Issuing Bank or any Lender to sue any Borrower or any
Loan Guarantor, or any other guarantor of, or any other Person obligated for,
all or any part of the Guaranteed Obligations (each, an “Obligated Party”), or
otherwise to enforce its payment against any collateral securing all or any part
of the Guaranteed Obligations.

SECTION 11.03. No Discharge or Diminishment of Loan Guaranty.

(a) Except as otherwise provided for herein, the obligations of each Loan
Guarantor hereunder are unconditional and absolute and not subject to any
reduction, limitation, impairment or termination for any reason (other than the
indefeasible payment in full in cash of the Guaranteed Obligations), including:
(i) any claim of waiver, release, extension, renewal, settlement, surrender,
alteration or compromise of any of the Guaranteed Obligations, by operation of
law or otherwise; (ii) any change in the corporate existence, structure or
ownership of any Borrower or any other Obligated Party liable for any of the
Guaranteed Obligations; (iii) any insolvency, bankruptcy, reorganization or
other similar proceeding affecting any Obligated Party or their assets, or any
resulting release or discharge of any obligation of any Obligated Party; or
(iv) the existence of any claim, setoff or other rights which any Loan Guarantor
may have at any time against any Obligated Party, the Administrative Agent, the
Issuing Bank, any Lender or any other Person, whether in connection herewith or
in any unrelated transactions.

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

(c) Further, the obligations of any Loan Guarantor hereunder are not discharged
or impaired or otherwise affected by: (i) the failure of the Administrative
Agent, the Issuing Bank or any Lender to assert any claim or demand or to
enforce any remedy with respect to all or any part of the Guaranteed
Obligations; (ii) any waiver or modification of or supplement to any provision
of any agreement relating to the Guaranteed Obligations; (iii) any release,
non-perfection or invalidity of any indirect or direct security for the
obligations of any Borrower for all or any part of the Guaranteed Obligations or

 

110

--------------------------------------------------------------------------------

any obligations of any other Obligated Party liable for any of the Guaranteed
Obligations; (iv) any action or failure to act by the Administrative Agent, the
Issuing Bank or any Lender with respect to any collateral securing any part of
the Guaranteed Obligations; or (v) any default, failure or delay, willful or
otherwise, in the payment or performance of any of the Guaranteed Obligations,
or any other circumstance, act, omission or delay that might in any manner or to
any extent vary the risk of such Loan Guarantor or that would otherwise operate
as a discharge of any Loan Guarantor as a matter of law or equity (other than
the indefeasible payment in full in cash of the Guaranteed Obligations).

SECTION 11.04. Defenses Waived. To the fullest extent permitted by applicable
law, each Loan Guarantor hereby waives any defense based on or arising out of
any defense of any Borrower or any Loan Guarantor or the unenforceability of all
or any part of the Guaranteed Obligations from any cause, or the cessation from
any cause of the liability of any Borrower, any Loan Guarantor or any other
Obligated Party, other than the indefeasible payment in full in cash of the
Guaranteed Obligations. Without limiting the generality of the foregoing, each
Loan Guarantor irrevocably waives acceptance hereof, presentment, demand,
protest and, to the fullest extent permitted by law, any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
Person against any Obligated Party or any other Person. Each Loan Guarantor
confirms that it is not a surety under any state law and shall not raise any
such law as a defense to its obligations hereunder. The Administrative Agent
may, at its election, foreclose on any Collateral held by it by one or more
judicial or nonjudicial sales, accept an assignment of any such Collateral in
lieu of foreclosure or otherwise act or fail to act with respect to any
collateral securing all or a part of the Guaranteed Obligations, compromise or
adjust any part of the Guaranteed Obligations, make any other accommodation with
any Obligated Party or exercise any other right or remedy available to it
against any Obligated Party, without affecting or impairing in any way the
liability of such Loan Guarantor under this Loan Guaranty, except to the extent
the Guaranteed Obligations have been fully and indefeasibly paid in cash. To the
fullest extent permitted by applicable law, each Loan Guarantor waives any
defense arising out of any such election even though that election may operate,
pursuant to applicable law, to impair or extinguish any right of reimbursement
or subrogation or other right or remedy of any Loan Guarantor against any
Obligated Party or any security.

SECTION 11.05. Rights of Subrogation. No Loan Guarantor will assert any right,
claim or cause of action, including, without limitation, a claim of subrogation,
contribution or indemnification, that it has against any Obligated Party or any
collateral, until the Loan Parties and the Loan Guarantors have fully performed
all their obligations to the Administrative Agent, the Issuing Bank and the
Lenders.

SECTION 11.06. Reinstatement; Stay of Acceleration. If at any time any payment
of any portion of the Guaranteed Obligations (including a payment effected
through exercise of a right of setoff) is rescinded, or must otherwise be
restored or returned upon the insolvency, bankruptcy or reorganization of any
Borrower or otherwise (including pursuant to any settlement entered into by a
Secured Party in its discretion), each Loan Guarantor’s obligations under this
Loan Guaranty with respect to that payment shall be reinstated at such time as
though the payment had not been made and whether or not the Administrative
Agent, the Issuing Bank and the Lenders are in possession of this Loan Guaranty.
If acceleration of the time for payment of any of the Guaranteed Obligations is
stayed upon the insolvency, bankruptcy or reorganization of any Borrower, all
such amounts otherwise subject to acceleration under the terms of any agreement
relating to the Guaranteed Obligations shall nonetheless be payable by the Loan
Guarantors forthwith on demand by the Administrative Agent.

SECTION 11.07. Information. Each Loan Guarantor assumes all responsibility for
being and keeping itself informed of the Borrowers’ financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Guaranteed Obligations and the nature, scope and extent of the risks that
each Loan Guarantor assumes and incurs under this Loan Guaranty, and agrees that
none of the Administrative Agent, the Issuing Bank or any Lender shall have any
duty to advise any Loan Guarantor of information known to it regarding those
circumstances or risks.

 

111

--------------------------------------------------------------------------------

SECTION 11.08. Termination. Each of the Lenders and the Issuing Bank may
continue to make loans or extend credit to the Borrowers based on this Loan
Guaranty until five (5) days after it receives written notice of termination
from any Loan Guarantor. Notwithstanding receipt of any such notice, each Loan
Guarantor will continue to be liable to the Lenders for any Guaranteed
Obligations created, assumed or committed to prior to the fifth day after
receipt of the notice, and all subsequent renewals, extensions, modifications
and amendments with respect to, or substitutions for, all or any part of such
Guaranteed Obligations. Nothing in this Section 11.08 shall be deemed to
constitute a waiver of, or eliminate, limit, reduce or otherwise impair any
rights or remedies the Administrative Agent or any Lender may have in respect
of, any Default or Event of Default that shall exist under clause (r) of
Section 8.01 hereof as a result of any such notice of termination.

SECTION 11.09. Taxes. Each payment of the Guaranteed Obligations will be made by
each Loan Guarantor without withholding for any Taxes, unless such withholding
is required by law. If any Loan Guarantor determines, in its sole discretion
exercised in good faith, that it is so required to withhold Taxes, then such
Loan Guarantor may so withhold and shall timely pay the full amount of withheld
Taxes to the relevant Governmental Authority in accordance with applicable law.
If such Taxes are Indemnified Taxes, then the amount payable by such Loan
Guarantor shall be increased as necessary so that, net of such withholding
(including such withholding applicable to additional amounts payable under this
Section), the Administrative Agent, Lender or Issuing Bank (as the case may be)
receives the amount it would have received had no such withholding been made.

SECTION 11.10. Maximum Liability. Notwithstanding any other provision of this
Loan Guaranty, the amount guaranteed by each Loan Guarantor hereunder shall be
limited to the extent, if any, required so that its obligations hereunder shall
not be subject to avoidance under Section 548 of the Bankruptcy Code or under
any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute or common law. In determining the limitations,
if any, on the amount of any Loan Guarantor’s obligations hereunder pursuant to
the preceding sentence, it is the intention of the parties hereto that any
rights of subrogation, indemnification or contribution which such Loan Guarantor
may have under this Loan Guaranty, any other agreement or applicable law shall
be taken into account.

SECTION 11.11. Contribution.

(a) To the extent that any Loan Guarantor shall make a payment under this Loan
Guaranty (a “Guarantor Payment”) which, taking into account all other Guarantor
Payments then previously or concurrently made by any other Loan Guarantor,
exceeds the amount which otherwise would have been paid by or attributable to
such Loan Guarantor if each Loan Guarantor had paid the aggregate Guaranteed
Obligations satisfied by such Guarantor Payment in the same proportion as such
Loan Guarantor’s “Allocable Amount” (as defined below) (as determined
immediately prior to such Guarantor Payment) bore to the aggregate Allocable
Amounts of each of the Loan Guarantors as determined immediately prior to the
making of such Guarantor Payment, then, following indefeasible payment in full
in cash of the Guarantor Payment and the Guaranteed Obligations (other than
Unliquidated Obligations that have not yet arisen), and all Commitments and
Letters of Credit have terminated or expired or, in the case of all Letters of
Credit, are fully collateralized on terms reasonably acceptable to the
Administrative Agent and the Issuing Bank, and this Agreement, the Swap
Agreement Obligations and the Banking Services Obligations have terminated, such
Loan Guarantor shall be entitled to receive contribution and indemnification
payments from, and be reimbursed by, each other Loan Guarantor for the amount of
such excess, pro rata based upon their respective Allocable Amounts in effect
immediately prior to such Guarantor Payment.

 

112

--------------------------------------------------------------------------------

(b) As of any date of determination, the “Allocable Amount” of any Loan
Guarantor shall be equal to the excess of the fair saleable value of the
property of such Loan Guarantor over the total liabilities of such Loan
Guarantor (including the maximum amount reasonably expected to become due in
respect of contingent liabilities, calculated, without duplication, assuming
each other Loan Guarantor that is also liable for such contingent liability pays
its ratable share thereof), giving effect to all payments made by other Loan
Guarantors as of such date in a manner to maximize the amount of such
contributions.

(c) This Section 11.11 is intended only to define the relative rights of the
Loan Guarantors, and nothing set forth in this Section 11.11 is intended to or
shall impair the obligations of the Loan Guarantors, jointly and severally, to
pay any amounts as and when the same shall become due and payable in accordance
with the terms of this Loan Guaranty.

(d) The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets of the Loan Guarantor or Loan
Guarantors to which such contribution and indemnification is owing.

(e) The rights of the indemnifying Loan Guarantors against other Loan Guarantors
under this Section 11.11 shall be exercisable upon the full and indefeasible
payment of the Guaranteed Obligations in cash (other than Unliquidated
Obligations that have not yet arisen) and the termination or expiry (or, in the
case of all Letters of Credit, full cash collateralization), on terms reasonably
acceptable to the Administrative Agent and the Issuing Bank, of the Commitments
and all Letters of Credit issued hereunder and the termination of this
Agreement, the Swap Agreement Obligations and the Banking Services Obligations.

SECTION 11.12. Liability Cumulative. The liability of each Loan Party as a Loan
Guarantor under this Article X is in addition to and shall be cumulative with
all liabilities of each Loan Party to the Administrative Agent, the Issuing Bank
and the Lenders under this Agreement and the other Loan Documents to which such
Loan Party is a party or in respect of any obligations or liabilities of the
other Loan Parties, without any limitation as to amount, unless the instrument
or agreement evidencing or creating such other liability specifically provides
to the contrary.

SECTION 11.13. Keepwell. Each Qualified ECP Guarantor hereby jointly and
severally absolutely, unconditionally and irrevocably undertakes to provide such
funds or other support as may be needed from time to time by each other Loan
Party and/or Guarantor to honor all of its obligations under this Guarantee in
respect of a Swap Obligation (provided, however, that each Qualified ECP
Guarantor shall only be liable under this Section 11.13 for the maximum amount
of such liability that can be hereby incurred without rendering its obligations
under this Section 11.13 or otherwise under this Loan Guaranty voidable under
applicable law relating to fraudulent conveyance or fraudulent transfer, and not
for any greater amount). Except as otherwise provided herein, the obligations of
each Qualified ECP Guarantor under this Section 11.13 shall remain in full force
and effect until the termination of all Swap Obligations. Each Qualified ECP
Guarantor intends that this Section 11.13 constitute, and this Section 11.13
shall be deemed to constitute, a “keepwell, support, or other agreement” for the
benefit of each other Loan Party for all purposes of Section 1a(18)(A)(v)(II) of
the Commodity Exchange Act.

 

113

--------------------------------------------------------------------------------

ARTICLE XII

The Borrower Representative.

SECTION 12.01. Appointment; Nature of Relationship. The CSW Borrower is hereby
appointed by each of the Borrowers as its contractual representative (herein
referred to as the “Borrower Representative”) hereunder and under each other
Loan Document, and each of the Borrowers irrevocably authorizes the Borrower
Representative to act as the contractual representative of such Borrower with
the rights and duties expressly set forth herein and in the other Loan
Documents. The Borrower Representative agrees to act as such contractual
representative upon the express conditions contained in this Article XII.
Additionally, the Borrowers hereby appoint the Borrower Representative as their
agent to receive all of the proceeds of the Loans in the Funding Account(s), at
which time the Borrower Representative shall promptly disburse such Loans to the
appropriate Borrower(s), provided that, in the case of a Revolving Loan, such
amount shall not exceed Availability. The Administrative Agent and the Lenders,
and their respective officers, directors, agents or employees, shall not be
liable to the Borrower Representative or any Borrower for any action taken or
omitted to be taken by the Borrower Representative or the Borrowers pursuant to
this Section 12.01.

SECTION 12.02. Powers. The Borrower Representative shall have and may exercise
such powers under the Loan Documents as are specifically delegated to the
Borrower Representative by the terms of each thereof, together with such powers
as are reasonably incidental thereto. The Borrower Representative shall have no
implied duties to the Borrowers, or any obligation to the Lenders to take any
action thereunder except any action specifically provided by the Loan Documents
to be taken by the Borrower Representative.

SECTION 12.03. Employment of Agents. The Borrower Representative may execute any
of its duties as the Borrower Representative hereunder and under any other Loan
Document by or through authorized officers.

SECTION 12.04. Notices. Each Borrower shall immediately notify the Borrower
Representative of the occurrence of any Default or Event of Default hereunder,
refer to this Agreement, describe such Default or Event of Default, and state
that such notice is a “notice of default”. In the event that the Borrower
Representative receives such a notice, the Borrower Representative shall give
prompt notice thereof to the Administrative Agent and the Lenders. Any notice
provided to the Borrower Representative hereunder shall constitute notice to
each Borrower on the date received by the Borrower Representative.

SECTION 12.05. Successor Borrower Representative. Upon the prior written consent
of the Administrative Agent, the Borrower Representative may resign at any time,
such resignation to be effective upon the appointment of a successor Borrower
Representative. The Administrative Agent shall give prompt written notice of
such resignation to the Lenders.

SECTION 12.06. Execution of Loan Documents. The Borrowers hereby empower and
authorize the Borrower Representative, on behalf of the Borrowers, to execute
and deliver to the Administrative Agent and the Lenders the Loan Documents and
all related agreements, certificates, documents, or instruments as shall be
necessary or appropriate to effect the purposes of the Loan Documents,
including, without limitation, the Compliance Certificates. Each Borrower agrees
that any action taken by the Borrower Representative or the Borrowers in
accordance with the terms of this Agreement or the other Loan Documents, and the
exercise by the Borrower Representative of its powers set forth therein or
herein, together with such other powers that are reasonably incidental thereto,
shall be binding upon all of the Borrowers.

 

114

--------------------------------------------------------------------------------

SECTION 12.07. Reporting. Each Borrower hereby agrees that such Borrower shall
furnish promptly after each fiscal month to the Borrower Representative a copy
of any certificate or report required hereunder or requested by the Borrower
Representative on which the Borrower Representative shall rely to prepare the
Compliance Certificate required pursuant to the provisions of this Agreement.

[Signature Page Follows]

 

115

--------------------------------------------------------------------------------

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

 

CSW INDUSTRIALS HOLDINGS, INC. By:  

/s/ Joseph B. Armes

Name:   Joseph B. Armes Title:   Chief Executive Officer CSW INDUSTRIALS, INC.
By:  

/s/ Joseph B. Armes

Name:   Joseph B. Armes Title:   Chief Executive Officer 549 ROCKWALL, LLC By:  

/s/ Ray D. Schwertner

Name:   Ray D. Schwertner Title:   President CAPSTAR HOLDINGS CORPORATION By:  

/s/ Ray D. Schwertner

Name:   Ray D. Schwertner Title:   President THE WHITMORE MANUFACTURING COMPANY
By:  

/s/ Jeff Kilpatrick

Name:   Jeff Kilpatrick Title:   President and Chief Executive Officer
WHITMORE’S FIELD SERVICES, LLC By:  

/s/ Jeff Kilpatrick

Name:   Jeff Kilpatrick Title:   President

 

Signature Page to Credit Agreement

--------------------------------------------------------------------------------

JET-LUBE EXPORTS, INC. By:  

/s/ Greg L. Havelka

Name:   Greg L. Havelka Title:   President JET-LUBE, INC. By:  

/s/ Greg L. Havelka

Name:   Greg L. Havelka Title:   President SIERRA LUBRICANTS By:  

/s/ Greg L. Havelka

Name:   Greg L. Havelka Title:   President SMOKE GUARD CALIFORNIA, INC. By:  

/s/ Bernard W. Kangieser

Name:   Bernard W. Kangieser Title:   President SMOKE GUARD, INC. STRATHMORE
ACWORTH PROPERTY, LLC

STRATHMORE CUTTEN ROAD PROPERTY, LLC

STRATHMORE EMPLOYEE HOLDINGS, LLC

STRATHMORE HOLDINGS, LLC

STRATHMORE LONGVIEW PROPERTY, LLC

STRATHMORE PROPERTIES HOLDINGS, LLC

By:  

/s/ Christopher J. Mudd

Name:   Christopher J. Mudd Title:   President BALCO, LLC By:  

/s/ Ronnie L. Leonard

Name:   Ronnie L. Leonard Title:   President and Chief Executive Officer

 

Signature Page to Credit Agreement

--------------------------------------------------------------------------------

THE RECTORSEAL CORPORATION By:  

/s/ David M. Smith

Name:   David M. Smith Title:   President

 

Signature Page to Credit Agreement

--------------------------------------------------------------------------------

JPMORGAN CHASE BANK, N.A., individually, and as Administrative Agent, Swingline
Lender and Issuing Bank By:  

/s/ Scott R. Maggard

Name:   Scott R. Maggard Title:   Senior Underwriter

 

Signature Page to Credit Agreement

--------------------------------------------------------------------------------

SUNTRUST BANK By:  

/s/ Justin Lien

Name:   Justin Lien Title:   Director

 

Signature Page to Credit Agreement

--------------------------------------------------------------------------------

COMERICA BANK By:  

/s/ Jeff Darnell

Name:   Jeff Darnell Title:   Senior Vice President

 

Signature Page to Credit Agreement

--------------------------------------------------------------------------------

AMEGY BANK By:  

/s/ Kathy V. Magee

Name:   Kathy V. Magee Title:   Senior Vice President

 

Signature Page to Credit Agreement

--------------------------------------------------------------------------------

WELLS FARGO BANK, NATIONAL ASSOCIATION By:  

/s/ Jason Ford

Name:  

Jason Ford

Title:   Senior Vice President

 

Signature Page to Credit Agreement

--------------------------------------------------------------------------------

BRANCH BANKING AND TRUST COMPANY By:  

/s/ Allen K. King

Name:   Allen K. King Title:   Senior Vice President

 

Signature Page to Credit Agreement

--------------------------------------------------------------------------------

FROST BANK By:  

/s/ Paul R. Haney

Name:   Paul R. Haney Title:   Vice President

 

Signature Page to Credit Agreement

--------------------------------------------------------------------------------

COMMITMENT SCHEDULE

 

Lender

   Revolving Commitment  

JPMorgan Chase Bank, N.A.

   $ 50,000,000.00   

SunTrust Bank

   $ 50,000,000.00   

Comerica Bank

   $ 36,500,000.00   

Amegy Bank, N.A.

   $ 36,500,000.00   

Wells Fargo Bank, National Association

   $ 36,500,000.00   

Branch Banking and Trust Company

   $ 22,000,000.00   

Frost Bank

   $ 18,500,000.00      

 

 

 

Total

   $ 250,000,000.00      

 

 

 

 

Commitment Schedule

--------------------------------------------------------------------------------

SCHEDULE 3.05

Properties etc.

Owned Real Property

THE WHITMORE MANUFACTURING COMPANY

Address and Legal Description

930 Whitmore Drive/1250 Justin Road, ROCKWALL, TX 75087 containing 27.770 acres
more particularly described as follows:

All of Lots 2, 3, and 4, Block A, Whitmore Manufacturing Addition, an addition
to the City of Rockwall, Texas, according to the plat thereof recorded at Slide
F, Pages 291-292, of the Map Records of Rockwall County, Texas; and

All of Lot 7, Block A of the Replat Municipal Industrial Park, an addition to
the City of Rockwall, Texas, according to the plat thereof recorded at Slide G,
Pages 113-11 of the Map Records of Rockwall County, Texas; and

All of Lot 4, Block A of the Municipal Industrial Park, an addition to the City
of Rockwall, Texas, according to the plat thereof recorded at Slide B, Page 30
of the Map Records of Rockwall County, Texas

STRATHMORE LONGVIEW PROPERTY, LLC

Address and Legal Description

 

10 Robert Wilson Road, Longview, Texas

All that certain 25.441 acre tract of land in the James Hill Survey, A-300, in
Harrison County, Texas, being all of the called 25.44 acre tract conveyed from
GEQ International Corporation to Rescar, lnc. by Special Warranty Deed dated
December 19,1989, and recorded in Volume 1233, Page 291, of the Deed Records of
Harrison County, Texas, said 25.441 acre tract being more particularly described
as follows:

Bearings are based upon the Texas State Plane Coordinate System, North Central
Zone, 1927 North American Datum, Grid Bearings.

BEGINNING at a 5/8” iron rod set at a cross-tie fence corner post in the south
right-of-way line of Robert Wilson Road for the northwest corner of the called
0.32 acre tract conveyed to Joe H. Redmon and wife by Warranty Deed recorded in
Volume 633, Page 523, of the Deed Records of Harrison County, Texas, and for the
most northerly northeast corner of this tract;

 

Schedule 3.05

--------------------------------------------------------------------------------

THENCE: S 03°33’28” E 186.01 feet along a fence and with the west line of said
called 0.32 acre tract and the west line of the tract conveyed to Joe H. Redmon
by Warranty Deed recorded in Volume 879, Page 228, of said Deed Records, to a
5/8” iron rod set at a cross-tie fence corner post for the southwest corner of
said Redmon tract and the most westerly corner of the called 2.078 acre tract
conveyed to Jim M. Grimes and Jean C. Grimes by Warranty Deed recorded in Volume
1374, Page 450, of said Deed Records;

THENCE: S 46°59’19” E 401.52 feet, Y^ith the southwest line of said called 2.078
acre tract to a 3/8” iron rod found for the southeast corner of same, and the
southwest corner of the called 0.893 acre tract conveyed to John T. Thompson and
wife by Warranty Deed recorded in Volume 1504, Page 264, of the Official Public
Records of Harrison County, Texas, from which a found 1/2” iron rod bears S
66°22’41” W 4.70 feet, a fence angle post bears S 64°50(10” W 5.15 feet, and a
chain link fence corner post bears S 15°13’53” W 2.61 feet;

THENCE: S 89°22’15” E 190.05 feet along a fence and with the south line of said
called 0.893 acre tract to a 3/8” iron rod found in the west line of the called
one acre tract conveyed to Leonard Stanley Morgan and wife by Warranty Deed
recorded in Volume 557, Page 355, of said Deed Records, for the southeast corner
of said called 0.893 acre tract, and the middle northeast corner of this tract,
from which a fence corner post bears N 69°10’ E 2.69 feet;

THENCE: S 00°20’28” W, generally along a fence and with the west line of said
called one acre tract passing a 5/8” iron rod found 0.19 foot left at 199.41
feet, continuing with the west line of the called 1.38 acre tract conveyed to
Pasty Jo Brack Morgan by Warranty Deed recorded in Volume 1345, Page 289, of
said Deed Records, passing a 3/8” iron rod found 0.28 foot left at 398.12 feet,
and continuing with the west line of the called 2.66 acre tract conveyed to Big
M Construction Company by Warranty Deed recorded in Volume 701 , Page 151, of
said Deed Records, and the west line of the called 2.397 acre tract conveyed to
Big M Construction Company by Warranty Deed recorded in Volume 1366, Page 453,
of said Deed Records, a total distance of 805.60 feet to a 3/8” iron rod found
at a fence corner for the southwest corner of said called 2.397 acre tract;

THENCE: N 88°35f32” E 385.34 feet along a fence and with the south line of said
called 2.397 acre tract to a 3/8” iron rod found for the northwest corner of the
called 38.26 acre tract conveyed to Earl E. Nolan, Jr. by Warranty Deed recorded
in Volume 457, Page 28, of said Deed Records, and the most easterly northeast
corner of this tract;

THENCE: S 00°18’38’ E 349.23 feet along a fence and with the west line of said
called 38.26 acre tract to a 5/8” iron rod set in the north right-of-way line of
lnterstate Highway No. 20 for the southeast corner of this tract, from which a
3/8” iron rod found for reference bears S 00°18’38” E 0.48 feet, and a fence
corner post bears S 00°56’54” W 0.68 feet;

THENCE: S 78°42’47” W 446.22 feet, along a fence and with said right-of-way line
to a concrete right-of-way monument found for an angle point in said
right-of-way line;

THENCE: N 80°38’14” W 113.13 feet along a fence and with said right-of-way line
to another concrete monument found in the east right-of-way line of the
Burlington Northern Santa Fe Railroad as shown on the right of-way Map for
lnterstate Highway No. 20;

 

Schedule 3.05

--------------------------------------------------------------------------------

THENCE: ln a northwesterly direction with the east right-of-way line of the
Burlington Northern Santa Fe Railroad, as described in the said Warranty Deed to
Rescar, lnc., as follows:

N 78°47’05” W, 83.65 feet to a found 1/2” iron rod;

N 20°00’18’ W, 21.95 feet to a point;

N 16°13’39” W 41 .92 feet to a found 1/2” iron rod;

N 16°36’54” W 100.75 feet to a set 5/8” iron rod;

N 17°34’34” W 52.36 feet to a set 5/8” iron rod;

N 25“49’34” W 48.03 feet to a set 5/8” iron rod;

N 23°31’34” W 117.03 feet to a set 5/8” iron rod;

N 30°19’34’W 86.39 feet to a set 5/8” iron rod;

N 32°00’34’W 229.83 feet to a set 5/8” iron rod;

N 33°33’34’W 137.37 feet to a set 5/8” iron rod;

N 33°40’34” W 200.03 feet to a set 5/8” iron rod;

N 33°24’54” W 400.12 feet to a found railroad spike;

N 33°30’54” W 200.12 feet to a found 1/2” iron rod;

N 33°42’29” W 100.57 feet to a set 5/8” iron rod;

N 33°40’07” W 1 01 .00 feet to a found 1/2” iron rod, and

N 34°38’50” W 69.24 feet to a found 1/2” iron rod in the south right-of-way line
of Robert Wilson Road for the northwest corner of this tract;

THENCE: N 87°56’32” E 720.03 feet with the south right-of-way line of Robert
Wilson Road to the POINT OF BEGINNING, containing 25.441 acres of land, more or
less.

 

Schedule 3.05

--------------------------------------------------------------------------------

STRATHMORE PROPERTIES HOLDINGS, LLC

Address and Legal Description

 

4724 Burr Drive, Clay, New York

Parcel 1:

ALL THAT TRACT OR PARCEL OF LAND situate in the Town of Clay, County of Onondaga
and State of New York, being part of Farm Lot 88 of said Town of Clay, and being
more particularly bounded and described as follows:

BEGINNING at a point in the south line of said Lot 88 where the same is
intersected by the easterly line of the lands now or formerly owned by
Penn-Central Railroad, said point also being the southwest corner of the
premises conveyed to Harold S. Burr by deed dated March 30, 1962 and recorded in
the Onondaga County Clerk’s Office in Book 2085 of Deeds at page 245; running
thence N 02° 49’ 00” E along the easterly line of the aforesaid Railroad Parcel
and the westerly line of the aforesaid Burr property a distance of 1,219.61 feet
to the southwest corner of the premises conveyed to Maximus Properties Co.,
Inc., by deed recorded in the Onondaga County Clerk’s Office in Book 2496 of
Deeds at page 702; thence running along the southerly line of the said Maximus
parcel on a curve to the right having a radius of 444.28 feet, a length of arc
of 538.84 feet to a point; thence N 02° 33’ 13” W a distance of 0.92 feet to a
point in the north line of the premises conveyed to Harold S. Burr by deed dated
May 1, 1962 and recorded in the Onondaga County Clerk’s Office in Book 2089 of
Deeds at page 115; running thence N. 87° 26’ 47” E. along the north line of the
aforesaid Burr premises and the north line of the premises conveyed to Harold S.
Burr by deed dated July 7, 1964 and recorded in the Onondaga County Clerk’s
Office in Book 2205 of Deeds at page 585 a distance of 875.89 feet to the
northeast corner of the last above mentioned Burr parcel; running thence S. 01°
27’ 55” E. along the easterly line of the last mentioned Burr parcel a distance
of 1,383.04 feet to a point in the center line of Vine Street; running thence
southerly along the center line of Vine Street a distance of 203.6 feet more or
less to the point of intersection of said center line with the southerly line of
Burr Drive; running thence in a northwesterly direction along the southerly line
of said Burr Drive a distance of 146.60 feet to a point of curve; thence
continuing along said southerly line of distance of 73.91 feet to a point of
curve; thence continuing again along said southerly street line a distance of
88.21 feet to the northeast corner of the premises conveyed to Ruth M. Burr by
deed dated February 8, 1978 and recorded in the Onondaga County Clerk’s Office
on February 9, 1978; running thence S. 42° 50’ 58” W. along the northwesterly
line of the said Ruth S. Burr parcel a distance of 375.06 feet to the south line
of Farm Lot 88 of the Town of Clay; running thence S. 87° 26’ 53” W. along the
said southerly Farm Lot line a distance of 771.29 feet to the point and place of
beginning.

EXCEPTING THEREFROM that parcel conveyed to Fay’s Drug Company, Inc. by deed
dated February 14, 1986 and recorded February 28, 1986 in Liber 3239 Page 304,
described as follows:

ALL THAT TRACT OR PARCEL OF LAND situate in the Town of Clay, County of Onondaga
and State of New York, being part of Farm Lot 88 of said Town of Clay, and being
more particularly bounded and described as follows:

BEGINNING at a point in the south line of said Lot 88 where the same is
intersected by the easterly line of the lands now or formerly owned by
Penn-Central

 

Schedule 3.05

--------------------------------------------------------------------------------

Railroad, said point also being the southwest corner of the premises conveyed to
Harold S. Burr by deed dated March 30, 1962 and recorded in the Onondaga County
Clerk’s Office in Book 2085 of Deeds at page 245; running thence N 02° 49’ 00” E
along the easterly line of the aforesaid Railroad parcel and the westerly line
of the aforesaid Burr property a distance of 72l.97 feet to a point; thence N
87° 26’ 47” E a distance of 562.69 feet to a point; thence N 02° 33’ 13” W a
distance of 785.00 feet to a point in the north line of the premises conveyed to
Harold S. Burr by deed dated May 1, 1962 and recorded in the Onondaga County
Clerk’s Office in Book 2089 of Deeds at page 115; running thence N 87° 26’ 47” E
a distance of 775.89 feet to the northeast corner of the last above-mentioned
Burr parcel; running thence S 03° 42’ 10” E along the easterly line of the last
mentioned Burr parcel, a distance of 1,383.04 feet to a point in the centerline
of Vine Street; running thence southerly along the centerline of Vine Street a
distance of 203.6 feet more or less to the point of intersection of said center
line with the southerly line of Burr Drive; running thence in a northwesterly
direction along the southerly line of Burr Drive a distance of 146.60 feet to a
point of curve; thence continuing along said southerly line a distance of 73.9l
feet to a point of curve; thence continuing again along said southerly line of a
distance of 88.21 feet to the northeast corner of the premises conveyed to Ruth
M. Burr by deed dated February 8, 1978 and recorded in the Onondaga County
Clerk’s Office on February 9, 1978; running thence S 42° 50’ 58” W along the
northwesterly line of the said Ruth M. Burr parcel a distance of 375.06 feet to
a point in the south line of Farm Lot 88 of the Town of Clay; running thence S
87° 26’ 53” W along the said southerly Farm Lot line a distance of 775.29 feet
to the point and place of beginning.

Parcel 2:

ALL THAT TRACT OR PARCEL OF LAND situate in the Town of Clay, County of Onondaga
and State of New York, being part of Farm Lot 88 in said Town, being more
particularly described as follows:

Beginning at a point in the easterly Right-of-Way boundary of the Penn-Central
Railroad Company, said point being the northwesterly corner of said lands
conveyed by Younglove to Burr; running thence N 87° 26’ 47” E along the
northerly boundary of said lands conveyed to Burr, a distance of 388.90 feet to
a point; thence S 2° 33’ 13” E, a distance of 0.92 feet to a point; thence
westerly and southwesterly following a curve to the left having a radius of
444.28 feet, an arc distance of 538.84 feet to a point in said easterly
Right-of-Way boundary of the Penn-Central Railroad Company; thence N 2° 49’ 00”
E along said easterly Right-of-Way boundary, a distance of 290.81 feet to the
point of beginning, being 0.671 acre of land, more or less.

 

Schedule 3.05

--------------------------------------------------------------------------------

STRATHMORE ACWORTH PROPERTY, LCC

Address and Legal Description

 

19 North Drive, Acworth, GA 30102

All that lot, tract or parcel of land situate, lying and being in Land Lot 1280,
of the 21st District, 2nd Section, Bartow County, Georgia, and being more
particularly described as follows:

TO FIND THE TRUE POINT OF BEGINNING, commence at a point formed by the
intersection of the southwest right-of-way line of Northpoint Parkway and the
mitered southern right-of-way line of North Drive (formerly incorrectly called
Northpoint Drive); running thence in a western and southwestern direction, along
the southern and southeastern right-of-way line of North Drive (80 foot
right-of-way), the following courses and distances: North 84 degrees 08 minutes
38 seconds West, a distance of 2939 feet to a point; South 53 degrees 09 minutes
06 seconds West, a distance of 29.39 feet to a point; South 53 degrees 09
minutes 06 seconds West, a distance of 21.02 feet to a point; along the arc of a
curve to the right a distance of 70.59 feet to a  1⁄2” rebar found (said arc
having a radius of 756.20 feet and being subtended by a chord bearing South 55
degrees 49 minutes 34 seconds West and having a length of 70.56 feet); along the
arc of a curve to the right, a distance of 438.84 feet to a point (said arc
having a radius of 756.20 feet and being subtended by a chord bearing South 75
degrees 07 minutes 31 seconds West and having a length of 432.71 feet); and
North 88 degrees 14 minutes 59 seconds West, a distance of 97.54 feet to a  1⁄2”
rebar set, which marks the TRUE POINT OF BEGINNING; FROM THE TRUE POINT OF
BEGINNING, AS THUS ESTABLISHED, leaving the southern right-of-way line of North
Drive and running along the boundary line of real property now or formerly owned
by Orton (DB 1391, PG 267), the following courses and distances: South 01
degrees 17 minutes 00 seconds West, a distance of 243.93 feet to a  1⁄2” rebar
found; and South 11 degrees 01 minutes 18 seconds West, a distance of 339.27
feet to a  1⁄2” rebar set on the northern right-of-way line of Interstate
Highway No. 75; running thence along the northern right-of-way line of
Interstate Highway 75 the following courses and distances: North 86 degrees 55
minutes 27 seconds West, a distance of 123.90 feet to a concrete monument found;
and North 85 degrees 11 minutes 35 seconds West, a distance of 182.21 feet to a
 1⁄2” rebar set; thence leaving the northern right-of-way line of Interstate
Highway No. 75 and running along the boundary line of real property now or
formerly owned by the W.W. Williams Company (DB 1142, PG 374), North 01 degrees
34 minutes 26 seconds East, a distance of 566.18 feet to a  1⁄2” rebar set on
the southern right-of-way line of North Drive (80 foot right-of-way); running
thence along the southern right-of-way line of North Drive, South 88 degrees 14
minutes 59 seconds East, a distance of 360.24 feet to a  1⁄2” rebar set, which
marks the TRUE POINT OF BEGINNING.

The tract or parcel of land herein described is shown on, and described
according to, that certain Boundary Survey for Northpoint Property Group, LLC,
SunTrust Bank and Chicago Title Insurance Company, dated February 24, 2006,
prepared by Due West Surveying Inc., certified by Christopher P. Wehrle, G.R.L.S
#2494, which Boundary Survey is incorporated herein by reference.

CAPSTAR HOLDINGS CORPORATION

 

Property

Tax ID

  

Address and Legal Description

11192 & 28961

   A0120 R Irvine, Tracts 10 and 10-3 (NE I-30 and FM3549, 23.03 acres),
Rockwall, Texas

82726

   ABS A0120 R Irvine, Tract 22-2 (SE I-30 and FM3549, 31.65 acres), Rockwall,
Texas

11204

   A0120 R Irvine, Tract 22 (SE I-30 and FM3549, 20.51 acres), Rockwall, Texas

11210

   A0120 R Irvine, Tract 24 (SE I-30 and FM3549, 3.86 acres), Rockwall, Texas

11230

   A0120 R Irvine, Tract 35 (FM 3549, 4.46 acres), Rockwall, Texas

11422

   7740 E. Hwy 21 (5.03 acres), Bryan, Texas

237-0051-012 & 013

   901 Main Ave. (29.56 acres), Sacramento, California

 

Schedule 3.05

--------------------------------------------------------------------------------

BALCO, INC.

2626 S Sheridan, Wichita, Kansas 67217

2636 S. Sheridan, Wichita, KS 67217

5551 NW 5th, Oklahoma City, Oklahoma 73127

THE RECTOR SEAL CORPORATION

Address and Legal Description

 

3300 Produce Row, Houston, TX

A 0.4509 acre (19,639 square feet) tract of land situated in Lot Twelve (12) of
the East one-half (1/2) of the Luke Moore League, Abstract No. 51, Harris
County, Texas, and being more particularly described by metes and bounds as
follows:

COMMENCING for reference at the northwest corner of a 4.579 acre tract of record
in Volume 2663, Page 680 in the Harris County Deed Records (H.C.D.R.) and being
in the southwesterly right-of-way (R.O.W.) line of Produce Row (80 feet wide) of
record in Volume 2813, Page 457 in the H.C.D.R. from which point a 5/8 inch iron
rod bears South 51° 14’ 14” West, 0.50 feet;

THENCE, along the southwesterly R.O.W. line of said Produce Row, North 70° 42’
00” West, 34.18 feet to a one inch iron rod found for the northeast corner of
the herein described tract and the POINT OF BEGINNING;

THENCE, along the easterly line of the herein described tract the following
courses:

South 02° 25’ 45” East, 29.43 feet to a 5/8 inch iron rod set for corner;

South 03° 03’ 00” West, 50.00 feet to a 5/8 inch iron rod set for corner;

South 14° 37’ 00” West, 50.00 feet to a 5/8 inch iron rod set for corner;

South 16° 44’ 00” West, 50.00 feet to a 5/8 inch iron rod set for the southeast
corner of the herein described tract of land;

THENCE, along the southerly line of the herein described tract, South 74° 40’
00” West, 46.57 feet to a one inch iron rod found for corner;

 

Schedule 3.05

--------------------------------------------------------------------------------

THENCE, along the westerly line of the herein described tract, North 15° 20’ 00”
West, 245.00 feet to a 5/8 inch iron rod set for the northeast corner of the
herein described tract and being in the southwesterly R.O.W. line of the
aforementioned Produce Row;

THENCE, along the southwesterly R.O.W. line of said Produce Row, South 70° 42’
00” East, 146.35 feet to the POINT OF BEGINNING, containing 0.4509 acre (19,639
square feet) of land.

Address and Legal Description

 

2601 Spenwick Dr., Houston, TX

A tract of land containing 21.566 Acres of land (939,397.5 Square Feet) being
all of Unrestricted Reserve “A”, Final Plat Weiners Stores, Inc., as recorded in
Volume 332, Page 67, Harris County Map Records, Harris County, Texas, located in
the Daniel Alexander Survey, A-92, Harris County, Texas, and being more
particularly described by metes and bounds as follows:

BEGINNING at an I.R. (found) in the southerly line of Southern Pacific Railroad
Co. 100’ R.O.W. for the N.E. corner, said point being the N.E. corner of
Unrestricted Reserve “A” and the N.W. corner of Rreef Mid American Fund D-1
Tract, described in County Clerk’s File No. G-636624;

THENCE S 20°51’52” W, along the common line of Unrestricted Reserve “A” and
Rreef Mid American Fund D-1 Tract, 368.18 feet to an “X” in concrete at the P.C.
of a curve to the left, said point being in the center line of Spenwick Drive
(60’ R.O.W.);

THENCE in a southwesterly direction, along the common line of Unrestricted
Reserve “A” and Rreef Mid American Fund D-1 Tract, a 487.95 ft radius (I =
23°08’09”) 197.06 feet to a “X” in concrete in the center of Spenwick Drive for
the S.E. corner;

THENCE S 87°42’28” W, along the common line of Unrestricted Reserve “A” and
Kempwood Industrial Park, Section 1, recorded in Volume 81, Page 47, Harris
County Map Records, 764.65 to an I.R. (set);

THENCE S 2°12’38” E, 125.59 feet to an I.R. (found) in the east line of a Harris
County Flood Control District 50 easement, recorded in Volume 3064, Page 616,
Harris County Deed Records;

THENCE S 87°46’50” W, 25.00 feet to a point in the center line of said 50 ft.
drainage easement, said point being the P.C. of a curve to the left.

THENCE in a north westerly direction, along the center line of said easement and
a 125.00 ft. radius curve (I = 90°00’00”) 196.35 feet to the P.T. of a curve;

THENCE S 87°46’50” W, along the center line of said drainage easement, 54.80
feet to the P.C. of a curve to the right;

THENCE in a north westerly direction, along the center line of said drainage
easement, along the center line of said drainage easement, west line of
Unrestricted Reserve “A” and a 125.00 ft. radius curve (I = 83°13’00”) 185.91
feet to the P.T. of a curve;

 

Schedule 3.05

--------------------------------------------------------------------------------

THENCE N 7°00’10” W, along the center line of said drainage easement and the
west line of Unrestricted Reserve “A” and the east line of Kempwood Industrial
Park, Section 2, recorded in Volume 124, Page 57, Harris County Map Records,
556.99 feet to a point in the center line of Brickhouse Gully for the N.W.
corner;

THENCE in a north easterly direction, along the center line of Brickhouse Gully,
recorded in Volume 4041, Page 370 and Volume 2495, Page 58, Harris County Deed
Records, the north line of Unrestricted Reserve “A” and a 381.97 ft. radius
curve (I = 17°40’28”) 117.83 feet to the P.C. of a curve;

THENCE 68°19’55” E, (call N 70°32’05” E) along the center line of Brickhouse
Gully and the north line of Unrestricted Reserve “A”, 449.40 feet to the P.C. of
a curve to the right;

THENCE in an easterly direction, along the center line of Brickhouse Gully, the
north line of Unrestricted Reserve “A” and a 381.97 ft radius curve (I =
20°01’00”) 133.44 feet to the p.C. of a curve;

THENCE along the center line of Brickhouse Gully and the north line of
Unrestricted Reserve “A” the following meanders:

 

N 88°19’55” E    170.00 feet N 89°53’32” E    52.52 feet N 83°10’56” E    33.16
feet to a point in the westerly line of Southern Pacific Railroad Co. R.O.W. for
the N.E. corner;

THENCE S 52°35’24” E, along the westerly line of Southern Pacific Railroad
R.O.W. and the easterly line of Unrestricted Reserve “A”, at 68.52 feet pass an
I.R. at 371.49 feet pass an I.R. and a total distance of 517.21 feet to the
PLACE OF BEGINNING.

 

Schedule 3.05

--------------------------------------------------------------------------------

Real Property Held for Investment

THE WHITMORE MANUFACTURING COMPANY

 

Property

Tax ID

  

Address and Legal Description

    

Geo ID

11638    HWY205 & Sids Road      0145-0000-0018-00-0R    All that certain lot
tract or parcel of land situated in the J.D. McFARLAND SURVEY ABSTRACT NO. 145,
City of Rockwall, Rockwall County, Texas and being all of Tract II a called
30.9655 acres tract of land as described in a Warranty deed from Rockwall
Commercial Park Joint Venture to JDI Investors, LP, dated July 24, 2003 and
being recorded in Volume 3152 Page 242 of the Official Public Records of
Rockwall County, Texas, and being more particularly described as follows:     
  

BEGINNING at a 1/2” iron rod found for corner in the Southwest right-of-way line
of State Highway 205 said point being at the East corner of said 30.9655 acres
tract and at the North corner of a 10 foot right-of-way dedication as shown on
the plat of ROCKWALL HOSPITAL ADDITION, an Addition to the City of Rockwall,
Rockwall County, Texas, according to the Plat thereof recorded in Cabinet E,
Slide 133 of the Plat Records of Rockwall County, Texas;

 

THENCE S. 44 deg. 28 min. 04 sec. W. at 10.00 feet pass the North corner of Lot
1, Block A of said ROCKWALL HOSPITAL ADDITION, and continuing for a total
distance of 920.77 feet to a 1/2’ iron rod found for corner at an inner “L”
corner of said Lot 1;

 

THENCE N. 45 deg. 31 min. 56 sec. W. a distance of 227.94 feet to a 1/2” iron
rod found for corner at the West most North corner of said Lot 1;

 

THENCE S. 25 deg. 52 min. 56 sec. W. a distance of 290.61 feet to a 1/2’ iron
rod found for corner at the West corner of said Lot 1 and the South most corner
of said 30.9655 acres tract;

 

THENCE N. 45 deg. 09 min. 25 sec. W. a distance of 1020.14 feet to a 1/2’ iron
rod with yellow plastic cap stamped “R.S.C.I. RPLS 5034” set for corner at the
West corner of said 30.9655 acres tract and being at the South corner of Lot 1,
Block B of ROCKWALL BUSINESS PARK EAST NO. 3, an Addition to the City of
Rockwall, Rockwall County, Texas, according to the Plat thereof recorded in
Cabinet B, Slide 291 of the Plat Records of Rockwall County, Texas;

 

THENCE N. 44 deg. 50 min. 42 sec. E. along the Southeast line of said Addition a
distance of 981.14 feet to a 1/2’ iron rod found for corner in the Southeast
line of Lot 1, Block C of Rockwall BUSINESS PARK EAST an Addition to the City of
Rockwall, Rockwall County, Texas, according to the Plat thereof recorded in
Cabinet B Slide 143 of the Plat Records of Rockwall County, Texas and also being
at the West corner of a 2.00 acres tract of land as described in a Deed to Cathy
Strother, as recorded in Volume 421, Page 68 of the Real Property Records of
Rockwall County, Texas;

 

THENCE S. 45 deg. 38 min. 00 sec. E. along the Southwest line of said 2.00 acres
tract, a distance of 355.86 feet to a 112” iron rod found for corner at the
South corner of same;

 

THENCE N. 14 deg. 11 min. 13 sec. E. along the Southeast line of said 2.00 acres
tract, a distance of 387.20 feet to a 1/2” iron rod found for corner at the West
corner of a 0.494 acres tract as described in a Deed from J.S. Lofland to State
of Texas, as recorded in Volume 31, Page 510 of the Deed Records of Rockwall
County, Texas;

    

 

Schedule 3.05

--------------------------------------------------------------------------------

  

THENCE S. 45 deg. 19 min. 38 sec. E. along the West line of said 0.494 acres
tract, a distance of 528.19 feet to a concrete right-of-way monument found for
corner in the Southwest right-of-way line of State Highway 205;

 

THENCE S. 30 deg. 22 min. 20 sec. E. along said right-of-way line, a distance of
476.76 feet to the POINT OF BEGINNING and containing 1,353,112 square feet or
31.06 acres of land., ACRES 31.03

     55999    HWY205 & Sids Road      4809-000A-0001-00-0R    BEING all of Lot
1, Block A, of ROCKWALL HOSPITAL ADDITION, an Addition to the City of Rockwall,
Rockwall County, Texas according to the Plat thereof recorded in Cabinet E,
Slide 133 of the Plat Records of Rockwall County, Texas., ACRES 9.01     

STRATHMORE PROPERTIES HOLDINGS, LLC

Address and Legal Description

 

All that certain tract or parcel containing 25.0000 acres of land out of that
certain call 49.963 acre tract of land situated in the James Hitchcock Survey,
A-128 in Waller County, Texas, said 49.963 acre tract being that same tract of
land as described in a Deed filed for record in Volume 794, Page 157, of the
Official Public Records of Real Property, Waller County, Texas,
(O.P.R.R.P.W.C.T.).

CAPSTAR HOLDINGS CORPORATION

 

Property

Tax ID

    

Address and Legal Description

       11192 & 28961      A0120 R Irvine, Tracts 10 and 10-3 (NE I-30 and
FM3549, 23.03 acres), Rockwall, Texas      82726      ABS A0120 R Irvine, Tract
22-2 (SE I-30 and FM3549, 31.65 acres), Rockwall, Texas      11204      A0120 R
Irvine, Tract 22 (SE I-30 and FM3549, 20.51 acres), Rockwall, Texas      11210
     A0120 R Irvine, Tract 24 (SE I-30 and FM3549, 3.86 acres), Rockwall, Texas
     11230      A0120 R Irvine, Tract 35 (FM 3549, 4.46 acres), Rockwall, Texas
     11422      7740 E. Hwy 21 (5.03 acres), Bryan, Texas     
237-0051-012 & 013      901 Main Ave. (29.56 acres), Sacramento, California     

 

Schedule 3.05

--------------------------------------------------------------------------------

Leased Real Property

WHITMORE’S FIELD SERVICES, LLC

 

Date of Lease

  

Parties

  

Property Address

October 14, 2010   

C&S Halvorson, LLP

(Lessor)

   Lot 7B, Block 1, Interstate Industrial Park commonly known as 3207 East 2nd
Street, Gillette, WY 82718 (approx 1.06 acres of land)   
Whitmore’s Field Services, LLC (Lessee)   

 

STRATHMORE HOLDINGS, LLC

 

Date of Lease

  

Parties

  

Property Address

January 22, 2015   

S&L Dorsett, LLC (Lessor)

 

Strathmore Holdings, LLC (Lessee)

   25 Quiet Place Drive, Woodlands, Texas February 1, 2014   

American Coatings L.P. (Lessor)

 

Strathmore Holdings, LLC (Lessee)

  

Two office trailers at 10625 Mahaffey Rd. Tomball, Texas 77375

and

 

Building and lot at 22802 Commercial Lane, Tomball, TX 77375

 

STRATHMORE CUTTEN ROAD PROPERTY, LLC

 

Date of Lease

  

Parties

  

Property Address

November 12, 2015   

Clay Partners – 11917

Cutten, L.P. (Landlord)

 

Strathmore Cutten Road Property, LLC (Tenant)

   11917 Cutten Road, Houston, Texas

 

Schedule 3.05

--------------------------------------------------------------------------------

SMOKE GUARD CALIFORNIA, INC.

 

Date of Lease

  

Parties

  

Property Address

June 15, 2010   

GLP US Management LLC

(Lessor)

   1915 Mark Court Suite #100 Concord, CA 94520    Smoke Guard California, Inc.
(Lessee)   

Date of Lease

  

Parties

  

Property Address

September 7, 2010    Teachers Insurance and Annuity Association of America
(Lessor)    9865 S. Pioneer Blvd. Santa Fe Springs, CA 90670    Smoke Guard
California, Inc. (Lessee)   

JET-LUBE, INC.

 

Date of Lease

  

Parties

  

Property Address

11/18/2015    Leasor:     Northway Park II    4849 Homestead Rd., Houston, TX
77028 (Expires    Leasee:     Jet-Lube, Inc.    Suites
200,220,230,232,233,234,236 3/31/2017       and will not be renewed; Suite 236
to be terminated on March 31, 2016) 10/2/2015   

Leasors:     Daniel C. Bruckner

         & Rebecca Bruckner

Leasee:      Jet-Lube, Inc.

   Lot No. 2A in the resubdivison of Tract No 2 of the Landmark Limited
Partnership Subdivision Tract No 2C in Landmark Limited Partnership Subdivision
dated June, 1991 and 20 foot right of way over across and through other lands of
the grantor in the Township of Canton, County of Washington, and Commonwealth of
Pennsylvania. 10/2/2015   

Leasors:     Erik Bruckner

Leasee:       Jet-Lube, Inc.

   Lot No. 2B in the resubdivison of Tract No 2 of the Landmark Limited
Partnership Subdivision in the Township of Canton, County of Washington, and
Commonwealth of Pennsylvania.

 

Schedule 3.05

--------------------------------------------------------------------------------

THE RECTORSEAL CORPORATION

 

Date of Lease

  

Parties

  

Property Address

August 1, 2012   

1244 Davol Realty Associates LLC

(Landlord)

  

1190 Davol Street

Fall River, MA 02720

  

The RectorSeal Corporation

(Tenant)

   August 4, 2011   

1244 Davol Realty Associates LLC

(Landlord)

  

1244 Davol Street

Fall River, MA 02720

  

The RectorSeal Corporation

(Tenant)

   May 5, 2010   

Gary L. Olive, LLC

(Landlord)

  

1207 N. F.M. 3083 East

Conroe, TX 77303

  

Blue Magic, Inc.

(Tenant)

   May 5, 2010   

Gary L. Olive, LLC

(Landlord)

  

1209 N. F.M. 3083 East

Conroe, TX 77303

  

Blue Magic, Inc.

(Tenant)

  

 

SMOKE GUARD, INC.

 

  

Date of Lease

  

Parties

  

Property Address

May 1st, 2010    Eagle Holdings, LLC    287 N. Maple Grove This lease expires   
Vincent Sisilli    Boise, Idaho, 83704 June 30th, 2016    (Landlord)         
Approximately 32,000 sq. ft.    Smoke Guard, Inc.       (Tenant)   

Date of Lease

  

Parties

  

Property Address

March 1, 2014    Sundance Investments    200 N. Maple Grove, Suite 200 This
lease ends    L.L.L.P. (Landlord)    Boise, Idaho 83704 June, 30th, 2016      
      Approximately 8,908 sq. ft.    Smoke Guard, Inc.       (Tenant)   

 

Schedule 3.05

--------------------------------------------------------------------------------

CSW INDUSTRIALS, INC.

Sublease, dated as of September 18, 2015 by and between Capital Southwest
Corporation, as sublessor, and CSW Industrials, Inc., as sublessee, relating to
approximately 9,261 square feet of space on the 13th floor of the building known
as One Lincoln Centre, 5400 LBJ Freeway, Dallas, Texas 75240.

Lease, dated as of April 4, 2015, by and between Teachers Insurance and Annuity
Association of America, as landlord, and Capital Southwest Corporation, as
tenant, relating to approximately 9,261 square feet of space on the 13th floor
of the building known as One Lincoln Centre, 5400 LBJ Freeway, Dallas, Texas
75240.

CAPSTAR HOLDINGS CORPORATION

Commercial Lease, dated July 15, 2014, by and between CapStar Holdings
Corporation, as landlord, and Select Energy Services, LLC, as tenant.

Grazing and Farming Lease Agreement, dated January 30, 2014, by and between
CapStar Holdings Corporation, as landlord, and Stanley Springer, as tenant.

Billboard Sign Lease Agreement, dated May 20, 2015, by and between CapStar
Holdings Corporation, as lessor, and Southstar Woodcreek Developer, LLC, as
lessee (intersection of FM 3549 and Airport Road).

Billboard Sign Lease Agreement, dated May 20, 2015, by and between CapStar
Holdings Corporation, as lessor, and Southstar Woodcreek Developer, LLC, as
lessee (intersection of Corporate Drive and I-30 Frontage Road).

 

Schedule 3.05

--------------------------------------------------------------------------------

SCHEDULE 3.10

Plans Subject to Title IV of ERISA

Plans Subject to Title IV of ERISA

Retirement Plan for Employees of CSW Industrials, Inc. and its Affiliates (as
amended and restated effective April 1, 2011)

Carpenter’s Pension Trust Fund for Northern California

ERISA Events

The Carpenter’s Pension Trust Fund for Northern California is in critical
status.

Withdrawal Liability

Withdrawal liability could be assessed if an ERISA Affiliate withdraws from the
Carpenter’s Pension Trust Fund for Northern California.

 

Schedule 3.10

--------------------------------------------------------------------------------

SCHEDULE 3.13

Subsidiaries

 

Subsidiary Name

 

Jurisdiction of Formation

 

Outstanding Shares

 

Ownership of Subsidiary

The Whitmore Manufacturing Company

  Delaware   100 shares of common stock   80% by CSW Industrials Holdings, Inc.,
and 20% by The RectorSeal Corporation

549 Rockwall, LLC

  Texas   1,000 Units   100% owned by The Whitmore Manufacturing Company

Whitmore’s Field Services, LLC

  Texas   N/A   100% owned by The Whitmore Manufacturing Company

Strathmore Holdings, LLC

  Delaware   N/A   100% owned by The Whitmore Manufacturing Company

Strathmore Employee Holdings, LLC

  Delaware   N/A   100% owned by The Whitmore Manufacturing Company

Strathmore Longview Property, LLC

  Delaware   N/A   100% owned by The Whitmore Manufacturing Company

Strathmore Properties Holdings, LLC

  Delaware   N/A   100% owned by The Whitmore Manufacturing Company

Strathmore Acworth Property, LLC

  Delaware   N/A   100% owned by The Whitmore Manufacturing Company

Strathmore Cutten Road Property, LLC

  Texas   N/A   100% owned by Strathmore Holdings, LLC

Whitmore UK Holdings, Ltd

  UK   100 Ordinary Shares   100% owned by The Whitmore Manufacturing Company

Whitmore Europe Limited

  UK   2 Ordinary Shares   100% owned by Whitmore UK Holdings, Ltd

Balco, Inc.

  Kansas   445,000 shares of Class A Common Stock, and 60,920 shares of Class B
Common Stock   100% owned by the Company

 

Schedule 3.13

--------------------------------------------------------------------------------

Smoke Guard California, Inc.

  Nevada   100 shares of Common Stock   100% owned by Smoke Guard, Inc.

Jet-Lube, Inc.

  Delaware   150 shares of Common Stock   100% owned by The RectorSeal
Corporation

Jet-Lube of Canada Ltd.

  Canada   115,874 shares of Common Stock   100% owned by Jet-Lube, Inc.

Jet-Lube UK, Ltd.

  UK   100 shares of A Ordinary Stock, and 13,097 shares of B Ordinary Stock  
100% owned by Jet-Lube, Inc.

Sierra Lubricants

  California   140 shares of Common Stock   100% owned by Jet-Lube, Inc.

Jet-Lube Exports, Inc.

  California   25 shares of Common Stock   50% owned by Jet-Lube, Inc. and 50%
owned by Sierra Lubricants

The RectorSeal Corporation

  Delaware   27,907 shares of Common Stock   100% owned by the Company

RectorSeal Australia Proprietary Limited

  Australia   100 shares of Common Stock   100% owned by The RectorSeal
Corporation

Smoke Guard, Inc.

  Nevada   100 shares of Common Stock   100% owned by The RectorSeal Corporation

CSW Industrials Holdings, Inc.

  Delaware   100 shares of Common Stock   100% owned by the Company

CapStar Holdings Corporation

  Nevada   500 shares of Common Stock, and 1,000,000 shares of Series A
Convertible Preferred Stock   100% owned by the Company

THE WHITMORE MANUFACTURING COMPANY, a Delaware corporation

 

Authorized Capital Stock:

   1,000 shares of common stock, $0.01 par

Issued Capital Stock:

   100 shares of common stock, $0.01 par

Outstanding Capital Stock:

   100 shares of common stock, $0.01 par

Certificate No. 003, issued in the name of CSW industrials Holdings, Inc.,
representing 80 shares of common stock of Debtor.

 

Schedule 3.13

--------------------------------------------------------------------------------

Certificate No. 002, issued in the name of The RectorSeal Corporation,
representing 20 shares of common stock of Debtor.

WHITMORE’S FIELD SERVICES, LLC, a Texas limited liability company

The Whitmore Manufacturing Company is the sole member of Whitmore’s Field
Services, LLC and holds 100% of all outstanding limited liability company
interest in such LLC.

The membership interests in Whitmore’s Field Services, LLC are not certificated.

549 ROCKWALL, LLC, a Texas limited liability company

The Whitmore Manufacturing Company is the sole member of 549 Rockwall, LLC and
holds 1,000 units of limited liability company interest in such LLC.

The membership interests in 549 Rockwall, LLC are certificated.

STRATHMORE HOLDINGS, LLC, a Delaware limited liability company

The Whitmore Manufacturing Company is the sole member of Strathmore Holdings,
LLC and holds 100% of all outstanding limited liability company interest in such
LLC.

The membership interests in Strathmore Holdings, LLC are not certificated.

STRATHMORE EMPLOYEE HOLDINGS, LLC, a Delaware limited liability company

The Whitmore Manufacturing Company is the sole member of Strathmore Employee
Holdings, LLC and holds 100% of all outstanding limited liability company
interest in such LLC.

The membership interests in Strathmore Employee Holdings, LLC are not
certificated.

STRATHMORE LONGVIEW PROPERTY, LLC, a Delaware limited liability company

The Whitmore Manufacturing Company is the sole member of Strathmore Longview
Property, LLC and holds 100% of all outstanding limited liability company
interest in such LLC.

The membership interests in Strathmore Longview Property, LLC are not
certificated.

 

Schedule 3.13

--------------------------------------------------------------------------------

STRATHMORE PROPERTIES HOLDINGS, LLC, a Delaware limited liability company

The Whitmore Manufacturing Company is the sole member of Strathmore Properties
Holdings, LLC and holds 100% of all outstanding limited liability company
interest in such LLC.

The membership interests in Strathmore Properties Holdings, LLC are not
certificated.

STRATHMORE ACWORTH PROPERTY, LLC, a Delaware limited liability company

The Whitmore Manufacturing Company is the sole member of Strathmore Acworth
Property, LLC and holds 100% of all outstanding limited liability company
interest in such LLC.

The membership interests in Strathmore Acworth Property, LLC are not
certificated.

STRATHMORE CUTTEN ROAD PROPERTY, LLC, a Texas limited liability company

Strathmore Holdings, LLC is the sole member of Strathmore Cutten Road Property,
LLC and holds 100% of all outstanding limited liability company interest in such
LLC.

The membership interests in Strathmore Cutten Road Property, LLC are not
certificated.

WHITMORE UK HOLDINGS, LTD, a private limited company formed under the United
Kingdom’s Companies Act of 2006

The Whitmore Manufacturing Company is the sole shareholder of Whitmore UK
Holdings, Ltd and holds 100% of all outstanding shares of stock in such company.

 

Authorized Capital Stock:

   N/A

Issued Capital Stock:

   100 shares of ordinary stock, US$1.00 nominal value

Outstanding Capital Stock:

   100 shares of ordinary stock, US$1.00 nominal value

Certificate No. 1, issued in the name of The Whitmore Manufacturing Company,
representing 65 shares of ordinary stock of Whitmore UK Holdings, Ltd.

Certificate No. 2, issued in the name of The Whitmore Manufacturing Company,
representing 35 shares of ordinary stock of Whitmore UK Holdings, Ltd.

 

Schedule 3.15

--------------------------------------------------------------------------------

WHITMORE EUROPE LIMITED, a private limited company formed under the United
Kingdom’s Companies Act of 2006

Whitmore UK Holdings, Ltd is the sole shareholder of Whitmore Europe Limited and
holds 100% of all outstanding shares of stock in such company.

 

Authorized Capital Stock:    N/A Issued Capital Stock:    2 shares of ordinary
stock, GBP£1.00 nominal value Outstanding Capital Stock:    2 shares of ordinary
stock, GBP£1.00 nominal value

Certificate No. 1, issued in the name of Whitmore UK Holdings Limited,
representing 2 shares of ordinary stock of Whitmore Europe Limited.

BALCO, INC., a Kansas corporation

 

Authorized Capital Stock:   

1,929,080 shares of class A common stock, $.01 par

60,920 shares of class B common stock, $.01 par

Issued Capital Stock:   

445,000 shares of class A common stock, $.01 par

60,920 shares of class B common stock, $.01 par

Outstanding Capital Stock:   

445,000 shares of class A common stock, $.01 par

60,920 shares of class B common stock, $.01 par

Certificate No. 014, issued in the name of CSW Industrials, Inc. representing
445,000 shares of class A common stock of Balco, Inc.

Certificate No. 007, issued in the name of CSW Industrials, Inc. representing
60,920 shares of class B common stock of Balco, Inc.

SMOKE GUARD CALIFORNIA, INC., a Nevada corporation

 

Authorized Capital Stock:    100 shares of common stock, $.001 par Issued
Capital Stock:    100 shares of common stock, $.001 par Outstanding Capital
Stock:    100 shares of common stock, $.001 par

Certificate No. 1, issued in the name of Smoke Guard, Inc. representing 100
shares of common stock of such Loan Party.

JET-LUBE, INC., a Delaware corporation

Authorized Capital Stock: 1,000 shares of common stock, $0.01 par

Issued Capital Stock: 150 shares of common stock, $0.01 par

Outstanding Capital Stock: 150 shares of common stock, $0.01 par

Certificate No. 001, issued in the name of The RectorSeal Corporation,
representing 150 shares of common stock of such Loan Party.

 

Schedule 3.13

--------------------------------------------------------------------------------

JET-LUBE OF CANADA, organized in Alberta, Canada

 

Authorized Capital Stock:    200,000 shares of Common stock, CA$0.00 par Issued
Capital Stock:    115,874 shares of Common stock, CA$0.00 par Outstanding
Capital Stock:    115,874 shares of Common stock, CA$0.00 par

Certificate No. 2, issued in the name of Jet-Lube, Inc., representing 75,318
shares of Common stock of Jet-Lube of Canada, Ltd.

Certificate No. 3, issued in the name of Jet-Lube, Inc., representing 40,556
shares of Common stock of Jet-Lube of Canada, Ltd.

JET-LUBE UK LTD., a private limited company formed in the United Kingdom

 

Authorized Capital Stock:    100 shares of A Ordinary stock, £1.00 par, and   
15,000 shares of B Ordinary stock, £1.00 par Issued Capital Stock:    100 shares
of A Ordinary stock, £1.00 par, and    13,097 shares of B Ordinary stock, £1.00
par Outstanding Capital Stock:    100 shares of A Ordinary stock, £1.00 par, and
   13,097 shares of B Ordinary stock, £1.00 par

Certificate No.     , issued in the name of Jet-Lube, Inc., representing 100
shares of A Ordinary stock of Jet-Lube (UK) Ltd.1

Certificate No.     , issued in the name of Jet-Lube, Inc., representing 13,097
shares of B Ordinary stock of Jet-Lube (UK) Ltd.2

SIERRA LUBRICANTS, a California corporation

 

Authorized Capital Stock:    250 shares of common stock, $100.00 par Issued
Capital Stock:    140 shares of common stock, $100.00 par Outstanding Capital
Stock:    140 shares of common stock, $100.00 par

Certificate No. 6, issued in the name of such Jet-Lube, Inc., representing 140
shares of common stock of Sierra Lubricants.

 

1  This stock certificate is in the process of being canceled and split into two
stock certificates so that 65% of the shares represented by this certificate can
be pledged to the lender.

2  This stock certificate is in the process of being canceled and split into two
stock certificates so that 65% of the shares represented by this certificate can
be pledged to the lender.

 

Schedule 3.13

--------------------------------------------------------------------------------

JET-LUBE EXPORTS, INC., a California corporation

 

Authorized Capital Stock:    250 shares of common stock, $100.00 par Issued
Capital Stock:    25 shares of common stock, $100.00 par Outstanding Capital
Stock:    25 shares of common stock, $100.00 par

Certificate No. 1, issued in the name of Jet-Lube, Inc., representing 12.5
shares of common stock of Jet-Lube Exports, Inc.

Certificate No. 2, issued in the name of Sierra Lubricants, representing 12.5
shares of common stock of Jet-Lube Exports, Inc.

THE RECTORSEAL CORPORATION, a Delaware corporation

 

Authorized Capital Stock:    30,000 shares of common stock, $.01 par Issued
Capital Stock:    27,907 shares of common stock, $.01 par Outstanding Capital
Stock:    27,907 shares of common stock, $.01 par

Certificate No. 002, issued in the name of CSW Industrials Inc. representing
27,907 shares of common stock of such Loan Party.

RECTORSEAL AUSTRALIA PROPRIETARY LIMITED, a is a registered company under the
Australia Corporations Act of 2001

 

Authorized Capital Stock:    There is no concept of authorized stock in
Australia. Issued Capital Stock:    100 shares of Common stock, $0.10 AUD
Outstanding Capital Stock:    100 shares of Common stock, $0.10 AUD

Certificate No. 1, issued in the name of The RectorSeal Corporation representing
100 shares of common stock of RectorSeal Australia Proprietary Limited. 3

SMOKE GUARD, INC., a Nevada corporation

 

Authorized Capital Stock:    100 shares of common stock, $.001 par Issued
Capital Stock:    100 shares of common stock, $.01 par * Outstanding Capital
Stock:    100 shares of common stock, $.01 par *

 

3  This stock certificate is in the process of being canceled and split into two
stock certificates so that 65% of the shares represented by this certificate can
be pledged to the lender.

 

Schedule 3.13

--------------------------------------------------------------------------------

Certificate No. 001, issued in the name of The RectorSeal Corporation,
representing 100 shares of common stock of such Loan Party.

* Note the certificate reflect $.01 par and the Articles of Incorporation
reflect $.001 par.

CSW INDUSTRIALS HOLDINGS, INC., a Delaware corporation

 

Authorized Capital Stock:    100 shares of common stock, par value $0.01 per
share. Issued Capital Stock:    100 shares of common stock, par value $0.01 per
share. Outstanding Capital Stock:    100 shares of common stock, par value $0.01
per share.

Certificate No. 1, issued in the name of CSW Industrials, Inc., representing 100
shares of common stock of such Loan Party.

CAPSTAR HOLDINGS CORPORATION, a Nevada corporation

 

Authorized Capital Stock:    4,000,000 shares of common stock, par value $0.001
per share;    3,000,000 shares of preferred stock, par value $0.001 per share.
Issued Capital Stock:    500 shares of common stock, par value $0.001 per share;
   1,000,000 shares of Series A Convertible Preferred Stock, par    value $0.001
per share. Outstanding Capital Stock:    500 shares of common stock, par value
$0.001 per share;    1,000,000 shares of Series A Convertible Preferred Stock,
par    value $0.001 per share.

Certificate No. 002, issued in the name of CSW Industrials, Inc., representing
500 shares of common stock of such Loan Party

1,000,000 shares of Series A Convertible Preferred Stock of such Loan Party are
held by CSW Industrials, Inc. and are not certificated.

 

Schedule 3.13

--------------------------------------------------------------------------------

SCHEDULE 5.17

Post-Closing Matters

1. The Borrower Representative shall use commercially reasonable efforts to
deliver to the Administrative Agent (or its counsel) within 60 days of the
Effective Date (or such longer period as the Administrative Agent may agree in
its sole discretion), Collateral Access Agreements on terms and conditions, and
subject to documentation in form and substance satisfactory to the
Administrative Agent, for the locations at the addresses set forth below:

 

  a. 200 N. Maple Grove, Boise, ID

  b. 255 N. Maple Grove, Boise, ID

  c. 1190 Davol Street, Fall River, MA

  d. 1244 Davol Street, Fall River, MA

  e. 4849 Homestead Road, Houston, Texas

  f. 804 Winkler Drive, Houston, Texas

  g. 310 Beaumont Street, Houston, Texas

2. Within 60 days of the Effective Date (or such longer period as the
Administrative Agent may agree in its sole discretion) the Borrower
Representative shall cause to be delivered to the Administrative Agent the stock
certificates listed below along with appropriate executed assignments separate
from certificate:

a. A certificate issued in the name of Jet-Lube, Inc., representing 65 shares of
A Ordinary stock of Jet-Lube (UK) Ltd.

b. A certificate issued in the name of Jet-Lube, Inc., representing 8,513 shares
of B Ordinary stock of Jet-Lube (UK) Ltd.

c. A certificate issued in the name of The RectorSeal Corporation, representing
65 ordinary shares in RectorSeal Australia Proprietary Limited.

3. Within 60 days of the Effective Date (or such longer period as the
Administrative Agent may agree in its sole discretion) the Borrower
Representative shall cause to be delivered to the Administrative Agent the
promissory notes listed below along with appropriate executed allonges:

 

  a. A promissory note from Jet-Lube, Inc. to RectorSeal Corp. in the original
principal amount of $11,000,000

 

  b. A promissory note from RectorSeal Australia PTY LTD to The RectorSeal
Corporation in the original principal amount of $2,599,573.

 

  c. A subordinated note, dated June 17, 2010, from Smoke Guard California, Inc.
to Smoke Guard, Inc. in the original principal amount of $250,000

 

  d. A subordinated note, dated September 17, 2010, from Smoke Guard California,
Inc. to Smoke Guard, Inc. in the original principal amount of $250,000

 

Schedule 5.17

--------------------------------------------------------------------------------

  e. A subordinated note, dated September 30, 2010, from Smoke Guard California,
Inc. to Smoke Guard, Inc. in the original principal amount of $250,000

 

  f. A subordinated note, dated November 12, 2010, from Smoke Guard California,
Inc. to Smoke Guard, Inc. in the original principal amount of $250,000

 

  g. A subordinated note, dated January 7, 2011, from Smoke Guard California,
Inc. to Smoke Guard, Inc. in the original principal amount of $250,000

 

  h. A subordinated note, dated March 21, 2011, from Smoke Guard California,
Inc. to Smoke Guard, Inc. in the original principal amount of $250,000

 

  i. A subordinated note, dated June 30, 2011, from Smoke Guard California, Inc.
to Smoke Guard, Inc. in the original principal amount of $150,000

 

  j. A subordinated note, dated August 23, 2011, from Smoke Guard California,
Inc. to Smoke Guard, Inc. in the original principal amount of $150,000

 

  k. A subordinated note, dated September 10, 2012, from Smoke Guard California,
Inc. to Smoke Guard, Inc. in the original principal amount of $300,000

 

  l. Real Estate Lien Note, dated June 6, 2014, principal amount $1,250,000, in
favor of The Whitmore Manufacturing Company, secured by tract situated in the R.
B. Irvine Survey, Abstract No. 120, Rockwall County, Texas, containing 20.51
acres of land.

 

  m. Real Estate Lien Note, dated August 27, 2014, principal amount $4,750,000,
in favor of The Whitmore Manufacturing Company, secured by tract situated in the
R. B. Irvine Survey, Abstract No. 120, Rockwall County, Texas, containing 31.65
acres of land.

 

  n. Real Estate Lien Note, dated October 8, 2014, principal amount $3,350,000,
in favor of The Whitmore Manufacturing Company, secured by tract situated in the
R. B. Irvine Survey, Abstract No. 120, Rockwall County, Texas, containing 23
acres of land.

 

  o. Real Estate Lien Note, dated October 8, 2014, principal amount $550,000, in
favor of The Whitmore Manufacturing Company, secured by tract situated in the R.
B. Irvine Survey, Abstract No. 120, Rockwall County, Texas, containing 4.456
acres of land.

4. Within 60 days of the Effective Date (or such longer period as the
Administrative Agent may agree in its sole discretion) the Borrower
Representative shall (a) cause to be delivered to the Administrative Agent
searches with the U.S. Copyright Office and U.S. Patent and Trademark Office for
all Loan Parties and (b) to the extent any patents, patent application,
trademarks, trademark applications, copyrights or copyright applications are
disclosed as a result of these searches which were not previously pledged to the
Administrative Agent pursuant to the terms of the Security Agreement, cause to
be executed and delivered to the Administrative Agent such updated schedules to
the Security Agreement, trademark security agreements, patent security
agreements, copyright security agreement, instruments, agreements and documents
that the Administrative Agent may require to effectuate the foregoing, each in
form and substance acceptable to the Administrative Agent.

5. Within 60 days of the Effective Date (or such longer period as the
Administrative Agent may agree in its sole discretion) the Borrower
Representative shall cause to be delivered to the Administrative Agent evidence
that all assets currently held in the name of American Coatings, Strathmore
Products, Inc. or any

 

Schedule 5.17

--------------------------------------------------------------------------------

other non-Loan Party that were acquired by a Loan Party pursuant to the terms of
the Strathmore Acquisition, including but not limited, to (a) the checking
account in the name of American Coatings (account processes ACH/credit card
payments from American Coatings customers, checks then cut on these accounts and
deposited in the Strathmore Products of Houston LLC account) with the Account
No. 8513050070 at Regions Bank, (b) the checking account in the name of American
Coatings (account processes ACH/credit card payments from American Coatings
customers, checks then cut on these accounts and deposited in the Strathmore
Products of Houston LLC account) with the Account No. 1881309767 at Comerica
Bank, (c) Registered Patent No. 6,706,404, (d) Trademark Registration
No. 441105, (e) Trademark Registration No. 4444750, (f) Trademark Registration
No. 4444749, (g) Trademark Registration No. 1872159, (h) Trademark Application
Serial No. 86487589, (i) the August 17, 2010 Agreement between Strathmore
Products, Inc. and Tru Vue, Inc., and (j) the Assignment and Licensing Agreement
dated August 11, 2010 between Strathmore Products, Inc. and FSP Research, Inc.
have been assigned to Strathmore Holdings, LLC to the satisfaction of the
Administrative Agent.

 

Schedule 5.17

--------------------------------------------------------------------------------

SCHEDULE 6.01

Existing Indebtedness

The First Amended and Restated Credit Agreement, dated April 27, 2015, as
amended by the First Amendment to First Amended and Restated Credit Agreement,
to be entered into among The Whitmore Manufacturing Company, a Delaware
corporation, as “Borrower”, each of CSW Industrials Holdings, Inc., a Delaware
corporation, as a loan guarantor, CSW Industrials, Inc., a Delaware corporation,
as a loan guarantor, Whitmore’s Field Services, LLC, a Texas limited liability
company, as a loan guarantor, 549 Rockwall, LLC, a Texas limited liability
company, as a loan guarantor, Strathmore Holdings, LLC, a Delaware limited
liability company, as a loan guarantor, Strathmore Employee Holdings, LLC, a
Delaware limited liability company, as a loan guarantor, Strathmore Longview
Property, LLC, a Delaware limited liability company, as a loan guarantor,
Strathmore Properties Holdings, LLC, a Delaware limited liability company, as a
loan guarantor, Strathmore Acworth Property, LLC, a Delaware limited liability
company, as loan guarantor, Strathmore Cutten Road Property, LLC, a Texas
limited liability company, as loan guarantor, the persons signatory thereto from
time to time as lenders (the “Lenders”), and JPMorgan Chase Bank, N.A., as
administrative agent for the Lenders (in such capacity, “Agent”), pursuant to
which the Lenders will extend credit to the Borrower in the form of Term Loans
on the Effective Date in an aggregate principal amount of approximately $13.7
million

 

CapStar Holdings Corporation / Whitmore Intercompany Transactions

Real Estate and Debt Schedule

                  CapStar
Acquired
Cost Basis      Note
Balance      Accrued
Interest
Payable                           Original                            Tract     
Tax      Note      Interest               

Transaction Date

   Acres      ID      Amount      Rate     12/31/2014      11/30/2015     
11/30/2015     

Security

6/6/2014

     20.51         11204       $ 1,250,000         2 %      2,481,360       $
1,250,000       $ 10,479       Deed of Trust

8/27/2014

     31.65         82726       $ 4,750,000         2 %      6,243,491       $
4,750,000       $ 39,822       Deed of Trust

10/8/2014

     23.03        
  11192,
28961   
      $ 3,350,000         2 %      4,652,155       $ 3,350,000       $ 28,085   
   Deed of Trust

10/8/2014

     4.46         11230       $ 550,000         2 %      656,870       $ 550,000
      $ 4,611       Deed of Trust          $ 9,900,000           14,033,875   
   $ 9,900,000       $ 82,997      

 

Schedule 6.01

--------------------------------------------------------------------------------

Note Receivable from Whitmore UK Holdings, Ltd

 

Date    Principal      Duration      Interest     As of    Principal
Balance      Interest Balance      Total Balance  

4/30/2012

     10,000,000.00         10yrs         Libor + 3 %    10/31/2015     
6,375,000         164,837         6,539,837   

Intercompany A/R with Whitmore Europe Limited

           10/31/2015            (25,776 ) 

Intercompany A/R with Whitmore’s Field Services, LLC

           10/31/2015            2,070,948   

Intercompany A/R with Strathmore Holdings, LLC

                      8,661,529   

WHITMORE’S FIELD SERVICES, LLC – See intercompany A/R above.

THE RECTORSEAL CORPORATION

 

Obligor

 

Obligee

 

Date Created

 

Principal

(Current Balance)

 

Collateral/ Guaranties

Jet Lube

  RectorSeal Corp.   9/30/2015   $11,000,000   N/A

Rectorseal Australia PTY LTD

  The RectorSeal Corporation   8/15/2014   Initial principal amount $2,599,573,
  N/A       Current balance $2,749,115  

 

SMOKE GUARD CALIFORNIA, INC.

 

   

Obligor

 

Obligee

 

Date Created

 

Principal

(Current Balance)

 

Collateral/ Guaranties

Smoke Guard California

  Smoke Guard Inc.,   Various months during FY11 –   $210,000 (payment received
mid-November 2015)   N/A

 

JET-LUBE, INC.

 

   

Obligor

 

Obligee

 

Date Created

 

Principal

(Current Balance)

 

Collateral/ Guaranties

Jet-Lube, Inc.   The RectorSeal Corporation   September 29, 2015   $11,000,000  
None

 

Schedule 6.01

--------------------------------------------------------------------------------

THE RECTORSEAL CORPORATION

Stand-by Letter of Credit # CTCS-339738 issued by JP Morgan Chase Bank, N.A. on
July 10, 2007 in the amount of €17,800 for the benefit of ING Bank. The
Applicant is The RectorSeal Corporation and the Letter of Credit renews annually
on July 10th. (The Letter of Credit is issued to cover a bank guarantee relative
to the guarantee of payment of VAT owed to the Dutch taxing authority).

BALCO, INC.

The following letters of credit:

 

SO#48459      $198,762.70 US-HSBC Bank USA New York, NY- L/C#DPCDOH152527;     
Issue date 10/14/15; Expires 01/21/16      $118,941.03 INDIA-HSBC Bank USA New
York, NY- L/C#DPCDOH15258;      Issue date 10/14/15; Expires 01/21/16 SO#50195
     $47,266.21-Open Bank Los Angeles, CA-L/C#M037P506NS00598:      Issue
date-10/22/15; Expires 01/01/16

 

Schedule 6.01

--------------------------------------------------------------------------------

SMOKE GUARD, INC.

Intercompany Loan from Smoke Guard, Inc. to Smoke Guard California, Inc.:
Monthly payments of $70K + interest; only 3 months of payments remaining as of
November 30, 2015.

 

Original Dates

  

Description

  

Related Party

   Initial
Amount      Initial
Principal
Balance  

June 2010

   Interco Loan #1    Smoke Guard California    $ 250,000      

September 2010

   Interco Loan #2    Smoke Guard California    $ 250,000      

September 2010

   Interco Loan #3    Smoke Guard California    $ 250,000      

November 2010

   Interco Loan #4    Smoke Guard California    $ 250,000      

January 2011

   Interco Loan #5    Smoke Guard California    $ 250,000      

March 2011

   Interco Loan #6    Smoke Guard California    $ 250,000             Total at
EOY FY11    $ 1.5MM       $ 1.5MM   

June 2011

   Interco Loan #7    Smoke Guard California    $ 150,000      

August 2011

   Interco Loan #8    Smoke Guard California    $ 150,000             Total at
EOY F12    $ 300K       $ 1.8MM   

September 2012

   Interco Loan #9    Smoke Guard California    $ 300,000             Total at
EOY FY13    $ 300K       $ 2.1MM   

CAPSTAR HOLDINGS CORPORATION

Real Estate Lien Note, dated June 6, 2014, principal amount $1,250,000, in favor
of The Whitmore Manufacturing Company, secured by tract situated in the R. B.
Irvine Survey, Abstract No. 120, Rockwall County, Texas, containing 20.51 acres
of land.

Real Estate Lien Note, dated August 27, 2014, principal amount $4,750,000, in
favor of The Whitmore Manufacturing Company, secured by tract situated in the R.
B. Irvine Survey, Abstract No. 120, Rockwall County, Texas, containing 31.65
acres of land.

Real Estate Lien Note, dated October 8, 2014, principal amount $3,350,000, in
favor of The Whitmore Manufacturing Company, secured by tract situated in the R.
B. Irvine Survey, Abstract No. 120, Rockwall County, Texas, containing 23 acres
of land.

Real Estate Lien Note, dated October 8, 2014, principal amount $550,000, in
favor of The Whitmore Manufacturing Company, secured by tract situated in the R.
B. Irvine Survey, Abstract No. 120, Rockwall County, Texas, containing 4.456
acres of land.

 

Schedule 6.01

--------------------------------------------------------------------------------

SCHEDULE 6.02

Existing Liens

UCC Financing Statement filed April 15, 2014, with the Delaware Secretary of
State, Filing Number 2014 1475284, debtor is The Whitmore Manufacturing Company
and the Secured Party is Xerox Corporation. This financing statement covers the
following collateral: one (1) Xerox X700XV together with all attachments,
additions, replacements and repairs incorporated in or affixed thereto.

UCC Financing Statement filed February 22, 2011, with the Kansas Secretary of
State, Filing Number 70894071, debtor is Balco, Inc. and the Secured Party is
Webbank. This financing statement covers the following collateral (among other
collateral): all computer, equipment, peripherals and other equipment wherever
located, heretofore or hereafter financed to Balco, Inc. by creditor pursuant to
that certain Revolving Credit Account #6879450208000475488, dated November 15,
2010.

 

Schedule 6.02

--------------------------------------------------------------------------------

SCHEDULE 6.04

Existing Investments

Investments in the real property listed on Schedule 3.05.

Investments in subsidiaries listed on Schedule 3.13.

The Whitmore Manufacturing Company owns 1,135 shares of common stock of Applied
Industrial Technologies.

Indebtedness listed on Schedule 6.01.

 

Schedule 6.04

--------------------------------------------------------------------------------

SCHEDULE 6.05(m)

Real Property To Be Sold

 

Property

Tax ID

  

Address and Legal Description

    

Geo ID

11638    HWY205 & Sids Road      0145-0000-0018-00-0R   

All that certain lot tract or parcel of land situated in the J.D. McFARLAND
SURVEY ABSTRACT NO. 145, City of Rockwall, Rockwall County, Texas and being all
of Tract II a called 30.9655 acres tract of land as described in a Warranty deed
from Rockwall Commercial Park Joint Venture to JDI Investors, LP, dated July 24,
2003 and being recorded in Volume 3152 Page 242 of the Official Public Records
of Rockwall County, Texas, and being more particularly described as follows:

 

BEGINNING at a 1/2” iron rod found for corner in the Southwest right-of-way line
of State Highway 205 said point being at the East corner of said 30.9655 acres
tract and at the North corner of a 10 foot right-of-way dedication as shown on
the plat of ROCKWALL HOSPITAL ADDITION, an Addition to the City of Rockwall,
Rockwall County, Texas, according to the Plat thereof recorded in Cabinet E,
Slide 133 of the Plat Records of Rockwall County, Texas;

 

THENCE S. 44 deg. 28 min. 04 sec. W. at 10.00 feet pass the North corner of Lot
1, Block A of said ROCKWALL HOSPITAL ADDITION, and continuing for a total
distance of 920.77 feet to a 1/2’ iron rod found for corner at an inner “L”
corner of said Lot 1;

 

THENCE N. 45 deg. 31 min. 56 sec. W. a distance of 227.94 feet to a 1/2” iron
rod found for corner at the West most North corner of said Lot 1;

 

THENCE S. 25 deg. 52 min. 56 sec. W. a distance of 290.61 feet to a 1/2’ iron
rod found for corner at the West corner of said Lot 1 and the South most corner
of said 30.9655 acres tract;

 

THENCE N. 45 deg. 09 min. 25 sec. W. a distance of 1020.14 feet to a 1/2’ iron
rod with yellow plastic cap stamped “R.S.C.I. RPLS 5034” set for corner at the
West corner of said 30.9655 acres tract and being at the South corner of Lot 1,
Block B of ROCKWALL BUSINESS PARK EAST NO. 3, an Addition to the City of
Rockwall, Rockwall County, Texas, according to the Plat thereof recorded in
Cabinet B, Slide 291 of the Plat Records of Rockwall County, Texas;

    

 

Schedule 6.05(m)

--------------------------------------------------------------------------------

  

THENCE N. 44 deg. 50 min. 42 sec. E. along the Southeast line of said Addition a
distance of 981.14 feet to a 1/2’ iron rod found for corner in the Southeast
line of Lot 1, Block C of Rockwall BUSINESS PARK EAST an Addition to the City of
Rockwall, Rockwall County, Texas, according to the Plat thereof recorded in
Cabinet B Slide 143 of the Plat Records of Rockwall County, Texas and also being
at the West corner of a 2.00 acres tract of land as described in a Deed to Cathy
Strother, as recorded in Volume 421, Page 68 of the Real Property Records of
Rockwall County, Texas;

 

THENCE S. 45 deg. 38 min. 00 sec. E. along the Southwest line of said 2.00 acres
tract, a distance of 355.86 feet to a 112” iron rod found for corner at the
South corner of same;

 

THENCE N. 14 deg. 11 min. 13 sec. E. along the Southeast line of said 2.00 acres
tract, a distance of 387.20 feet to a 1/2” iron rod found for corner at the West
corner of a 0.494 acres tract as described in a Deed from J.S. Lofland to State
of Texas, as recorded in Volume 31, Page 510 of the Deed Records of Rockwall
County, Texas;

 

THENCE S. 45 deg. 19 min. 38 sec. E. along the West line of said 0.494 acres
tract, a distance of 528.19 feet to a concrete right-of-way monument found for
corner in the Southwest right-of-way line of State Highway 205;

 

THENCE S. 30 deg. 22 min. 20 sec. E. along said right-of-way line, a distance of
476.76 feet to the POINT OF BEGINNING and containing 1,353,112 square feet or
31.06 acres of land., ACRES 31.03

     55999    HWY205 & Sids Road      4809-000A-0001-00-0R    BEING all of Lot
1, Block A, of ROCKWALL HOSPITAL ADDITION, an Addition to the City of Rockwall,
Rockwall County, Texas according to the Plat thereof recorded in Cabinet E,
Slide 133 of the Plat Records of Rockwall County, Texas., ACRES 9.01     

Address and Legal Description

 

All that certain tract or parcel containing 25.0000 acres of land out of that
certain call 49.963 acre tract of land situated in the James Hitchcock Survey,
A-128 in Waller County, Texas, said 49.963 acre tract being that same tract of
land as described in a Deed filed for record in Volume 794, Page 157, of the
Official Public Records of Real Property, Waller County, Texas,
(O.P.R.R.P.W.C.T.).

 

Schedule 6.05(m)

--------------------------------------------------------------------------------

Address and Description

 

Undeveloped tract containing 29.56 acres of land, located at 901 Main Ave.,
Sacramento, California.

 

Property

Tax ID

    

Address and Legal Description

11192 & 28961

     A0120 R Irvine, Tracts 10 and 10-3 (NE I-30 and FM3549, 23.03 acres),
Rockwall, Texas

82726

     ABS A0120 R Irvine, Tract 22-2 (SE I-30 and FM3549, 31.65 acres), Rockwall,
Texas

11204

     A0120 R Irvine, Tract 22 (SE I-30 and FM3549, 20.51 acres), Rockwall, Texas

11210

     A0120 R Irvine, Tract 24 (SE I-30 and FM3549, 3.86 acres), Rockwall, Texas

11230

     A0120 R Irvine, Tract 35 (FM 3549, 4.46 acres), Rockwall, Texas

11422

     7740 E. Hwy 21 (5.03 acres), Bryan, Texas

237-0051-012 & 013

     901 Main Ave. (29.56 acres), Sacramento, California

 

Schedule 6.05(m)

--------------------------------------------------------------------------------

SCHEDULE 6.10

Existing Restrictions

None

 

Schedule 6.10